SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, For Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
FOODMAKER, INC.
(Name of Registrant as Specified in Its Charter)
FOODMAKER, INC.
(Name of Person(s) Filing Proxy Statement)
Paying of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
FOODMAKER [LOGO]
January 8, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Foodmaker, Inc. to be held at 2:00 p.m. on Friday, February 12, 1999, at the Del
Mar Hilton, 15575 Jimmy Durante Boulevard, Del Mar, California.
We hope you will attend in person. If you plan to do so, please indicate in
the space provided on the enclosed proxy. Whether you plan to attend the meeting
or not, we urge you to sign, date and return the enclosed proxy as soon as
possible in the postage-paid envelope provided or, if indicated on your proxy
card, in the alternative vote your proxy by telephone. This will ensure
representation of your shares in the event that you are unable to attend the
meeting.
The matters expected to be acted upon at the meeting are described in
detail in the attached Notice of Meeting and Proxy Statement.
The Directors and Officers of the Company look forward to meeting with you.
Sincerely,
JACK W. GOODALL
Jack W. Goodall
Chairman of the Board
<PAGE>
FOODMAKER, INC.
9330 Balboa Avenue
San Diego, California 92123
____________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on February 12, 1999
The 1999 Annual Meeting of Stockholders of Foodmaker, Inc. will be held at
2:00 p.m. on Friday, February 12, 1999, at the Del Mar Hilton, 15575 Jimmy
Durante Boulevard, Del Mar, California.
The meeting will be held to vote upon the following proposals:
1. To elect nine directors to serve until the next Annual Meeting of
Stockholders and until their successors are elected and qualified;
2. To approve the Non-Employee Director Stock Option Plan, as amended;
3. To ratify the appointment of KPMG Peat Marwick LLP as independent
accountants; and
4. To act upon such other matters as may properly come before the
meeting or any postponements or adjournments thereof.
Only stockholders of record at the close of business on December 23, 1998,
will be entitled to vote at the meeting.
By Order of the Board of Directors
LAWRENCE E. SCHAUF
Lawrence E. Schauf
Secretary
San Diego, California
January 8, 1999
<PAGE>
FOODMAKER, INC.
9330 Balboa Avenue
San Diego, California 92123
____________________________
PROXY STATEMENT
____________________________
ANNUAL MEETING OF STOCKHOLDERS
February 12, 1999
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Foodmaker, Inc., a Delaware corporation
("Foodmaker" or the "Company"), for use at the 1999 Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held at 2:00 p.m. on
Friday, February 12, 1999, at the Del Mar Hilton, 15575 Jimmy Durante Boulevard,
Del Mar, California, or any postponements or adjournments thereof. This Proxy
Statement and form of proxy were mailed to stockholders on or about January 8,
1999.
The cost of preparing, assembling and mailing the Notice of Annual Meeting
of Stockholders, Proxy Statement and form of proxy and the solicitation of
proxies will be paid by Foodmaker. The Company has engaged D.F. King & Co., Inc.
("D.F. King") to assist in the solicitation of proxies, for which D.F. King will
be paid a fee not to exceed $4,500 plus out-of-pocket expenses. In addition to
solicitation by mail, proxies may be solicited personally or by telephone or
other means by D.F. King, as well as by directors, officers or employees of the
Company, who will receive no additional compensation for such services.
VOTING
The close of business on December 23, 1998 has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting. On that date, there were 38,060,452 shares of Foodmaker
common stock, $.01 par value (the "Common Stock"), outstanding. Each share is
entitled to one vote on any matter that may be presented for consideration and
action by the stockholders.
The presence, in person or by proxy, of the holders of at least a majority
of the total number of shares of Common Stock entitled to vote is necessary to
constitute a quorum at the Annual Meeting. Abstentions and broker non-votes
(i.e., shares held by brokers or nominees that the broker or nominee does not
have discretionary power to vote on a particular matter and as to which
instructions have not been received from the beneficial owners or persons
entitled to vote) are counted for the purpose of determining the presence or
absence of a quorum for the transaction of business. In the event that there are
insufficient votes to constitute a quorum at the time of the Annual Meeting,
the Annual Meeting may be adjourned in order to permit the further solicitation
of proxies.
A director will be elected by a plurality of the votes of the shares of
Common Stock present in person or represented by proxy. The affirmative vote of
a majority of the shares of Common Stock present in person or represented by
proxy will be required to approve the Company's Non-Employee Director Stock
Option Plan, as amended and restated, and to ratify the appointment of KPMG Peat
Marwick LLP as independent accountants of the Company for the 1999 fiscal year.
With regard to the election of directors, votes may be cast in favor or
withheld. Votes that are withheld will be excluded entirely from the vote and
will have no effect. Abstentions may be specified on all proposals other than
the election of directors and will be counted as present for purposes of the
item on which the abstention is voted. Therefore, such abstentions will have the
effect of a negative vote. Broker non-votes are not counted for purposes of
determining whether a proposal has been approved and, therefore, have the effect
of reducing the number of affirmative votes required to achieve a majority of
the votes cast for such proposal.
<PAGE>
Proxies will be voted as directed by stockholders in writing or by
telephone. If no direction is given, proxies will be voted FOR management's
nominees for election as directors and FOR Proposals 2 and 3, unless the
stockholder otherwise directs in the proxy. The enclosed proxy gives
discretionary authority as to any matters not specifically referred to therein.
See "Other Business". The telephone voting procedures, available only to
stockholders of record, are designed to authenticate stockholders' identities,
to allow record stockholders to vote their shares and to confirm that their
instructions have been properly recorded. Specific instructions as to the
procedures to be followed by any record stockholder interested in voting via
telephone are set forth on the enclosed proxy card. A proxy may be revoked at
any time before it is voted at the Annual Meeting by submitting written notice
of revocation to the Secretary of Foodmaker, by filing a duly executed written
proxy bearing a later date or, for record stockholders, by a later proxy
delivered using the telephone voting procedures. A proxy will not be voted if
the stockholder who executed it or voted it by telephone is present at the
Annual Meeting and elects to vote the shares represented thereby in person.
PROPOSAL ONE
ELECTION OF DIRECTORS
The directors of Foodmaker are elected annually. The term of office of all
present directors expires on the date of the Annual Meeting, at which time nine
directors are to be elected to serve for the ensuing year and until their
successors are elected and qualified. The nominees of management for election as
directors are set forth below along with certain information regarding these
nominees. Should any nominee become unavailable to serve as a director, the
proxies will be voted for such other person as the Board of Directors of the
Company (the "Board") shall designate. To the best of Foodmaker's knowledge, all
nominees are and will be available to serve. Stockholders' nominations for
election as a director may be made only pursuant to the provisions of the
Company's bylaws, described below under "Other Business".
The following table provides certain information about each of the
Company's nominees for director as of January 1, 1999:
Director
Name Age Position(s) with the Company Since
- ------------------------------------------------------------------------------
Michael E. Alpert(4)(5). . 56 Director. . . . . . . . . . . . . . . . 1992
Jay W. Brown(2)(3)(6). . . 53 Director. . . . . . . . . . . . . . . . 1997
Paul T. Carter(1)(2)(6). . 76 Director. . . . . . . . . . . . . . . . 1991
Charles W. Duddles . . . . 58 Executive Vice President, Chief
Financial Officer, Chief Administrative
Officer and Director. . . . . . . . . . 1988
Edward Gibbons(1)(4) . . . 62 Director. . . . . . . . . . . . . . . . 1985
Jack W. Goodall(3)(4)(5) . 60 Chairman of the Board . . . . . . . . . 1985
Murray H. Hutchison
(1)(2)(5) . . . . . . . . 60 Director. . . . . . . . . . . . . . . . 1998
Robert J. Nugent(3)(6) . . 57 President, Chief Executive Officer and
Director. . . . . . . . . . . . . . . . 1988
L. Robert Payne(1)(4). . . 65 Director. . . . . . . . . . . . . . . . 1986
__________________________
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Executive Committee.
(4) Member of the Finance Committee.
(5) Member of the Nominating and Governance Committee.
(6) Member of the Year 2000 Ad Hoc Committee.
