<PAGE>
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:
[ X ] Preliminary Proxy Statement [ ] Confidential - For Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2)
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
FAMILY STEAK HOUSES OF FLORIDA, INC.
(Name of Registrant as Specified in its Charter)
FAMILY STEAK HOUSES OF FLORIDA, INC.
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price of other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[LETTERHEAD OF FAMILY STEAK HOUSES OF FLORIDA, INC.]
DEAR SHAREHOLDERS:
Over the last few weeks you have received a number of different materials
regarding Family Steak Houses of Florida, Inc. (the "Company"). I would like to
take a moment of your time to review those items and summarize for you the
position of your Board of Directors.
First, you received the offer by Bisco Industries, Inc. ("Bisco"), to buy
up to 2,600,000 shares of the Company's stock at $.90 per share (the "Offer"),
subject to a variety of conditions. You will recall that the Offer did not pay
to you any "control premium." In fact, the Offer included a mere $.02 per share
premium over the closing price of our stock the day before the Offer. This is in
spite of the fact that the Offer, if successful, would give Bisco and its
president, Glen F. Ceiley, 30% of the outstanding shares of the Company's common
stock and effective control over your Company.
Then, you received the Board's recommendation to reject the Offer. The
reasons for the Board's recommendation were discussed at length in the Company's
Schedule 14D-9. Basically, the Board doesn't believe Bisco's Offer adequately
reflects the value of the Company's stock. We didn't believe it a month ago, and
we don't believe it now. That's why we made the recommendation that you reject
the Offer.
Next, you received a lengthy Consent Solicitation Statement from Bisco
("Bisco Solicitation") asking for your consent to a number of proposals which
would amend the Company's Bylaws (the "Bisco Proposals"). As Bisco admits in the
Bisco Solicitation, the main reason it is seeking your consent for the Bisco
Proposals is so that it can consummate the Offer. BISCO DOES NOT WANT TO CHANGE
THE COMPANY'S BYLAWS TO BENEFIT YOU - THE BISCO PROPOSALS ARE STRICTLY FOR ITS
OWN BENEFIT.
After careful consideration, your Board recommends that you reject the
Bisco Proposals, just as you rejected their Offer. In their communications with
you, they claim that they are seeking to maximize shareholder value. However,
your Board does not believe Ceiley has the qualifications or experience to do
so. Rather, your Board believes that Ceiley and Bisco seek nothing short of
control of your Company for their own benefit.
IS BISCO REALLY ACTING IN YOUR BEST INTEREST?
Bisco and Ceiley say they are only seeking to maximize shareholder value.
Are they? Before you decide whether to turn over control of your Company to
Ceiley, let's examine his credentials:
- - - Ceiley has no experience in the restaurant business.
- - - Ceiley has no experience running a publicly held corporation that has to
answer to and protect the interests of all shareholders.
- - - Ceiley has not offered any business plan on how he intends to maximize
shareholder value.
- - - Ceiley has not demonstrated the ability to maximize shareholder value at
any other company.
- - - Ceiley has failed in two prior attempts at hostile takeovers of public
companies.
<PAGE>
Do these sound like the credentials of someone you would like to lead your
Company? How is Ceiley going to maximize shareholder value? What does he know
about your Company and its business? Your Company is back on the path to
profitability and growth. Your Board does not believe that Ceiley can do a
better job running the Company than current management.
WHAT IS THE REAL REASON CEILEY WANTS YOUR COMPANY?
Your Board asked Ceiley this question. We did not get a satisfactory
answer. Ceiley says he just wants a good return on his investment. Is that true?
While we are pleased to say that we believe the Company's stock is an attractive
investment, we don't believe Ceiley's sole motivation is a good return. Does it
strike you as more than a little suspicious that a small business owner from Los
Angeles, California would want to make a $3 million investment in a restaurant
company in Florida, a business he admits he knows nothing about? Ceiley's
business is electronics and fasteners. He is a wholesale distributor. He is a
continent away from this Company and its operations. Why does he want control
over your Company?
Ceiley says that the Company is right when we point out that he knows
nothing about the Company's business. He says "What's the point?" Ceiley has
also said that he may seek to maximize shareholder value by disposing of
restaurants. Why would he sell off the Company's only business? Why would his
lack of knowledge about the Company's business be irrelevant? Perhaps the answer
to both these questions is that he has no intention of continuing to operate the
Company's business. Maybe Ceiley just wants to control a publicly-traded
company. If Ceiley is allowed to gain control of your Company, he would be free
to access the capital markets for the financing of other ventures. He says this
is not what he has planned. But when the Board asked him to commit to such a
restriction in a contract, he would only limit himself for 15 months.
Thereafter, he would be free to obtain total control of your Board and your
Company and do as he pleased. IF YOU AGREE TO THE BISCO PROPOSALS NOW, YOU WILL
BE UNABLE TO STOP HIM IN THE FUTURE. IT WILL BE TOO LATE.
WHAT ARE THE BISCO PROPOSALS?
The Bisco Proposals are essential elements in Ceiley's scheme to take over
your Company. Because your Board had the foresight to recognize that your
Company was vulnerable to the abusive and coercive takeover tactics of corporate
raiders like Ceiley, they adopted a number of provisions that benefit and
protect all shareholders. Before Ceiley can pull off his "COUP", he has to
attack these protections and persuade you to remove them. In the Bisco
Solicitation, he asks for your consent to: 1) eliminate the Shareholder Rights
Plan, 2) opt out of the Florida Control Share Act, 3) revoke all bylaws adopted
by your Board since 1985, and 4) require that no bylaw be adopted in the future
without the approval of a majority of all outstanding shares. Please take a
moment to read the following and understand the impact of what Ceiley and Bisco
are asking you to do.
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<PAGE>
THE SHAREHOLDER RIGHTS AGREEMENT
As many of you know, a shareholder rights plan is designed to protect ALL
shareholders from the abusive takeover tactics employed by corporate raiders who
launch tender offers that don't offer shareholders a significant premium and
don't offer to purchase all shares. Sound familiar? This is exactly the type of
offer that Ceiley has made. And it is precisely the reason your Board adopted
the Rights Agreement for your Company. Under the Rights Agreement, upon the
occurrence of certain events, you will be entitled to receive at little or no
cost additional shares of stock in the Company which will increase your
percentage of ownership in the Company relative to Ceiley and Bisco.
Simultaneously, the Rights Agreement is extremely dilutive to Ceiley and Bisco.
The effect of the Rights Agreement is to compel persons intent on a takeover of
the Company to negotiate with your Board so that the Board can obtain the best
terms for ALL shareholders, consistent with their fiduciary duty.
Ceiley's offer has now been open for more than a month. SEVENTY-FIVE
PERCENT OF YOU HAVE SAID NO TO CEILEY AND BISCO BY REFUSING TO TENDER YOUR
SHARES. Apparently, your Board is not alone in its opinion that the Offer from
Ceiley and Bisco does not represent a fair value for all shareholders. However,
if you consent to the Bisco Proposals and permit Ceiley to take away your rights
under the Rights Agreement, you will enable him to take control of your Company
without fear of any adverse consequences and without having to worry about what
is in the best interest of anyone other than himself.
THE FLORIDA CONTROL SHARE ACT
The Bisco Proposals also seek to have your Company opt out of the Florida
Control Share Act. This is an additional protection your Company enjoys from
corporate raiders and takeover artists. The State of Florida and many other
states have adopted control share statutes which protect companies from
shareholders who accumulate enough shares to control the company without paying
a premium for that control. The Company did not apply for this protection - it
is afforded to all public companies in Florida.
Ceiley wants to make sure that once he acquires enough stock to control
your Company he has the power to vote those shares. Therefore, he is asking you
and all shareholders of the Company to remove this Florida law which protects
you from the takeover tactics he is using! If this sounds crazy, that's because
it is. Ceiley wants you to help him gain control over your Company and then he
says "TRUST ME, I'll treat you all equally when I have control." On what basis
should you trust Ceiley? His willingness to pay a 2 cent premium for only 23% of
the shares!
REVOCATION OF ALL BYLAWS ADOPTED SINCE 1985
This is another attempt by Ceiley and Bisco to eliminate all the
protections that your Company has put into place in the last 12 years so that
your Board might have the ability to negotiate the best terms for all
shareholders in the event of a merger or acquisition. Eliminating these Bylaws
severely weakens the ability of your Board in negotiations and strengthens the
position of the bidder. Why would Ceiley and Bisco want to force your Board to
negotiate from a position of weakness? Because their position would be
strengthened.
REQUIRE THAT ALL BYLAWS BE APPROVED BY SHAREHOLDERS
Can you imagine being required to vote on every Bylaw adopted by your
Board? This is ludicrous! It would "handcuff" your Board and prevent us from
being able to react quickly to a rapidly changing business environment. Your
Board members are fiduciaries required by law to act
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<PAGE>
in the best interest of all shareholders. It is most certainly not in your best
interest to prohibit or delay the Board from making critical decisions on your
behalf. On the other hand, it is clearly in the best interest of Ceiley and
Bisco to do so.
BISCO AND CEILEY ARE NOT ACTING IN YOUR BEST INTEREST.
If all Ceiley really wants is a good return on his investment, then why does he
need to make all these changes? He can enjoy the return on his investment and
not require the Company to opt out of the Florida Control Share Act. The Board
indicated a willingness to exempt him from the provisions of the Rights
Agreement if he would commit to a long-term standstill agreement. That would
have allowed him to enjoy a good return on his investment, but he was unwilling
to accept such an agreement. Changes in the Bylaws are not required to allow him
to enjoy a good return on his investment. SO, CONTRARY TO WHAT CEILEY AND BISCO
ARE SAYING, IT DOES NOT APPEAR THAT A GOOD RETURN ON THEIR INVESTMENT IS THEIR
SOLE MOTIVATION HERE.
We now find ourselves back where we started: what is the real reason Ceiley
and Bisco want control of your Company? We don't know. He won't give us a
straight answer and he hasn't given you a straight answer. Until he does, your
Board believes that our fiduciary duty to act in the best interest of ALL
shareholders requires us to oppose his takeover attempts.
IF YOU ARE AS SUSPICIOUS OF BISCO'S MOTIVES AS YOUR
BOARD IS, WE URGE YOU TO REJECT HIS OFFER AND THE
BISCO SOLICITATION.
For many of the same reasons that the Board recommended rejecting the
Offer, the Board recommends that the Company's shareholders reject the Bisco
Proposals. The enclosed Consent Revocation Statement explains in more detail the
reasons for the Board's recommendation against the Bisco Proposals. Please give
the Consent Revocation Statement your careful attention.
Regardless of how many shares you own, your support is critical. If you
have already tendered your shares or signed Bisco's consent form and would like
to revoke your consent and/or withdraw your shares, please follow the
instructions below.
