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PRELIMINARY PROXY MATERIAL
AMENDMENT
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 10549
SCHEDULE 14A
(RULE 14a-6(i)(3))
Pursuant to Section 14(a) of the Securities Exchange Act of 1934
OPPOSITION GROUP'S PROXY STATEMENT
PROXY STATEMENT 1 - OPPOSITION TO MERGER
THE OPPOSITION GROUP ASKS YOU TO VOTE ON THREE MATTERS:
AGAINST THE MERGER, FOR THE RESIGNATION OR REMOVAL OF THE PRESENT
BOARD, AND FOR A NEW BOARD OF DIRECTORS
ON THE RED PROXY CARDS RELATED TO EACH MATTER
FILED BY A PARTY OTHER THAN THE REGISTRANT
SUMMIT FAMILY RESTAURANTS, INC.
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(Name of Registrant as Specified in Its Charter)
First Global Securities, Inc., on behalf of the Opposition Proxy Group,
including, itself, Susan W. Trenham, Kennedy Capital Management, Inc.,
William H. Burgess, J. D. Campa and Associates, Inc., Michael E.Portnoy,
Howard Foster Company, Mark R. Tonucci, T.H. Fitzgerald, Peter Sorokin, Mark
A. Fries, Gary B. Davidson and Harold Fox
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(Names of Persons or Entities Filing Proxy Statement,
if other than the Registrant)
Contact:
Susan W. Trenham
Co-Chair and CEO
First Global Securities, Inc.
790 East Colorado Blvd., #500
Pasadena, Ca. 91101
(818) 568-8800
Payment of Filing Fee: $500 pursuant to Exchange Act Rule 14a-6(i)(3).
Fee previously paid: $500 pursuant to Exchange Act Rule 14a-6(i)(3).
PLEASE COMPLETE AND RETURN THE RED PROXY CARD
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PRELIMINARY JUNE ,
OPPOSITION TO THE MERGER BETWEEN
SUMMIT FAMILY RESTAURANTS, INC.
AND CKE RESTAURANTS, INC.
Fellow Shareholders:
We are a group of Summit shareholders who own 14% of the outstanding shares
of common stock of Summit Family Restaurants, Inc. ("Summit"). We oppose the
proposed merger between Summit and CKE Restaurants, Inc. ("CKE") to be voted on
at a special meeting of Summit shareholders to be held on July 12, 1996, at
10:00 a.m. at the Howard Johnson Hotel, 122 West South Temple, Salt Lake City,
Utah ("Special Meeting"). We believe the transaction is not fair and equitable
to the shareholders of Summit. The shareholders opposed to the proposed merger
are First Global Securities, Inc., Kennedy Capital Management, Inc., William H.
Burgess, J. D. Campa and Associates, Michael E. Portnoy, Howard Foster and
Company, Mark Tonucci, T.H. Fitzgerald, Gary B. Davidson, Peter Sorokin, and
Mark A. Fries. Susan W. Trenham is the Chief Executive Officer of First Global
Securities, Inc., and all of the foregoing ("Opposition Group") are
participating in this solicitation.
We believe that the Board of Summit did not act in the best interests of
shareholders by signing two amendments to the Merger Agreement agreeing to
reductions in the purchase price to be paid to the shareholders; that members of
the Summit Board have acted in a manner designed to give you no viable
alternative except to vote for the proposed merger by terminating much of the
senior management; that the fairness opinion rendered by Piper Jaffray Inc. may
not be objective since Piper Jaffray will be paid $758,000 upon the successful
completion of the merger; and that certain issues which shareholders ought to
consider in reaching a decision to vote for or against the merger have been
obscured such as the fair market value of Summit versus the offer to
shareholders.
You are an owner of Summit Family Restaurants, Inc. and THIS MERGER IS A
DECISION OVER WHICH YOU ARE SUPPOSED TO HAVE AUTHORITY TO ACT. We urge you to
take the time to understand the proxy statement which you receive from Summit,
to be sure that you understand the proposed merger as it stands as of the time
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that you vote, and that you take the time to understand why we object to the
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proposed merger. The merger price to be paid to Summit shareholders is based on
a formula which takes into consideration the fluctuation of the market price of
CKE stock. The recent upward price movement of CKE stock in the past ninety
days will result in a substantial reduction (beyond the two announced reductions
to which we also object) in the number of CKE shares Summit shareholders will
receive at the time of the merger. In the pages that follow we suggest an
alternative to the present proposal.
The Opposition Proxy - The Red Proxy Card
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The OPPOSITION GROUP urges you to vote AGAINST the proposed merger between
Summit and CKE on the RED PROXY CARD. Further, we recommend that you assert your
Dissenting Shareholders Rights to require an
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independent valuation of your shares/1/. All participants in this Opposition
Proxy have stated that it is their intention to perfect their Dissenters'
Rights. It should be noted that, at the discretion of CKE, the obligations of
CKE to effect the Merger are subject to the condition that the holders of not
more than 10% of the shares of Summit Common Stock have asserted dissenters'
rights.
You may use the OPPOSITION GROUP'S PROXY to Vote For or Against the
proposed merger. Failure to vote or to return a proxy card will have the
same effect as a vote against the Merger. We urge you to complete, sign and date
the enclosed OPPOSITION PROXY and to return it in the enclosed prepaid envelope
as soon as possible. This will not prevent you from attending the Special
Meeting and voting your shares in person even if you have previously returned
your proxy card since the proxy is revocable up to the time it is voted. IF YOU
HAVE VOTED FOR THE MERGER ON A SUMMIT PROXY, YOU MAY STILL VOTE AGAINST THE
PROPOSED MERGER ON THE OPPOSITION PROXY MERELY BY SIGNING, DATING AND MAILING
THE ENCLOSED PROXY CARD.
RISKS ASSOCIATED IN ACCEPTING THE OPPOSITION GROUP'S PROXY
There is No Assurance that the Opposition Proxy Group Will Succeed In
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Implementing It's Proposed Plan
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The Opposition Group urges shareholders to vote against the proposed merger
and to support a proposed alternative plan for Summit. In order to implement
that plan, shareholders must disapprove the merger, and the present Summit Board
must agree to resign and allow shareholders to vote on a new proposed Board or
the Opposition Group must succeed through a proxy, a shareholders's suit, or
other remedies. There is no assurance that the Opposition Group will succeed.
Certain transactions contemplated by the Opposition Group may be subject to
approval by the Preferred Shareholders. CKE has indicated a willingness to work
cooperatively with the Opposition Group if the Merger is defeated.
There Is No Assurance of Success In Selling The Assets of Summit At A Higher
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Value
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The Opposition Group believes that under new management and a new Board the
assets of Summit may be sold at a higher price than the consideration being
offered by CKE to Summit shareholders. However, the present Summit Board has
outlined in detail the efforts they made to sell the assets. There is no
assurance that the proposed Board and management will be more successful in
selling the assets at a higher price than the present Board.
There Is No Assurance that Shareholders Will Receive Fair Market or Book Value
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The proposed merger offer to Summit shareholders is below the book value of
Summit. We believe that the fair market value is considerably higher. However,
there is no assurance that shareholders will receive book or fair market value
if they vote against the merger and an alternative plan is implemented.