2
<PAGE>
The business experience, principal occupations and the employment of the
nominees has been as follows:
Mr. Alpert has been a director of the Company since August 1992. Mr. Alpert
was a partner in the San Diego office of the law firm of Gibson, Dunn & Crutcher
LLP for more than five years prior to his retirement in August 1992. He is
currently Advisory Counsel to Gibson, Dunn & Crutcher LLP. Gibson, Dunn &
Crutcher LLP provides legal services to the Company from time to time.
Mr. Brown has been a director of the Company since February 1996. He is
currently a principal with Westgate Group, LLC, a private equity investment
firm. From April 1996 to September 1998, Mr. Brown was President and CEO of
Protein Technologies International, Inc., the world's leading supplier of soy-
based proteins to the food and paper processing industries. He was Chairman and
CEO of Continental Baking Company from October 1984 to July 1995 and President
of Van Camp Seafood Company from August 1983 to October 1984. From July 1981
through July 1983, he served as Vice President of Marketing for Jack in the Box.
Mr. Carter has been a director of the Company since June 1991. Mr. Carter
has been an insurance consultant for the Government Division of Corroon & Black
Corporation since February 1987. From February 1987 until December 1990, he was
also a consultant to the San Diego Unified School District on insurance matters.
He retired in February 1987 as Chairman and Chief Executive Officer of Corroon &
Black Corporation, Southwestern Region and as Director and Senior Vice President
of Corroon & Black Corporation, New York. Mr. Carter is a director of Borrego
Springs National Bank.
Mr. Duddles has been Executive Vice President and Chief Administrative
Officer of the Company since May 1988. He has been Chief Financial Officer of
the Company since October 1985 and was Senior Vice President from October 1985
to May 1988. He has been a director since February 1988. Mr. Duddles has 19
years of experience with the Company in various finance positions.
Mr. Gibbons has been a director of the Company since October 1985 and has
been a general partner of Gibbons, Goodwin, van Amerongen, an investment banking
firm, for more than five years preceding the date hereof. Mr. Gibbons is also a
director of Robert Half International, Inc., in Menlo Park, California, and
Summer Winds Garden Centers, Inc., in Boise, Idaho.
Mr. Goodall has been Chairman of the Board since October 1985. For more
than five years prior to his retirement in April 1996, he was President and
Chief Executive Officer of the Company. Mr. Goodall is a director of Ralcorp
Holdings, Inc.
Mr. Hutchison has been a director of the Company since May 1998. He served
18 years as Chief Executive Officer and Chairman of International Technology
Corp., one of the largest publicly traded environmental engineering firms in the
U.S., until his retirement in 1994. Mr. Hutchison is a director of Sunrise
Medical, Inc., Cadiz Land Company Inc., Epic Solutions, Inc., and the Huntington
Hotel Corp.
Mr. Nugent has been President and Chief Executive Officer of the Company
since April 1996. He was Executive Vice President of the Company from February
1985 to April 1996 and President and Chief Operating Officer of Jack in the Box
from May 1988 to April 1996. He has been a director since February 1988.
Mr. Nugent has 19 years of experience with the Company in various executive and
operations positions.
Mr. Payne has been a director of the Company since August 1986. He has been
President and Chief Executive Officer of Multi-Ventures, Inc. since February
1976 and was Chairman of the Board of Grossmont Bank, a wholly-owned subsidiary
of Bancomer, S.A., from February 1974 until October 1995. Multi-Ventures, Inc.
is a real estate development and investment company that is also the managing
partner of the San Diego Mission Valley Hilton and the Hanalei Hotel. He was a
principal in the Company prior to its acquisition by its former parent, Ralston
Purina Company, in 1968.
INFORMATION ABOUT THE BOARD OF DIRECTORS
AND CERTAIN COMMITTEES OF THE BOARD
The following information is provided about the Board of Directors and
certain of its committees.
The Audit Committee directs the internal and external audit activities of
Foodmaker as deemed appropriate. The Audit Committee held two meetings in 1998.
3
<PAGE>
The Compensation Committee reviews compensation policies and recommends
changes when appropriate. The Compensation Committee held three meetings in 1998
and on two occasions acted by unanimous written consent.
The Nominating and Governance Committee recommends to the Board nominees
for election as directors and will consider nominees properly submitted by
stockholders. See "Other Business". The Nominating and Governance Committee held
three meetings in 1998.
In 1998, the Board of Directors held seven meetings, including one
telephonic meeting, and on one occasion acted by unanimous written consent. Each
current director attended more than 75% of the aggregate number of the general
meetings held and the meetings of committees on which such director served.
Directors who are also officers of Foodmaker or its subsidiaries receive no
additional compensation for their services as directors. Mr. Goodall, in
addition to serving as Chairman of the Board, provided consultation on various
matters through June 1998 and received $10,000 per month for all such services.
As Chairman of the Board, Mr. Goodall receives compensation consisting of a
$36,000 annual retainer and $3,000 for each Board meeting attended in person.
The other independent directors of the Company receive compensation consisting
of an $18,000 annual retainer and $2,000 for each Board meeting attended in
person. All directors are reimbursed for out-of-pocket and travel expenses. No
additional compensation is paid for actions taken by the Board by written
consent or participating in telephonic meetings. Under the Company's Deferred
Compensation Plan for Non-Management Directors, each independent director may
defer any portion or all of such compensation. Amounts deferred under the plan's
equity option are immediately converted to stock equivalents at the then current
market price of the Company's Common Stock and matched at a 25% rate by the
Company. A director's stock equivalent account is distributed in cash, based
upon the ending number of stock equivalents and the market value of the
Company's Common Stock, at the conclusion of the director's service as a member
of the Board. All of the independent directors have elected to defer their
compensation pursuant to this plan.
Pursuant to the Company's Non-Employee Director Stock Option Plan,
commencing February 17, 1995 and annually thereafter upon election to the Board,
each independent director also receives a stock option to purchase 10,000 shares
of the Company's Common Stock at the market value, as defined, on the date of
grant. Proposal Two below describes a proposed amendment to increase the number
of shares available under the Non-Employee Director Stock Option Plan.
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of December 15, 1998, information with
respect to beneficial ownership of voting securities of the Company by (i) each
person who is known to the Company to be the beneficial owner of more than 5% of
any class of the Company's voting securities (none at the above date), (ii) each
director and nominee for director of the Company, (iii) each executive officer
listed in the Summary Compensation Table herein and (iv) all directors and
executive officers of the Company as a group. Each of the following stockholders
has sole voting and investment power with respect to shares beneficially owned
by such stockholder, except to the extent that authority is shared with spouses
under applicable law or as otherwise noted.
Number of Shares
of Common Stock Percent of
Name Beneficially Owned(1) Class(1)
- -----------------------------------------------------------------------------
Jack W. Goodall. . . . . . . . . . . . . . . 1,078,123 2.8%
Robert J. Nugent . . . . . . . . . . . . . . 754,771 2.0%
Charles W. Duddles . . . . . . . . . . . . . 454,193 1.2%
Kenneth R. Williams. . . . . . . . . . . . . 434,156 1.1%
Edward Gibbons(2). . . . . . . . . . . . . . 404,736 1.1%
Paul L. Schultz. . . . . . . . . . . . . . . 181,845 *
L. Robert Payne. . . . . . . . . . . . . . . 101,000 *
Paul T. Carter . . . . . . . . . . . . . . . 58,750 *
Michael E. Alpert. . . . . . . . . . . . . . 42,500 *
Jay W. Brown . . . . . . . . . . . . . . . . 30,000 *
Lawrence E. Schauf . . . . . . . . . . . . . 3,500 *
Murray H. Hutchison. . . . . . . . . . . . . - -
All directors and executive officers as a
group (21 persons) . . . . . . . . . . . . 3,959,837 10.0%
_________________________
* Less than one percent
(1) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares as of a given date which such person
has the right to acquire within 60 days after such date. For purposes of
computing the percentage of outstanding shares held by each person or group
of persons named above on a given date, any security which such person or
persons has the right to acquire within 60 days after such date is deemed to
be outstanding, but is not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person. Messrs. Goodall,
Nugent, Duddles, Williams, Gibbons, Schultz, Payne, Carter, Alpert, Brown,
Schauf and Hutchison have the right to acquire through the exercise of stock
options within 60 days of the above date, 405,000, 250,000, 157,500,
175,500, 40,000, 101,500, 76,000, 46,750, 40,000, 20,000, none and none,
respectively, of the shares reflected above as beneficially owned.