SEND A MESSAGE TO BISCO
- - - Do not return the [GOLD] consent form sent to you by Bisco, even to vote
against their proposal. If you have already done so, please mark the
REVOCATION box on the enclosed WHITE revocation of consent form, sign and
date the form and return it in the postage-paid envelope provided.
- - - Do not tender your shares to Bisco. If you have already done so, you can
have your shares returned to you by completing the YELLOW Notice of
Withdrawal previously mailed to you.
- - - If you have already provided your consent to Bisco, you can revoke it by
signing, dating and mailing the enclosed WHITE revocation of consent form
in the enclosed envelope. If your shares are held through a bank or broker,
please contact your representative at that firm and request the
representative to execute the WHITE revocation of consent form on your
behalf.
If you require any assistance, please call Corporate Investor Communications at
(800) 932-8498.
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<PAGE>
Thank you for taking the time to read this letter and the enclosed Consent
Revocation Statement. We will keep you advised of further developments.
Very truly yours,
/s/ Lewis E. Christman, Jr.
President and Chief Executive Officer
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<PAGE>
FAMILY STEAK HOUSES OF FLORIDA, INC.
2113 FLORIDA BOULEVARD
NEPTUNE BEACH, FLORIDA 32233
(904) 249-4197
----------
STATEMENT BY BOARD OF DIRECTORS
IN OPPOSITION
TO BISCO INDUSTRIES, INC.
MAY 1, 1997
This Consent Revocation Statement (this "Statement") is furnished by the
Board of Directors (the "Board") of Family Steak Houses of Florida, Inc., a
Florida corporation (the "Company") to the holders of outstanding shares of the
Company's common stock, par value $.01 per share (the "Shares"), in connection
with the Board's opposition to the solicitation (the "Bisco Solicitation") by
Bisco Industries, Inc. ("Bisco"), of written shareholder consents to do the
following:
(1) repeal the Amended and Restated Bylaws recently adopted by the Board and
any other bylaws or amendments to bylaws adopted without shareholder
approval subsequent to November 27, 1985, and prior to the effectiveness of
any actions taken through the Bisco Solicitation (the "Bylaws Repeal
Proposal"). If the Bylaws Repeal Proposal is approved, the Bylaws adopted
by the Board on November 27, 1985, will become the Company's Bylaws,
subject to the amendments proposed by Bisco;
(2) amend the Company's Bylaws to provide that Section 607.0902 of the Florida
Business Corporation Act (the "Control Share Act") shall not apply to
control share acquisitions of shares of the Company (the "Control Share
Proposal");
(3) amend the Company's Bylaws to require the Company to redeem the rights
agreement dated March 18, 1997, between the Company and ChaseMellon
Shareholder Services, Inc. (the "Rights Agreement"), and require prior
shareholder approval for adoption of any similar anti-takeover measure in
the future (the "Rights Revocation Proposal"); and
(4) amend the Company's Bylaws to provide that the Bylaws shall not be subject
to amendment or repeal by the Board (the "Bylaw Restriction Proposal").
YOUR BOARD UNANIMOUSLY OPPOSES EACH OF THESE PROPOSALS AND RECOMMENDS THAT
YOU DO NOT CONSENT TO ANY OF THEM AND REVOKE ANY CONSENT PREVIOUSLY GIVEN TO
BISCO.
This Statement and the enclosed WHITE Revocation of Consent Form are first
being mailed to shareholders on or about May 1, 1997.
IF YOU PREVIOUSLY SIGNED AND RETURNED THE [GOLD] FORM OF CONSENT SENT
TO YOU BY BISCO, YOU HAVE EVERY RIGHT TO CHANGE YOUR MIND. THE BOARD URGES YOU
TO SIGN, DATE AND MAIL THE ENCLOSED WHITE REVOCATION OF CONSENT FORM IN THE
POSTAGE-PAID ENVELOPE PROVIDED.
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<PAGE>
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR REVOCATION OF CONSENT IS
IMPORTANT. PLEASE ACT TODAY!
IF YOUR SHARES ARE HELD IN THE NAME OF A BANK, BROKER OR OTHER NOMINEE, WE
URGE YOU TO CONTACT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT AND DIRECT HIM OR
HER TO EXECUTE A WHITE REVOCATION OF CONSENT FORM ON YOUR BEHALF. YOU SHOULD
ALSO SIGN, DATE AND MAIL YOUR WHITE REVOCATION OF CONSENT FORM WHEN YOU RECEIVE
IT IN THE MAIL. PLEASE DO SO IMMEDIATELY!
If you have any questions about giving your revocation of consent or
require assistance, please contact our agent:
CORPORATE INVESTOR COMMUNICATIONS, INC. ("CIC")
111 COMMERCE ROAD
CARLSTADT, NEW JERSEY 07072-2586
CALL TOLL FREE (800) 932-8498
CALL COLLECT (201) 876-1900
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<PAGE>
BACKGROUND AND REASON FOR THE COMPANY'S POSITION
On December 30, 1996, the Company received a copy of a Schedule 13D filed by
Bisco Industries, Inc., the Bisco Industries Profit Sharing and Savings Plan and
Glen F. Ceiley, president of Bisco Industries, Inc. According to the Schedule
13D, Bisco and its affiliates had acquired over 5.0% of the Company's common
stock. At the same time, Ceiley submitted a shareholder proposal to be included
in the Company's annual meeting proxy, seeking to have the Company opt out of
the Florida Control Share Act. After receiving these notices, Lewis E.
Christman, Jr., the President and Chief Executive Officer of the Company,
suggested to the Company's Board of Directors that he believed a meeting with
Ceiley would be in order. The Board concurred and met with Ceiley on February
11, 1997.
At the February 11, 1997 meeting, members of the Board inquired of Ceiley as to
the reasons for his substantial investment in the Company. Ceiley insisted that
he supported the Board, did not wish to seek an active role in the management of
the Company's affairs, and simply wanted to obtain a good return on his
investment. Ceiley reiterated his request that the Company opt out of the
Florida Control Share Act, but the Board indicated to him that it did not intend
to do so.
Having failed to persuade the Board to voluntarily opt out of the Florida
Control Share Act, on March 6, 1997, Bisco commenced a $.90 per share tender
offer for 2,600,000 shares of the Company's common stock (the "Offer"), subject
to, among other things, Bisco being satisfied, in its reasonable discretion,
that the Florida Control Share Act will not apply to the Offer.
After carefully considering the terms and conditions of the Offer and other
matters it deemed relevant, at a meeting on March 18, 1997, the Board of
Directors of the Company unanimously determined that the Offer was inadequate
and decided to recommend that the shareholders reject the Offer. The Board based
its decision on a number of factors which are discussed at length in the
Company's Schedule 14D-9 previously mailed to you. Among the most significant
factors, however, were the following:
1. the Company's current business, assets, financial condition and future
prospects, including the recent refinancing of its long-term debt, recent
new restaurant opening and its renewed momentum for growth;
2. the slight 2 cent premium provided by the Offer over the market price of
the Shares on the day before Bisco commenced its Offer;
3. the lack of information provided by Bisco with respect to its strategies
for the Company;
4. the lack of depth in Bisco's management team, its lack of experience and
expertise in the franchised restaurant industry and its apparently limited
financial resources;
5. the range of values for the Company revealed in a valuation study prepared
by a nationally-recognized investment banking firm;
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<PAGE>
6. the opinion of most shareholders who had contacted the Company that the
price of the Offer was too low and their stated intent not to tender their
Shares in response to the Offer; and
7. the Board's concern that since Bisco is only offering to buy 23.8% of the
Shares, if the offer is consummated, holders who tender their Shares will
most likely have a portion of their Shares returned to them and will be
SHAREHOLDERS IN A COMPANY CONTROLLED BY A PERSON WITH NO EXPERTISE IN THE
RESTAURANT INDUSTRY, limited financial resources and no experience managing
a publicly-traded corporation.
After filing its response to the Offer, the Company called Ceiley and Bisco to
see if there was some basis on which the Company could accommodate Ceiley's
goals while still protecting all shareholders of the Company. After numerous
conversations, it became apparent that such a compromise could not be reached.
Your Board, acting in accordance with its fiduciary duty, insisted on certain
measures designed to protect the Company's shareholders from a takeover by Mr.
Ceiley. While he insisted that he was not interested in a takeover of the
Company, Ceiley refused to agree to the Company's reasonable requests that would
prohibit him from doing so without first coming to the Board and negotiating a
transaction that would be in the best interest of all shareholders. Now, Ceiley,
in the Bisco Solicitation has launched an attack on your Company and hurled
unfounded accusations at your Board. WE THINK YOU ARE ENTITLED TO HEAR OUR SIDE
OF THE STORY. PLEASE REVIEW THE NEXT FEW PAGES BEFORE MAKING YOUR DECISION ON
WHETHER TO SUPPORT CEILEY'S TAKEOVER ATTEMPT.
CEILEY AND BISCO ARE FORCING THE COMPANY TO SPEND YOUR COMPANY'S MONEY IN
RESPONDING TO THEIR ILL-FOUNDED TAKEOVER ATTEMPT.
Without a trace of irony, Bisco suggests that the Company is squandering its
resources in an unjustified response to his takeover offer. However, as several
shareholders have accurately pointed out in recent telephone calls to the
Company, it is in fact Bisco and Ceiley who have prompted the expenditure of
Company funds in response to his takeover attempt and the Bisco Solicitation.
Responding to those filings is expensive, but your Board is doing nothing more
than what it is required by law to do: acting in accordance with its fiduciary
duty and in a manner consistent with the best interests of all shareholders. If
it were not for Ceiley and Bisco launching the Offer and the Bisco Solicitation,
then the Company would be employing its resources and focusing its attention on
more productive areas, including building new restaurants and remodeling older
restaurants.
THE BOARD HAS REPEATEDLY TRIED TO NEGOTIATE WITH BISCO AND CEILEY.
Contrary to Ceiley's assertions that your Board has failed to negotiate in good
faith, your Board has bent over backwards to accommodate Ceiley's stated goals.
It was your Board that sought out
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<PAGE>
Ceiley after learning he had acquired a 5% stake in the Company and invited him
to meet with them - a fact Ceiley neglects to point out in the Bisco
Solicitation. Clearly, your Board is concerned about shareholders. We believe it
is prudent to meet with anyone who acquires such a significant stake in our
Company. Then, after Ceiley filed his tender offer, it was your Board who first
called him to establish a dialogue in an effort to minimize the costs associated
with responding to tender offers and consent solicitations. On neither occasion
did Ceiley initiate contact with the Board.