The Opposition Group's Proposed Two Dollar Dividend Is Not Assured
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Under the proposed CKE/Summit merger, Summit shareholders will receive
$2.63 in cash and an equivalent amount in CKE shares. The Opposition Proxy
Group believes that the assets of Summit may be sold for more than $2.63 per
share without diluting Summit shares. The Opposition Proxy Group proposes a $2
dividend to shareholders and an alternative business approach for Summit. There
is no assurance that the alternative plan will succeed. Shareholders will have
to determine whether they would rather receive a
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/1/ See Proxy Statement of Summit: "Rights of Dissenting Stockholders--Failure
to follow the steps required by Section 262 of the Delaware General Law (the
"DGCL"), may result in your loss of such rights (but not in your loss of the
merger consideration).
PLEASE COMPLETE AND RETURN THE RED PROXY CARD
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guaranteed $2.63 cash now from CKE and minimum upside value to the remainder of
their consideration in stock or to risk a failure on the part of a new Summit
management team to take the necessary action to pay a $2 dividend and to provide
profits in the future of Summit Family Restaurants, Inc.
A Successful New Direction for Summit is Speculative
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The Opposition Group believes that Summit can become a dynamic and
profitable organization through the sale of assets and the successful pursuit of
a newly focused direction for Summit. However, the implementation of a new
business plan, whether by new management of Summit or by the management of CKE
is speculative.
Perfection of Dissenter's Rights May Not Result in a Higher Consideration
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The Opposition Group believes that the value of Summit assets exceeds the
consideration offered by CKE and recommends that Summit shareholders assert
their Dissenting Shareholders rights and call for appraisal of the value of
their stock. Under Delaware law, where Summit is incorporated, CKE must pay
shareholders the higher value in cash, if such value is determined by the Court
to exist. There is no assurance that the Court will determine that a higher
value does exist. If the Court determines that the value of Summit's stock is
less than the consideration offered by CKE, the shareholder will receive the
lower consideration. At any time within 60 days after the effective date of the
merger, if approved, any stockholder has the right to withdraw his demand for
appraisal and to accept the terms offered upon the merger. Shareholders should
refer to the Summit proxy statement, for details as to how to assert Dissenting
Shareholders rights, and obtain legal counsel for further answers to questions.
In addition to voting Against the merger on either proxy, shareholders must
deliver a letter asking for appraisal of their shares before the vote on the
merger if they wish to assert their Dissenting Rights. The letter merely needs
to state the identity of the shareholder and that the shareholder intends to
demand appraisal of his shares.
Risk in Failure To Accept Merger And Failure to Accept Plan
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Certain risks may exist with respect to a failure to pass the merger and a
simultaneous failure to approve the plan of the Opposition Group. As the
Summit Board has terminated senior management and has stated in the proxy
statement that it does not believe that Summit can continue to operate as a
viable company risks may be associated with a failure by shareholders to approve
the merger and a simultaneous failure to approve the Opposition Group's plan for
an alternative to the merger. It should be noted that the Opposition Group plans
to perfect its Dissenters' Rights. If CKE elects to terminate the merger
agreement and shareholders fail to approve the alternate proposal or the present
Summit Board refuses to allow the Shareholder proposals at the scheduled
meeting, the company may be adrift for a considerable period with the attendant
loss of performance and risk to shareholders of sale of assets at unfavorable
prices or ultimate liquidation. Shareholders voting in favor of the merger may
also want to vote in favor of the alternative plan so that if the merger fails
to be approved that there is an alternative plan for proceeding. A period of
uncertainty may occur in either case.
OPPOSITION TO THE MERGER
KEY ISSUES
The Opposition Group's objections to the proposed merger center around
seven key issues:
. The actions of the Summit Board of Directors
. The pre-merger approval actions on the part of CKE
. The reductions in the price to be paid by CKE to Summit shareholders.
. The effect of current CKE prices on Summit shareholders under the
proposed merger.
. The lack of effort to determine the fair market value of the assets
of Summit Family Restaurants, Inc.
. The lack of an unaffiliated fairness opinion for
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Summit shareholders, and possible conflicts on the part of Piper
Jaffray, Inc. in rendering it's opinion.
. A viable alternative for Shareholders if they disapprove the merger.
The Actions of the Summit Board of Directors
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The Merger agreement provided for modifications of the employment
agreements extending to 90 days following the closing at which time certain key
employees could voluntarily resign and obtain severance benefits set forth
therein. We believe that pending approval of the merger, the Summit board had a
responsibility to maintain all operations so that there would be no diminishment
in Summit's performance if shareholders disapproved the merger.
Summit states in its proxy statement, under Special Factors, that "Mr.
McComas [then President] has entered into an amendment to the change of control
provision of the Employment Agreement as requested by CKE...which requires Mr.
McComas to continue his employment for the first 90 days following the
Merger..."
In Summit's news release of December 1, 1995, William P. Foley, CKE
Restaurants' chairman and chief executive officer, said, "The merger of Summit
Family Restaurants is an excellent financial transaction...' Don McComas is a
strong operator, who, along with his management team, has created the Galaxy
Diner concept which we are especially excited about and view as a rapid
expansion vehicle."
According to the Special Factors section, page 27, of the Summit Proxy
Statement, the Board states, "On April 9, 1996, the Board of Directors,
determined to terminate the employment relationships of Messrs. McComas,
Gehling, Bales and Yanez and made payments in the aggregate amount of $1,071,776
under the Employment Agreement with Mr. McComas ..." The proxy goes on to
state, "The terminations of employment were a continuation of reductions in
force initiated by Summit in September 1995 in response to Summit's
deteriorating financial condition and were effected for a variety of reasons,
including performance, job responsibilities, assessments of Summit's future
needs, strategic direction and financial considerations." Notes to the
Consolidated Financial Statements, F-19, indicate "the Company paid $1,236,000
to the President and four senior vice presidents upon their termination in April
1996. The Merger Agreement triggered a provision in the change of control
agreements that requires the Company to place in escrow accounts an additional
$450,000 for three additional senior vice presidents."
According to its minutes, the Summit Board seemed to act at the request of
CKE, to terminate the employment of the President, Mr. McComas, the Senior Vice
President of Marketing and New Development, the Senior Vice President of Food
Services, the Senior Vice President of Human Resources and Franchising, and the
Senior Vice President of Family Restaurants, leaving the company, with what we
believe is a massive void in the management of the company. Further, the change
of control payments reduce the assets on Summit's balance sheet rather than
CKE's. While in a letter of May 7, 1996, to the Opposition Group, the Summit
Board claimed that the termination was a continuation of 'cost-savings
measures', the Board paid out over $1.2 million and reserved four hundred fifty
thousand dollars in 'change of control' payments--in effect prepaying between
one and three years the annual salaries of the six individuals who were
terminated rather than continuing to pay only their monthly salaries.
Summit states that Clark D. Jones, who had served as Chairman and/or
President for more than ten years, stepped in to fill the void left by the
president and five senior vice-presidents. Mr. Jones, in addition to apparently
serving in the capacities of the six Summit officers who were fired, also is
employed full time by the State of Utah as a utilities commissioner.