(2) Includes 50,000 shares owned by Mr. Gibbons' wife.
5
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning the annual and long-
term compensation of the Company's chief executive officer and the other four
most highly compensated executive officers of the Company for services in all
capacities to the Company and its subsidiaries during the fiscal years
indicated. Bonus amounts were accrued during the year and paid shortly
thereafter.
Long-Term
Compensation
------------
Annual Compensation Securities All Other
Name and --------------------------- Underlying Compensation
Principal Position(s) Year Salary($) Bonus($) Other($) Options(#) ($)(1)
- --------------------------------------------------------------------------------
Robert J. Nugent. . . .1998 525,000 550,000 12,000 52,000 22,685
President, Chief 1997 467,500 500,000 32,497 50,000 13,823
Executive 1996 408,685 435,000 6,000 25,000 10,628
Officer and Director
Kenneth R. Williams . .1998 364,000 302,400 12,000 33,000 20,671
Executive Vice 1997 330,000 280,000 12,000 25,000 18,638
President, 1996 296,185 248,000 6,000 13,000 19,214
Marketing and
Operations
Charles W. Duddles. . .1998 321,500 266,400 12,000 30,000 18,501
Executive Vice 1997 305,000 248,000 16,270 25,000 17,682
President, Chief 1996 291,185 240,000 6,000 10,000 19,105
Financial Officer,
Chief Administrative
Officer and Director
Lawrence E. Schauf (2).1998 257,500 212,000 19,034 23,700 15,429
Executive Vice 1997 250,000 200,000 19,034 25,000 8,796
President, 1996 28,846 - 1,385 50,000 577
Secretary
Paul L. Schultz . . . .1998 270,000 182,000 12,000 17,000 14,886
Vice President, 1997 242,500 169,000 12,000 20,000 12,952
Operations 1996 216,586 146,250 6,000 9,000 13,246
_________________________
(1) All other compensation represents the Company's matching contributions to
the deferred compensation plan, except for approximately $1,300-$1,400
annually for each person (except Mr. Schauf in 1996) for premiums on term
life insurance paid by the Company for the benefit of the named executive
officer. The Company has no interest in such insurance policies.
(2) Mr. Schauf began his employment with the Company on August 19, 1996.
Stock Option Grants in Fiscal 1998
Set forth below is information with respect to options granted to the named
executive officers in the Summary Compensation Table during the 1998 fiscal
year.
Potential
Realizable Value
at Assumed Annual
% of Total Rates of
Number of Options/SARs Stock Price
Securities Granted to Exercise Appreciation
Underlying Employees or Base for Option Term
Options/SARs in Fiscal Price Expiration ----------------
Name Granted (#) Year ($/Share) Date 5% 10%
- -------------------------------------------------------------------------------
Robert J.
Nugent. . . . . 52,000 7.4% 19.0625 6/8/2008 $630,000 $1,600,694
Kenneth R.
Williams. . . . 33,000 4.7% 19.0625 6/8/2008 399,869 1,015,825
Charles W.
Duddles . . . . 30,000 4.3% 19.0625 6/8/2008 363,517 923,477
Lawrence E.
Schauf. . . . . 23,700 3.4% 19.0625 6/8/2008 287,179 729,547
Paul L.
Schultz . . . . 17,000 2.4% 19.0625 6/8/2008 205,993 523,304
6
<PAGE>
Option Exercises in Fiscal 1998 and Fiscal Year-End Values
Set forth below is information with respect to options exercised by the
named executive officers in the Summary Compensation Table during the 1998
fiscal year, and the number and value of unexercised stock options held by the
named executive officers at the end of the fiscal year.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options/SARs Held at Options/SARs at
Acquired Fiscal Year-End Fiscal Year-End(1)
on --------------------- ----------------------
Exercise Value Exer- Unexer- Exer- Unexer-
Name (#) Realized cisable cisable cisable cisable
- -------------------------------------------------------------------------------
Robert J.
Nugent. . . . 0 0 250,000 77,000 $1,795,522 $34,375
Kenneth R.
Williams. . . 0 0 175,500 45,500 1,237,013 17,188
Charles W.
Duddles . . . 0 0 157,500 42,500 1,273,051 17,188
Lawrence E.
Schauf. . . .37,500 $305,769 25,000 36,200 109,375 17,188
Paul L.
Schultz . . . 0 0 101,500 27,000 645,428 13,750
_________________________
(1) Based on the difference between the exercise price of the options and the
closing price of the Company's Common Stock on the last trading day prior to
the Company's fiscal year ended September 27, 1998 ($13.50). At such date,
Messrs. Nugent, Williams, Duddles, Schauf and Schultz had unexercisable
stock options which were not in-the-money for 52,000, 33,000, 30,000, 23,700
and 17,000 shares, respectively.
Report of the Board of Directors and Compensation Committee on Executive
Compensation
The Board of Directors has the primary responsibility for determining
executive compensation. In addition, there is also a Compensation Committee
composed of not fewer than two non-employee directors. Executive compensation is
designed to (a) provide compensation opportunities that will attract, motivate
and retain highly qualified managers and executives, and (b) provide salary and
other rewards that are closely linked to Company, team, and individual
performance, focused on achievement of annual business plans and longer term
incentives linked to increases in stockholder value. The Chief Executive Officer
recommends the compensation to be paid to executive officers of the Company
other than himself; final determination of the amount of compensation rests with
the non-employee members of the Board of Directors. Board members who are also
executive officers do not participate in discussions about, nor do they vote on,
recommendations concerning their respective compensation.
The Company's executive officer compensation program is comprised of base
salary, bonus opportunity, long-term incentive compensation in the form of stock
options, and other benefits such as health insurance. It is the objective of the
Company to maintain base salaries that are at approximately the mid-range of
compensation paid to senior executives with comparable qualifications,
experience and responsibilities at other companies engaged in the same or
similar business as the Company. The Performance Bonus Plan provides for a bonus
as a percent of base salary which is dependent upon the Company's performance
level achieved and the job classification of the individual. The purpose of the
Performance Bonus Plan is to reward key employees, executives and officers for
achievement of corporate goals relating to earnings. The performance bonuses for
the named executives for fiscal 1998 were paid in accordance with the
established plan and are reflected in the Summary Compensation Table.
The 1992 Employee Stock Incentive Plan forms the basis for the Company's
long-term incentive plan for officers and key managers. The purpose of the Plan
is to enable the Company and its subsidiaries to attract, retain and motivate
employees by providing for or increasing the proprietary interests of such
employees in the Company. During 1998, options to purchase the Company's
Common Stock were granted to Messrs. Nugent, Williams, Duddles, Schauf and
Schultz for the purchase of 52,000, 33,000, 30,000, 23,700 and 17,000 shares,
respectively, at $19.0625 per share, exercisable 20% annually beginning on
May 8, 1999. All options were granted at 100% of the market price of the
Company's Common Stock on the dates of grant. Options serve to directly align
the interests of executives, including the Chief Executive Officer, with the
interests of other stockholders, since such executives will not realize a
7
<PAGE>
benefit unless and until the market price of the Company's Common Stock
increases.
Mr. Nugent became the Chief Executive Officer of the Company on April 1,
1996. His base salary as of March 31, 1998, was increased 10% over his previous
base salary in order to maintain his salary at approximately the mid-range of
competitive industry practice. An annual cash incentive award is payable to Mr.
Nugent if the Company achieves or exceeds specified earnings goals. Mr. Nugent's
bonus for 1998 reflects the highest performance rating under the Foodmaker
Performance Bonus Plan. In 1998, approximately one-half of Mr. Nugent's
compensation was incentive pay.
This report is submitted by the Board of Directors and the Compensation
Committee.
