Important Notice Regarding the Availability of Proxy Materials..., page 2
| 3. | We noticed that the proxy statement and the proxy card may be available at a dedicated website. Please confirm that the participants are not relying upon Rule 14a-16 to engage in the electronic distribution of the proxy statement as the primary means of fulfilling their obligations under Rule 14a-3(a) and Rule 14a-4(f), or advise. |
We acknowledge the Staff’s comment and hereby confirm that the participants are not relying upon Rule 14a-16 to engage in the electronic distribution of the proxy statement as the primary means of fulfilling their obligations under Rule 14a-3(a) and Rule 14a-4(f).
Reasons for the Solicitation, page 5
| 4. | The disclosure that the current Board “has reduced the level of...communications” was not evidenced by the second and third examples offered given that no prior level of communications or measurable level of transparency could reasonably have been cited in support of such assertion. For this statement and others that have been represented as statements of fact, revise to provide the reasonable factual foundation or delete the assertions. |
We acknowledge the Staff’s comment and have revised the Proxy Statement accordingly. See pages 6 and 7 of the Proxy Statement.
Proposal 1: Election of Directors..., page 9
| 5. | We noticed the disclosure that “[i]f elected, the Nominees will represent a majority of the members of the Board.” Advise us, with a view toward revised disclosure, whether the successful election of at least five of the Kerrisdale nominees in and of itself could result in any of the potential severance and/or change of control payments disclosed in the registrant’s proxy statement being made to any of the registrant’s officers or directors. |
We acknowledge the Staff’s comment and have revised the Proxy Statement accordingly. See Page 11 of the Proxy Statement. In addition, we advise on a supplemental basis that the successful election of at least five of the Kerrisdale nominees in and of itself may result in certain of the potential severance and/or change of control payments disclosed in the registrant’s proxy statement being made to any of the registrant’s officers or directors.
| 6. | We noticed the statement that, “[o]ther than as stated herein, [ ] there are no arrangements or understandings between members of Kerrisdale and any of the Nominees...” Advise us, with a view toward revised disclosure, whether or not any arrangement or understanding exists with respect to the registrant and any of its nominees regarding indemnification or otherwise pursuant to which such person may be selected as an officer. Refer to Item 7 of Schedule 14A and Item 401(b) of Regulation S-K. |
We acknowledge the Staff’s comment and have revised the Proxy Statement accordingly. See page 11 of the Proxy Statement. In addition, we advise on a supplemental basis that at the time Kerrisdale filed the Proxy Statement, the indemnification and compensation letter agreements now disclosed on page 11 of the Proxy Statement were not finalized and thus, we bracketed the language in the Proxy Statement accordingly.
| 7. | Revise the disclosure to make clearer that execution of the participants’ proxy card will result in an inability to vote for two of director positions for which only the registrant is soliciting and is lawfully permitted to solicit votes. In addition, briefly explain how those two board positions will be filled notwithstanding the related disclosure regarding plurality voting. |
We acknowledge the Staff’s comment and have revised the Proxy Statement accordingly. See page 9 of the Proxy Statement.
Solicitation of Proxies, page 17
| 8. | Item 4(b) of Schedule 14A requires disclosure of costs “in connection with the solicitation.” Instruction 1 to this requirement indicates that such costs include “fees for attorneys...and other costs incidental to the solicitation.” Advise us, with a view towards disclosure, whether or not the legal fees being paid have been included within the estimated costs to be disclosed. |
We acknowledge the Staff’s comment and have revised the Proxy Statement accordingly. See page 17 of the Proxy Statement.
Additional Participant Information, page 17
| 9. | In light of the requirement to disclose criminal convictions within the last ten years to the extent specified in Item 5(b)(1)(iii) of Schedule 14A, please provide us with a written reply on behalf of each participant in response to this line item notwithstanding the fact that a negative response need not be disclosed in the proxy statement filed on Schedule 14A. Alternatively, please remove the potential impression that such a conviction could exist given the qualifying language that indicates the existing representation is qualified by the reference to “[e]xcept as set forth in this Proxy Statement (including the Schedules hereto)...” |
We acknowledge the Staff’s comment and hereby confirm on behalf of each participant that no participant, during the past ten years, has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).
Schedule I
| 10. | We noticed the transaction history regarding securities trades within the past two years was limited to a single participant. This disclosure only provides an itemization of the transactions undertaken by Kerrisdale Partners Master Fund Ltd. Please confirm that no other participant had any securities transactions to report under Item 5(b) or revise. |
We acknowledge the Staff’s comment and have revised Schedule I of the Proxy Statement to clarify that Kerrisdale Advisers, LLC, as the investment adviser to certain managed accounts (the “Kerrisdale Accounts”), may be deemed to have transacted in shares of Morgans’ Common Stock through the Kerrisdale Accounts. See page 4 of Schedule I to the Proxy Statement. In addition, were hereby confirm that no other participant has transacted in securities of Morgans during the past two years.
Form of Proxy
| 11. | Disclosure has been made regarding Kerrisdale’s reservation of a right to vote for substitute nominees. Advise us, with a view toward revised disclosure, whether the participants are already aware that the introduction of any substitute nominees would be inconsistent with the registrant’s bylaws. To the extent no nominee could be lawfully introduced at this stage of the solicitation, please revise to remove any implication that the potential exists for the proxy holders to vote for substitute nominees or advise. |
We acknowledge the Staff’s comment and have revised the Proxy Statement accordingly. See page 11 of the Proxy Statement as well as the Proxy Card.
* * * * *
The Staff is invited to contact the undersigned with any comments or questions it may have. We would appreciate your prompt advice as to whether the Staff has any further comments.
| Sincerely, |
| |
| /s/ Andrew M. Freedman |
| |
| Andrew M. Freedman |
In connection with responding to the comments of the Staff of the Securities and Exchange Commission (“SEC”) relating to the preliminary proxy statement on Schedule 14A (the “Proxy Statement”) filed by the undersigned on April 4, 2014, each of the undersigned acknowledges the following:
| | · | Each of the undersigned is responsible for the adequacy and accuracy of the disclosure pertaining to him/it in the Proxy Statement. |
| | · | The Staff’s comments or changes to disclosure in response to Staff comments in the Proxy Statement do not foreclose the SEC from taking any action with respect to the Proxy Statement. |
| | · | The undersigned may not assert Staff comments as a defense in any proceeding initiated by the SEC or any person under the federal securities laws of the United States. |
| | KERRISDALE ADVISERS, LLC |
| | |
| | By: | |
| | | Name: | Sahm Adrangi |
| | | Title: | Managing Member |
| | KERRISDALE CAPITAL MANAGEMENT, LLC |
| | |
| | By: | |
| | | Name: | Sahm Adrangi |
| | | Title: | Chief Investment Officer |
| | KERRISDALE PARTNERS MASTER FUND LTD By: Kerrisdale Advisers, LLC, Its investment advisor |
| | |
| | By: | |
| | | Name: | Sahm Adrangi |
| | | Title: | Managing Member |
