<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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 Section 240.14a-12
CHECKERS DRIVE-IN RESTAURANTS, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment 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:
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(4) Date Filed:
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<PAGE>
CHECKERS DRIVE-IN RESTAURANTS, INC.
14255 49TH STREET NORTH, BUILDING 1
CLEARWATER, FLORIDA 33762
August 25, 2000
Dear Stockholder:
You are cordially invited to attend the 2000 Annual Meeting of
Stockholders of Checkers Drive-In Restaurants, Inc. The Meeting will be held on
September 15, 2000 at 9:30 a.m., Eastern Standard Time, at Wyndham Harbour
Island Hotel, located at 725 South Harbour Island Blvd., Tampa, Florida.
The Notice of the Meeting and the Proxy Statement on the following
pages cover the formal business of the Meeting. We will also report on the
progress of the Company and comment on matters of current interest.
It is important that your shares be represented at the Meeting. We ask
that you promptly sign, date and return the enclosed proxy card in the envelope
provided, even if you plan to attend the Meeting. Returning your proxy card to
us will not prevent you from voting in person at the Meeting if you are present
and choose to do so.
If your shares are held in street name by a brokerage firm, your broker
will supply you with a proxy to be returned to the brokerage firm. It is
important that you return the form to the brokerage firm as quickly as possible
so that the brokerage firm may vote your shares. You may not vote your shares in
person at the Meeting unless you obtain a power of attorney or legal proxy from
your broker authorizing you to vote the shares, and you present this power of
attorney or proxy at the Meeting.
The Company's management team looks forward to greeting you personally
at the Meeting.
Sincerely,
/s/ ANDREW D. SIMONS
ANDREW D. SIMONS
Secretary
<PAGE>
CHECKERS DRIVE-IN RESTAURANTS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 15, 2000
Notice is hereby given that the Annual Meeting of Stockholders of
Checkers Drive-In Restaurants, Inc., a Delaware corporation, will be held at
Wyndham Harbour Island Hotel, located at 725 South Harbour Island Blvd.,
Tampa, Florida, on Friday, September 15, 2000 at 9:30 a.m., Eastern Standard
Time, for the following purposes:
1. To elect three Directors to serve until the Annual Meeting in
2003 and until their successors are elected and qualified or
until their earlier resignation, removal from office or death;
2. To ratify and approve an amendment to the Company's 1991 Stock
Option Plan to increase the number of shares available under
the Plan to 1,500,000 shares;
3. To ratify and approve an amendment to the Company's 1994 Plan
for Non-Employee Directors;
4. To ratify and approve the appointment of KPMG Peat Marwick LLP
as the Company's independent auditors for fiscal 2000; and
5. To transact such other business as may properly come before
the Meeting or any adjournment thereof.
Your attention is directed to the Proxy Statement accompanying this
Notice for a more complete description of the matters to be acted upon at the
Meeting. The 1999 Annual Report of the Company and a copy of our Form 10-Q
for the second quarter of 2000 are also enclosed. Stockholders are encouraged
to review the 10-Q in conjunction with their review of the Annual Report.
Stockholders of record at the close of business on August 24, 2000 are
entitled to receive notice of and to vote at the Meeting and any adjournment
thereof. A list of such stockholders will be available for examination by any
stockholder, for any purpose germane to the Meeting, during ordinary business
hours, at Checkers Drive-In Restaurants, Inc., 14255 49th Street North,
Building 1, Clearwater, FL 33762, for a period of ten days prior to the
Meeting date.
All stockholders are cordially invited to attend the Meeting. Whether
or not you expect to attend, please sign and return the enclosed Proxy
promptly in the envelope provided to assure the presence of a quorum. You may
revoke your Proxy and vote in person at the Meeting if you desire. If your
shares are held in street name by a brokerage firm, your broker will supply
you with a proxy to be returned to the brokerage firm. It is important that
you return the form to the brokerage firm as quickly as possible so that the
brokerage firm may vote your shares. You may not vote your shares in person
at the Meeting unless you obtain a power of attorney or legal proxy from your
broker authorizing you to vote the shares, and you present this power of
attorney or proxy at the Meeting.
By Order of the Board of Directors,
/s/ ANDREW D. SIMONS
ANDREW D. SIMONS
Secretary
August 25, 2000
<PAGE>
CHECKERS DRIVE-IN RESTAURANTS, INC.