Board of Directors Compensation Committee
-------------------------------------------- ----------------------
Michael E. Alpert Jack W. Goodall Jay W. Brown
Jay W. Brown Murray H. Hutchison Paul T. Carter
Paul T. Carter Robert J. Nugent Murray H. Hutchison
Charles W. Duddles L. Robert Payne
Edward Gibbons
This report will not be deemed to be incorporated by reference in any
filing by the Company under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that the Company specifically
incorporates this report by reference.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee are currently Jay W. Brown, Paul
T. Carter and Murray H. Hutchison. Jay W. Brown, who was Vice President of the
Company from July 1981 to July 1983, participated in the deliberations of the
committee.
Pension Plan Table
Retirement Plan. The Company maintains a retirement plan (the "Retirement
Plan"), which was adopted effective October 21, 1985 and restated effective as
of January 1, 1989. The Retirement Plan is a defined benefit plan covering
eligible regular employees employed in an administrative, clerical, or
restaurant hourly capacity who have completed 1,000 Hours of Service and reached
age 21. The Retirement Plan provides that a participant retiring at age 65 will
receive an annual retirement benefit equal in amount to one percent of Final
Average Pay multiplied by Benefit Service plus .4% of Final Average Pay in
excess of Covered Compensation multiplied by Benefit Service, subject to
grandfathered minimum benefit accruals under the previous plan as of December
31, 1988. The .4% portion of the calculation is limited to a maximum of 35 years
of service. The Employee Retirement Income Security Act of 1974 ("ERISA") and
various tax laws may cause a reduction in the annual retirement benefit payable
under the Retirement Plan. (The preceding capitalized terms are defined in the
Retirement Plan, a copy of which is filed as an exhibit to the Company's Annual
Report on Form 10-K.)
Although normal retirement is age 65, benefits may begin as early as age 55
if service requirements defined in the Retirement Plan are met. Benefits payable
are reduced for early commencement.
Supplemental Retirement Plan. The Company established a non-qualified
supplemental retirement plan for selected executives effective April 2, 1990,
known as the Supplemental Executive Retirement Plan. The plan provides for a
percentage of replacement income based on Service and Final Average Compensation
(each as defined in the plan). The target replacement income from all Company
funded sources based upon a maximum of 20 full years of service is 60% of Final
Average Compensation. For those executives whose service lengths are less than
20 years, the target percentage of 60% is reduced by applying a factor
determined by dividing the number of full years of actual service by 20. The
plan is unfunded and represents an unsecured claim against the Company.
Easy$aver Plus Plan. Effective October 21, 1985, the Company adopted the
Foodmaker Savings Investment Plan, currently named the Foodmaker Easy$aver Plus
Plan (the "E$P"), which includes a cash-or-deferred arrangement under Section
401(k) of the Internal Revenue Code. Eligible employees who have completed at
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least one year of service and reached age 21 qualify for the E$P. Participants
in the E$P may defer up to 12% of their pay on a pre-tax basis. In addition, the
Company contributes on a participant's behalf an amount equal to 50% of the
first 4% of compensation that is deferred by the participant.
Deferred Compensation Plan. Since January 1, 1989, all executive officers
and certain other members of management of the Company have been excluded from
participation in the E$P. Effective April 2, 1990, all such persons were offered
an opportunity to participate in a non-qualified deferred compensation plan
established by the Company. Participants of the plan, known as the Capital
Accumulation Plan for Executives, may defer up to 15% of base and/or bonus pay.
The Company contributes on a participant's behalf 100% of the first 3% of
compensation that is deferred by the participant. Benefits paid under such plan
also include an interest component based on Moody's Average Corporate Bond Yield
Index. The plan is unfunded and participants' accounts represent unsecured
claims against the Company.
Summary of Retirement and Other Deferred Benefits. The following table
shows estimated annual benefits payable to participants as a straight life
annuity. The benefits are derived from some or all of the following Company
funded sources: Retirement Plan, Company contributions to the E$P, Company
contributions to the Deferred Compensation Plan, Supplemental Retirement Plan
and Social Security (50% of primary insurance amount).
Estimated Annual Benefits Based on
Years of Service
----------------------------------
Average Annual Earnings 10 15 20
- -------------------------------------------------------------------------
$ 100,000. . . . . . . . . . . . $ 30,000 $ 45,000 $ 60,000
200,000. . . . . . . . . . . . 60,000 90,000 120,000
300,000. . . . . . . . . . . . 90,000 135,000 180,000
400,000. . . . . . . . . . . . 120,000 180,000 240,000
500,000. . . . . . . . . . . . 150,000 225,000 300,000
600,000. . . . . . . . . . . . 180,000 270,000 360,000
800,000. . . . . . . . . . . . 240,000 360,000 480,000
1,000,000. . . . . . . . . . . . 300,000 450,000 600,000
1,200,000. . . . . . . . . . . . 360,000 540,000 720,000
At September 27, 1998, the number of years of service under the retirement
plans for Messrs. Nugent, Williams, Duddles, Schauf and Schultz was 19, 28, 25,
2 and 23, respectively; and the amount of eligible compensation for each of
these individuals approximates the amounts reflected as salary and bonus in the
Summary Compensation Table.
Severance Arrangements
The Company has entered into compensation and benefits assurance agreements
with certain of its senior executives, including Messrs. Nugent, Williams,
Duddles, Schauf and Schultz, for the payment of certain compensation and the
provision for certain benefits in the event of termination of employment
following a change in control of the Company. The agreements continued in effect
through September 29, 1998 and are automatically extended for additional,
successive, two-year terms thereafter unless at least six-months written notice
is given to the contrary. If there is a change of control (as defined in the
agreements) during the term of any such agreement, the executive will be
entitled to receive the payments and benefits specified in the event that his
employment is terminated within 24 months thereafter: (i) involuntarily, without
cause or (ii) voluntarily for "good reason" (as defined in the agreements).
Amounts payable under each agreement include all amounts earned by the employee
prior to the date of termination and a multiple of the employee's annual base
salary, bonus and the Company's matching contributions to the deferred
compensation plan. In the case of Messrs. Nugent, Williams, Duddles, Schauf and
Schultz, the applicable multiples are 2.5, 2.5, 2.5, 2.5 and 1.5, respectively.
In addition, the agreements provide for the continuation of health insurance
benefits for a period of up to 18 months following termination and certain
incidental benefits.
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CERTAIN TRANSACTIONS
In 1990, a wholly-owned subsidiary of the Company entered into a master
license agreement with Foodmex, Inc., a Nevada corporation, for the development
and operation of Jack in the Box restaurants in Mexico. In connection with the
master license agreement in 1990, the stockholders of Foodmex provided personal
guarantees of Foodmex's obligations to the Company's subsidiary. In 1993,
Foodmex and the Company's subsidiary modified and amended their agreement.
Subsequently, as the result of severe financial difficulties encountered by
Foodmex, it became unable to meet its obligations on a current basis. Therefore,
Foodmex was required to pay in advance for its food and supplies purchased from
the Company and entered into an agreement for the payment, over an extended
period without interest, of the accumulated arrearage.
In December 1996, the Company's subsidiary terminated its franchise
agreement with Foodmex; and Foodmex filed a lawsuit in the U.S. District Court
in San Diego, Foodmex, Inc. v. Foodmaker International Franchising, Inc., et
al., against the Company, its subsidiary, Jack W. Goodall, Robert J. Nugent and
another employee of the Company. As amended, the complaint alleges claims for
breach of contract, breach of the implied covenant of good faith and fair
dealing, fraud, tortious interference with contract relations, violation of the
California Franchise Relations Act, Racketeer Influenced and Corrupt
Organization Act and civil conspiracy. The amended complaint seeks monetary
damages in excess of $10 million and punitive damages. A counterclaim was filed
by the Company and its subsidiary alleging claims based on breach of contract,
trademark infringement, unfair competition and false designation of origin. The
counterclaim seeks injunctive relief and monetary damages, including payment of
over $1 million owing to the Company's subsidiary.
