<PAGE>
YOUR BOARD OF DIRECTORS OPPOSES THE EFFORTS
OF THE OPPOSITION GROUP TO ABANDON THE MERGER WITH
CKE RESTAURANTS INC.
AND TO OBTAIN CONTROL OVER SUMMIT FOR NO CONSIDERATION
TO THE SUMMIT STOCKHOLDERS
June 25, 1996
Dear Summit Stockholder:
You may have recently received two proxy statements from a group of
dissident stockholders led by First Global Securities, Inc. This so-called
"Opposition Group" requests that you vote against the proposed merger of Summit
Family Restaurants Inc. with CKE Restaurants, Inc. at the Special Meeting Of
Stockholders scheduled to occur on July 12, 1996. It also purports to seek your
vote to remove the current directors of Summit and to elect its slate of
directors.
IT IS APPARENT THAT THE OPPOSITION GROUP'S ULTIMATE GOAL IS TO GAIN CONTROL
OVER THE BOARD OF DIRECTORS AND MANAGEMENT OF SUMMIT WITHOUT PAYING ANY
CONSIDERATION TO SUMMIT STOCKHOLDERS .
WE URGE YOU TO SIGN, DATE AND RETURN THE ENCLOSED WHITE PROXY CARD TODAY!
SINCE TIME IS VERY IMPORTANT, IMMEDIATE ACTION ON YOUR PART IS CRITICAL.
REJECTING THE MERGER WITH CKE JEOPARDIZES A CERTAIN PAYMENT TO SUMMIT
STOCKHOLDERS
The Opposition Group, only one member of which owns a substantial number of
shares of Summit Common Stock, asks all Summit stockholders to forego a
substantial forthcoming payment in order to further the Opposition Group's goal
to obtain control of Summit. In the merger, which is scheduled to occur on or
about July 12, 1996, each outstanding share of Summit Common Stock (other than
dissenting shares, if any, and shares owned by CKE or its subsidiaries, which
will be canceled) will be converted into the right to receive $2.63 in cash and
a number of shares of CKE Common Stock equal to a fraction, the numerator of
which is $2.64 and the denominator of which will be an amount determined on the
basis of an average of the closing sales prices of CKE Common Stock on the New
York Stock Exchange for the 20 consecutive trading days ending on July 5, 1996.
Using the first 12 trading days ended June 24, 1996, the total consideration in
the Summit/CKE merger would be $2.63 in cash plus 0.1043 shares of CKE stock.
This represents a total consideration of $5.38 based on the closing stock price
of CKE Common Stock of $26.375 as of the close of business on June 24, 1996.
The amount you will actually receive in the merger will vary depending on
the price of CKE Common Stock. The payment of cash and the issuance of the CKE
Common Stock would occur as soon as practicable after the merger. In order to
induce you to vote against the Merger, the Opposition Group claims that it
would, at an unspecified time, pay a cash dividend of $2 per share out of
proceeds of asset sales they claim will be made after the Opposition Group gains
control of Summit. Such a dividend would require the Opposition Group to gain
control of Summit, locate assets that could be sold, find purchasers for such
assets, negotiate and complete the sale of such assets, and then pay all
liabilities before being able to pay stockholders any dividend.
<PAGE>
WHAT IS WRONG WITH THE OPPOSITION GROUP'S "PLAN"?
* In the view of your Board of Directors, the Opposition Group's "plan" could
require months - if not years - to accomplish and, as the Opposition Group
itself states, "there is no assurance that any proposal or combination of
proposals contained [in the Opposition Group proxy statements] will result
in a successful outcome for [Summit] shareholders."
* The Opposition Group purports to seek the removal of all Summit directors
at the Special Meeting on July 12, 1996, but such action is not permitted
under Summit's Certificate of Incorporation, Bylaws or Delaware law.
* Even if the Opposition Group could gain control of Summit, the Opposition
Proxy presupposes that the current Summit assets are easily saleable for
cash on terms highly favorable to Summit - a dubious assumption based upon
Summit's exhaustive search for potential buyers.
* The proposal by the Opposition Group could be inefficient to Summit
stockholders from a tax standpoint, since any taxable gains resulting from
the sale of assets would be recognized first by Summit, and then the
dividends would be taxable to the Summit stockholders.
