[State of Wisconsin Investment Board Letterhead]
October 21, 2000
VIA FAX 612-352-2692
Stephen Cohen, General Counsel
Rainforest Cafe, Inc.
720 South 5th Street
Hopkins, MN 55343
Dear Mr. Cohen:
This letter is written in response to your October
20 letter to me and in response to misleading
accusations attributed to Lyle Berman in a Business
Wire story that was published yesterday. It is
unfortunate that you and Mr. Berman have continued to
engage in doublespeak that appears to me to be designed
solely to mislead other shareholders.
To put SWIB's specific concerns about Rainforest
Cafe's poison pill on the record, the Shareholder
Rights Agreement adopted by the company last May, by
its terms, is triggered when a shareholder becomes the
"Beneficial Owner" of a "Threshold Percentage" of the
company's common stock, unless exempted by the board.
(The capitalized terms are defined in the Shareholder
Rights Agreement.) The "Threshold Percentage" for
SWIB, as an owner of over 10% at the time the Agreement
was adopted, is 15%. SWIB currently owns almost 15% of
the company's common stock, and we could trigger the
pill if we were deemed to become a "Beneficial Owner"
of more than 15%. The Agreement deems a shareholder to
be the "Beneficial Owner" of not only securities which
the shareholder owns but also securities which "are
beneficially owned, directly or indirectly, by any
other Person . . . with which such Person or any of
such Person's Affiliates or Associates has any
agreement, arrangement or understanding . . . for the
purpose of acquiring, holding, voting . . . or
disposing of any securities of the Company."
Needless to say, it would be difficult for SWIB to
take collective action with any other shareholder that
has a significant position in the company without
taking a risk that the Rainforest board might conclude
we should be deemed to be the "Beneficial Owner" of
more than 15%. For example, an agreement to jointly
participate in making a competing offer might very well
be viewed as an understanding with another Person for
the purpose of holding or voting securities of the
Company and result in triggering of the pill.
Furthermore, the strident assertions being made by
you and Mr. Berman that SWIB has nothing to worry about
are of little comfort. First of all, it is not clear
that you speak for a majority of the board, which is
the only authority that can bind the company in regard
to the
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Shareholder Rights Agreement. Second, your
statements seem carefully worded so as to be limited to
"communications" with other shareholders "with respect
to developing a superior offer" or "talking to other
shareholders about putting together a better offer."
You completely miss the point. We are not asking for
an amendment to permit communications with other
shareholders. We want a clear and binding
authorization to reach an agreement to act collectively
with other substantial shareholders in putting forth an
alternative to the Landry's offer. To date, your
responses have been off the point and appear to be
either intentionally misleading or naive.
The insincerity of comments from the company on
application of the pill is obvious. In our view, the
Rainforest board violates its fiduciary duty to
shareholders when it amends the poison pill for
Landry's, yet refuses to act on an amendment to
facilitate efforts by the company's largest shareholder
to develop a better offer.
Under the circumstances, I see no need to further
pursue agreement on a confidentiality agreement. So
long as Rainforest is not willing to seek an amendment
of the Shareholder Rights Agreement to give SWIB the
clear right to act collectively with the Siegel group
or any other shareholder group, we have no need for it.
Sincerely,
/s/ John F. Nelson
John F. Nelson
Investment Director
cc: William Levit, Godfrey & Kahn, S.C.