In March 1997, the Court granted the Company's subsidiary's motion for a
preliminary injunction, held that the Company was likely to prevail in its suit,
and ordered Foodmex to immediately cease using the Jack in the Box trademarks
and systems. In granting the motion, the Court found that the Company's
subsidiary has a likelihood of success on the merits of its breach of contract
and trademark infringement claims and required Foodmex to comply with the
termination provisions of its agreement, including the removal of all
Jack in the Box signs and discontinuance of all further use of Jack in the Box
trademarks. In June 1997, Foodmex and its president were found in contempt of
court for failing to comply with the preliminary injunction.
In April 1997, the Company's subsidiary filed an action in the Superior
Court for San Diego, Foodmaker International Franchising, Inc. v. Weber et al.,
against certain of the stockholders of Foodmex, seeking to enforce guarantee of
Foodmex's obligations to the Company. This action was dismissed by the court.
Sharon Payne, who is the daughter of L. Robert Payne, a director of the
Company, acquired 25% of the outstanding common stock of Foodmex in 1990, loaned
certain funds to Foodmex and signed a guarantee of Foodmex's obligations to the
Company's subsidiary, similar in substance to that provided by the other Foodmex
stockholders. The Company has been advised that it is the position of Ms. Payne
that her personal guarantee is no longer of any legal effect as the result of
changes made to the agreements between Foodmex and the Company's subsidiary
subsequent to the making of her guarantee. Ms. Payne is not a defendant in the
Weber lawsuit.
The Company has been advised by Mr. Payne that the majority of the funds
invested by his daughter in Foodmex (including her loans to Foodmex) were loaned
to her by him. In addition, Mr. Payne has advised that in the past he, his wife
and a family trust provided guarantees of, and certain collateral for, Foodmex's
bank indebtedness, the maximum amount of which was approximately $760,000, and
which is currently $69,200. Mr. Payne has also advised the Company that he never
guaranteed any of Foodmex's obligations to the Company's subsidiary. Mr. Payne
has also advised the Company that in December 1995 all of the ownership interest
formerly held by his daughter in Foodmex was transferred to other stockholders
of Foodmex; and that neither he nor his daughter presently holds any ownership
interest in Foodmex.
10
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PERFORMANCE GRAPH
The following graph compares the cumulative return to holders of the
Company's Common Stock at September 30th of each year with a Restaurant Peer
Group Index and the Standard & Poor's ("S&P") 500 Index for the same period. The
comparison assumes $100 was invested on September 30, 1993 in the Company's
Common Stock and in each of the comparison groups, and assumes reinvestment of
dividends. The Company paid no dividends during the periods.
[A LINE GRAPH CHART WAS INCLUDED HEREIN WHICH
GRAPHICALLY REFLECTED THE FOLLOWING DATA]
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
Foodmaker, Inc. 100 58 58 100 188 157
Restaurant Peer Group (1) 100 88 86 91 114 99
S&P 500 Index 100 104 135 162 227 248
_________________________
(1) The Restaurant Peer Group Index is comprised of the following companies:
Bob Evans Farms, Inc.; CKE Restaurants, Inc.; Luby's Cafeterias, Inc.;
Ryan's Family Steak Houses, Inc.; Sbarro, Inc.; Shoney's, Inc.; and Vicorp
Restaurants, Inc.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, each
executive officer, director and beneficial owner of more than 10% of the
Company's Common Stock is required to file certain forms with the Securities and
Exchange Commission. A report of beneficial ownership of the Company's Common
Stock on Form 3 is due at the time such person becomes subject to the reporting
requirements and a report on Form 4 or Form 5 must be filed to reflect changes
thereafter. Based on written statements and copies of forms provided to the
Company by persons subject to the reporting requirements, the Company believes
that all such reports required to be filed by such persons during fiscal 1998
were filed on a timely basis.
11
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PROPOSAL TWO
APPROVAL OF AMENDED AND RESTATED
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
General Information
The Company has used stock options granted under the Non-Employee Director
Stock Option Plan (the "Director Plan") as an incentive for its non-employee
directors. As of December 15, 1998, only 10,000 of the originally approved
250,000 shares of the Company's Common Stock remained available under the
Director Plan. All stock options granted under the Director Plan are
nontransferable and have exercise prices at least equal to the market price of
the underlying stock on the date the options were granted. The Director Plan
provides for options that do not qualify as incentive stock options under
Section 422A of the Internal Revenue Code. On November 12, 1998, the Board of
Directors of the Company amended the Director Plan, subject to the approval of
the stockholders, to increase the aggregate number of shares available for
grants under the plan to 650,000 from 250,000. This plan, as amended and
restated, is being submitted to the stockholders of the Company for their
approval at the Annual Meeting. The affirmative vote of a majority of shares of
Common Stock voting at the Annual Meeting, provided a quorum is present, is
required for approval of this proposal. THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE FOR THIS PROPOSAL.
The following description of the Director Plan is qualified in its entirety
by reference to the full text of the plan, as it is proposed to be amended and
restated, a copy of which is attached as Exhibit A to this Proxy Statement.
Purpose and Eligibility
The purpose of the Director Plan is to promote the long-term growth and
financial success of the Company by enabling the Company to attract, retain and
motivate non-employee directors of the Company by providing for or increasing
their proprietary interest in the Company. The persons eligible to be considered
for the grant of options hereunder are any directors of the Board who are not
employees of the Company or a subsidiary of the Company.
Stock Subject to Director Plan
The Director Plan currently provides for a maximum of 250,000 shares of
Common Stock that may be subject to options granted thereunder during the ten
year duration of the plan. Under the proposed amendment to the Director Plan,
the number of shares available would be increased to 650,000.
The Director Plan provides that if the outstanding shares of stock of the
class then subject to this plan are increased or decreased or are changed into
or exchanged for a different number or kind of shares or securities, as a result
of one or more reorganizations, recapitalizations, stock splits, reverse stock
splits, stock dividends and the like, appropriate adjustments shall be made in
the number and/or type of shares or securities for which options may thereafter
be granted under this plan and for which options then outstanding under this
plan may thereafter be exercised. Any such adjustments in outstanding options
shall be made without changing the aggregate exercise price applicable to the
unexercised portions of such options. Shares of Common Stock subject to the
unexercised portions of any options granted under this plan which expire,
terminate or are canceled may again be subject to options under this plan.
Terms of Options
Commencing February 17, 1995 and on the date of each annual stockholder
meeting thereafter at which such non-employee director has been re-elected to
the Board, such non-employee director will be automatically granted a non-
qualified stock option to purchase 10,000 shares of Common Stock under the
Director Plan. The per share exercise price of each option will be equal to the
current market price per share of Common Stock on the date of grant, which is
generally equal to the closing price of the Common Stock on the New York Stock
Exchange.
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<PAGE>
The current market price per share of Common Stock on the date of grant
shall be not less than the higher of (a) the Quoted Price per share for such
stock on the business day immediately preceding the date of grant or (b) the
average of the Quoted Prices of the Common Stock for 30 consecutive trading days
commencing 45 trading days before the date of grant. The "Quoted Price" of the
Common Stock shall be the last reported sales price of the Common Stock as
reported by NASDAQ, National Market System, or if the Common Stock is listed on
a securities exchange, the last reported sales price of the Common Stock on such
exchange which shall be for consolidated trading if applicable to such exchange,
or if neither is so reported or listed, the last reported bid price of the
Common Stock. In the absence of one or more such quotations, the Board shall
determine the current market price on the basis of such information as it in
good faith considers appropriate.
Each option will have a term of ten years and shall become exercisable in
full six months after the date of grant. If on any date upon which options are
to be granted under this Director Plan the number of shares of Common Stock
remaining available under the Director Plan is less than the number of shares
required for all grants to be made on such date, then options to purchase a
proportionate amount of such available number of shares of Common Stock shall be
granted to each eligible non-employee director.
Payment for Securities
All or a portion of an exercisable option shall be deemed exercised upon
delivery to the Secretary of the Company at the Company's principal office of
all of the following: (i) a written notice of exercise specifying the number of
shares to be purchased signed by the non-employee director or other person then
entitled to exercise the option, (ii) full payment of the exercise price for
such shares by any of the following or combination thereof (a) cash, (b)
certified or cashier's check payable to the order of the Company, or (c) the
delivery of whole shares of the Company's Common Stock owned by the option
holder and valued at the closing market price on the business day prior to the
date of exercise, (iii) such representations and documents as the Board, in its
sole discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended, and any other
federal or state securities laws or regulations, (iv) in the event that the
option shall be exercised by any person or persons other than the non-employee
director, appropriate proof of the right of such person or persons to exercise
the option, and (v) such representations and documents as the Board, in its sole
discretion, deems necessary or advisable.