Additionally, Summit's operational performance deteriorated sharply during the
most recent five years that Mr. Jones served as Chairman.
The minutes state:
"A Special Meeting of the Board of Directors (the "Board") of Summit Family
Restaurants Inc. (the "Company") was held by telephone conference on April
9, 1996 at 1:00 p.m. MDT, Clark D. Jones, Norman N. Habermann, Carl R.
Hays, Norton Parker, Ronald N. Paul and Thomas J. Russo, constituting a
majority of the members of the Board each participated in such a way that
each could hear each other member during the meeting. Also participating by
invitation were Bryant Edwards and Richard G. Brown, outside counsel to the
Company. Mr. Jones acted as chairman of the meeting and Mr. Brown acted as
secretary thereof.
Mr. Jones welcomed all present and asked Mr. Habermann to provide a brief
update with respect to the Merger transaction with CKE.
Mr. Habermann advised that the purchase of the Company's outstanding
Preferred Stock from the holder has been completed pursuant to the second
amendment to the Merger Agreement and that Messrs. Bryant and Paternotte
have resigned as members of the Board. He further reported that he has been
asked by CKE to act as a liaison between CKE and the Company in
facilitating the transition and the Merger. He reported a meeting with Mr.
Robert E. Wheaton and Mr. Tom Thompson in San Francisco during the week of
April 1st to discuss transition matters. Messrs. Wheaton and Thompson have
been assigned responsibility for the transaction by CKE.
Mr. Jones stated that the purpose of the meeting is to consider matters
related to an efficient transition and completion of the Merger
transaction, including changes in personnel which might be considered
prior to consummation of the Merger.
Mr. Habermann advised the Board that CKE has confirmed that it does not
intend to continue employment of Messrs. McComas, Gehling, Bales, and
Yanez after the Merger and that, in CKE's opinion, termination of these
officers at an early date would facilitate the transition plan.
The Board was advised that change of control payments required in
connection with termination of these officers would aggregate approximately
$1.0 million. The Board also considered the effect of termination on the
conduct of the Company's business and any associated projects and plans.
The Board further considered the possibility that the Merger transaction
will not consummate for reasons outside of the control of the Company or
CKE which would result in the loss of the change of control payments and of
key officers whose services may be lost to the Company. After discussion,
the Board concluded that termination of these officers would not materially
affect the conduct of the Company's business prior to the Merger and that
the risk of the transaction not closing is minimal, particularly in view of
CKE's purchase of the outstanding Preferred Stock, but nevertheless
determined to request that CKE indemnify the Company in respect of the
change of control payments if the Merger transaction is not completed for
reasons outside of the control of Summit.
After further discussion, upon motion made, seconded and unanimously
adopted, it was: RESOLVED, that the employment relationship of Messrs,
McComas, Gehling, Bales, and Yanez be terminated, effective April 15th, or
on such earlier date as the chairman, in his discretion deems necessary or
appropriate, subject, however, to CKE's favorable response to the Company's
request for indemnification in respect of the change in control payments."
The minutes go on to state:
"The meeting was recessed to permit Mr. Jones to consult with Messrs.
Wheaton and Thompson concerning the willingness of CKE to indemnify Summit
with respect to change of control payments referred to above. At the
conclusion of the recess the meeting resumed and Mr. Jones reported to the
Board that Messrs, Wheaton and Thompson, on behalf of CKE, had agreed to
indemnify Summit in respect of change in control payments to a maximum of
$300,000 in the event the Merger transaction is not consummated for reasons
outside the control of the Company. After discussion, upon motion made,
seconded and unanimously adopted, the Board affirmed its decision to
terminate the officers referred to in these minutes and instructed Mr.
Jones to effect the terminations with assistance of other members of senior
management and to secure an agreement with CKE reflecting CKE's agreement
to indemnify the Company in respect of change in control payments up to
$300,000."
The Board of Summit states that they set up a committee of independent
Board members and an unaffiliated financial advisor to determine whether the
merger is in the best interests of shareholders. Mr. Norman Habermann, a board
member, was named to chair the Special Committee to evaluate the CKE offer and
other offers to the company, including a management led buy-out. Mr. Habermann
is paid a fee as a Board member and received an additional fee as the head of
the Special Committee as is disclosed in the Summit proxy statement.
Subsequently, he negotiated with Piper Jaffray, Inc. to receive a portion of
their success fee, approximately $115,900, for the completion of the merger as
is disclosed on page 24 of the Summit proxy statement.
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On page 24 of the Summit proxy statement, Summit states, "the Summit Board
believes that the financial interest of Mr Habermann in completing a transaction
to sell Summit is consistent with the Board's previous decision to sell Summit
and with the interests of Summit's Board and stockholders to obtain the highest
possible consideration for Summit, and as a result, did not affect the manner or
the procedural fairness with which the Merger was considered by Summit."
The Opposition Group finds that statement difficult to believe when one
further considers the minutes of April 9, 1996 which state:
"Mr. Habermann reported to the Board that the Company has completed a
preliminary analysis of the effects of adopting Statement of Financial
Accounting Standards No. 121, 'Accounting for the Impairment of Long-Lived
Assets and the Long-Lived Assets to be Disposed Of,' SFAS No. 121 requires the
assessment of certain long-lived assets, including many intangible assets, for
possible impairment when events or circumstances indicate that carrying amounts
of these assets may not be recoverable. He advised the Board that the Company is
not required to adopt SFAS No. 121 until the 1997 fiscal year; however,
management's preliminary assessment indicates that the adoption will result in a
write down of approximately $7.0 million or $1.22 per share which on a per share
basis, reduces book value at March, 1996 to approximately $5.32 which is very
close to the anticipated aggregate Merger Consideration of $5.27 per share."
Mr. Habermann appears to the Opposition Group to have been more concerned
with making the price look reasonable to shareholders, by taking a write-down a
year early, than he was about actually getting the best price for shareholders.
The minutes also do not explain why, in one moment the Board unanimously agreed
that CKE should indemnify Summit for the entire amount of change in control
payments if the merger was not approved and then several minutes later, after
talking with CKE, voted unanimously for an indemnification of only $300,000.
First Global Securities, Inc. received the minutes, marked for discussion
purposes only, unidentified and unsolicited. The Opposition Group disclosed the
minutes in their Schedule 13D filing with the Securities and Exchange Commission
on April 26, 1996. Mr. Richard Brown, outside counsel to Summit later purported
to have prepared the minutes.
Pre Shareholder Approval Actions by CKE
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On April 5, 1996, CKE purchased all of the 946,714 shares of the Preferred
Stock of Summit Family Restaurants, Inc. from ABS MB(JB) Limited Partnership
("ABS") for an all cash price of $5.27 per share. The preferred stock is
convertible into approximately 16.5% of Summit's stock. On April 9, CKE
requested that the Summit Board terminate the employment of all of the top
officers of Summit Family Restaurants, Inc. and agreed to indemnify Summit for
up to $300,000 if the merger is not approved as disclosed on page 28 of the
Summit Proxy Statement.