* The Opposition Group's claim that it would make a $2 per share dividend is
wishful thinking. Your Board of Directors believes that the Opposition
Group has made this claim without determining the true value of Summit's
assets, considering the funds needed to provide for the liabilities of
Summit, assessing the potential for further cash flow deterioration and
factoring in the rights of Summit's preferred stockholder.
If the Opposition Group were acting in the best interests of Summit
stockholders and had in fact identified potential buyers willing to purchase
Summit's assets for more than the consideration offered in the merger, WHY HAVE
THEY NOT IDENTIFIED SUCH BUYERS TO THE SUMMIT BOARD OF DIRECTORS, SO THE BOARD
COULD EVALUATE SUCH OPPORTUNITIES AGAINST THE MERGER OR OFFER A HIGHER
CONSIDERATION TO YOU, THE STOCKHOLDER? Further, if the CKE offer is inadequate
as they state, why has the Opposition Group not made a higher offer to all
stockholders. Summit negotiated a provision to allow it to terminate the Merger
Agreement in certain circumstances if a better offer were to materialize.
INSTEAD OF IDENTIFYING THE POTENTIAL BUYERS TO THE BOARD OF DIRECTORS OR TO
SUMMIT STOCKHOLDERS OR EVEN DESCRIBING THE TERMS ON WHICH SUCH PURCHASES WOULD
BE MADE, THE OPPOSITION GROUP ASKS THAT SUMMIT STOCKHOLDERS FOREGO THE MERGER
CONSIDERATION AND TURN SUMMIT OVER TO THE OPPOSITION GROUP WITHOUT ANY PAYMENTS
TO THE STOCKHOLDERS.
THE OPPOSITION GROUP WANTS TO GAIN CONTROL OF SUMMIT WITHOUT PAYING ANYTHING
TO YOU
The Opposition Group has had plenty of time to propose a plan to acquire
Summit. The Board of Directors has publicized its search for a merger or
acquisition partner since July 24, 1995. In fact, in the summer and fall of
1995, First Global expressed interest in providing financing or in participating
in some way in a purchase. As a result, Summit management provided information
about Summit to First Global following First Global's execution of a
confidentiality agreement by Nobel Trenham, founder, Co-Chairman of the Board
and Chief Investment Officer of First Global Securities. Interestingly, this
information was returned by First Global, purportedly unread, after First Global
advised Summit management that First Global was not interested in pursuing a
transaction with Summit.
THE FACT IS, THE OPPOSITION GROUP HAS NO FUNDS OR FINANCING AVAILABLE FOR
USE IN CONJUNCTION WITH THIS TRANSACTION AND NOTHING TO OFFER STOCKHOLDERS OTHER
THAN VAGUE CLAIMS REGARDING THE POSSIBILITY OF FUTURE DIVIDENDS AND CHANGES IN
DIRECTION. Instead, they want you to vote against the Merger and turn control of
Summit over to the Opposition Group for no consideration whatsoever. The Summit
Board of Directors believes that this gamble is not in your best interest.
<PAGE>
THE OPPOSITION GROUP CANNOT "REMOVE" SUMMIT'S DIRECTORS
The Opposition Group's plan is premised upon taking control of Summit by
"removing" Summit's directors at the Special Meeting on July 12, 1996. Under the
Delaware General Corporation Law and under the Certificate of Incorporation and
Bylaws of Summit, the Opposition Group may not bring to a vote any proposal to
remove Summit's directors or elect a new slate of directors at the Special
Meeting. Accordingly, any attempt to bring these matters before the Special
Meeting will necessarily be deemed out of order and not appropriate for
stockholder action and therefore Summit recommends that you do not return the
red proxy card, even to vote against the Opposition Group.
THE BUSINESS PLAN PROPOSED BY THE OPPOSITION GROUP IS SPECULATIVE AND
PROBABLY NOT FINANCEABLE
The Opposition Group states that, if it gains control of Summit, it will
"create a new direction for Summit focused on themed restaurants and
entertainment creating an 'eatertainment' focus." The Opposition Group says that
its first themed project will be the "Wave Cafe." According to the Opposition
Group, the Wave Cafe will consist of "a surfable wave ridden by employee
instructors" and a retail store featuring surf, volleyball, snowboarding and
related merchandise. The Wave Cafe concept has never been tried. In the view of
the Board of Directors, such a plan is highly speculative and not in your best
interest. Summit believes that there have been attempts, albeit unsuccessful, to
raise capital for this venture for at least the past year and that the company
sponsoring the "Wave Cafe" concept has been unable to obtain financial support
to move its concept forward. THE BOARD OF DIRECTORS BELIEVES THAT THE OPPOSITION
PROXY IS AN EFFORT TO TAKE THE MONEY OF SUMMIT'S STOCKHOLDERS AND INVEST IT IN A
HIGHLY SPECULATIVE, UNTESTED RESTAURANT VENTURE. THE BOARD OF DIRECTORS BELIEVES
THAT THIS APPROACH IS AN IRRESPONSIBLE ATTEMPT TO ALLOW FIRST GLOBAL TO
SPECULATE WITH THE MONEY OF SUMMIT'S STOCKHOLDERS.