14255 49TH STREET NORTH, BUILDING 1
CLEARWATER, FLORIDA 34615
PROXY STATEMENT
This Proxy Statement is furnished by the Board of Directors and
management of Checkers Drive-In Restaurants, Inc. (the "Company" or
"Checkers") in connection with the solicitation of proxies to be voted at the
Company's 2000 Annual Meeting of Stockholders, which will be held on Friday,
September 15, 2000 at 9:30 a.m. Eastern Standard Time, at Wyndham Harbour
Island Hotel, 725 South Harbour Island Blvd., Tampa, Florida (the "Meeting").
Any proxy delivered pursuant to this solicitation may be revoked, at
the option of the person executing the proxy, at any time before it is exercised
by delivering a signed revocation to the Company, by submitting a later-dated
proxy or by attending the Meeting in person and casting a ballot. If proxies are
signed and returned without voting instructions, the shares represented by the
proxies will be voted as recommended by the Board of Directors.
The close of business on August 24, 2000 has been designated as the
record date for the determination of stockholders entitled to receive notice of
and to vote at the Meeting (the "Stockholders"). As of August 18, 2000,
9,463,261 shares of the Company's Common Stock, par value $.001 per share (the
"Common Stock"), were issued and outstanding. Each Stockholder will be entitled
to one vote for each share of Common Stock registered in his or her name on the
books of the Company as of the close of business on August 24, 2000 on all
matters that come before the Meeting.
The affirmative vote of a majority of the votes cast at the Meeting
will be required for the election of Directors. A properly executed proxy marked
"WITHHOLD AUTHORITY" with respect to the election of one or more Directors will
not be treated as voted with respect to the Directors indicated, although it
will be counted for purposes of determining whether there is a quorum. For each
other item to be acted upon at the Meeting, the affirmative vote of the holders
of a majority of the shares of Common Stock represented in person or by proxy at
the meeting and entitled to vote on the item will be required for approval. A
properly executed proxy marked "ABSTAIN," although counted for purposes of
determining whether there is a quorum, will not be voted. Accordingly, an
abstention will have the same effect as a vote cast against such other matters.
In accordance with the rules of the NASDAQ National Market, brokers and
nominees may be precluded from exercising their voting discretion with respect
to certain matters to be acted upon (e.g., any proposal which would
substantially affect the rights or privileges of the Common Stock) and thus, in
the absence of specific instructions from the beneficial owner of shares, will
not be empowered to vote the shares on such matters. If a broker indicates that
it does not have discretionary authority as to certain shares to vote on a
particular matter, such shares will not be considered as present and entitled to
vote with respect to that matter. Shares represented by such broker non-votes
will, however, be counted for purposes of determining whether there is a quorum.
The cost of soliciting proxies will be borne by the Company. In
addition to the use of the mails, proxies may be solicited personally or by
telephone by regular employees of the Company, without additional compensation.
The Company will reimburse brokers and other persons holding stock in their
names, or in the names of nominees, for their expenses in sending proxy
materials to their principals and obtaining their proxies. The approximate date
on which this Proxy Statement and enclosed form of proxy has been first mailed
to Stockholders is August 25, 2000.
<PAGE>
ELECTION OF DIRECTORS
There are currently eleven seats on the Board of Directors of the
Company, with no vacancies. The Board is divided into three classes of Directors
serving staggered three-year terms. Directors hold their positions until the
annual meeting of stockholders in the year in which their term expires and until
their respective successors are elected and qualified or until their earlier
resignation, removal from office or death. The term of office of three of the
Company's Directors, David Gotterer, Ronald B. Maggard and Burt Sugarman, will
expire at the Meeting. The Board of Directors unanimously recommends that you
vote "FOR" the election of Messrs. Gotterer, Maggard and Sugarman as Directors,
to hold office until the Company's annual meeting in 2003 and until their
successors shall be duly elected and qualified or until their earlier
resignation, removal from office or death. See "Management - Directors and
Executive Officers" and "Security Ownership of Management and Others" for
further information on such nominees. Stockholders may vote for up to three
nominees. Stockholders may not vote cumulatively in the election of Directors.