Nontransferability
Any option granted under this plan shall by its terms be nontransferable by
the optionee otherwise than by will or the laws of descent and distribution, and
shall be exercisable during the optionee's lifetime only by the optionee.
Administration
The Director Plan is intended to meet the requirements of Rule 16b-3
adopted under the Securities Exchange Act of 1934 (or its successor) and
is intended to be self-governing. To this end, the Director Plan requires no
discretionary action by any administrative body with regard to any transaction
under the Director Plan. To the extent that any questions of interpretation
arise, these shall be resolved by the Board.
Amendment and Termination
The Board may alter, amend, suspend, or terminate the Director Plan,
provided that no such action shall deprive any optionee, without his or her
consent, of any option granted to the optionee pursuant to this plan or of any
of his or her rights under such option and provided further that the provisions
of this plan designating persons eligible to participate in the Director Plan
and specifying the amount, exercise price and timing of grants under the
Director Plan shall not be amended more than once every six months other than to
comport with changes in the Internal Revenue Code, the Employee Retirement
Income Security Act, or the rules thereunder.
Unless sooner terminated, the Director Plan terminates ten years after the
date of stockholders' approval thereof. Subsequent to such termination date, no
13
<PAGE>
options may be granted under this plan, but such termination will not prevent a
participant holding an option with an exercise date subsequent to the
termination date from exercising that option.
Federal Income Tax Consequences
The following statement is based on present federal tax laws and
regulations and does not purport to be a complete description of the federal
income tax aspects of the Director Plan.
Although the grant of a non-qualified option is not generally taxable to
the recipient, upon exercise the recipient will be taxed at ordinary income
rates on the excess of the fair market value on the exercise date of the stock
received over the option exercise price, and the Company will be entitled to a
tax deduction of the same amount. The amount included in the optionee's taxable
income on the exercise of a non-qualified option will be subject to federal and
state income tax withholding. The optionee's basis in the acquired shares will
be equal to the option exercise price plus the amount included in income upon
exercise. Gain or loss on the subsequent sale or disposition of the shares will
be treated as long-term or short-term capital gain or loss, depending on the
holding period for the stock as of the date of disposition. The stockholder will
recognize long-term capital gain or loss if the holding period exceeds one year.
Participant Benefits of Amended and Restated Plan
Each of the seven non-executive (non-employee) directors of the Company,
assuming continued service, would receive annually, until the amended and
restated plan's 650,000 shares are depleted, stock options for the purchase of
10,000 shares (70,000 shares annually for all such directors) of Common Stock at
the fair market value on the date of grant. Any potential realizable value of
the options is subject to the increase, if any, in the market price of the
Company's Common Stock.
None of the executive officers reflected in the summary compensation table
or other categories of employees of the Company are covered by the Director
Plan.
PROPOSAL THREE
RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT ACCOUNTANTS
The Board has appointed KPMG Peat Marwick LLP as independent accountants
to examine the consolidated accounts of the Company for the fiscal year ending
October 3, 1999, subject to ratification by stockholders. KPMG Peat Marwick LLP
has acted as accountants for Foodmaker since 1986. A representative of the firm
will be present at the Annual Meeting and will have the opportunity to make a
statement and respond to appropriate questions from stockholders.
OTHER BUSINESS
Foodmaker's management is not aware of any other matters to come before the
Annual Meeting. If any matter not mentioned herein is properly brought before
the Annual Meeting, the persons named in the enclosed proxy will have
discretionary authority to vote all proxies with respect thereto in accordance
with their best judgment.
Pursuant to the Company's Bylaws, in order for a stockholder to present
business at the Annual Meeting or to make nominations for election of a
director, such matters must be filed in writing with the Secretary of the
Company in a timely manner. To be timely, a stockholder's notice must be
delivered to the principal executive offices of the Company not less than ninety
(90) nor more than one hundred and twenty (120) days prior to the meeting as
originally scheduled; provided, however, that in the event that less than 100
days' notice or prior public disclosure of the date of the meeting is made to
stockholders, notice by the stockholder must be received not later than the
close of business on the 10th day following the day on which notice of the date
of the Annual Meeting was mailed or public disclosure was made. Such notice
shall set forth, as to the stockholder giving notice, the stockholder's name and
address as they appear on the Company's books, and the class and number of
shares of the Company which are beneficially owned by such stockholder.
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Additionally, (i) with respect to a stockholder's notice regarding a nominee for
director, such notice shall set forth, as to each person whom the stockholder
proposes to nominate for election or re-election as a director, all information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors pursuant to the Securities Exchange Act of
1934, as amended (including such person's written consent to being named in the
Proxy Statement as a nominee and to serving as a director if elected); and (ii)
with respect to a notice relating to a matter the stockholder proposes to bring
before the Annual Meeting, a brief description of the business desired to be
brought before the meeting and any material interest of the stockholder in such
business.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Any stockholder of the Company wishing to have a proposal considered for
inclusion in the Company's proxy solicitation materials to be distributed in
connection with the Company's Annual Meeting of Stockholders to be held in the
year 2000 must set forth such proposal in writing and file it with the Secretary
of the Company on or before September 10, 1999. Any such proposals must comply
in all respects with the rules and regulations of the Securities and Exchange
Commission.
1998 ANNUAL REPORT AND FORM 10-K
A copy of the 1998 Annual Report to Stockholders accompanies this Proxy
Statement. Foodmaker's Annual Report on Form 10-K for the year ended
September 27, 1998, as filed with the Securities and Exchange Commission,
contains detailed information concerning Foodmaker and its operations which is
not included in the 1998 Annual Report. A COPY OF THE 1998 FORM 10-K WILL BE
FURNISHED TO STOCKHOLDERS WITHOUT CHARGE UPON REQUEST IN WRITING TO: Foodmaker
Treasury Department, 9330 Balboa Avenue, San Diego, California 92123-1516.
By Order of the Board of Directors,
LAWRENCE E. SCHAUF
Lawrence E. Schauf
Secretary
15
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Exhibit A
FOODMAKER, INC.
AMENDED AND RESTATED
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Purpose of the Plan. Under this Non-Employee Director Stock Option
Plan (the "Director Plan") of Foodmaker, Inc., a Delaware corporation (the
"Company"), options may be granted to eligible persons, as set forth in Section
4, to purchase shares of the Company's common stock ("Common Stock"). This
Director Plan is designed to promote the long-term growth and financial success
of the Company by enabling the Company to attract, retain and motivate such
persons by providing for or increasing their proprietary interest in the
Company.
2. Effective Date. This Director Plan shall be in effect commencing on
February 17, 1995, subject to approval by the Company's stockholders. Options
may not be granted more than ten years after the date of stockholder approval of
this Director Plan or termination of this Director Plan by the Board of
Directors of the Company (the "Board"), whichever is earlier.
3. Plan Operation. This Director Plan is intended to meet the
requirements of Rule 16b-3(c)(2)(ii) adopted under the Securities Exchange Act
of 1934 (or its successor) and accordingly is intended to be self-governing. To
this end, this Director Plan requires no discretionary action by any
administrative body with regard to any transaction under this Director Plan. To
the extent, if any, that any questions of interpretation arise, these shall be
resolved by the Board.
4. Eligible Persons. The persons eligible to receive a grant of non-
qualified stock options hereunder are any Director of the Board who on the date
of said grant is not an employee of the Company or a subsidiary of the Company.
For purposes of this Section 4, a person shall not be considered an employee
solely by reason of serving as Chairman of the Board.
5. Stock Subject to Director Plan. The maximum number of shares that may
be subject to options granted hereunder shall be 650,000 shares of Common Stock,
subject to adjustments under Section 6. Shares of Common Stock subject to the
unexercised portions of any options granted under this Director Plan which
expire, terminate or are canceled may again be subject to options under this
Director Plan.