THE OPPOSITION GROUP'S ATTACKS ON CKE STOCK ARE UNFOUNDED
Even though it is unwilling to offer any consideration of its own, the
Opposition Group wants you to believe that the CKE Common Stock is overvalued.
Whether CKE's stock is overvalued is certainly a matter of opinion. On June 12,
1996, CKE reported that net income for the first quarter ended May 20, 1996
nearly tripled to $5.3 million, or $0.28 per share, compared with net income of
$1.9 million, or $0.11 per share for the prior year period. CKE also reported
that revenues for the 16 week period ended May 20, 1996 increased $15.3 million,
or 11 percent, to $152.9 million as compared with the prior year 16 week period.
SUMMIT MANAGEMENT IS SOUND AND HIGHLY QUALIFIED - THE OPPOSITION GROUP'S
ATTACKS ARE INACCURATE
First Global is also inaccurate in portraying Summit as a company with no
management. The company continues to have two vice presidents overseeing the
JB's Restaurants and Galaxy Diners, a senior vice president overseeing the
HomeTown Buffets, and two senior vice presidents and a vice president overseeing
the support functions. Additionally, Clark D. Jones is currently serving as
interim President and Chief Executive Officer. Mr. Jones is familiar with Summit
and the restaurant industry, having served as president of the company for 10
years previously and as interim president in 1993. The home office of Summit
employs approximately thirty individuals who provide support to the operation of
the company.
<PAGE>
Please show your support by signing, dating and mailing the enclosed WHITE
PROXY CARD, and disregarding any Red Proxy Card sent to you by the Opposition
Group. Only the latest dated proxy will count. Regardless of how many shares you
own, your vote is very important, and I encourage you to exercise your right to
vote. PLEASE VOTE ONLY THE WHITE PROXY CARD. Do not sign or return any Red proxy
card sent to you by the Opposition Group.
In the meantime, if you are contacted by the Opposition Group and wish to
voice your concerns to Summit, or have any questions, please call our proxy
solicitor, Corporate Investor Communications, Inc., at (800) 346-7885, or
collect at (201) 896-1900 or call me, Clark Jones, at (801) 463-5500.
Very truly yours,
THE BOARD OF DIRECTORS OF
SUMMIT FAMILY RESTAURANTS INC.
By: /s/ Clark D. Jones
----------------------
Clark D. Jones
Chairman of the Board
IMPORTANT
Whether or not you have previously signed a proxy card from the Opposition
Group, please sign, date and mail management's WHITE PROXY CARD in the enclosed
postage paid envelope. (If you wish to add your comments and suggestions about
the issues discussed in this letter, please note them on the proxy card.)
Please DO NOT execute or return any Red card sent to you by the Opposition
Group.
If you own your shares in the name of a brokerage firm, your broker cannot
vote such shares unless he receives your specific instructions.
If you have any questions about voting your shares or want further
assistance or information, please do not hesitate to call our proxy solicitor:
CORPORATE INVESTOR COMMUNICATIONS, INC.
AT (800) 346-7885 OR COLLECT AT (201) 896-1900.
<PAGE>
SHOULD YOU TRUST THE OPPOSITION GROUP?