MANAGEMENT
The following table sets forth the names and ages of the Directors of
the Company and the positions they hold. Executive officers serve at the
pleasure of the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
William P. Foley, II 55 Chairman of the Board of Directors (term
expiring in 2002)
Peter C. O'Hara 44 Vice Chairman of the Board of Directors
and Director (term expiring in 2001)
Daniel J. Dorsch 46 President, Chief Executive Officer and
Director (term expiring in 2001)
Terry N. Christensen 59 Director (term expiring in 2001)
Willie D. Davis 65 Director (term expiring in 2001)
David Gotterer 71 Director (term expiring in 2000); Nominee
for Director with term expiring in 2003
Ronald B. Maggard 50 Director (term expiring in 2000); Nominee
for Director with term expiring in 2003
Clarence V. McKee 59 Director (term expiring in 2002)
Andrew F. Puzder 49 Director (term expiring in 2002)
Burt Sugarman 61 Director (term expiring in 2000); Nominee
for Director with term expiring in 2003
C. Thomas Thompson 50 Director (term expiring in 2002)
</TABLE>
<PAGE>
DIRECTORS
WILLIAM P. FOLEY, II has served as a director of the Company since
November 1996 and as Chairman of the Board since June 1997. Mr. Foley
has been Chairman of the Board of Santa Barbara Restaurant Group, Inc.
since July 1997. He has been the Chairman of the Board and Chief
Executive Officer of Fidelity National Financial, Inc. which, through
its subsidiaries, is a title insurance underwriting company, since its
formation in 1984. He has been Chairman of the Board and Chief
Executive Officer of Fidelity National Title Insurance Company since
April 1981. Mr. Foley is also currently serving as Chairman of the
Board of Directors of CKE Restaurants, Inc., owner, operator and
franchiser of quick-service restaurants, primarily under the Carl's Jr.
and Hardee's brand names, and is a director of Micro General
Corporation, Miravant Medical Technologies and Fresh Foods, Inc.
PETER C. O'HARA has served as a director of the Company since June 1998
and Vice Chairman since September 1999. He has served as president of
Capital Management of L.I., N.Y., Inc., a Checkers franchise area
developer for Long Island, New York since March 1994.
DANIEL J. DORSCH has served as the Chief Executive Officer, President
and a director of the Company since December 1999. Mr. Dorsch is also a
multi-unit franchise owner for Papa John's Pizza, earning franchisee of
the year in 1998. Mr. Dorsch also owned and operated franchises with
Honda, Kawasaki, Yamaha, Suzuki, & Seadoo from 1994 through 1999. Mr.
Dorsch was President and Chief Operating Officer and shareholder for a
chain of 91 Taco Bell & KFC restaurants operating in seven states from
1984-1993.
TERRY N. CHRISTENSEN has served as a director of the Company since
November 1996. Mr. Christensen has been a partner in the law firm of
Christensen, Miller, Fink, Jacobs, Glaser, Well & Shapiro, LLP since
May 1988. Mr. Christensen is a director of GIANT GROUP, LTD. and MGM
MIRAGE.
WILLIE D. DAVIS has served as a director of the Company since August
1999. Mr. Davis has been the President and a director of All-Pro
Broadcasting, Inc., a holding company operating several radio stations,
for more than the past five years. Mr. Davis currently also serves on
the board of directors of Sara Lee Corporation, K-Mart Corporation,
Dow Chemical Company, Metro-Goldwyn-Mayer Inc., MGM MIRAGE, Alliance
Bank, Johnson Controls, WICOR, Inc., Bassett Furniture Industries,
Incorporated and Strong Fund.
DAVID GOTTERER has served as a director of the Company since August
1999. Mr. Gotterer has been a partner in the accounting firm of Mason &
Company, LLP, New York, New York, for more than the past five years.
Mr. Gotterer is a director and Vice Chairman of GIANT GROUP, LTD.
RONALD B. MAGGARD has served as a director of the Company since August
1999. For more than the past five years, Mr. Maggard has been President
of Maggard Enterprises, Newport Beach, which owns 20 franchised Long
John Silver Restaurants and President of Midstate Distributing,
Lexington, Kentucky, which is a Miller Distributing Company.
CLARENCE V. MCKEE has served as a director of the Company since June
1996. Mr. McKee has been the President and Chief Executive Officer of
McKee Communications, Inc., a Tampa, Florida based company engaged in
the acquisition and management of communications companies, since
October 1992. He is a former chairman of the Florida Association of
Broadcasters.
ANDREW F. PUZDER has served as a director of the Company since August
1999. Mr. Puzder has been Chief Executive Officer and President of
Hardee's Food Systems, Inc. since June 2000. He
<PAGE>
served as Chief Executive Officer and President of Santa Barbara
Restaurant Group, Inc. from July 1997 to June 2000. He also served as
Executive Vice President and General Counsel of CKE Restaurants, Inc.
from February 1997 to June 2000. Mr. Puzder also served as Executive
Vice President and other capacities for Fidelity National Financial,
Inc. from January 1995 to April 1997. Mr. Puzder is also a director of
Fresh Foods, Inc., Santa Barbara Restaurant Group, Inc. and Aspeon,
Inc.