Another fact which Ceiley fails to note is that it was your Board that made the
first offer to accommodate Ceiley's stated goal of "obtaining a good return on
his investment." Those initial terms offered by the Board included a request
that Mr.Ceiley agree to a long-term standstill so that the Board could be
assured that Ceiley is not engaged in an ATTEMPT TO TAKE CONTROL OF THE COMPANY.
Ceiley initially refused to any such limitations, but later agreed to a fifteen
month standstill. Even then, however, Ceiley continued to insist that the
Company exempt him from the application of the Florida Control Share Act, redeem
the Shareholder Rights Plan and agree not to adopt any defensive measures in the
future. Your Board was, and is, unwilling to accept these conditions because we
believe they reveal his true intentions to assume control of the Company, either
now or in the near future.
ARE YOUR BOARD'S SUSPICIONS UNWARRANTED?
Ceiley suggests that your Board's concerns regarding a takeover of your Company
are unwarranted. He states in his communications to you that Bisco has "no
present intention to seek to acquire the entire equity interest in the Company
or to consummate a merger or other business combination transaction between the
Company and Bisco or any of its affiliates." (Emphasis added).
Why does the Board believe that Ceiley may be interested in a takeover of the
Company? BECAUSE CEILEY HAS A HISTORY OF HOSTILE TAKEOVER ATTEMPTS. In 1990,
Ceiley made an unsolicited offer to buy shares of Bell Industries, Inc., a large
distributor of electronics components. The offer was contingent on Ceiley
getting financing for the offer. Press reports at the time indicate that Bell
Industries did not regard Ceiley's offer as credible and rejected it. Mr. Bruce
Jaffe, the Executive Vice President of Bell Industries at that time, is quoted
in press reports as saying of Ceiley's offer, "We don't consider it a serious
offer. It would be like our Chairman calling up Roger Smith and offering to buy
General Motors." It appears that the shareholders of Bell Industries never
received any payment for their shares from Ceiley pursuant to this offer.
Similarly, in 1991, Ceiley initiated an unsolicited offer to acquire RB&W
Corporation, an Ohio-based manufacturer and distributor of fasteners. RB&W
rejected the offer citing Ceiley's failure to identify the source and viability
of his financing. In November 1991, Ceiley revised his offer, which was again
rejected by RB&W. Ceiley then submitted a proposal to the shareholders of RB&W
recommending that RB&W's board of directors immediately seek offers to sell the
company. Ceiley's proposal was included in RB&W's proxy statement for the 1992
annual meeting of shareholders where it was overwhelmingly rejected.
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<PAGE>
In both of these situations, Ceiley's offer resulted in SIGNIFICANT COSTS to
these companies and the diversion of management's attention, with no benefit to
their shareholders. Your Board likewise believes that the Bisco Offer and the
Bisco Proposals waste the Company's time and money without offering any benefit
to you, our shareholders. WE URGE YOU TO PROMPTLY REJECT THE BISCO OFFER AND THE
BISCO PROPOSALS BY REFUSING TO TENDER YOUR SHARES AND BY WITHHOLDING YOUR
CONSENT OR REVOKING ANY CONSENT PREVIOUSLY GIVEN.
WHAT IS CEILEY REALLY INTERESTED IN?
What possible explanation can there be for a small business owner from Los
Angeles, California seeking to acquire control of a franchised restaurant
company in Florida? Ceiley admits he knows nothing about our Company's business.
Is he simply seeking a good return on his investment?
DESPITE WHAT HE SAYS, IT APPEARS THAT CEILEY IS LOOKING FOR SOMETHING MORE THAN
JUST A GOOD RETURN ON HIS INVESTMENT. As Ceiley admits in the Bisco
Solicitation, the Board agreed to allow Ceiley to acquire up to 20% of the
Company's common stock and exempt him from the provisions of the Shareholder
Rights Plan. The only conditions imposed by your Board were contractual
restrictions that would have limited Ceiley's ability to consummate a takeover
of the Company and the continued protection of the Florida Control Share Act.
These conditions would not have precluded Ceiley from enjoying the return on his
investment. However, as Ceiley admits in the Bisco Solicitation, he was
unwilling to accept the Company's conditions unless they expired after 15
months.
- Repeal of the Bylaws isn't required for Ceiley to enjoy a good return
on his investment.
- Opting out of the Florida Control Share Act isn't required for Ceiley
to enjoy a good return on his investment.
- A prohibition on future amendments to the Bylaws isn't required for
Ceiley to enjoy a good return on his investment.
Obviously, there is some ULTERIOR MOTIVE to Ceiley's acquisition of shares which
Ceiley is unwilling to share with you or your Board. We believe it is nothing
less than a desire to assume control of the Company in the immediate or near
future.
WHY IS THE BOARD CONCERNED ABOUT BISCO'S OFFER AND PROPOSALS?
Ceiley suggests that the Board's defensive posture with respect to his takeover
attempt is an unjustified, "knee-jerk" reaction. Why is your Board so concerned
about Ceiley acquiring a 30% stake in your Company? The answer is quite simple -
the fiduciary duty imposed on your Board by Florida law requires that we act in
the best interest of ALL shareholders. We cannot disregard the
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<PAGE>
fact that, if Ceiley acquires 30% of the Company's common stock, he would
exercise effective control over the Company. THEREFORE, WE NEED TO EVALUATE
WHETHER HIS ACTIONS WILL BENEFIT THE 70% OF SHAREHOLDERS WHO WILL REMAIN IF HIS
OFFER IS SUCCESSFUL. We believe our concern is justified for the reasons set
forth in this Statement and in our Schedule 14D-9. Many of you have called the
Company in recent days to express your support for management and to ask how you
can help oppose Ceiley's tender offer. It also appears that the vast majority of
our shareholders agree with the Board's opinion regarding the Offer - MORE THAN
75% OF OUR SHAREHOLDERS HAVE SAID "NO" TO CEILEY AND HAVE DECLINED TO TENDER
THEIR SHARES. It is the interest of those shareholders that your Board has a
duty to protect.
HOW COULD CEILEY POSSIBLY MAXIMIZE SHAREHOLDER VALUE?
Ceiley says he will work to maximize shareholder value. YET, HE ADMITS HE KNOWS
NOTHING ABOUT OUR COMPANY'S BUSINESS. How can someone so lacking in knowledge
regarding our Company's business possibly maximize shareholder value? Your
Company's management has over 100 years combined experience in the food
business. If Ceiley thinks the way to maximize our shareholders' value is to
sell restaurant properties, does he think he can sell property located in
Florida better from his base in California? ISN'T IT OBVIOUS THAT THE COMPANY'S
MANAGEMENT HAS GREATER EXPERIENCE, GREATER EXPERTISE, BETTER CONTACTS AND DEEPER
KNOWLEDGE OF OUR COMPANY, THE FLORIDA MARKET AND THE RESTAURANT INDUSTRY?
YOUR COMPANY IS MAXIMIZING SHAREHOLDER VALUE.
In fact, the management team here has been working hard the last 2-3 years in
turning around the Company. You will recall that following the new management
team's first full year of operations in 1995, the Company enjoyed $1.3 million
in earnings, a dramatic turnaround from the $1.7 million in losses the prior
year. Moreover, the Company has now returned to a growth posture: we opened a
new restaurant in Brooksville, Florida in January and we will open another new
restaurant in Deland, Florida this summer. The Company has also refinanced its
long-term debt on the most favorable basis ever enjoyed by the Company.
Moreover, the Company has in place a loan facility to finance the construction
of additional new restaurants.
Finally, your Company is constantly seeking to maximize shareholder value by
evaluating strategic opportunities. The Company is presently in preliminary
discussions regarding a transaction that, if consummated, would permit the
Company to diversify its business lines and simultaneously provide access to
additional capital for the construction of new, high volume restaurants with the
potential for significantly higher earnings.
WHY HASN'T BISCO INCREASED ITS OFFER PRICE?
In the Bisco Solicitation, Ceiley accuses the Board of failing to act in the
best interest of the shareholders by failing to seek a higher offer price.
Bisco's argument is misplaced. BISCO, not the
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Company, filed the Offer. Bisco and Ceiley had every opportunity over the course
of the last month to increase the Offer price. Had they increased the Offer
price, the Board would have been required to reevaluate the Offer. The fact that
Bisco chose not to increase its Offer price cannot now be transformed into some
failure on the part of your Board. If they were serious about the Offer, they
should have increased the price. It would have been easy enough to do - they
have filed two other amendments extending the expiration date for the Offer.
So why hasn't Bisco increased the Offer price? Maybe they don't have the money.
They have not revealed the source of their financing. They point out in the
Bisco Solicitation that the Offer price is within the range of the valuation
obtained by the Company. However, the Offer price is not in the top 25% of that
valuation range.
Based on this background and the information provided below, the Board believes
you will agree that the Bisco Offer and the Bisco Proposals are not in your best
interest.
BISCO PROPOSAL 1: THE BYLAWS REPEAL PROPOSAL
According to the Bisco Solicitation, the Bylaws Repeal Proposal proposes
the adoption of the following resolution:
"RESOLVED, that the Amended and Restated Bylaws recently adopted by the
Board of Directors, and each other provision of the bylaws or
amendments to bylaws adopted by the Board of Directors without
shareholder approval subsequent to November 27, 1985 and prior to the
effectiveness of the actions proposed in the Consent Solicitation
Statement of Bisco Industries, Inc. dated April , 1997, be and they
hereby are, repealed effective at the time this resolution is approved
by the holders of a majority of the outstanding Common Stock. It is the
intention of this resolution that the bylaws adopted by the Board of
Directors on November 27, 1985 shall become the bylaws of the
corporation, subject to any amendments approved by the shareholders."
To be adopted, the Bylaws Repeal Proposal requires the approval of the
holders on the Record Date of a majority of the outstanding Shares. See "The
Consent Procedure".
THE BOARD RECOMMENDS THAT YOU REVOKE ANY CONSENT TO THE BYLAWS REPEAL
PROPOSAL BY SIGNING, DATING AND RETURNING THE ACCOMPANYING WHITE FORM OF
REVOCATION OF CONSENT TODAY.
RECOMMENDATION OF THE BOARD
The Bylaws Repeal Proposal seeks to repeal the Amended and Restated
Bylaws of the Company, adopted by the Board on March 18, 1997 (the "New
Bylaws"). The Bisco Solicitation
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describes the New Bylaws as part of a "knee jerk response" to the Bisco tender
offer. In fact, the Board's initiated a review of its Bylaws in 1995, more than
a year prior to the Bisco tender offer. This review continued throughout 1996.