CKE had previously announced that it was not the intention of CKE to effect
a change of control without approval of the merger by the shareholders. If
converted, the stock owned by CKE is the single largest block of stock. We
believe, that by virtue of its reductions in the offer to Summit shareholders
which were approved by the Summit Board, the acquisition of the single largest
block of Summit stock, and the termination of virtually all of the top
management of Summit, that CKE took control of Summit Family Restaurants, Inc.
without Summit shareholder approval.
According to the April 9, 1996 Board minutes, CKE seemed to determine the
daily management of Summit at that time.
The minutes state:
"Mr. Jones reported that CKE has suggested that he be appointed to act as
interim Chief Executive Officer of the Company following the termination of
Mr. McComas."
The Reductions in the Price by CKE
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On December 1, 1995, Summit announced the signing of an agreement and plan
of merger and reorganization with CKE. According to Summit's press release,
"CKE will acquire all of the outstanding common and preferred stock of Summit
Family Restaurants for a purchase price equal to $3.00 per share in cash and
.20513 shares of CKE common stock..." The Summit press releases on the merger
seemed to be inconsistant with the actual terms of the merger agreement.
Actually, according to the merger agreement which was later disclosed, the
price was $3.00 in cash and a number of shares equal to $3.00 divided by the
average adjusted CKE price. Thus, at that time CKE was acquiring Summit's assets
for approximately $34.8 million dollars (approximately $6.00 x 5.8 million
shares) on the date of the announcement, if calculated according to the press
announcement. As of June 10, 1996, because of the price advance of CKE, they are
now paying under $31 million for Summit.
According to the Summit proxy statement on page 24 and the Merger
agreement, CKE was to receive a fairness opinion from NatWest Markets, CKE's
financial advisor, with respect to the Merger within ten days of the original
merger agreement. On December 11, 1996, CKE advised Summit that it had not
received the fairness opinion from NatWest and that CKE would not go forward
with the agreement. Although the Merger agreement required a fairness opinion
from NatWest Markets, it was never received and the agreement was modified to
eliminate the requirement.
Estimates have now been given in the Special Factors section of the Summit
proxy statement of potential liabilities identified by CKE which resulted in the
second amendment to the merger agreement. The total liabilities of Summit were
known to CKE before the Merger Agreement was signed. The Summit proxy statement
says that CKE determined that there would be a potential $3 million lease
liability as a result of the bankruptcy of two franchisees. We believe that half
of that potential liability may actually accrue to the benefit of Summit, as it
is a Summit owned property in Spanish Fork, Utah. We believe the location is
prime, in a new attractive building on Interstate 15, and just as there was a
potential liability--there is a potential gain from having the lease returned to
Summit.
By the second reduction in the offer to Summit shareholders, CKE's stock
was valued at a multiple of a 30x price to earnings. Thus Summit was getting
very little more than they would get in the open market and the value of their
shares was being highly diluted. Actually, the press announcement failed to give
the actual offer as amended in the merger agreement because it is actually based
on a formula to be calculated just before the time of the merger.
As the price of CKE stock advances, the Merger Agreement and subsequent
amendments call for a further reduction in the number of CKE shares that
Summit shareholders will receive. On June 5, a limitation was placed on the
reduction in shares after a CKE price of $30. At that point Summit share holders
will receive 1/11th of a share of CKE for every Summit share, in addition to the
$2.63 cash price.
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As of May 22, 1996, based on the closing NYSE price of $25.50 per share of
CKE stock, Summit shareholders will receive $2.63 in cash and less than 1/9th
(.108) of a share of CKE stock for each share of Summit stock. After the merger,
in order for Summit shareholders to receive a $1 increase (still less than the
original offer), the price of CKE will have to advance $11.11 to $36.61 which is
62x 1995 earnings (as of January 31, 1996), and 46x 1996 Dow Jones projected
earnings. We are not aware of any restaurant chain in the industry class which
sells at anywhere close to that multiple. Estimates are a Dow Jones composite of
analysts projections of earnings based upon the public statements of CKE
management.
Following are some comparisons:
<TABLE>
<CAPTION>
Company 52-Week 1995 1995 Earnings P/E Ratio
- ------- ------------ ------------- ---------
<S> <C> <C> <C>
CKE 18-6 .59 30x
CKE (5/22/96) 25.50 .59 43x
.79 E 32x
<CAPTION>
Company 52-Week 1995 1995 Earnings P/E Ratio
- ------- ------------ ------------- ---------
<S> <C> <C> <C>
Brinker International 21-12 .98 17x
Cracker Barrel Stores 25-16 1.09 16x
Darden Restaurants 13-9 .80 16.1x
McDonald's 54-32 1.97 23.5x
Morrison 28-13 1.35 20.x
Ryan's Stk Hses 9-6 0.62 10x
Shoney's 13-8 1.10 11.8x
</TABLE>
Under the Merger Agreement shareholders will receive $2.63 in cash. They
will hand in their Summit certificates and receive CKE certificates following
the merger, if it is approved. We believe the risk in a substantial drop in the
value of CKE stock, to Summit shareholders, dramatically increases as the price
of CKE increases, because of the price/earnings ratio of CKE and the concurrent
reduction in the number of shares a Summit shareholder will receive. According
to Schedule 13D filings with the SEC, William Foley, the CEO/Chairman of CKE,
several Vice Presidents, and a Director have sold more than $8 million in CKE
Stock in the past ninety days causing us to wonder whether they expect the
continued performance of the Company.
Post merger, at $26.00, a point move upward of CKE stock will only be a
1/10th point upside for Summit shareholders as a result of the exchange rate.
There is little upside value to Summit shareholders if CKE prices continue to
escalate after the merger. Further, although the merger was announced as a tax
free reorganization, Summit has now determined that it is a taxable transaction
to Summit shareholders. We also believe that there is a limit to which Carl's
Restaurants, serving basically the same fast food, with a much lower market
share than many other chains, can increase Summit shareholder value when they
have received 1/10th of a CKE share for one share of Summit stock. While CKE has
been successful in the short term in restructuring and putting on a cleaned up
face, and an "in your face TV advertising campaign" for their shareholders and
customers, they still remain a fast food entity.
CKE has announced that in addition to paying $2.63 cash to Summit
shareholders, they plan to expand the Galaxy concept in Summit, to open 17 new
restaurants, to take over 28 Rally's restaurants, and to refurbish as many as
160 restaurants at a cost ranging from $100,000 to $130,000 per location for
total capital needs in excess of $60 million. While CKE has a much larger
existing capital base their proposed plan is capital intensive and CKE has a
debt to equity ratio of 47% (or $144 million in debts). The Opposition Group
believes that CKE is capable of providing or raising the capital needed to
implement
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their business plan based on their current performance. However, the plan itself
is ambitious. We believe lag in their plan would reduce the results for CKE,
as it did for Summit, and presumably impair their ability to raise significant
amounts of capital.
The Value of Summit
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Neither Summit, nor Piper Jaffray, Inc., in its fairness opinion, discuss
the market value, in terms of the physical assets of Summit, and what that may
mean to Summit shareholders. Rather they have focused on the market value of
Summit's stock. We believe that the fair market value of Summit's assets is
important to Summit shareholders in making their decision as to where they may
realize the greatest value for their shares.