BURT SUGARMAN has served as a director of the Company since June 1997.
Mr. Sugarman has been the Chairman of the Board, President and Chief
Executive Officer of GIANT GROUP, LTD. for for the past five years. Mr.
Sugarman is a director of GIANT and Santa Barbara Restaurant Group,
Inc. Mr. Sugarman served as Chairman of the Board of Rally's
Hamburgers, Inc. from November 1994 to October 1997.
C. THOMAS THOMPSON has served as a director of the Company since
November 1996 and served as Vice Chairman of the Board of Directors
from December 1996 to September 1999. He also served as Chief Executive
Officer of the Company from December 1996 to November 1997. Mr.
Thompson served as President and Chief Operating Officer of Carl
Karcher Enterprises, Inc., a wholly owned subsidiary of CKE
Restaurants, Inc., from October 1994 to March 2000 at which time he was
elected Chief Executive Officer of CKE. Mr. Thompson is a director of
Santa Barbara Restaurant Group, Inc.
EXECUTIVE OFFICERS
THEODORE ABAJIAN, 36, was appointed Senior Vice President and Chief
Financial Officer of the Company in December 1999. He also serves as
Executive Vice President and Chief Financial Officer of Santa Barbara
Restaurant Group, Inc. Prior to joining Santa Barbara Restaurant Group,
Inc. in May 1998, Mr. Abajian served as Chief Financial Officer of Star
Buffet, Inc. since its formation in July 1997. Mr. AbaJian also served
as a director of Stacey's Buffet, Inc. from October 31, 1997 to
February 4, 1998. Mr. Abajian served as the Vice President and
Controller of Summit Family Restaurants, Inc. from May 1994 to May
1998.
DAVID MILLER, 47, has served as Senior Vice President and Chief
Operating Officer since October 1999. Mr. Miller has been with Checkers
for ten years serving in various capacities including Vice President
Marketing, Senior Director of Operations and Senior Director of
Franchise Operations.
ANDREW SIMONS, 39, was appointed Senior Vice President, General Counsel
and Secretary of the Company in July 1999. In addition, Mr. Simons
holds the position of Senior Vice President, General Counsel and
Secretary of Santa Barbara Restaurant Group, Inc. From April 1996 to
June 1999, Mr. Simons served as Vice President, General Counsel and
Secretary of Circon Corporation. From July 1992 through April 1996, Mr.
Simons worked for Tokos Medical Corporation in various capacities
including Vice President, General Counsel and Secretary.
STEVEN COHEN, 48, was appointed as Senior Vice-President of Human
Resources for the Company in December, 1997. He is responsible for all
human resource, training, benefits and workers compensation functions.
From 1995 to 1997, he served as a Regional Human Resources director for
EZCorp. Inc., a specialty retail chain with 300 locations throughout
the United States.
ANNETTE DELLA FLORA, 38, was appointed Senior Vice President of
Marketing of the Company in September 1999. Ms. Della Flora is also the
Vice President of Marketing of Santa Barbara Restaurant Group, Inc.
From December 1998 to September 1999, she was Vice President of
Marketing for Del Taco, Inc. in Laguna Hills, California. Ms. Della
Flora worked for
<PAGE>
HomeBase/Home Improvement Warehouse in Anaheim, California from June
1994 to November 1998 in various marketing and advertising positions.
WENDY BECK, 35, is Vice President of Finance and Treasurer. Ms. Beck
came to Checkers in 1993 and has 13 years of experience in finance, tax
and treasury.
No family relationships exist between any of the directors and the
executive officers of the Company. There are no arrangements or
understandings between any director and any other person concerning service
or nomination as a director.
The Board of Directors held three meetings during 1999 and acted one
time by unanimous written consent without a meeting. In 1999, each incumbent
Director attended at least 75% of the meetings of the Board of Directors and of
each committee of which he was a member. From time to time during 1999, the
Chairman and other Board members communicated with one another regarding Company
business in between formal meetings.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has Executive, Audit, Compensation and Stock
Option Committees; it does not have a Nominating Committee. The entire Board of
Directors functions as a Nominating Committee, and the Board will consider
written recommendations from stockholders for nominations to the Board of
Directors in accordance with the procedures set forth in the By-Laws of the
Company. See "Stockholder Proposals for Presentation at the 2000 Annual
Meeting."