The Board had observed the relatively common use of certain coercive takeover
tactics in recent years, including the accumulation of substantial common stock
positions as a prelude to a threatened takeover or corporate restructuring,
proxy fights and partial tender offers and the related use of "two-tiered"
pricing. The Board believes that the use of these tactics can place undue
pressure on a corporation's board of directors and shareholders to act hastily
and on incomplete information, and therefore can be highly disruptive to a
corporation as well as result in unfair differences in the treatment of
shareholders.
THE NEW BYLAWS PROVIDE VALUABLE PROTECTION TO YOU AND YOUR COMPANY
Presently, a high proportion of publicly-traded companies have adopted
defensive measures similar to those incorporated into the New Bylaws to reduce
the threat of a hostile takeover. Since the Bylaws of the Company had not been
amended since their adoption in 1985, the Board decided to review its Articles
of Incorporation, as amended (the "Articles"), and Bylaws to make sure the
Company's corporate governance practices were up to date and structured in a
manner to protect against the threats described above. On that basis, the Board
determined to adopt the New Bylaws, the purpose of which, separate from the
Bisco tender offer, is to provide a greater likelihood that the Company will
remain independent or, in the alternative, that the Board will have flexibility
and strength in negotiating with an unsolicited bidder. In addition, the New
Bylaws are consistent with the modern corporate governance practices of public
companies. However, the Bisco Solicitation proposes to throw out the entire New
Bylaws, regardless of their benefits and protection. As described below, the
Board believes that the New Bylaws are in the best interest of the Company and
its shareholders and should not be repealed.
The New Bylaws classify the Board into three classes as nearly equal in
size as possible (the "Classified Board Provision"). Initially, Class I
directors will serve for a term expiring at the first annual meeting after their
election, Class II directors will serve for a term expiring at the second annual
meeting after their election, and the Class III directors will serve a term
expiring at the third annual meeting after their election. After each such
initial term, each class of directors will serve a three year term. Accordingly,
only one class of directors will be elected at each annual meeting.
Historically, the Company has elected the entire board each year. The Board
plans to recommend that the shareholders approve an amendment to the Articles to
classify the Board and adopt related provisions as part of the agenda for the
1997 Annual Meeting of Shareholders.
The Bisco Solicitation states that the Classified Board Provision
"reduce[s] shareholder value over the long run by entrenching management and by
reducing the probability that someone, like Bisco, will make a bid for Shares at
a price above market value." HOWEVER, THE BOARD BELIEVES THAT THE CLASSIFIED
BOARD STRUCTURE WILL PROVIDE BOTH CONTINUITY AND STABILITY TO THE COMPANY,
IMPROVE ACCOUNTABILITY TO SHAREHOLDERS AND ENCOURAGE TRANSACTIONS THAT ARE FAIR
TO ALL SHAREHOLDERS.
The Board plays an important role in strategic planning and corporate
policy-making. A
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director's ability to make meaningful contributions in these areas depends in
large part on his familiarity with the Company's business. Directors who serve
three year terms rather one year terms are likely to be more familiar with and
better informed regarding the Company. The classified Board structure is
intended to prevent disruptive changes in the composition of the Board by
preventing the election of an entire new Board in a single year. Preventing such
a rapid change in control serves to enhance business strategy and shareholder
value because a majority of the directors will have prior experience in the
management of the Company's business. Accordingly, the classified Board
structure lends stability and helps the Board to make insightful and
well-informed decisions.
The selection of responsible, experienced and respected directors also
enhances accountability to shareholders. The Company's annual elections at which
approximately one-third of the directors will be elected will provide
shareholders with the regular opportunity to make significant changes in the
composition of the Board, while also providing the Company with experienced and
knowledgeable directors. In addition, Florida law provides that shareholders may
remove directors with or without cause unless the articles of incorporation
provide that directors may be removed only for cause. Please note that, as part
of the agenda for the 1997 Annual Meeting, the Board plans to recommend that the
shareholders approve an amendment to its Articles to provide that directors may
be removed only for cause, a provision designed to protect the Board from an
insurgent while maintaining director accountability.
In addition, the Board believes that the classified Board serves as an
obstacle to sudden and disruptive attempts to obtain control of the Company. As
noted above, the Board did not develop the concept of the classified Board in
response to the Bisco tender offer; only the timing of the formal adoption of
the New Bylaws was related to the Bisco tender offer. Instead, the exact
language of the Classified Board Provision was drafted and reviewed by the
Company long before the Bisco tender offer for the purpose of protecting the
Company and its shareholders from an insurgent shareholder's attempt to gain
control or to achieve some other personal gain. Regardless of its chances for
success, such an attempt can seriously disrupt the conduct of the Company's
business and waste time, money and other resources of the Company in the
process.
In response to that concern, since a minimum of two successive annual
meetings are required to elect a majority of the Board, the classified Board
structure prevents an insurgent from gaining rapid control of the Board.
Therefore, in spite of Bisco's allegations that the classified Board reduces
shareholder value, the classified Board encourages a person seeking to gain
control of the Company to do so through arm's length negotiations with
management and the Board, who are in an informed position to, AND ARE DUTY BOUND
TO, negotiate a transaction that IS FAIR TO ALL SHAREHOLDERS.
The New Bylaws institute additional changes to the previously existing
bylaws of the Company. Certain of the changes are designed to complement the
Classified Board Provision while maintaining accountability to shareholders. For
example, the New Bylaws provide that vacancies on the Board may only be filled
by the vote of 80% of the directors then in office (the "Vacancy Provision").
This provision prevents an insurgent shareholder from circumventing the
protections of the classified board, for example, by preventing such shareholder
from voting to
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increase the size of the Board, filling such vacancies with his own
representatives, and thereby potentially gaining rapid majority representation
on the Board. The Vacancy Provision instead enables experienced directors to
fill such vacancies until shareholders can vote on such positions at the
appropriate annual meeting of shareholders.
In addition, the New Bylaws added certain requirements for shareholders to
give advance notice to the Company if they wish to propose action to be taken by
shareholders at a meeting or if they wish to nominate directors for election
(the "Notice Provisions"). Typically, such shareholder proposals involve
important issues. Accordingly, the Board believes that the Notice Provisions are
necessary so that it can adequately inform all shareholders of the proposed
action or nomination, together with the Board's recommendation or position with
respect to the proposal or nomination. Shareholders are then better able to
determine whether they wish to attend the shareholder meeting or grant a proxy
to the Board, and whether they support the proposal or nomination. The Notice
Provisions also afford the Board a meaningful opportunity to consider the
qualifications of proposed director nominees and to inform shareholders about
them. Therefore, the Notice Provisions are intended to increase the likelihood
that the Company and all of its shareholders are given an opportunity to
carefully consider and respond to important shareholder proposals.
The New Bylaws also incorporate many provisions which are standard
corporate governance provisions and which are ministerial in nature. For
example, the New Bylaws authorize the Company to appoint an inspector of
elections or an inspector of written consents to provide an independent
ministerial review of the validity and tabulation of shareholder votes, consents
and revocations. The New Bylaws also provide more flexibility in connection with
certain management issues, such as providing that the annual meeting may be
scheduled by the Board rather than the requiring the meeting to take place
during the first two months of the second fiscal quarter. The New Bylaws expand
on such mundane issues as the requirements for transfer of stock. The New Bylaws
also are updated to conform with current Florida law, by deleting references to
Treasury stock, which no longer exists by law, for example.
Accordingly, while certain additions of the New Bylaws are intended to
protect shareholders from unfair or coercive takeover tactics, other provisions
are simply intended to improve and modernize the corporate governance provisions
of the Company. The Bylaws Repeal Proposal of the Bisco Solicitation, however,
proposes to throw out the ENTIRE New Bylaws without distinction. The Board
believes that the New Bylaws are in the best interest of the Company and its
shareholders. However, the Board believes that any shareholder objections to the
New Bylaws should be addressed specifically, with respect to the individual
bylaw, rather than Bisco's overly broad approach of throwing out an entire
corporate governance document.
Moreover, not only does the Board unanimously endorse the New Bylaws,
but THE BOARD ALSO BELIEVES THAT CERTAIN PROVISIONS OF THE NEW BYLAWS ARE SO
IMPORTANT THAT THEY SHOULD BE APPROVED BY THE SHAREHOLDERS AS AMENDMENTS TO THE
ARTICLES. As a result, you will soon be receiving separately from the Company
proxy materials for the 1997 Annual Meeting of Shareholders which contain a
proposal to classify the Board of Directors, permit removal of directors only
for cause, and provide that vacancies occurring in the Board of Directors may
only be filled by the affirmative vote of 80% of the directors then in office
(the "Proposed Articles
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Amendment"). If the Articles are so amended, then ONLY a majority vote of
shareholders will be able to change them. Accordingly, shareholders wishing to
discuss and vote on these provisions will have an opportunity to do so at the
Annual Meeting.
YOUR BOARD OF DIRECTORS UNANIMOUSLY OPPOSES THE BYLAWS REPEAL PROPOSAL. THE
BOARD URGES YOU NOT TO GIVE YOUR CONSENT TO THE BYLAWS REPEAL PROPOSAL, OR IF
YOU HAVE ALREADY DONE SO, URGES YOU TO REVOKE ANY CONSENT GIVEN TO BISCO BY
SIGNING, DATING AND RETURNING THE ENCLOSED WHITE REVOCATION OF CONSENT FORM.
BISCO PROPOSAL 2: THE CONTROL SHARE PROPOSAL
According to the Bisco Solicitation, the Control Share Proposal proposes to
amend the Bylaws of the Company by adding the following provision:
"CONTROL SHARE ACT. The provisions of Section 607.0902 of the Florida
Business Corporation Act shall not apply to control share acquisitions of shares
of this corporation."
Adoption of the Control Share Proposal will make the provisions of the
Control Share Act inapplicable to control share acquisitions of the Shares. To
be adopted, the Control Share Proposal requires the approval of the holders on
the Record Date of a majority of the outstanding Shares. See "The Consent
Procedure".
THE BOARD RECOMMENDS THAT YOU REVOKE ANY CONSENT TO THE CONTROL SHARE
PROPOSAL BY SIGNING, DATING AND RETURNING THE ACCOMPANYING WHITE FORM OF
REVOCATION OF CONSENT TODAY.
RECOMMENDATION OF THE BOARD
The Board recommends against this proposal to opt out of the Control Share
Act for a number of reasons. The Board believes that the Company benefits from
the protection provided by this Florida law. THE CONTROL SHARE ACT WAS ENACTED
TO PROTECT FLORIDA CORPORATIONS AND THEIR SHAREHOLDERS FROM A PERSON SEEKING TO
ACQUIRE A SUBSTANTIAL BLOCK OF SHARES OF A PUBLIC COMPANY AND TO LIMIT SUCH
PERSON'S ABILITY TO CONTROL THE CORPORATION. It accomplishes this purpose by
limiting the ability of persons who acquire certain percentages of a
corporation's shares from voting those shares unless the corporation's articles
of incorporation or bylaws opt out of the Control Share Act, the acquisition is
approved by the corporation's board or in certain other circumstances or the
shareholders confer voting rights to such person. See "Background On The Control
Share Act."