According to Summit's audited financial statements for the fiscal year as
of September 25, 1995, the value of Summit's property, buildings, equipment,
and land is $83.1 million less $37.4 million in depreciation and amortization or
$45.7 million.
Summit has owned some of its properties for thirty years. There is no
indication that anyone has attempted to determine the fair market value of the
assets or the highest and best use for the properties. The depreciation of the
assets of Summit on the balance sheet reflects standard accounting principles.
Presumably some of Summit's properties have actually appreciated in thirty
years.
Piper Jaffray, in its opinion, states that it neither valued the assets nor
visited any of Summit's restaurant sites. Instead, the Summit Board and Piper
Jaffray focus Summit shareholders on Summit's failure to attract a better offer
than the CKE offer. We do not understand how Piper Jaffray can state that they
made a serious attempt to sell the assets without having visited sites, without
having made geographical and demographical determinations as to markets which
would find portions of the assets attractive, and without appraisals of the
properties.
In a May 7, 1996 letter from the Summit Board to the Opposition Group,
Summit stated, "Of the 70 potential purchasers contacted by Piper Jaffray, only
six expressed general interest and two parties made offers for portions of
Summit's assets. Only two of the potential purchasers (one of which was CKE)
showed sufficient interest to review further Summit's books, records and assets.
CKE was the only party to make an offer for all of Summit which included a
purchase price and available financing...the party which initially expressed
interest in acquiring the JB's Restaurants and franchise system unilaterally
terminated those discussions and there is no indication as to whether or when
they may be resumed."
On pages 21 and 22 of the Summit proxy under Special Factors it states
that 25 requested confidential memoranda, that there was one proposal from
HomeTown to acquire Summit's HomeTown Buffet restaurant assets, and one proposal
from Flagstar Companies, Inc. to acquire all of Summit's JB's Restaurants and
Galaxy Diner restaurant assets. In contradiction to the Summit letter to the
Opposition Group, Flagstar indicated that it was Summit and CKE who had
terminated discussions, even though Flagstar remained interested in purchasing
the assets. HomeTown Buffet also indicated that Summit had terminated
discussions as is disclosed in the Summit proxy statement. HomeTown Buffet
stated a continued interest in the HomeTown franchises to us.
On page 22 of the Summit proxy statement, dated June 10, 1996, it is
stated, that interest was expressed by Buffets, Inc. Perkins Family
restaurants, Saunders Karp & Co., Den America, Inc., Concept Restaurant Ventures
and the Summit management group. The Opposition Group was told by the CEO's of
Lions and Vicorp that they had been contacted and had also expressed an interest
in the assets but that there had been no follow-up.
In the Opposition Group's opinion, based on visits to individual sites,
preliminary conversations with potential buyers, and preliminary discussions
with real estate appraisers, greater value may be realized by Summit
shareholders for their company. Collectively, the Opposition Group have more
than five hundred years experience in evaluating projects or companies to
determine their value. Where Summit is concerned, we have identified potential
buyers, who have expressed an interest in substantially all of the assets of
Summit. We have not even really begun to engage in further analysis and
discussions that we feel would result in a more successful outcome for Summit
shareholders.
We believe that one of the difficulties that Summit has had in selling the
assets is that by failing to do demographic and geographic analyses, and by
approaching potential buyers on the basis of buying all of the assets
simultaneously, that potential buyers were faced with pre-existing units in the
same areas which would have been in competition with the units offered for sale.
Flagstar, for instance, expressed an interest in purchasing all of the JB's at
an approximate price of $240,000 per unit. They have made an offer for units of
Coco's and Carrows Restaurants for more than $900,000 per unit. Flagstar
expressed to us that they would be much more amenable to better pricing if they
were able to choose units which do not sit in competition with their
pre-existing units.
In initial discussions with commercial real estate brokers, in Arizona and
in Utah, one of whom has managed a real estate trust, it was indicated that
certain properties which have been owned by Summit for many years are located in
prime areas and would likely sell for uses other than restaurants at
considerably higher prices than book value.
In its May 7, 1996 letter to the Opposition Group, the Summit board stated,
"You should also note on page 40 of the Proxy/Prospectus the requirement that
any amount that CKE is to receive in excess of $40,000,000 for the Summit assets
will be shared with Summit, thereby benefiting the Summit shareholders."
Actually, that was not the case. On page 7 of the Proxy statement, it is
stated that Summit shareholders would receive one half of the consideration, if
CKE sells the assets of Summit for more than $40 million AS OF THE DATE OF THE
MERGER. SUMMIT SHAREHOLDERS NEED TO BE AWARE THAT FURTHER CONSIDERATION IS
UNLIKELY because the proxy statement goes on to say that CKE has not sold the
assets and is unlikely to sell the assets prior to the merger. We were told in
late April, by the CEOs of both Flagstar and Hometown Buffets, with whom CKE had
publicly announced they had had discussions that discussions had been terminated
with regard to the sale of assets. Both entities indicated that they were still
interested in the assets. Thus, we believe it is not possible to reach a
conclusion that it will be difficult or easy to sell the assets.
Under the proposed merger, Summit's tax loss carry forward will be lost to
CKE because of the change in control. The Opposition Group has not obtained a
tax opinion on its proposal and it is not aware of significant adverse tax
consequences.
PLEASE COMPLETE AND RETURN THE RED PROXY CARD.
8
<PAGE>
Summit's Proxy Materials
- ------------------------
The negotiations for the proposed merger were completed by the management
of Summit and Piper Jaffray when CKE was selling below $20 per share.
At a CKE stock price of $25.50, there is a forty-seven percent reduction in
the number of shares Summit shareholders will receive since the original merger
offer. The following table calculates the exchange ratio under the amended offer
at CKE current prices of $20 and beyond.
<TABLE>
<CAPTION>
Exchange Ratio (CKE Shares
Average Price Adjusted Price to Summit Shares)
- -------------- -------------- ---------------------------
<S> <C> <C>
20 19 0.139
21 20 0.132
22 21 0.126
23 22 0.120
24 23 0.115
25 24 0.110
26 25 0.106
27 26 0.102
28 27 0.098
29 28 0.094
30 29 0.091
</TABLE>
Analysis of the Position of Piper Jaffray
- -----------------------------------------
In the Summit Proxy materials, the Summit Board states that Piper Jaffray
has rendered an opinion as to the fairness of the proposed transaction. We have
a number of questions regarding the opinion.
Piper Jaffray was originally engaged by Summit to advise management on
direction for the company. They received an undisclosed fee for that
engagement. Piper Jaffray negotiated a fee of approximately $758,000 for the
successful completion of the present merger. They will receive a $125,000 fee
to render a fairness opinion. We believe that Piper Jaffray has a financial
interest in the Summit shareholders' relying on Piper Jaffray's fairness opinion
to approve the merger in order to obtain its success fee.
Piper Jaffray, in its opinion letter of June 5, 1996, states that it relied
on the representations of management with regard to financial statements and
projections and have not attempted independently to verify such information.