The Audit Committee consists of Ronald D. Maggard, Clarence V. McKee
and Andrew F. Puzder. David Gotterer was elected to the Committee in January
2000. The Committee held one meeting In 1999. The Audit Committee recommends
the appointment of the independent public accountants of the Company, discusses
and reviews the scope and fees of the prospective annual audit and reviews the
results thereof with the independent public accountants, reviews and approves
non-audit services of the independent public accountants, reviews compliance
with existing major accounting and financial policies of the Company, reviews
the adequacy of the financial organization of the Company, reviews management's
procedures and policies relative to the adequacy of the Company's internal
accounting controls and compliance with federal and state laws relating to
accounting practices, and reviews and approves (with the concurrence of the
majority of the disinterested Directors of the Company) transactions, if any,
with affiliated parties.
The Executive Committee consists of William P. Foley, II, Burt Sugarman
and C. Thomas Thompson and held one meeting in 1999. James J. Gillespie also
served on the Committee until his resignation in September 1999. The Executive
Committee has the authority, between meetings of the Board, to take all actions
with respect to the management of the Company's business that require action by
the Board, except with respect to certain specified matters that by law must be
approved by the entire Board.
The Compensation Committee consists of William P. Foley, II, Willie D.
Davis and Peter C. O'Hara and held one meeting in 1999. Its principal function
is to make recommendations to the Board of Directors with respect to the
compensation and benefits to be paid to officers, and it performs other duties
prescribed by the Board with respect to employee stock plans and benefit
programs.
The Stock Option Committee consists of C. Thomas Thompson and Burt
Sugarman and acted by written consent twice in 1999. Its principal function is
to administer the stock plans on behalf of the Board and make recommendations to
the Board of Directors with respect to the option plans when appropriate.
<PAGE>
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive $2,500 for each
Board meeting, and $1,000 for each committee meeting they attend plus out of
pockets expenses. Non-employee Directors also participate in the 1994 Stock
Option Plan for Non-Employee Directors, which provides for the automatic grant
to each non-employee Director, upon election to the Board of Directors, of a
non-qualified, ten-year option to acquire 8,333 shares of the Company's Common
Stock, with the subsequent automatic grant on the first day of each fiscal year
thereafter of a non-qualified, ten-year option to acquire an additional 1,667
shares of Common Stock. All such options have an exercise price equal to the
closing sale price of the Common Stock on the date of grant. One-fifth of each
initial option granted pursuant to such Plan prior to August 6, 1997 become
exercisable on a cumulative basis on each of the first five anniversaries of
the date of the grant of such option. One-third of each annual option granted
pursuant to such Plan prior to August 6, 1997 becomes exercisable on a
cumulative basis on each of the first three anniversaries of the date of the
grant of such option. Pursuant to a proposal approved by stockholders at the
Annual Meeting in 1999, the Chairman of the Board received an option to purchase
40,000 shares, the Vice-Chairman received an option to purchase 20,000 shares
and all other non-employee directors received options to purchase 10,000 shares
of the Company's common stock. All options granted pursuant to this Plan on or
after August 6, 1997 are exercisable immediately upon grant. Options are
exercisable whether or not the Non-Employee Director, at the time of exercise,
is a member of the Board of Directors, unless the Director is removed for cause.
Directors who are employees of the Company receive no extra compensation for
their services as Directors. In addition, from September 1999 to June, 2000
Peter O'Hara received $10,000 per month for performing services as a consultant.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's Directors, officers and holders of more
than 10% of the Company's Common Stock to file with the Securities and Exchange
Commission (the "SEC") initial reports of ownership and reports of changes in
ownership of Common Stock and any other equity securities of the Company. To the
Company's knowledge, based solely upon a review of the forms, reports and
certificates filed with the Company by such persons, all such Section 16(a)
filing requirements were complied with by such persons in 1999.
SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS
The following table sets forth certain information as of August 18,
2000, relating to the beneficial ownership of the Company's common stock by
(i) all persons known by the Company to beneficially own more than 5% of the
outstanding shares of the Company's Common Stock, (ii) each director, director
nominee and Named Executive Officer, as defined under "Compensation of Executive
Officers" and (iii) all officers and directors of the Company as a group. The
Company had 9,463,261 shares outstanding as of August 18, 2000,
<PAGE>
<TABLE>
<CAPTION>
NAME AND NUMBER OF SHARES PERCENTAGE
ADDRESS OF BENEFICIALLY OF SHARES
BENEFICIAL OWNER (1)(2)(3) OWNED (1) OUTSTANDING(4)
-------------------------------- ---------------- --------------
<S> <C> <C>
CKE Restaurants, Inc.(5) 1,960,202 19.0%
401 W. Carl Karcher Way
Anaheim, CA 92801
GIANT GROUP, LTD (6) 743,229 7.7%
9440 Santa Monica Blvd, #407
Beverly Hills, CA 90210
William P. Foley, Il (7) 338,373 3.5%
Burt Sugarman (8) 281,100 2.9%
Peter C. O'Hara (9) 230,417 2.4%
C. Thomas Thompson (10) 154,235 1.6%
David Gotterer (11) 124,489 1.3%
Willie Davis (12) 118,922 1.2%
Daniel J. Dorsch (13) 125,000 1.3%
Andrew F. Puzder (14) 111,499 1.2%
Terry N. Christensen (15) 103,496 1.1%
Ronald B. Maggard (16) 105,655 1.1%
Clarence V. McKee (17) 80,084 *
Wendy Beck (18) 12,119 *
Steven Cohen (19) 14,424 *
David Miller (20) 13,655 *
All officers and directors as a
group (17 persons)(21) 1,871,774 16.6%
</TABLE>
* Represents less than 1% of the outstanding Common Stock of the company.
(1) Unless otherwise noted, the Company believes that all shares are
beneficially owned and that all persons named in the table have sole voting
and investment power with respect to all shares of Company Common Stock owned
by them.
<PAGE>
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from August 18, 2000, upon the exercise
of warrants or options. Each beneficial owner's percentage ownership is
determined by assuming that options or warrants that are held by such person
(but not those held by any other person) and which are exercisable within 60
days from August 18, 2000 have been exercised.
(3) Unless otherwise indicated, the address of each stockholder listed is 14255
49th Street North, Building 1, Clearwater, Florida 33762.
(4) Percentage calculation assumes owners' derivative securities exercisable
within 60 days have been exercised.
(5) Includes 865,513 shares issuable upon the exercise of presently exercisable
warrants.
(6) Includes 237,416 shares issuable upon the exercise of presently exercisable
warrants held by KCC Delaware, a wholly owned subsidiary of GIANT GROUP, LTD.
(7) Includes 304,982 shares subject to options and warrants. Excludes the
1,960,202 shares and warrants to purchase shares held by CKE Restaurants, Inc.
and 282,072 shares held by Santa Barbara Restaurant Group, Inc. as to which Mr.
Foley disclaims beneficial interest. Mr. Foley is Chairman of the Board of both
CKE Restaurants, Inc. and Santa Barbara Restaurant Group, Inc. Also excludes
357,557 warrants held by Fidelity National Financial, Inc., as to which Mr.
Foley disclaims beneficial ownership. Mr. Foley is Chairman of the Board and
Chief Executive Officer of Fidelity National Financial, Inc.
(8) Includes 272,753 shares subject to options and warrants. Excludes 743,229
shares and warrants to purchase shares held by GIANT GROUP, LTD., as to which
Mr. Sugarman disclaims beneficial ownership. Mr. Sugarman is Chairman of the
Board and Chief Executive Officer of GIANT GROUP, LTD.
(9) Includes 228,334 shares issuable upon the exercise of stock options which
are exercisable within 60 days.
(10) Includes 150,898 shares issuable upon the exercise of stock options which
are exercisable within 60 days.
(11) Includes 115,044 shares issuable upon the exercise of stock options which
are exercisable within 60 days.
(12) Includes 118,922 shares issuable upon the exercise of stock options which
are exercisable within 60 days.
(13) Includes 125,000 shares issuable upon the exercise of stock options which
are exercisable within 60 days.
(14) Includes 108,029 shares issuable upon the exercise of stock options which
are exercisable within 60 days.
(15) Includes 98,989 shares issuable upon the exercise of stock options which
are exercisable within 60 days.
(16) Includes 105,655 shares issuable upon the exercise of stock options which
are exercisable within 60 days.
(17) Includes 80,001 shares issuable upon the exercise of stock options which
are exercisable within 60 days.
(18) Includes 10,452 shares issuable upon the exercise of stock options which
are exercisable within 60 days.
(19) Includes 14,424 shares issuable upon the exercise of stock options which
are exercisable within 60 days.
(20) Includes 13,655 shares issuable upon the exercise of stock options which
are exercisable within 60 days.
<PAGE>
(21) Includes an aggregate of 1,805,444 shares issuable upon the exercise of
stock options and warrants which are exercisable within 60 days held by officers
and directors of the Company.