Without the Control Share Act, a person could acquire a controlling
block of a corporation's stock through periodic purchases at current market
prices without paying a premium to
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shareholders for such control. The Control Share Act encourages a person
interested in acquiring control of a public corporation to negotiate with the
Board of Directors. The Company's Board believes that its ability to negotiate
with a potential acquiror is significantly greater than that of the
shareholders, individually. While a bidder may make an offer that is higher than
the current market price, without negotiations with the Board of Directors, the
premium may not compensate for the long-term prospects and other factors
affecting the corporation's value. The Board is also in a better position to
discuss and evaluate other aspects of the offer with the acquiror, such as the
acquiror's experience, future strategies for the Company, financial resources,
and other matters that can affect the value of the offer.
The Board also objects to Bisco's use of a consent solicitation to amend
the Bylaws to obtain voting rights for the Shares it seeks to acquire through
its tender offer. The Control Share Act provides that voting rights may be
granted by a shareholder resolution. If voting rights are accorded by
shareholder resolution, rather than a bylaw amendment, and if certain other
conditions are met, you, the shareholder, would have the right to assert
dissenters' rights and obtain the "fair value" of your Shares. See "RIGHTS OF
DISSENTING SHAREHOLDERS".
By seeking to amend the Bylaws rather than using the process specified in
the Control Share Act, Bisco is depriving you, the shareholders, of your
dissenters' rights to obtain the "fair value" of your Shares which, under the
Control Share Act, may not be less than the highest price paid per share by
Bisco upon consummation of its tender offer. Furthermore, the Control Share Act
provides that in approving a shareholder resolution to accord voting rights to
control shares, "interested shares" are excluded from the votes entitled to be
cast. As defined under the Control Share Act, interested shares are those held
by (1) Bisco and others in its group, such as Glen F. Ceiley, and the Bisco
Industries Profit Sharing and Savings Plan (the "Bisco Plan"), (2) the Company's
officers, and (3) directors who are also employees of the Company. By proposing
an amendment to the Bylaws rather than a shareholder resolution to grant voting
rights to Shares acquired by Bisco in its tender offer, Bisco retains the
ability to vote on the Control Share Proposal and eliminates the protection
provided by Florida law of excluding interested shares from the vote.
IN SUMMARY, BISCO'S PROCESS OF SEEKING A BYLAW AMENDMENT PRIOR TO
CONSUMMATING THE BISCO TENDER OFFER IS AN "END-RUN" AROUND FLORIDA LAW AND
DEPRIVES THE SHAREHOLDERS OF VALUABLE PROTECTIONS ACCORDED TO YOU BY THE CONTROL
SHARE ACT: (1) THE ABILITY TO ASSERT DESSENTER'S RIGHTS IN CERTAIN
CIRCUMSTANCES; AND (2) THE EXCLUSION OF INTERESTED SHARES FROM VOTING ON THE
MATTER.
YOUR BOARD OF DIRECTORS UNANIMOUSLY OPPOSES THE CONTROL SHARE PROPOSAL. THE
BOARD URGES YOU NOT TO GIVE YOUR CONSENT TO THE CONTROL SHARE PROPOSAL, OR IF
YOU HAVE ALREADY DONE SO, URGES YOU TO REVOKE ANY CONSENT GIVEN TO BISCO BY
SIGNING, DATING AND RETURNING THE ENCLOSED WHITE REVOCATION OF CONSENT FORM.
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BACKGROUND ON THE CONTROL SHARE ACT
Pursuant to the Control Share Act, an "acquiring person" who makes a
"control share acquisition" of shares of an "issuing public corporation" may not
exercise voting rights for any "control shares" unless (1) the corporation's
articles of incorporation or bylaws provide that the Control Share Act does not
apply to control share acquisitions of the corporation's shares, (2) the
acquisition is consummated in certain circumstances including an acquisition of
shares approved by the issuing public corporation's board of directors, or (3)
such voting rights are conferred by the affirmative vote of a majority of the
issuing public corporation's disinterested shareholders at a meeting or by
written consent of such shareholders. Unless otherwise provided in the
corporation's articles of incorporation or bylaws before the control share
acquisition has occurred, in the event that the control shares are accorded full
voting rights and the acquiring person has acquired control shares with a
majority or more of all voting power, shareholders who do not vote in favor of
authorizing voting rights for the control shares are entitled to exercise
dissenters' rights and demand payment for the "fair value" of their shares. See
"RIGHTS OF DISSENTING SHAREHOLDERS."
For purposes of the Control Share Act, a "control share acquisition" is the
acquisition, directly or indirectly, by any person of ownership of, or the power
to direct the exercise of voting power with respect to, issued and outstanding
control shares. "Control shares" are shares that, except for the Control Share
Act, would have voting power with respect to shares of an issuing public
corporation that, when added to all other shares of the issuing public
corporation owned by a person or in respect to which that person may exercise or
direct the exercise of voting power, would entitle that person, immediately
after acquisition of the shares, directly or indirectly, alone or as part of a
group, to exercise or direct the exercise of the voting power of the issuing
public corporation in the election of directors within any of the following
ranges of voting power: (i) one-fifth or more but less than one-third of all
voting power; (ii) one-third or more but less than a majority of all voting
power; and (iii) a majority or more of all voting power.
All shares, the beneficial ownership of which is acquired within ninety
(90) days before or after the date of acquisition of beneficial ownership of
shares which result in a control share acquisition, and all shares the
beneficial ownership of which is acquired pursuant to a plan to make a control
share acquisition, are deemed to have been acquired in the same acquisition.
An "issuing public corporation" means a corporation that has (i) 100 or
more shareholders, (ii) its principal place of business, principal office or
substantial assets in Florida, and (iii) either (a) more than 10% of its
shareholders resident in Florida, (b) more than 10% of its shares owned by
residents of Florida, or (c) 1,000 shareholders resident in Florida.
The above provisions do not apply to a control share acquisition of
shares of an issuing public corporation whose articles of incorporation or
bylaws in effect before such control share acquisition provide that the Control
Share Act does not apply to control share acquisitions of its shares. The
Company's Articles and Bylaws currently do not exclude the Company from the
protections provided by the Control Share Act. If the Control Share Proposal is
adopted, the Control Share Act will no longer apply to control share
acquisitions of the Shares, whether by
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Bisco or otherwise.
BISCO PROPOSAL 3: THE RIGHTS REVOCATION PROPOSAL
The Bisco Solicitation also seeks shareholder consent to the Rights
Revocation Proposal to amend the Bylaws to require the Company to redeem the
Rights Agreement, which is called a "poison pill" in the Bisco Solicitation, and
require prior shareholder approval for adoption of any "poison pill" or similar
anti-takeover measures in the future. The full text of the Bisco's proposed
amendment to the Bylaws for the Rights Revocation Proposal is set forth in
Appendix A.
To be adopted, the Rights Revocation Proposal requires the approval of the
holders on the Record Date of a majority of the outstanding Shares. See "The
Consent Procedure".
THE BOARD RECOMMENDS THAT YOU REVOKE ANY CONSENT TO THE RIGHTS REVOCATION
PROPOSAL BY SIGNING, DATING AND RETURNING THE ACCOMPANYING WHITE FORM OF
REVOCATION OF CONSENT TODAY.
RECOMMENDATION OF THE BOARD
REASONS FOR ADOPTING THE RIGHTS AGREEMENT: The Board adopted the Rights
Agreement to protect the shareholders of the Company from abusive practices
which unfairly pressure and coerce shareholders to sell their shares at less
than full value. Such tactics include partial or "two-tier" offers for less than
all the outstanding Shares, such as the Bisco tender offer, where all
shareholders may not receive the same price for their Shares and the acquisition
of a controlling interest in a corporation through open market purchases without
payment of a premium to all shareholders.
The Rights Agreement was not intended to, and will not, deter all takeover
bids for the Company. It does not prevent an offer to all shareholders of the
Company. The shareholders continue to possess the right to vote on extraordinary
transactions, such as mergers, major reorganizations and liquidations, to decide
whether to tender their shares if a tender offer is made and to decide how to
vote a proxy.
The Rights Agreement is designed to encourage any potential acquiror to
negotiate with the Board, create time for the Company to explore other
alternatives and thereby preserve, in the event of a takeover, values for
shareholders to the extent that the Shares are selling in the stock market at
prices less than the Company's long-term value. Under Florida law, directors
have a duty to act with due care in good faith and in what they believe to the
best interest of the Company and its shareholders. As part of its duty, the
Board is obliged to consider all acquisition offers on their merits. In
contrast, an acquiror typically has no such duty of fairness, care or loyalty to
the Company's shareholders and, most significantly, no responsibility to any
constituency, except itself, for failure to pay a fair price or otherwise act
fairly in dealing with all shareholders. The Board with its fiduciary duties
imposed by law, not the shareholders individually, is in the most effective
position to negotiate with any potential acquiror and to take other action in
the best interests of the
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Company and its shareholders.
BOARDS OF HUNDREDS OF U.S. CORPORATIONS HAVE ADOPTED RIGHTS PLANS SIMILAR
TO THAT ADOPTED BY THE COMPANY. A NUMBER OF STUDIES, INCLUDING STUDIES BY THE
GEORGESON & COMPANY INC., A PROXY SOLICITATION AND INVESTOR RELATIONS FIRM, AND
J.P. MORGAN, AN INVESTMENT BANKING FIRM, HAVE SHOWN THAT CORPORATIONS WITH A
SHAREHOLDER RIGHTS PLAN RECEIVE A HIGHER TAKEOVER PREMIUM THAN COMPANIES WHICH
DO NOT HAVE A RIGHTS PLAN.
REASONS TO NOT REDEEM THE RIGHTS: The reasons discussed above explain why
the Board adopted the Rights Agreement. After its adoption, the Board has the
discretion to redeem the Rights within certain time limitations set forth in the
Rights Agreement. The Board has not redeemed the Rights Agreement because it
believes the tender offer is not in the best interests of the Company and its
shareholders. Approval of the Rights Revocation Proposal will facilitate Bisco's
acquisition of the Shares, which the Board believes is adverse to the best
interests of the Company and its shareholders. Accordingly, the Board recommends
that the shareholders vote AGAINST the Rights Revocation Proposal. The Board
further notes that there can be no assurance that Bisco will consummate the
tender offer even if the Rights Revocation Proposal is approved. In that case,
the Company would be left without the protection of the Rights Agreement if it
is faced with another unsolicited tender offer in the future.