6. Adjustments. If the outstanding shares of stock of the class then
subject to this Director Plan are increased or decreased, or are changed into or
exchanged for a different number or kind of shares or securities, as a result of
one or more reorganizations, recapitalizations, stock splits, reverse stock
splits, stock dividends, spin-offs and the like, appropriate adjustments shall
be made in the number and/or type of shares or securities for which options may
thereafter be granted under this Director Plan and for which options then
outstanding under this Director Plan may thereafter be exercised. Any such
adjustments in outstanding options shall be made without changing the aggregate
exercise price applicable to the unexercised portions of such options.
7. Stock Options. Commencing February 17, 1995 and on the date of each
annual stockholder meeting thereafter at which such non-employee director has
been re-elected to the Board, such non-employee director will be automatically
granted a non-qualified stock option to purchase 10,000 shares of Common Stock.
The per share exercise price of each option will be equal to the current market
price per share of Common Stock on the date of grant.
The current market price per share of Common Stock on the date of grant
shall be not less than the higher of (a) the Quoted Price per share for such
stock on the business day immediately preceding the date of grant or (b) the
average of the Quoted Prices of the Common Stock for 30 consecutive trading days
commencing 45 trading days before the date of grant. The "Quoted Price" of the
Common Stock shall be the last reported sales price of the Common Stock as
reported by NASDAQ, National Market System, or if the Common Stock is listed on
a securities exchange, the last reported sales price of the Common Stock on such
exchange which shall be for consolidated trading if applicable to such exchange,
or if neither so reported or listed, the last reported bid price of the Common
Stock. In the absence of one or more such quotations, the Board shall determine
the current market price on the basis of such information as it in good faith
considers appropriate.
A-1
<PAGE>
Each option will have a term of ten years and shall become exercisable in
full six months after the date of grant. If on any date upon which options are
to be granted under this Director Plan the number of shares of Common Stock
remaining available under the Director Plan are less than the number of shares
required for all grants to be made on such date, then options to purchase a
proportionate amount of such available number of shares of Common Stock shall be
granted to each eligible non-employee director.
8. Documentation of Grants. Awards made under this Director Plan shall be
evidenced by written agreements or such other appropriate documentation as the
Board shall prescribe. The Board need not require the execution of any
instrument or acknowledgment of notice of an award under this Director Plan, in
which case acceptance of such award by the respective optionee will constitute
agreement to the terms of the award.
9. Nontransferability. Any option granted under this Director Plan shall
by its terms be nontransferable by the optionee otherwise than by will or the
laws of descent and distribution, and shall be exercisable, during the
optionee's lifetime, only by the optionee.
10. Amendment and Termination. The Board may alter, amend, suspend, or
terminate this Director Plan, provided that no such action shall deprive any
optionee, without his or her consent, of any option granted to the optionee
pursuant to this Director Plan or of any of his or her rights under such option
and provided further that the provisions of this Director Plan designating
persons eligible to participate in the Director Plan and specifying the amount,
exercise price and timing of grants under the Director Plan shall not be amended
more than once every six months other than to comport with changes in the
Internal Revenue Code, the Employee Retirement Income Security Act, or the rules
thereunder.
11. Termination of Directorship. Notwithstanding Section 7 above, all
options granted hereunder and held by non-employee directors as of the date of
cessation of service as a director may be exercised by the non-employee director
or his or her heirs or legal representatives until the earlier of the tenth
anniversary of the date of grant or the expiration of ninety days after the date
of cessation of such service.
12. Manner of Exercise. All or a portion of an exercisable option shall be
deemed exercised upon delivery to the Secretary of the Company at the Company's
principal office all of the following: (i) a written notice of exercise
specifying the number of shares to be purchased signed by the non-employee
director or other person then entitled to exercise the option, (ii) full payment
of the exercise price for such shares by any of the following or combination
thereof (a) cash, (b) certified or cashier's check payable to the order of the
Company, or (c) the delivery of whole shares of the Company's Common Stock owned
by the option holder and valued at the closing market price on the business day
prior to the date of exercise, (iii) such representations and documents as the
Board, in its sole discretion, deems necessary or advisable to effect compliance
with all applicable provisions of the Securities Act of 1933, as amended, and
any other federal or state securities laws or regulations, (iv) in the event
that the option shall be exercised by any person or persons other than the non-
employee director, appropriate proof of the right of such person or persons to
exercise the option, and (v) such representations and documents as the Board, in
its sole discretion, deems necessary or advisable.
13. Compliance with Law. Common Stock shall not be issued upon exercise of
an option granted under this Director Plan unless and until counsel for the
Company shall be satisfied that any conditions necessary for such issuance to
comply with applicable federal, state or local tax, securities or other laws or
rules or applicable securities exchange requirements have been fulfilled.
IN TESTIMONY WHEREOF, Foodmaker, Inc. has executed this Director Plan by
its officers thereunto duly authorized.
A-2
<PAGE>
Proxy with telephone voting instructions - side one --------------------------
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOODMAKER, INC.
FOR ANNUAL MEETING OF STOCKHOLDERS ON FEBRUARY 12, 1999 AT 2:00 P.M.
DEL MAR HILTON, 15575 JIMMY DURANTE BOULEVARD, DEL MAR, CALIFORNIA.
The undersigned hereby appoints Jack W. Goodall, Charles W. Duddles and
Lawrence E. Schauf and each of them, acting by a majority or by one of them
if only one is acting, as lawful proxies, with full power of substitution,
for and in the name of the undersigned, to vote on behalf of the undersigned,
with all the powers the undersigned would possess if personally present at
the Annual Meeting of Stockholders of Foodmaker, Inc., a Delaware corporation
("Foodmaker"), on February 12, 1999, and any postponements or adjournments
thereof. The above named proxies are instructed to vote all the
undersigned's shares of stock on the proposals set forth in the Notice of
Annual Meeting and Proxy Statement as specified on the other side hereof and
are authorized in their discretion to vote upon such other business as may
properly come before the meeting or any postponements or adjournments
thereof. This proxy when properly executed will be voted in the manner
directed herein by the undersigned stockholder. If no direction is made,
this proxy will be voted "FOR" all nominees listed and "FOR" Proposal 2 and 3.
The Board of Directors recommends a vote FOR the above proposals.
(Continued, and to be marked, dated and signed, on the other side)
---------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
FOODMAKER, INC.
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 12, 1999 AT 2:00 P.M.
DEL MAR HILTON
15575 JIMMY DURANTE BOULEVARD
DEL MAR, CALIFORNIA
<PAGE>
Proxy with telephone voting instructions - side two --------------------------
The Board of Directors recommends a vote FOR Proposals 1, 2 and 3
Please mark
your votes as
indicated in /x/
this example
FOR WITHHOLD
1. ELECTION OF DIRECTORS ALL ALL
Nominees: / / / /
01 Michael E. Alpert 06 Jack W. Goodall
02 Jay W. Brown 07 Murray H. Hutchison
03 Paul T. Carter 08 Robert J. Nugent
04 Charles W. Duddles 09 L. Robert Payne
05 Edward Gibbons
(Instruction: To withhold authority to vote for any individual nominee
write that nominee's name below.)
- ---------------------------------------------
2. Approve the Non-Employee Director Stock FOR AGAINST ABSTAIN
Option Plan, as amended. / / / / / /
3. Ratification of appointment of KPMG Peat FOR AGAINST ABSTAIN
Marwick LLP as independent accountants. / / / / / /
4. In their discretion, the Proxies are authorized
to vote upon such other business as may
properly come before the meeting.
I plan to attend the meeting. YES NO
/ / / /
*** IF YOU WISH TO VOTE BY TELEPHONE, PLEASE READ THE INSTRUCTIONS BELOW ***
[NAME, ADDRESS & SHARE INFORMATION]
Signature(s)_________________________Dated:___________________, 1999
Stockholder(s), please sign above exactly as name appears hereon; in the case
of joint holders, all should sign. Fiduciaries should add their full title to
their signature. Corporations should sign in full corporate name by an
authorized officer. Partnerships should sign in partnership name by an
authorized person.