Page 37 of the Summit proxy statement points out that Summit does not as a
matter of course make projections of forecasts as to future revenues or
operations. As is disclosed, in the Special Factors Section, management,
including the Chairman of the Board and the CEO, may have had a vested interest
at the time of the discussions with Piper Jaffray, because they themselves
wished to do a management buy-out.
Further, as stated above, we do not see how Piper Jaffray can claim to
have done sufficient analysis to express an opinion when they state that they
did not visit sites and had no independent appraisal of the assets. The
Opposition Group has difficulty with the 'arm chair' approach that Piper
Jaffray took to making recommendations on the sale of Summit assets. On page 22
in the Special Factors section of the proxy, Summit comments that almost no one
made an offer to Summit which included a price. (Although on page 25 of the
proxy statement Summit goes on to say that when considering CKE's proposed
reduction in the price the board considered prior offers to purchase certain
assets of Summit.) We find it unusual that there was an apparent expectation
that interested parties would make offers prior to reasonable analysis and
negotiation. We fail to see how Piper Jaffray could represent Summit in the sale
of the assets when they had no familiarity with them and apparently made no
active effort to create competitive interest.
The End of An Era
- -----------------
In its letter of May 7th to the Opposition Group, the Summit Board states
that along with Piper Jaffray, it concluded that Summit is not a viable company,
"because of four successive years of losses, shrinking sales and customer
counts, and the unsuccessful turnaround plan that had been implemented by a new
Summit management team put in place over two years ago." We believe the present
Board and management of Summit are incapable of providing vision, leadership,
and profits to its shareholders. We believe that if the merger fails all of the
Board members of Summit should resign and allow a new Board and management
proposed by the Opposition Group to be voted upon by shareholders. We still
believe in the assets and the people of Summit and believe that the foundation
exists for Summit to be restored to profitability.
On page 28 of its proxy statement, Summit discusses a letter from the
Opposition Group which suggests that there are outsiders attempting to take
over Summit without making an offer, The statement reads, "The Opposition Group
has not made any offer to purchase Summit or any of Summit's assets nor has it
indicated any consideration it is willing to pay for control of Summit." The
proxy statement fails to state that the Opposition Group already owned fourteen
percent of the common stock of the company and includes a composite of the
largest shareholder to one of the smallest shareholders.
The management of Summit Family Restaurants, Inc. has been under the
control of 1.5% of the voting shares of common stock for the past five years.
CKE is offering $2.63 cash and an exchange of Summit shares at the rate of
approximately 1/10th of a share (at market prices as of June 10) of CKE for
every share of Summit stock. At approximately thirty-four times twelve month
trailing earnings we believe the dilution of Summit stock is not justified.
There Is a Viable Alternative to the CKE Merger
- -----------------------------------------------
The alternative plan of the Opposition Group, as was publicly disclosed in
its Schedule 13D filing with the Securities and Exchange Commission on April 26,
1995, calls for the seating of a new board and management at Summit; the
appraisal and the sale of most of the assets based on their fair market value or
higher and best use; payment of a $2 per share cash dividend to shareholders
from the sale of assets; the retention of certain employees to maintain existing
operations until they are determined to be profitable and retained or to be
sold; and the use of the remaining cash to create a new direction for Summit
focused on themed restaurants and entertainment--creating an "eatertainment"
focus.
The one substantial corporate success that Summit has had in the last five
years came as a result of a $3.8 million investment (borrowed from the bank) in
a new venture entity, Americana Entertainment Group, Inc., now known as Hometown
Buffets. According to its proxy statement Summit made $16.4 million dollars from
its investment in the stock and operationally has profits from the sixteen
Hometown franchises it developed. The highly competitive restaurant business is
one in which success can only be achieved by maintaining current and repetitive
appeal to the customer base.
One of the fastest growing areas in the restaurant industry has been the
themed restaurant segment. Capitalizing on a central theme or concept, these
restaurants provide guests with a combined dining and entertainment experience.
Coupled with a strong retail operation, themed restaurants provide sales volumes
and returns on investment previously unheard of in the restaurant industry. The
successful public offerings for Cheesecake Factory, Rainforest Cafe and the IPO
for Planet Hollywood illustrate the high multiples that investors are willing to
pay for entry into the themed restaurant industry.
The table following shows various statistical data for two of the publicly
held large sized restaurant companies, plus Planet Hollywood. Each of these
restaurants is based upon some form of unique appeal e.g. Rainforest Cafe has
recreated a rain forest within each restaurant complete with thunderstorms:
Cheesecake Factory has emphasized its extensive dessert offerings featuring a
variety of cheese cakes.
Operating Data
--------------
<TABLE>
<CAPTION>
Planet Hollywood Rainforest Cafe Cheesecake
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Av. Sq. Feet 18,000 21,650 12,000
- -------------------------------------------------------------------------------
Av. Retail 3,250 3,500 N/A
- -------------------------------------------------------------------------------
Av. Seats 315 405 375
- -------------------------------------------------------------------------------
Av. check $15.75 $11.50 $13.40
- -------------------------------------------------------------------------------
Av. Revenue $14.30 $ 9.70 $ 8.50
- -------------------------------------------------------------------------------
Gross Margin
Food/Beverage 76.% 72.2% 69.9%
- -------------------------------------------------------------------------------
Gross Margin
Merchandise 55.4% 63.6% 59.2%
- -------------------------------------------------------------------------------
</TABLE>
Summit's board apparently rejected the Opposition Group's proposed
concepts, in part, because it appeared to them to be an appropriate investment
for venture capital. We believe that is not the case for two reasons. First, the
individuals identified to develop the themed restaurant division include Robert
Morris and Harold Fox. Robert Morris was the first restaurateur in the U.S. to
break $10 million in sales in a single location and has repeated that
accomplishment several times in the past ten years. Robert J. Morris Enterprises
is based in Universal City and in partnership with MCA operates Gladstone's
Universal at City Walk, a 750 seat themed restaurant developed by Robert Morris
in 1973. RJM is also a consulting company and has provided themed expertise to
most of the successful themed restaurants today. They provide menu and
operational expertise to Country Star at Universal and at the new Country Star
in Las Vegas. The consulting revenue and intellectual assets from RJM, excluding
Gladstone's but including Country Star, is expected to move with them to Summit
if shareholders approve the Opposition Group's plan.
Conceptually, the first themed project proposed for Summit is the Wave
Cafe. The Wave Cafe will be a themed restaurant, retail and entertainment
concept embodying California beach life. The Cafe will consist of a restaurant,
a surfable 'wave' ridden by employee instructors and a retail store featuring
surf, volleyball, snowborading and related retail merchandise. Arriving at the
Wave Cafe, guests will be greeted by an enormous rushing wave curling over the
walkway creating an aqua canopy leading up to the door. Near the entryway in an
open glass paned environment, there will be a fully operating and functioning
bakery, which will provide the restaurant will all of its baked goods. Walking
through the front door, guests will be greeted by the "Lifeguards", the Wave
Cafe's hosts and hostesses. Giant video screens will occupy the wall and each
screen will be filled with various action images of sports such as surfing,
snowboarding, in-line skating, skateboarding, etc.
