[SWIB Letterhead]
October 12, 2000
Board of Directors
c/o Stephen Cohen, General Counsel
Rainforest Cafe, Inc.
720 South Fifth Street
Hopkins, Minnesota 55343
Gentlemen:
We have received your letter dated October 10,
2000 and have reviewed your concurrent press release
and have the following response:
1. Fiduciary Duty. The State of Wisconsin Investment
Board ("SWIB") believes that when a Board of Directors
of a public company determines to sell the Company, the
directors have an overriding duty to maximize
shareholder value through an auction of the Company (or
comparable mechanism). In general, this process should
be overseen by disinterested directors, particularly
when management may receive compensation tied to the
transaction. Based on the publicly available
information we have reviewed and our discussions with
your chairman, Mr. Berman, we do not believe that the
process used by your Board meets this standard. Based
on our independent research, the so-called
"independent" directors of Rainforest Cafe, Inc.
("Rainforest") appear to have significant financial or
other ties to Mr. Berman. Moreover, the Board has
approved substantial payments to management during the
course of this Landry's offer that will not benefit all
shareholders. Accordingly, SWIB is highly skeptical of
your statements that the Board takes its fiduciary
duties seriously. We continue to believe that the
Landry's tender offer is flawed by the process used to
approve and protect it and fails to maximize value for
all the Company's shareholders. Furthermore, we call
on management and the Board to rescind these
arrangements for management payments and share these
amounts with all shareholders.
2. Amendment to Rights Agreement. SWIB finds it
curious that the Company adopted a rights plan
immediately following defeat of the prior Landry's
transaction. SWIB has clearly stated its request that
it be permitted to work collectively with other
shareholders to facilitate a superior proposal, not
just to "communicate" with them. Since SWIB already
beneficially owns approximately 14.6% of Rainforest's
common stock, we are concerned that any substantive
discussions or arrangements with other shareholders to
take collective action could trigger the pill. We find
your statements on this issue to be disingenuous and of
no practical value, particularly when your letter warns
that it "should not be construed as a waiver or
amendment of the Rights Agreement." If you
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believe your pill does not preclude SWIB from pursuing
collective arrangements with other shareholders, please
confirm this to us promptly in writing.
3. Confidentiality Agreement. We are reviewing the
terms of the proposed Confidentiality Agreement and
will get back to you shortly.
4. Extension of Tender Offer. We believe that your
refusal even to request an extension of the tender
offer deadline from Landry's is further confirmation
that the process you have used to date is not
reasonably designed to maximize shareholder value.
We continue to call on all members of the Board of
Directors to act in accordance with their fiduciary
duties to the Company and all its shareholders and
assure that shareholder value is maximized.
Very truly yours,
STATE OF WISCONSIN INVESTMENT BOARD
/s/ John F. Nelson
John F. Nelson
Investment Director
cc: Keith Johnson-SWIB
W. H. Levit, Jr.-Godfrey & Kahn, S.C.