COMPENSATION OF EXECUTIVE OFFICERS
The following table is a summary of the compensation earned for the
last three fiscal years for services in all capacities to each of the persons
who qualified as a "named executive officer" under item 402(b) of Regulation
S-K. All amounts shown before the Merger between the Company and Rally's
Hamburgers, Inc. in August 1999 include compensation paid by both Checkers and
Rally's pursuant to the management service
agreement between the companies.
<TABLE>
<CAPTION>
Compensation
Annual Compensation Awards
----------------------- -----------
Securities
Other Annual Underlying All Other
Salary Bonus Compensation Options Compensation
Name and Year ($) (5) ($) (#)(3)
Principal Position
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Daniel J. Dorsch (1) 1999 9,315 - - 100,000 -
Chief Executive Officer
James J. Gillespie (2) 1999 228,173 20,000 44,002(4) 43,593(2)
Chief Executive Officer 1998 292,500 20,000 45,304(5) 132,917
1997 45,067 50,000 - 49,750 -
James T. Holder (6) 1999 179,308 - - - 98,558
Senior Vice President 1998 180,000 144,000 - 43,275 -
General Counsel and 1997 179,231 - - 8,333 -
Secretary
Harvey Fattig (7) 1999 134,615 - - - 99,001
Executive Vice President 1998 147,404 - - 46,500 -
and Chief operating Officer
David Miller 1999 136,442 - - 500(8)
Chief Operating Officer 1998 127,695 - - 16,316 498
1997 117,679 - - - 439
Steven Cohen 1999 134,423 - - - 481(8)
Vice President, Human 1998 122,812 - 43,200(9) 21,637 462
Resources
Wendy Beck 1999 113,587 - - - 144(8)
Vice President, Treasury 1998 97,345 - - 13,113 l08
1997 90,563 - - - 94
</TABLE>
(1) Mr. Dorsch was appointed Chief Executive Officer of the Company on December
14, 1999.
(2) Mr. Gillespie resigned in November, 1999. All other compensation represents
severance ($41,658) and term life insurance ($1,935).
(3) All options listed have been adjusted to reflect the one-for-twelve reverse
stock split which occurred in August 1999.
(4) Includes relocation expense ($23,002), travel expense ($12,650) and health
care expense ($8,350).
<PAGE>
(5) Includes relocation expense ($9,809) and travel expense ($34,194).
(6) Mr. Holder resigned in November, 1999. All other compensation represents
severance ($98,159) and term life insurance ($398).
(7) Mr. Fattig resigned in September, 1999. All other compensation represents
severance ($97,596) and term life insurance ($1,405).
(8) All other compensation includes amounts paid by the Company on behalf of the
executives for term life insurance.
(9) Includes relocation expenses paid.
EMPLOYMENT AGREEMENTS
Effective December 14, 1999, the Company entered into an employment
agreement with Daniel J. Dorsch, pursuant to which Mr. Dorsch serves as the
Chief Executive Officer and a Director of the Company. The term of employment is
for two years, subject to renewal by the Company for one-year periods
thereafter, at an annual base salary of $200,000. Mr. Dorsch is also entitled to
participate in the incentive bonus plans of the Company and participate in the
Company's benefit plans. Upon execution of the employment agreement, Mr. Dorsch
was granted a fully vested option to purchase 100,000 shares of Checkers common
stock. Under the agreement, Mr. Dorsch may be terminated at any time for cause.
If Mr. Dorsch is terminated without cause, he will be entitled to receive his
base annual salary, and any earned unpaid bonus, through the unexpired terms of
the agreement, payable in a lump sum or as directed by Mr. Dorsch. Cause is
defined as (i) a material default or breach under the agreement, (ii) the
willful and habitual failure to perform duties under the agreement or corporate
policies, or (iii) misconduct, dishonesty, insubordination or other act that has
a direct substantial and adverse effect on the reputation of the Company or its
relationships with its customers or employees.
Effective November 10, 1997, the Company and Jay Gillespie entered
into an employment agreement, pursuant to which Mr. Gillespie served as the
President and Chief Executive Officer and a Director of the Company and
Rally's Hamburgers, Inc. prior to its merger with the Company. The term of
employment was for two years, subject to automatic renewal by the Company for
one-year periods thereafter, at an annual base salary of $282,500. Mr.
Gillespie was also entitled to participate in the incentive bonus plans of
the Company. Upon execution of the employment agreement Mr. Gillespie was
granted an option to purchase 300,000 shares of Common Stock and received a
signing bonus of $50,000. Mr. Gillespie was also entitled to participate in
the Company's employee benefit plans and programs and was entitled to
reimbursement of his reasonable moving expenses and a relocation fee of
$5,000. Under the agreement, Mr. Gillespie could be terminated at any time
for cause. If Mr. Gillespie was terminated without case, he was entitled to
receive his base annual salary, and any earned unpaid bonus, through the
unexpired term of the agreement, payable in a lump sum or as directed by Mr.