ADDITIONAL REASONS NOT TO APPROVE THE RIGHTS REVOCATION PROPOSAL: The Board
also recommends AGAINST the Rights Revocation Proposal because it would prevent
the Board from adopting "any 'poison pill', rights agreement . . . or any other
plan, agreement, bylaw or provision that is designed to or has the effect of
making acquisition of large holdings of the corporation's common stock more
difficult or expensive."
This proposed bylaw is too vague, and its proposal further evidences
Bisco's lack of expertise in managing public companies. The proposed bylaw could
be interpreted to prevent the Company from entering into certain agreements in
the ordinary course of business that often include provisions that could have
the effect of making "acquisitions of large blocks of Shares more expensive or
difficult." For instance, the Company's mortgage documents with its primary
lender contain a provision requiring the lender's approval of acquisitions of
over 25% of the outstanding Shares. Obtaining the lender's consent, or more
importantly, having the entire balance of the loan become due and payable if the
lender refuses to consent, could certainly make the acquisition more difficult
and expensive. Similarly, the Company has entered into a lease for one of its
highest revenue restaurants that requires the lessor's consent to any change in
the owner of a controlling interest of the Company. Such a provision would also
violate the bylaw proposed by the Rights Revocation Proposal. If the Company is
unable to enter into such commonly required provisions, it may not be able to
obtain the financing or leases it needs to operate or may not be able to enter
into such financing or leases on as favorable terms.
Moreover, the bylaw proposed by the Rights Revocation Proposal would
prevent the Company from instituting any shareholder rights plan similar to the
Rights Agreement. As explained in the section on "REASONS FOR ADOPTING THE
RIGHTS AGREEMENT", a rights plan encourages an acquiror to negotiate with the
Board. Obtaining shareholder approval involves the calling a
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special meeting, preparing and circulating a proxy statement and holding the
special meeting-- all of which takes time. If the Board is required to obtain
shareholder approval before instituting a rights plan, it may not be able to
obtain shareholder approval before the harm the rights plan was designed to
prevent is done. For example, without a rights plan, an acquiror may initiate an
cash offer for a percentage of the outstanding Shares with the intent to acquire
the remainder of the outstanding Shares for preferred stock or other
consideration. A shareholder faced with this scenario may feel coerced to tender
his Shares in the first tender offer because he would rather have cash than the
preferred stock or other consideration, regardless of the alleged value of the
alternative form of consideration. Thus, the initial tender offer would be
rapidly oversubscribed and the acquiror could acquire control of the Company
without the Board being able to evaluate the offer, negotiate a higher price
from the acquiror, explore alternative transactions on more favorable terms to
all shareholders or to take other action it considered appropriate under the
circumstances.
IN SUMMARY, THE BYLAW PROPOSED BY THE RIGHTS REVOCATION PROPOSAL COULD
HAMSTRING THE COMPANY'S ABILITY TO OPERATE IN THE ORDINARY COURSE OF BUSINESS BY
NOT PERMITTING THE COMPANY TO ENTER INTO CERTAIN AGREEMENTS AND IT COULD PREVENT
THE BOARD FROM TAKING TIMELY DEFENSIVE MEASURES IN THE FUTURE TO SLOW OR PREVENT
AN UNSOLICITED OFFER THAT IS NOT IN THE BEST INTERESTS OF ALL THE SHAREHOLDERS
AND THE COMPANY.
YOUR BOARD OF DIRECTORS UNANIMOUSLY OPPOSES THE RIGHTS REVOCATION PROPOSAL.
THE BOARD URGES YOU NOT TO GIVE YOUR CONSENT TO THE RIGHTS REVOCATION PROPOSAL,
OR IF YOU HAVE ALREADY DONE SO, URGES YOU TO REVOKE ANY CONSENT GIVEN TO BISCO
BY SIGNING, DATING AND RETURNING THE ENCLOSED WHITE REVOCATION OF CONSENT FORM.
HOW THE RIGHTS AGREEMENT WORKS
The Rights Agreement encourages an acquiror to negotiate with the Board by
creating substantial dilution for the acquiror unless the Board approves the
acquisition, redeems the Rights or takes other actions set forth in the Rights
Agreement. The Rights Agreement does this by giving each holder of Shares (other
than the acquiror as explained below) a Right to purchase Shares from the
Company on favorable terms under certain conditions summarized below.
The Rights become exercisable after a "Flip-In Event" which is either when
(1) a person becomes the beneficial owner of 15% or more of the then outstanding
Shares (an "Acquiring Person"), except through certain business combinations
described below or an offer for all outstanding Shares which the independent and
disinterested directors of the Company determine to be at a fair price and
otherwise in the best interests of the Company and its shareholders or (2) any
person is determined to be an Adverse Person as defined in the Rights Agreement
(generally, an owner of 10% of the Shares whose ownership has been determined by
the independent members of the Board to have an impact or intent that is not in
the best interests of the shareholders and the Company).
After a Flip-in Event, each holder of a Right (with the exception of an
Adverse or Acquiring
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<PAGE>
Person) will have the right to buy Shares at half of the lowest trading price
during the last twelve months for $5.00. However, Rights are not exercisable
following the occurrence of a Flip-in Event until the Rights are no longer
redeemable by the Company as set forth below.
For example, if a shareholder owns 100 Shares, he or she has the Right to
buy one share of preferred stock (since each Right is to purchase 1/100th of a
share of preferred stock). After the Rights become exercisable following a
Flip-In Event, the shareholder has the right to buy for $5.00 Shares at half of
the lowest trading price during the last twelve months. The Company's lowest
trading price in the last twelve months was $.4675. Therefore, by paying $5.00
and exercising the Right, the shareholder will acquire 21 Shares for $.23375 per
Share. If the current market price is $.80 per Share, the shareholder would have
acquired Shares with a market value of $16.80 for only $5.00. This example is
for illustrative purposes only and should not be treated as an estimate of
amounts a shareholder would actually receive upon exercise of the Rights or of
future prices of the Shares. Such amounts will depend on the occurrence of
certain events set forth in the Rights Agreement, the market prices of the
Shares at the time of any exercise and other factors which cannot be predicted.
If certain business combinations involving the Company occur, each holder
of a Right may have the right to buy for $5.00 shares of common stock of the
acquiring company at half of the acquiring company's lowest trading price during
the last twelve months.
Rights that are or were beneficially owned by an Acquiring Person or an
Adverse Person may (under certain circumstances specified in the Rights
Agreement) become null and void.
At any time after the occurrence of a Flip-in Event, the Board may, at its
option, exchange the Rights (other than Rights owned by an Acquiring Person or
an Adverse Person) in whole or in part, at an exchange ratio of one Share or
equivalent equity security, per Right.
The Board may redeem all of the Rights at a price of $0.001 per Right, as
such amount may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction, only until the earliest of (i) the close of
business on the 10th day following the date on which a person is declared to be
an Adverse Person, (ii) the close of business on the 10th calendar day after
public announcement that a person or group has become a 15% beneficial owner of
the Shares or (iii) March 17, 2007. Immediately the Board's redemption of the
Rights, the right to exercise the Rights will terminate and the holders of
Rights will only have the right to receive the redemption price.
THE FOREGOING SUMMARY OF TERMS AND CONDITIONS OF THE RIGHTS AGREEMENT IS
NOT COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE RIGHTS
AGREEMENT BETWEEN THE COMPANY AND CHASEMELLON SHAREHOLDER SERVICES, INC., WHICH
IS ATTACHED AS EXHIBIT 1 TO THE COMPANY'S REGISTRATION STATEMENT ON FORM 8-A
DATED MARCH 19, 1997 AND IS HEREBY INCORPORATED BY REFERENCE. UPON REQUEST, THE
COMPANY WILL PROVIDED SHAREHOLDERS WITH COPIES OF THE RIGHTS AGREEMENT. A MORE
DETAILED SUMMARY OF THE RIGHTS AGREEMENT WAS MAILED TO EACH SHAREHOLDER WITH THE
COMPANY'S SCHEDULE 14D-9 RECOMMENDING REJECTION OF THE BISCO TENDER OFFER.
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<PAGE>
BISCO PROPOSAL 4: THE BYLAW RESTRICTION PROPOSAL
According to the Bisco Solicitation, the Bylaw Restriction Proposal
proposes to amend the Bylaws of the Company by adding the following provision:
"AMENDMENT OF BYLAWS. The bylaws of this corporation may only be
amended or repealed by the shareholders and shall not be subject to
amendment or repeal by the Board of Directors."
To be adopted, the Bylaw Restriction Proposal requires the approval of the
holders on the Record Date of a majority of the outstanding Shares. See "The
Consent Procedure".
THE BOARD RECOMMENDS THAT YOU REVOKE ANY CONSENT TO THE BYLAW RESTRICTION
PROPOSAL BY SIGNING, DATING AND RETURNING THE ACCOMPANYING WHITE FORM OF
REVOCATION OF CONSENT TODAY.
RECOMMENDATION OF THE BOARD
THE BOARD BELIEVES THAT IT IS IMPRACTICAL, UNNECESSARY AND ILL-ADVISED TO
PROHIBIT THE BOARD FROM AMENDING THE BYLAWS.
The Bisco Solicitation proposes that the Bylaws of the Company be amended
to permit only the shareholders of the Company to amend the Bylaws. Currently,
both the shareholders of the Company and the Board may amend the Bylaws. The
Board believes that the Bylaw Restriction Proposal is HIGHLY UNUSUAL AND
ILL-ADVISED. Under the principles of modern corporate governance, the bylaws are
generally considered the "working" document, containing specific provisions
regarding the management of the affairs of the company. For example, a
corporation's bylaws usually contain provisions enumerating the titles and
duties of the corporation's officers, rules for stock transfers, procedures for
meetings of the Board and its committees and similar procedural regulations.
Although Florida law permits shareholders to provide that directors may not
amend or repeal bylaws, typically bylaws are intended to be separate from and
more flexible than the articles of incorporation. Thus, since only shareholders
can amend the articles of incorporation, certain formalities or details of
management that require constant change and flexibility usually appear in the
bylaws so that the directors can modify these provisions from time to time to
conform with current corporate practice and applicable law.
For a publicly traded company, the Bylaw Restriction Proposal is
absurd, since it may prevent the Board from being able to timely update its
bylaws for changes in the Company's business, the restaurant industry or Florida
corporate law. In addition, the Bylaw Restriction Proposal will cost your
Company more money. Obtaining shareholder approval is more expensive than
obtaining Board approval as shareholder approval of every bylaw amendment may
entail higher attorney's fees to prepare the proxy statement on any proposed
bylaw amendment, greater
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<PAGE>
printing and mailing costs for a longer proxy statement and additional
management time communicating with shareholders on the proposed bylaw amendment.