In its proxy, Summit states that "it advised the Opposition Group that it
was incorrect in its assumption that the assets of Summit were salable at a
price, net of liabilities, that would allow for payment of any dividend to
holders of Summit Common Stock..." At no time has either Summit nor CKE
suggested that the net value of Summit's assets is less than $30 million. The
Summit Board entered a lease in 1995, wherein their credit application claimed a
net worth of at least $40 million dollars. The revised application in January,
1996, claimed a net worth in excess of $33 million. See Summit proxy statement
F-20. The Opposition Group believes the Summit Board is incorrect when it
states that through the sale of assets the Opposition Group would be unable to
pay a $2 per share dividend for a total of $11.6 million. As noted in our risk
factors, however, no assurance can be given that the Opposition Group would be
successful in selling the assets at book or fair market value.
We believe the proposed management and Board have been composed in a manner
to provide for significant financial and investment banking expertise as well as
industry and marketing expertise. Since the filing of its Schedule 13D, in
April, the Opposition Group has been approached by no less than four entities
interested in providing the financing or, if necessary, the equity to carry the
group's proposed plans forward. The Opposition Group believes it will be able
to accomplish its goals mainly through the sale of Summit assets and believes
that it will be able to raise the capital, if necessary to complete its goals.
PLEASE COMPLETE AND RETURN THE RED PROXY CARD
9
<PAGE>
Three Votes by the Shareholders
- -------------------------------
The Opposition Group will provide two proxy cards to the shareholders of
Summit Family Restaurants, Inc. to be mailed simultaneously and voted upon
simultaneously. SEC regulations require that we provide separate proxy
statements and cards for the matters to be acted on by shareholders.
The first proxy discussed herein calls for a vote against the merger. NO
OTHER MATTER MAY BE VOTED ON THE PROXY CARD THAN THE SPECIFIC VOTE CALLED FOR ON
THE PROXY CARD.
The second proxy calls for the resignation or removal of the present Board
of Directors of Summit Family Restaurants, Inc. if the merger fails. The
Certificate of Incorporation of Summit provides that shareholders may remove all
or part of the Board with not less than 80% of the stock entitled to vote upon
the election of directors. We believe such a restrictive covenant is contrary to
the 'majority rules' standard most of us live by. However, we believe that the
Board has failed the shareholders of Summit Family Restaurants, Inc. and that
eighty percent of the shareholders may agree with us.
If the merger fails, the third vote calls for a new board of directors
proposed by the Opposition Group to fill the three seats to be vacated in 1996
by the present board, and to fill the other seats vacated as a result of
the resignation or removal of the other directors.
Under the proposed plan the first priority will be to complete the analysis
of Summit Family Restaurants, Inc. assets, to sell most to the existing assets,
to pay shareholders a proposed $2 dividend. New business, in the form of themed
restaurants and an entertainment entity will also be pursued. It is believed
that the proposed management, particularly Harold Fox and Susan Trenham, have
the background and the industry knowledge to complete detailed financial
packages tailored appropriately to specific potential buyers to complete the
sale of assets. Specific expertise would be contracted as it relates to real
estate appraisals and equipment valuations. There is no intention to sell any
assets to any affiliate of the Opposition Group.
PLEASE COMPLETE AND RETURN THE RED PROXY CARD.
10
<PAGE>
While a proposed new direction for Summit involves a decision on the part
of Summit shareholders that they are willing to step into new arenas, we believe
it is only through the success of a new direction that Summit shareholders can
achieve both a cash return and a fully realized upside for their Summit shares.
INCORPORATION OF CERTAIN DOCUMENTS AND CROSS REFERENCE TO THE SUMMIT PROXY
STATEMENT/PROSPECTUS--THE OPPOSITION PROXY STATEMENT HEREBY INCORPORATES ALL
DOCUMENTS CONTAINED IN THE SUMMIT PROXY/PROSPECTUS BY REFERENCE.
SOLICITATION OTHERWISE THAN THROUGH MAIL
Solicitation for the Opposition Proxy will be through the mail and by
telephone. If shareholders have questions they may contact Susan W. Trenham at
(818) 568-8800.
COST OF SOLICITATION
Costs of the solicitation will be borne by the Opposition Group.
Administrative, legal, filing, printing, and distribution costs are $30,000 to
date. Estimated total cost is $60,000. If the proposed merger is successfully
defeated and a new management and board is approved by Shareholders as outlined
herein, the Company may be asked to reimburse the group for its expenses.
CONTRACTS, ARRANGEMENTS, OR UNDERSTANDINGS
No participant is, or was within the past year, a party to any contract,
arrangements or understandings with any person with respect to any securities of
the registrant. No participant has had any related transaction of any nature
with Summit./2/
SECURITY OWNERSHIP OF SUMMIT
The following table sets forth certain information as of May 14, 1966, with
respect to voting securities of Summit held by (1) each person who owns of
record, or is known by the Opposition Group to own beneficially, more than five
percent of any class of voting securities of Summit.
<TABLE>
<CAPTION>
Class Name and Address Amount Percent of Class
- ----- ---------------- -------- ----------------
<S> <C> <C> <C>
Series A CKE Restaurants, Inc. 946,714 100%
Convertible 1200 North Harbor Blvd.
Preferred Anaheim, CA 92803
Common Kennedy Capital Management 567,600 11.8%
10829 Olive Boulevard
St. Louis, Missouri 63141
Common Heartland Advisors, Inc. 512,500 10.6%
790 North Milwaukee St.
Milwaukee, WI 53202
Common David L. Babson & Co., Inc. 422,500 8.79%
One Memorial Drive
Cambridge, MA 02142
Common Dimensional Fund Advisors, Inc. 315,150 6.56%
1299 Ocean Avenue, Suite 1100
Santa Monica, CA 90401
</TABLE>
SHARES REPRESENTED BY THIS OPPOSITION PROXY STATEMENT
The aggregate number of shares represented in this Opposition Proxy Statement is
as follows:
<TABLE>
<CAPTION>
Class Name and Address Amount of Shares
- ----- ---------------- ----------------
<S> <C> <C>
Common First Global Securities, Inc. 5
790 East Colorado Blvd., #500
Pasadena, Ca. 91101
Common Kennedy Capital Management, Inc. 567,600
10829 Olive Boulevard
St. Louis, Missouri 63141
Common William H. Burgess 4,000
550 Palisades Drive
Palm Springs, Ca. 92262
Common Joe Campa & Associates 14,000
301 East Colorado, Suite 800
Pasadena, Ca. 91101
Common Michael E. Portnoy 42,250
14 Winding Brook Road
Newtown, CT. 06471
</TABLE>
/2/ First Global Securities, Inc. issued a purchase recommendation on Summit
Family Restaurants, Inc. in September, 1994. In August, 1995 Summit
management asked First Global to consider representing them in a management
led buyout. First Global declined and returned unopened information on the
subject to the company. First Global had not requested the information. At
no time has First Global Securities, Inc. had any contracts or arrangements
with Summit Family Restaurants, Inc.