LOOK AT HOW OTHER INVESTORS HAVE FARED WITH FIRST GLOBAL SECURITIES AND THE
TRENHAMS
* CLAIM OF FRAUD
In November 1994, a group of investors filed an action for fraud, negligent
misrepresentation, breach of contract and breach of fiduciary duty against Noble
Trenham and Susan Trenham, among others. The complaint alleges that the
investors agreed to invest their money with the Trenhams by purchasing limited
partnership interests in a real estate-related partnership of which Noble
Trenham would be the general partner. According to the complaint, Susan Trenham
co-hosted meetings with Noble where Noble would fail to disclose material facts
about the actual condition of the property. In the complaint, the investors
claimed that they were lulled into making investments they believed to be sound,
conservative and prudently managed, while the Trenhams (who allegedly were
insolvent at such time) were using investors' funds to pay personal debts and
personal litigation expenses completely unrelated to the partnership. There are
also allegations in the complaint that the Trenhams were using the partnership's
real property for collateral for loans that were used to pay personal expenses
of the Trenhams unrelated to the partnership's business. Noble Trenham settled
the case for $100,000 together with an agreement to pay the investors 10% of his
gross income until June 1, 2001 from investment banking ventures (not to exceed
$50,000). (DASHJIAM V. TRENHAM, CASE NO. BC117223)
* CLAIM OF VIOLATIONS OF SECURITIES LAWS
On July 23, 1987, the United States Securities and Exchange Commission
filed an action against Noble Trenham and his former firm alleging violations of
(i) Section 13(d) and Rules 13d-1 and 13d-2 of the Securities Exchange Act of
1934 by failing to properly and timely file Schedules 13D disclosing their
intentions to change or influence the control of at least eight public companies
while beneficially owning at least five percent of the outstanding shares of
such companies, (ii) the Investment Advisers Act of 1940 by making false and
misleading statements regarding the aggregate concentrations of shares
accumulated by Noble Trenham and his firm in their clients' accounts and failing
to disclose to their clients the adverse consequences of such concentrations,
(iii) the Investment Advisers Act by failing to disclose conflicts of interest
between his firm and its clients, and (iv) the Investment Advisers Act by
transacting unlawful agency cross-trades.
Noble Trenham and his firm consented to final judgments permanently
enjoining and restraining them from further violations of the foregoing
provisions of the securities laws. (SECURITIES AND EXCHANGE COMMISSION V. FIRST
WILSHIRE MANAGEMENT INC., FREDERICK ASTMAN AND NOBLE TRENHAM, U.S. DISTRICT
COURT FOR THE DISTRICT OF COLUMBIA, CIVIL ACTION NO. 87-2037)
<PAGE>
* CLAIM OF BREACH OF FIDUCIARY DUTY
In April 1985, shareholders of Olson Farms filed a lawsuit against Noble
Trenham and his firm (as well as numerous other defendants) for breach of
fiduciary duty by using fraudulent schemes and conspiring to dilute plaintiffs
as controlling shareholders of Olson Farms by funding a company to take control
of Olson Farms at a deflated price and then conspiring to obtain an opinion that
such deflated price was fair. Noble Trenham and his firm were accused of
receiving a finders fee of between $50,000 and $65,000 for bringing together a
transaction whereby a company of which Noble Trenham's firm was a shareholder
would purchase 500,000 shares of Olson Farms common stock at a deflated price,
the sale of which would reduce plaintiff's ownership interest from 42.9% to 30%,
in order to raid the assets of Olson Farms to pay off the debts of such
company's parent company. The complaint further alleges that the parent company
was in severe financial trouble, had a negative net worth, was in violation of
bank loan covenants and had loan payments due the following year in excess of
$50,000,000. The case was ultimately dismissed. (OLSON, C. DEAN, ET AS V.
BUFFINGTON, JACK W., ET AL, CASE NO. C544668)
* CLAIM OF VIOLATION OF THE ANTI-RACKETEERING LAWS
In March 1985, a client filed a lawsuit against Noble Trenham and his firm
(and other defendants) alleging violations of federal and state securities laws,
antiracketeering laws, fraud, breach of fiduciary duty and breach of contract
arising from Noble Trenham's and his co-worker's mismanagement of the client's
funds. According to the complaint, Noble Trenham was one of the two individuals
who personally provided the investment advisory services to the client. One of
the other defendants (the clearing broker for securities transactions directed
by Noble Trenham's firm) entered into a settlement agreement for $260,000 with
the plaintiff. (SEE MORGAN, OLMSTEAD, KENNEDY & GARDNER INCORPORATED V. TRENHAM,
NOBLE, ET AL, CASE NO. C717414.)
We think that when you compare the proposed merger with CKE Restaurants,
Inc. against the Opposition Group proposal, you will agree with the Summit Board
of Directors that the merger is in your best interests.
PLEASE SIGN, DATE AND RETURN THE ENCLOSED WHITE PROXY CARD TODAY! SINCE
TIME IS VERY IMPORTANT, IMMEDIATE ACTION ON YOUR PART IS CRITICAL.