-------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
VOTE BY TELEPHONE
QUICK * * * EASY * * * IMMEDIATE
Your telephone vote authorizes the named proxies to vote your shares in the
same manner as if you marked, signed and returned your proxy card.
You will be asked to enter a Control Number which is located in the box in
the lower right hand corner of this form.
OPTION #1: To vote as the Board of Directors recommends on ALL proposals,
press 1.
Your vote will be confirmed and cast as you directed. END OF CALL
OPTION #2: If you choose to vote on each proposal separately, press 0. You
will hear these instructions:
Proposal 1: To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL
nominees, press 9; To WITHHOLD FOR AN INDIVIDUAL nominee,
press 0 and listen to the instructions.
Proposal 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
Proposal 3: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
Your vote will be confirmed and cast as you directed. END OF CALL.
If you vote by telephone, there is no need for you to mail back your proxy.
THANK YOU FOR VOTING
Call * * Toll Free * * On a Touch Tone Telephone
1-800-840-1208 - ANYTIME
There is NO CHARGE to you for this call [Control Number]
<PAGE>
Proxy without telephone voting instructions - side one -----------------------
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOODMAKER, INC.
FOR ANNUAL MEETING OF STOCKHOLDERS ON FEBRUARY 12, 1999 AT 2:00 P.M.
DEL MAR HILTON, 15575 JIMMY DURANTE BOULEVARD, DEL MAR, CALIFORNIA.
The undersigned hereby appoints Jack W. Goodall, Charles W. Duddles and
Lawrence E. Schauf and each of them, acting by a majority or by one of them
if only one is acting, as lawful proxies, with full power of substitution,
for and in the name of the undersigned, to vote on behalf of the undersigned,
with all the powers the undersigned would possess if personally present at
the Annual Meeting of Stockholders of Foodmaker, Inc., a Delaware corporation
("Foodmaker"), on February 12, 1999, and any postponements or adjournments
thereof. The above named proxies are instructed to vote all the
undersigned's shares of stock on the proposals set forth in the Notice of
Annual Meeting and Proxy Statement as specified on the other side hereof and
are authorized in their discretion to vote upon such other business as may
properly come before the meeting or any postponements or adjournments
thereof. This proxy when properly executed will be voted in the manner
directed herein by the undersigned stockholder. If no direction is made,
this proxy will be voted "FOR" all nominees listed and "FOR" Proposal 2 and 3.
The Board of Directors recommends a vote FOR the above proposals.
(Continued, and to be marked, dated and signed, on the other side)
-----------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
FOODMAKER, INC.
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 12, 1999 AT 2:00 P.M.
DEL MAR HILTON
15575 JIMMY DURANTE BOULEVARD
DEL MAR, CALIFORNIA
<PAGE>
Proxy without telephone voting instructions - side two -----------------------
The Board of Directors recommends a vote FOR Proposals 1, 2 and 3
Please mark
your votes as
indicated in /x/
this example
FOR WITHHOLD FOR ALL
1. ELECTION OF DIRECTORS ALL ALL EXCEPT
(noted below)
Nominees: / / / / / /
01 Michael E. Alpert 06 Jack W. Goodall
02 Jay W. Brown 07 Murray H. Hutchison
03 Paul T. Carter 08 Robert J. Nugent
04 Charles W. Duddles 09 L. Robert Payne
05 Edward Gibbons
(Instruction: To withhold authority to vote for any individual nominee mark
the "FOR ALL EXCEPT" box above and write that nominee's name below.)
- ---------------------------------------------
2. Approve the Non-Employee Director Stock FOR AGAINST ABSTAIN
Option Plan, as amended. / / / / / /
3. Ratification of appointment of KPMG Peat FOR AGAINST ABSTAIN
Marwick LLP as independent accountants. / / / / / /
4. In their discretion, the Proxies are authorized
to vote upon such other business as may
properly come before the meeting.
I plan to attend the meeting. YES NO
/ / / /
[NAME, ADDRESS & SHARE INFORMATION]
Signature(s)______________________________Dated:________________, 1999
Stockholder(s), please sign above exactly as name appears hereon; in the case
of joint holders, all should sign. Fiduciaries should add their full title to
their signature. Corporations should sign in full corporate name by an
authorized officer. Partnerships should sign in partnership name by an
authorized person.
------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
<PAGE>
Proxy Easy$aver Plus Plan - side one -----------------------------------------
FOODMAKER, INC. EASY$AVER PLUS PLAN BALLOT
FOR ANNUAL MEETING OF STOCKHOLDERS ON FEBRUARY 12, 1999 AT 2:00 P.M.
DEL MAR HILTON, 15575 JIMMY DURANTE BOULEVARD, DEL MAR, CALIFORNIA.
This is a ballot for voting instructions for the shares of Foodmaker, Inc.
stock allocated to your Foodmaker, Inc. Easy$aver Plus Plan account. Mellon
Bank, N.A., as Trustee of the Plan, will vote all shares held in your account
as directed on your ballot at the Foodmaker, Inc. Annual Meeting of
Stockholders to be held on February 12, 1999.
Indicate your voting instructions for the proposals on the ballot, sign and
date it, and return it in the envelope provided. Your ballot must be
received on or before February 10, 1999 in order to be counted. Your voting
instructions will be kept confidential.
If you properly sign and return your ballot, the Trustee will vote your
shares according to your instructions. If you do not properly sign and
return the ballot to be received on or before February 10, 1999, to Ellen
Philip Associates Inc., no action will be taken with respect to those shares
which have been allocated to your account.
(Continued, and to be marked, dated and signed, on the other side)
-----------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
FOODMAKER, INC.
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 12, 1999 AT 2:00 P.M.
DEL MAR HILTON
15575 JIMMY DURANTE BOULEVARD
DEL MAR CALIFORNIA
<PAGE>
Proxy Easy$aver Plus Plan - side two -----------------------------------------
The Board of Directors recommends a vote FOR Proposals 1, 2 and 3
Please mark
your votes as
indicated in /x/
this example
FOR WITHHOLD FOR ALL
1. ELECTION OF DIRECTORS ALL ALL EXCEPT
(noted below)
Nominees: / / / / / /
01 Michael E. Alpert 06 Jack W. Goodall
02 Jay W. Brown 07 Murray H. Hutchison
03 Paul T. Carter 08 Robert J. Nugent
04 Charles W. Duddles 09 L. Robert Payne
05 Edward Gibbons
(Instruction: To withhold authority to vote for any individual nominee mark
the "FOR ALL EXCEPT" box above and write that nominee's name below.)
- ---------------------------------------------
2. Approve the Non-Employee Director Stock FOR AGAINST ABSTAIN
Option Plan, as amended. / / / / / /
3. Ratification of appointment of KPMG Peat FOR AGAINST ABSTAIN
Marwick LLP as independent accountants. / / / / / /
4. In their discretion, the Proxies are authorized
to vote upon such other business as may
properly come before the meeting.
[NAME, ADDRESS & SHARE INFORMATION]
Signature(s)____________________________________Dated:________________, 1999
--------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
<PAGE>
BALLOT FOODMAKER, INC. BALLOT
Annual Meeting of Stockholders, February 12, 1999
The undersigned votes_________________________________(_______________________)
shares of stock, with respect to the following:
1. Election of Directors: Michael E. Alpert, Jay W. Brown, Paul T. Carter,
Charles W. Duddles, Edward Gibbons, Jack W. Goodall, Murray H. Hutchison,
Robert J. Nugent and L. Robert Payne.
/ / FOR all nominees listed.
/ / WITHHOLD AUTHORITY to vote for all nominees listed.
/ / FOR all nominees listed except__________________________________
2. Approve the Non-Employee Director Stock Option Plan, as amended.
/ / FOR / / AGAINST / / ABSTAIN
3. Ratification of appointment of KPMG Peat Marwick LLP as independent
accountants. / / FOR / / AGAINST / / ABSTAIN
____________________________________________
Stockholder's signature (/ / check box if you are voting shares held in
Easy$aver Plus Plan)
INSTRUCTION: If ballot is cast by proxy, print stockholder name above or, if
multiple stockholders, print "Proxies Filed" above.
____________________________________________
Proxy signature (if ballot is cast by proxy)
