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Landry's Sends Letter To Ark Restaurants Corp. Questioning Motives Of Board

Stocks in this article: ARKR

Accordingly, we question the Board's motives in rejecting our proposal with no meaningful dialogue or explanation.  We note the staleness of the current Board, with almost all current directors having served for over a decade.  Further, both Institutional Shareholder Services and Glass Lewis & Co, the two leading independent proxy advisory firms, have stated in their most recent reports their significant concern over the lack of independence on the Board.  Four of Ark's executives serve as directors, including its Chief Executive Officer and Chief Financial Officer.  These factors lead us to question whether Ark's directors are more focused on preserving their long-standing positions with the Company rather than doing what is best for shareholders.

In our view, it is irresponsible for the Board to deprive the shareholders of a full and fair review of the value-maximizing transaction we propose, and we believe that we should have the opportunity to take our proposal directly to Ark's shareholders.  As a New York corporation, Ark is subject to the New York business combination statute (N.Y. BSC. LAW § 912) which restricts the ability of shareholders beneficially owning in excess of 20% of the outstanding capital stock of the Company from engaging in certain business combinations with the Company for a period of five years.  In our view, the Board's fiduciary duties to its shareholders mandate that the Board immediately take the necessary steps to approve our acquisition of in excess of 20% of Ark's outstanding stock or waive the applicability of the New York business combination statute to the Company, thereby freeing us to take our proposal to acquire all of Ark's outstanding stock directly to the Company's shareholders so they can determine for themselves whether it is in their best interests. 

Overall, we believe a sensible and appropriate response requires that the Board either immediately initiate good faith discussions with us regarding our proposal or immediately take the necessary steps to remove any roadblocks to our ability to take our proposal directly to shareholders.  Any other course of action is hard to justify in light of the Board's duty to act in shareholders' best interests. 

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