Moreover, there are better means of reserving matters for shareholder
control. For example, as described above, if shareholders do not wish the Board
to be able to amend certain provisions, those provisions are simply placed in
the Articles. Even your Board has suggested this approach, as evidenced by the
Proposed Articles Amendment! Also, if specific Bylaw provisions should only be
amended by shareholder vote, the specific Bylaw can state that it may only be
amended by shareholder vote. There is simply NO RATIONAL REASON to lock the
directors out of the Bylaws completely. The impracticability of the Bylaw
Restriction Proposal is just further evidence of how ill-equipped Bisco is to
participate in the management of a publicly-traded company.
YOUR BOARD OF DIRECTORS UNANIMOUSLY OPPOSES THE BYLAW RESTRICTION PROPOSAL.
THE BOARD URGES YOU NOT TO GIVE YOUR CONSENT TO THE BYLAW RESTRICTION PROPOSAL,
OR IF YOU HAVE ALREADY DONE SO, URGES YOU TO REVOKE ANY CONSENT GIVEN TO BISCO
BY SIGNING, DATING AND RETURNING THE ENCLOSED WHITE REVOCATION OF CONSENT FORM.
THE CONSENT PROCEDURE
Section 607.0704 of the Florida Business Corporation Act states that,
unless otherwise provided in the Company's Articles, action required or
permitted by the Florida Business Corporation Act to be taken at an annual or
special meeting of shareholders, may be taken without a meeting, without prior
notice, and without a vote if the action is taken by the holders of outstanding
stock of each voting group entitled to vote thereon, having not less than the
minimum number of votes with respect to each voting group that would be
necessary to authorize or take such action at a meeting at which all voting
groups and shares entitled to vote thereon were present and voted. In order to
be effective, the action must be evidenced by one or more written consents
describing the action taken, dated and signed by approving shareholders having
the requisite number of votes of each voting group entitled to vote thereon, and
delivered to the corporation's principal office in Florida, its principal place
of business, the corporate secretary, or another officer or agent of the
corporation having custody of the book in which proceedings of meetings of
shareholders are recorded.
The Company's Articles and Bylaws do not prohibit the use of written
consents by the holders of the Shares.
Section 607.0707 of the Florida Business Corporation Act provides that,
if not otherwise provided by or pursuant to the bylaws, the record date for
determining shareholders entitled to take action without a meeting is the date
the first signed written consent is delivered as described above. Article I,
Section 1.2(b), of the Amended and Restated Bylaws provides that the Board may
fix in advance a date as the record date for any determination of shareholders,
and that "if no record date is fixed for the determination of shareholders
entitled to deliver written consent to a corporate action without a meeting,
when no prior action by the Board is necessary, the record date shall be
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<PAGE>
the day on which the first signed written consent is delivered to the
Corporation."
The Board did not fix a record date. Therefore, the Record Date is May
____, 1997, which is the date on which the first consent was delivered to the
Company. As of the Record Date, there were 11,030,000 Shares outstanding, each
entitled to one vote per Share, with no Shares having cumulative voting rights.
Under Section 607.0704 of the Florida Business Corporation Act, consents
must be delivered within sixty (60) days of May ____, 1997.
Each of the proposals in the Bisco Solicitation will be adopted and become
effective when properly completed, unrevoked consents are signed by the holders
of record on the Record Date of a majority of the outstanding Shares and those
consents are presented to the Company.
Under Florida law, abstentions from the consent solicitation will be
counted as a vote against each of the proposals in the Bisco Solicitation. Under
applicable rules of the National Association of Securities Dealers ("NASD"),
brokers that hold shares in "street name" do not have the authority to execute
or revoke a consent without instructions from the beneficial owners of such
shares.
Section 2.6 of Article II of the Company's Amended and Restated Bylaws
provides that the Company may engage independent inspectors of elections to
perform a ministerial review of the validity of any written shareholder consents
or revocations of consents. No action by written consent without a meeting shall
be effective until such date as the independent inspectors certify to the
Company that the consents delivered to the Company in accordance with Section
607.0704 of the Florida Business Corporation Act represent at least the minimum
vote that would be necessary to take corporate action. This section of the
Bylaws does not limit the Board's or shareholders' ability to contest the
validity of any consent or its revocation. The Bisco Solicitation seeks to
repeal this section of the New Bylaws.
If you have already returned your consent to Bisco, you may revoke any
previously signed consents by signing, dating and returning the WHITE Revocation
of Consent Form. If you need assistance in revoking a previously mailed consent
or instructions on how to withdraw your shares from Bisco's Offer, please call
our proxy solicitor, Corporate Investor Communications, Inc., toll free at (800)
932-8498, or collect at ((201) 896-1900.
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<PAGE>
RIGHTS OF DISSENTING SHAREHOLDERS
Under the Control Share Act, unless the corporation's articles of
incorporation and bylaws provide otherwise before the control share acquisition
has occurred, if full voting rights are authorized for control shares acquired
in the control share acquisition and the acquiring person has acquired control
shares with a majority or more of all voting power of the corporation, all
shareholders of the issuing public corporation shall have dissenters' rights to
receive the "fair value" of their shares as provided in Sections 607.1301,
607.1302 and 607.1320 of the Florida Business Corporation Act (the "Appraisal
Statute"). To assert dissenters' rights, among other steps, the shareholder must
not have voted in favor of the proposal to grant voting rights to the control
shares acquired in the control share acquisition and must have, before the
taking of the vote on the approval of such proposal, delivered a written notice
to the Company stating that he or she intends to demand payment for his or her
shares if the proposal is effectuated. Under the Control Share Act, the "fair
value" of the Shares means a value not less than the highest price per share
paid by the acquiring person in its control share acquisition.
If the shareholders approve the Control Share Proposal, shareholders will
not be able to assert dissenters' rights since the Bylaws would be amended to
provide otherwise before the occurrence of the control share acquisition Bisco
is pursuing through its tender offer.
None of the proposals in the Bisco Solicitation create dissenters rights
under the Florida Business Corporation Act.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table below presents certain information regarding beneficial ownership
of the Shares (the Company's only voting security) as of April 15, 1997, by each
shareholder known to the Company to own, or have the right to acquire within
sixty (60) days, more than five percent (5%) of the Shares outstanding.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT OF COMMON STOCK
BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS
---------------- ------------------ ----------------
<S> <C> <C>
Heartland Advisors, Inc. 900,000 (1) 8.2%
790 North Milwaukee Street
Milwaukee, WI 53202
Bisco Industries, Inc. 731,790 (2) 6.7%
704 West Southern Avenue
Orange, CA 92865
Cerberus Partners, L.P. 700,000 (3) 6.0%
950 Third Avenue, 20th Floor
New York, New York 10022
</TABLE>
- - ------------------------------
(1) Based on information contained in a Schedule 13G filed with the Commission
as of February 12, 1997, Heartland Advisors, Inc. claimed sole voting and
dispositive power with respect to all 900,000 Shares and shared voting and
dispositive power with respect to none of the Shares.
(2) Based on information set forth in the Preliminary Proxy Statement filed
with the Commission on April 15, 1997, Bisco owns 126,300 Shares; Glen F.
Ceiley, President and a director of Bisco, owns 95,300 Shares,
individually; and the Bisco Plan owns 518,190 Shares. The amount does not
include 15,000 Shares owned individually by Stephen Catanzaro, an executive
officer of Bisco. According to the Schedule 13D of Ceiley as amended on
January 16, 1997, Ceiley has the sole power to vote and dispose of the
Shares he owns individually and the power to vote and to dispose of the
Shares owned by Bisco and the Bisco Plan.
(3) Represents Shares issuable upon the exercise of certain stock purchase
warrants issued October 1, 1988, and March 14, 1995, pursuant to which the
holders thereof have the right to purchase an aggregate of up to 700,000
Shares for $.40 per share. None of such Shares are outstanding.
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<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The table below presents certain information regarding beneficial ownership
of the Shares as of April 15, 1997, by each executive officer and director of
the Company and all executive officers and directors as a group.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
NUMBER OF SHARES
WHICH MAY BE
ACQUIRED WITHIN
NUMBER OF SHARES 60 DAYS (1) TOTAL SHARES
NAME OWNED BENEFICIALLY OWNED PERCENT OF CLASS
---- ----- ------------------ ----------------
<S> <C> <C> <C> <C>
Lewis E. Christman, Jr. 11,409 100,000 111,409 .95%
- - -----------------------------------------------------------------------------------------------------------------------
Joseph M. Glickstein, Jr. 60,059 --------- 60,059 .55%
- - -----------------------------------------------------------------------------------------------------------------------
Richard M. Gray 60,059 --------- 60,059 .55%
- - -----------------------------------------------------------------------------------------------------------------------
Robert J. Martin 52,614(2) 53,000 105,614 .96%
- - -----------------------------------------------------------------------------------------------------------------------
Edward B. Alexander 12,500 82,000 94,500 .85%
- - -----------------------------------------------------------------------------------------------------------------------
All officers and directors as a 196,641 262,250 458,891 4.08%
group (6 persons)
- - -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Does not include options to purchase Shares not currently exercisable
within sixty (60) days of April 15, 1997, including 100,000 Shares subject
to an option granted to Mr. Christman, 52,000 Shares subject to options
granted to Mr. Alexander, 52,000 Shares subject to options granted to Mr.
Martin and 22,750 Shares subject to options granted to another executive
officer of the Company.
(2) Includes 5,800 shares owned by the spouse of Mr. Martin.
INTERESTS OF CERTAIN PERSONS
The following summarizes arrangements and agreements between Company and
its officers and directors that may be affected if the Control Share Proposal or
Rights Revocation Proposal are duly approved by shareholder consent and the
tender offer is consummated.
The Company has entered into employment agreements with Mr. Christman to
serve as Chief Executive Officer of the Company through June 1998 and with Mr.
Alexander to serve as Chief Financial Officer of the Company through October
1998. These agreements provide, among other matters, that the Company will pay
Messrs. Christman and Alexander certain salaries and other benefits. The
agreements further provide that Messrs. Christman and Alexander will be entitled
to receive, in a lump sum, the salary due for the remaining term of the
agreement upon the
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<PAGE>
Company's termination of their employment "without cause" (as defined in such
agreement).
The Company also has entered into a one-year consulting agreement with Mr.
Martin, a director of the Company, in connection with his retirement as an
officer of the Company, for a retainer of $13,500 and continued medical and
other insurance benefits. Under the consulting agreement, Mr. Martin also agreed
not to take certain actions to compete with the Company or to interfere with its
business relationships for a period of two years after termination of the
consulting agreement. If the consulting agreement is terminated by the Company
"without cause" (as defined in such agreement), the Company must pay the balance
of any consulting fee for the remaining term of the agreement.