PLEASE COMPLETE AND RETURN THE RED PROXY CARD
11
<PAGE>
<TABLE>
<CAPTION>
Class Name and Address Amount of Shares
- ----- ---------------- ----------------
<S> <C> <C>
Common Howard Foster Company 26,000
80 East Sir Francis Drake Boulevard
Number C
Larkspur, Ca. 94939
Common Mark R. Tonucci 5,000
142 Bennett Road
East Haven, CT. 06513
Common T. H. Fitzgerald 2,000
180 Church Street
Naugatuck, CT. 06770
Common Peter Sorokin 5,000
615 Fern Street
West Hartford, CT. 06107
Common Mark A. Fries 9,600
31 Zoar Road
Sandy Hook, Ct. 06482
Common Gary B. Davidson 4,100
3567 E. Sunrise, Suite 219
Tucson, Az. 85718
Harold Fox 0
679,955
The Opposition Group
</TABLE>
PLEASE COMPLETE AND RETURN THE RED PROXY CARD.
12
<PAGE>
Beneficial Owners
<TABLE>
<CAPTION>
Data Name Shares-Buy Shares-Sell
<S> <C> <C> <C>
12/29/95 First Global Securities, Inc. 5
02/15/95 Kennedy Capital Mgmt. 7,500
02/16/95 " 21,000
02/17/95 " 28,000
02/22/95 " 8,000
02/24/95 " 25,000
02/29/95 " 6,000
03/01/95 " 200
03/01/95 " 5,000
03/02/95 " 4,600
03/03/95 " 7,000
03/07/95 " 5,000
03/08/95 " 1,750
03/09/95 " 5,000
03/10/95 " 3,500
03/13/95 " 500
03/13/95 " 1,500
03/14/95 " 5,000
03/15/95 " 4,000
03/17/95 " 5,000
03/17/95 " 2,000
03/20/95 " 5,000
03/21/95 " 5,500
03/26/95 " 10,000
03/27/95 " 14,000
03/28/95 " 2,000
03/31/95 " 3,000
04/03/95 " 5,000
04/04/95 " 5,000
04/05/95 " 1,500
04/06/95 " 4,000
04/10/95 " 10,000
04/11/95 " 6,000
04/12/95 " 5,000
04/13/95 " 17,500
04/17/95 " 3,000
04/18/95 " 2,000
05/11/95 " 5,000
05/17/95 " 1,000
05/19/95 " 4,000
05/22/95 " 10,000
05/23/95 " 5,000
05/28/95 " 10,000
06/05/95 " 5,000
06/06/95 " 3,500
06/09/95 " 300
06/12/95 " 6,000
06/13/95 " 2,500
06/16/95 " 8,000
06/16/95 " 5,000
06/18/95 " 11,300
06/21/95 " 3,800
06/23/95 " 10,000
06/27/95 " 5,000
06/28/95 " 10,000
06/30/95 " 2,000
06/29/95 " 2,000
06/29/95 " 3,400
06/30/95 " 1,000
07/07/95 " 5,500
07/07/95 " 8,000
07/10/95 " 10,000
07/12/95 " 6,000
07/13/95 " 30,000
07/14/95 " 2,000
07/17/95 " 2,000
07/18/95 " 10,000
07/18/95 " 19,500
07/19/95 " 5,000
07/26/95 " 500
08/02/95 " 25,000
08/02/95 " 2,500
08/04/95 " 2,500
11/12/95 " 15,000
11/13/95 " 5,000
11/14/95 " 10,000
12/04/95 " 8,500
12/05/95 " 2,000
12/06/95 " 2,200
12/11/95 " 400
12/12/95 " 660
12/13/95 " 5,600
12/13/95 " 5,000
12/18/95 " 2,500
12/19/95 " 4,500
12/22/95 " 4,000
12/26/95 " 2,000
12/28/95 " 3,000
12/28/95 " 5,000
01/02/94 " 300
01/03/94 " 2,000
01/04/94 " 4,000
09/19/94 William H. Burguss 4,000
10/06/95 J.D. Camps & Assoc., Inc. 8,000
10/09/95 " 3,000
10/09/95 " 3,000
09/20/94 Michael E. Portnoy 2,000
10/27/94 " 4,000
12/09/94 " 6,000
08/16/95 " 5,000
08/17/95 " 2,000
08/17/95 " 3,000
09/21/94 " 1,200
09/23/94 " 3,000
05/11/95 " 2,000
05/30/95 " 1,000
05/31/95 " 500
10/12/95 " 200
11/02/95 " 5,000
11/16/95 " 3,000
11/22/95 " 5,000
03/20/95 " 2,150
03/22/95 " 3,300
12/16/94 Howard Foster Company 3,000
12/16/94 " 7,000
12/16/94 " 2,500
12/28/94 "
Mark R. Tonucci 2,000
01/15/96 " 4,500
11/20/95 " 500
09/27/94 T.H. Fitzgerald
08/16/95 Peter Sorokin 5,000
08/23/95 Mark A. Fries 200
08/23/95 " 1,400
11/03/95 Nancy Taylor (Fries Spouse) 3,000
11/16/95 " 2,000
02/09/95 Gary B. Davidson 600
02/09/95 " 1,000
02/13/95 " 1,500
02/13/95 " 1,200
02/13/95 " 3,100
02/16/95 " 400
</TABLE>
PLEASE COMPLETE AND RETURN THE RED PROXY CARD.
13
<PAGE>
OPPOSITION PROXY CARD Summit Family Restaurants, Inc.
Special Meeting of Stockholders -- To Be Held July 12, 1996
SOLICITED BY THE OPPOSITION GROUP.
The undersigned hereby appoints Susan W. Trenham individually, as proxy of
the undersigned, with full power to appoint her substitute, to represent and to
vote, as designated below, all of the shares of common stock of Summit Family
Restaurants, Inc. standing in the name of the undersigned, at the above Special
Meeting and at any adjournment or postponement thereof.
TO VOTE ON THE AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, AND AMENDMENTS
OF JANUARY 24, APRIL 2, AND JUNE 5, 1996 BY AND BETWEEN SUMMIT FAMILY
RESTAURANTS, INC. AND CKE RESTAURANTS, INC.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THE OPPOSITION GROUP RECOMMENDS A VOTE AGAINST ADOPTION OF THE MERGER.
IMPORTANT PLEASE SIGN AND DATE ON OTHER SIDE AND RETURN PROMPTLY
THIS PROXY CARD MAY ONLY BE USED TO VOTE FOR OR AGAINST THE MERGER
AND ON NO OTHER MATTER
<PAGE>
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
STOCKHOLDER ON THE REVERSE SIDE OF THIS PROXY. WHERE NO DIRECTION IS GIVEN, SUCH
SHARES WILL BE VOTED AGAINST THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT
AND THE MERGER.
Date _______________________, 1996
__________________________________
(Signature of shareholder)
Please sign your name exactly as it
appears hereon and mail this proxy in the
enclosed envelope. Where there is more
than one owner, each should sign. When
signing as an executor, administrator,
guardian or trustee, please add your title
as such. If executed by a corporation, the
proxy should be signed by a duly
authorized officer.