These agreements were discussed in greater detail in the Company's Schedule
14D-9 previously provided to the shareholders and copies of the full text of the
agreements were included as exhibits to the Company's Schedule 14D-9 filed with
the Commission as of March 19, 1997.
The Company's Amended Employee Stock Option Plan and option agreements
executed thereunder provide that options granted thereunder become immediately
exercisable if a person acquires beneficial ownership of 33% or more of the
outstanding Shares. Similarly, the Company's Long Term Incentive Plan provides
that options granted thereunder will become immediately exercisable upon, among
other events, any person's becoming the beneficial owner directly or indirectly
of 25% or more of the combined voting power of the Shares or the first purchase
of Shares pursuant to a tender or exchange offer (other than a tender or
exchange offer made by the Company). The executive officers holding affected
options, the number of affected shares and the exercise price thereof were set
forth in a table included in the Company's Schedule 14D-9 previously provided to
the shareholders.
Directors of the Company who are not employees receive an annual grant of
nonqualified stock options under the Stock Option Plan for Non-employee
Directors. The options are granted at an exercise price per share such that the
aggregate fair market value on the date of grant for all shares subject to the
options exceeds the aggregate option exercise price by $10,000. The options are
immediately exercisable and expire five years from the date of grant. Directors
who are full-time employees of the Company receive $100 for each meeting of the
Board of Directors they attend. Nonemployee directors receive a fee of $500 for
each Board of Directors meeting attended. No fees are paid for attendance at
meetings of committees of the Board of Directors.
Director Glickstein is a partner with Glickstein & Glickstein, P.A., a law
firm which the Company has retained in 1995 and plans to retain to provide legal
advice from time to time in the future.
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<PAGE>
SOLICITATION OF REVOCATIONS
The cost of the solicitation of revocations of consent will be borne by the
Company. The Company estimates that the total expenditures in connection with
such solicitation (including the fees and expenses of the Company's attorneys,
advertising, printing, mailing, travel and other costs, but excluding salaries
and wages of the Company's officers and employees and the fees and expenses of
CIC) will be approximately [$100,000]. In addition to solicitation by mail,
directors, officers and other employees of the Company may, without additional
compensation, solicit revocations by mail, in person, by telephone and facsimile
or by other electronic means.
The Company has retained CIC, at an estimated fee of $25,000 plus
reasonable disbursements, postage, filing reports, courier charges, data
transmissions and other expenses approved by the Company, to assist in the
solicitation of revocations. Approximately 12 persons will be utilized by such
firm in its efforts. The Company will reimburse brokerage houses, banks,
custodians and other nominees and fiduciaries for out-of-pocket expenses
incurred in forwarding the Company's consent revocation materials to, and
obtaining instructions relating to such materials from, beneficial owners of the
Shares.
SHAREHOLDER PROPOSALS
Proposals of shareholders to be presented at the 1998 Annual Meeting of
Shareholders must be received by the Company (addressed to the attention of the
Secretary) not later than January 9, 1998, to be considered for inclusion in the
Company's proxy materials relating to that meeting. To be submitted at the
meeting, any such proposal must be a proper subject for shareholder action under
the laws of the State of Florida, and must otherwise conform to applicable
regulations of the Commission. Excluding shareholder proposals to be included in
the Company's proxy materials, unless the Bylaws Repeal Proposal is approved, a
shareholder is required to comply with the Company's Bylaws with respect to any
proposal to be brought before an annual meeting. The Amended and Restated Bylaws
generally require that each written proposal be delivered to or mailed and
received by the Secretary of the Company at its principal executive office not
less than sixty (60) days nor more than ninety (90) days prior to the
anniversary date of the prior year's annual meeting, among other conditions. The
notice must include certain additional information as specified in the Amended
and Restated Bylaws.
We appreciate your support and encouragement.
-31-
<PAGE>
- - --------------------------------------------------------------------------------
IMPORTANT
1. If your shares are registered in your own name, please mark the
REVOCATION box, sign, date and mail the enclosed WHITE Revocation of Consent
Form to CIC, in the postage-paid envelope provided.
2. If you have previously signed and returned a GOLD consent form to Bisco,
you have every right to change your mind. Only your latest dated form will
count. You may revoke any GOLD consent form already sent to Bisco by signing,
dating and mailing the enclosed WHITE Revocation of Consent Form in the
postage-paid envelope provided.
3. If your shares are held in the name of a brokerage firm, bank, nominee
or other institution, only it can sign a WHITE Revocation of Consent Form with
respect to your shares and only after receiving your specific instructions.
Accordingly, please sign, date and mail the enclosed WHITE Revocation of Consent
Form in the postage-paid envelope provided by your bank, broker or other
institution. To ensure that your shares are voted, you should also contact the
person responsible for your account and give instructions for a WHITE Revocation
of Consent Form to be executed representing your shares.
4. After signing the enclosed WHITE Revocation of Consent Form, do not sign
or return the GOLD consent form. Do not even vote "Do Not Consent" on Bisco's
GOLD consent form. Such action will void your WHITE Revocation of Consent Form.
If you have any questions about giving your revocation of consent or
require assistance, please call:
CORPORATE INVESTOR COMMUNICATIONS, INC.
111 COMMERCE ROAD
CARLSTADT, NEW JERSEY 07072-2586
CALL TOLL FREE (800) 932-8498
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<PAGE>
REVOCATION OF CONSENT FORM
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
FAMILY STEAK HOUSES OF FLORIDA, INC.,
IN OPPOSITION TO THE SOLICITATION OF BISCO INDUSTRIES, INC.
The undersigned, a holder of shares of common stock, par value $.01 per
share (the "Shares"), of Family Steak Houses of Florida, Inc. (the "Company"),
acting with respect to all of the Shares held by the undersigned at the close of
business on the Record Date, hereby acts as follows concerning the proposal of
Bisco Industries, Inc. (the "Bisco") set forth below:
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") RECOMMENDS A REVOCATION
OF CONSENT TO EACH OF THE BISCO PROPOSALS.
1. Repeal of any amendments to bylaws or any bylaws of the Company adopted
without shareholder approval subsequent to November 27, 1985, and prior the
effectiveness of any bylaw amendments adopted through Bisco Solicitation.
[ ] REVOCATION
The undersigned hereby revokes any and all consents and proxies for
consents which the undersigned may have given for Bisco's Bylaws Repeal
Proposal.
2. Resolution that the Bylaws of the Company be amended to add language to
provide that Section 607.0902 of the Florida Business Corporation Act shall not
apply to control share acquisitions of the Company.
[ ] REVOCATION
The undersigned hereby revokes any and all consents and proxies for
consents given for Bisco's Control Share Proposal.
3. Resolution to amend the Company's Bylaws to require the Company to
redeem the shareholder rights agreement recently adopted by the Board and to
require prior shareholder approval for adoption of any shareholder rights plan
or similar defensive measure in the future.
[ ] REVOCATION
The undersigned hereby revokes any and all consents and proxies for
consents which the undersigned may have given for Bisco's proposal to
redeem the shareholder rights agreement.
4. Resolution to amend the Company's Bylaws to prohibit any amendment of
the Bylaws by the Board of Directors.
[ ] REVOCATION
The undersigned hereby revokes any and all consents and proxies for
consents which the undersigned may have given for Bisco's proposal to
redeem the shareholder rights agreement.
(IMPORTANT INSTRUCTIONS -- PLEASE READ CAREFULLY)
Please indicate your opposition to each of Bisco's proposals by marking the
box beside "Revocation" and signing, dating and mailing this revocation form
promptly, using the enclosed, postage paid envelope. If you mark the box for
"Non-Revocation", consent you may have given to any of Bisco's proposals will
not be revoked. If you need additional revocation forms or assistance, call CIC
toll free at (800) 932-8498.
UNLESS OTHERWISE INDICATED ABOVE, THIS REVOCATION FORM REVOKES ALL PRIOR
CONSENTS GIVEN WITH RESPECT TO EACH PROPOSAL SET FORTH HEREIN.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE REVOCATION OF CONSENT
STATEMENT OF THE COMPANY, DATED MAY ______, 1997, IN OPPOSITION TO THE
SOLICITATION OF BISCO. UNLESS YOU SPECIFY OTHERWISE, BY SIGNING AND DELIVERING
THIS REVOCATION FORM TO THE COMPANY, YOU WILL BE DEEMED TO HAVE REVOKED CONSENT
TO EACH OF BISCO'S PROPOSALS.
Date:
--------------------
------------------------------------------------------
Signature (title, if any)
------------------------------------------------------
Signature (if held jointly)
Please sign your name above exactly as it appears hereon and date your
form. When shares are registered in the name of more than one person, the
revocation form should be signed by all named holders. When signing as attorney,
executor, administrator, trustee or guardian, please given full title as such.
If a corporation, please sign in full corporate name by president or authorized
officer. If a partnership, please sign in partnership name by authorized person.
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<PAGE>
APPENDIX A
The full text of the Rights Revocation Proposal as stated in the Bisco
Solicitation is set forth below:
WHEREAS, the shareholders believe that the Shareholder Rights Plan
unilaterally adopted by the Board is not in the best interest of the Company
and, accordingly, want the Board to immediately redeem the rights issued
pursuant to such plan and to restrict the Company from adopting or maintaining
in the future a "poison pill", shareholder rights plan, rights agreement or any
other plan, agreement, bylaw or other provision that is designed to or has the
effect of making acquisition of the Company's shares more difficult or expensive
unless such plan, agreement, bylaw or provision has first been approved by the
holders of a majority of the outstanding common stock; now therefore, be it
RESOLVED, that the shareholders want the Board to redeem the recently
adopted "poison pill" and also want to prevent the Board from adopting new
"poison pills" in the future, and in furtherance of the foregoing, hereby amend
the Company's bylaws to add the following provision:
POISON PILLS. This corporation shall not adopt or maintain a "poison
pill", shareholder rights plan, rights agreement or any other plan,
agreement, bylaw or other provision that is designed to or has the effect
of making acquisition of large holdings of the corporation's common stock
more difficult or expensive (including, without limitation the "poison
pill" evidenced by the March 18, 1997 Rights Agreement (the "Rights
Agreement") between the corporation and ChaseMellon Shareholder Services,
Inc.) unless such plan, agreement, bylaw or other provision is first
approved by the holders of a majority of the corporation's outstanding
common stock. The corporation shall redeem any such rights (including
without limitation rights issued under the Rights Agreement) in effect as
of the date of adoption of this bylaw. This section shall be effective
immediately and automatically as of the date it is approved by the
shareholders.
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