Gillespie. Cause is defined as (i) a material default or breach under the
agreement, (ii) the willful and habitual failure to perform duties under the
agreement or corporate policies, or (iii) misconduct, dishonesty,
insubordination or other act that has a direct, substantial and adverse
effect on the reputation of the Company or its relationship with its
customers or employees. On October 7, 1999, Mr. Gillespie resigned pursuant
to an agreement he reached with the Company in which the Company agreed to
pay Mr. Gillespie his base salary through November 10, 1999.
In November 1997 and February 1998, the Company entered into letter
agreements with Steve Cohen and Harvey Fattig, respectively, which provide that
the executives are entitled to a severance payment equal to six months of their
base salary in the event that they are terminated without cause during the first
three years of
<PAGE>
their employment. In September 1999, in conjunction with Mr. Fattig's
resignation, the Company entered into a separation agreement with Mr. Fattig,
that superceded his letter agreement, in which the Company agreed to pay Mr.
Fattig a severance payment equal to six months of his base salary.
In August 1999, the Company entered into a separation agreement with
James T. Holder pursuant to which the Company agreed to make a severance payment
to Mr. Holder of an amount equal to six months of his base salary. Mr. Holder
also agreed to provide legal and consulting services to the Company on an "as
needed" basis following his resignation from the Company.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding options granted to
the named executive officers during fiscal 1999 pursuant to the Company's Stock
Option Plans:
<TABLE>
<CAPTION>
Individual Grants
--------------------------
Number of % of Potential Realizable
Securities Total Value at Assumed
Underlying Options Exercise Rates of Stock
Options Granted to or Base Price Appreciation
Granted Employees in Price Expiration for Option Term (1)
Name (#) Fiscal Year ($/Share) Date 5%($) 10%($)
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Daniel J. Dorsch 100,000 17.79% $1.2812 12/14/09 80,574 204,190
</TABLE>
(1) The 5% and 10% assumed annual rates of stock price appreciated are provided
in compliance with Regulation S-K under the Exchange Act. The Company does not
necessarily believe that these appreciation calculations are indicated of actual
future stock options values or that the price of the Company common stock will
appreciate at such rates.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
Set forth below is information with respect to the Company's options
exercised by the named executive officers during fiscal 1999 and the number and
value of unexercised stock options held by such executives at the end of the
fiscal year.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FY-END (#) AT FY-END (1)
SHARES ACQUIRED VALUE -------------------------------------------------------
NAME ON EXERCISE (#) REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Daniel J. Dorsch 0 0 100,000/0 $84,380$0
James J. Gillespie 0 0 47,029/0 $0/$0
Harvey Fattig 0 0 11,263/0 $0/$0
James T. Holder 0 0 20,893/0 $0/$0
David Miller 0 0 10,994/5,322 $0/$0
Steven Cohen 0 0 7,213/14,424 $0/$0
Wendy Beck 0 0 6,680/6,433 $0/$0
</TABLE>
(1) Based upon the difference between the exercise price and the closing price
of Checkers Common Stock as reported on the NASDAQ National Market on January 3,
2000 of $2.125
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The following report was prepared by the members of the Company's
Compensation Committee at the end of fiscal year 1999.
Annual compensation for all the executive officers of the Company is
determined by the Compensation Committee of the Company's Board of Directors,
subject to the terms of any applicable employment agreement negotiated between
an officer and the Company. During fiscal year 1999, annual compensation was set
with the intent of reasonably compensating the executive officers of the
Company, including the Chief Executive Officer, in line with industry norms,
based upon the Committee members' subjective evaluation of each officer and
their respective assigned responsibilities and individual performance. The
Committee also considered growth of the Company, earnings of the Company and
increases in the cost of living.
During fiscal 1999, awards of stock options under the Company's 1991
Stock Option Plan to all executive officers, including the Chief Executive
Officer, and other employees of the Company were made at the discretion of the
members of the Stock Option Committee (although options granted to the Chief
Executive Officer were approved by the full Board) pursuant to the terms of the
Plan. In determining awards under the Plan, the Stock Option Committee made a
subjective evaluation of individual responsibilities, past and anticipated
potential individual productivity and performance and past and anticipated
contributions to the profitability of the Company, both direct and indirect. The
Stock Option Committee did not give particular weight to a specific factor or
use a formula in determining awards under the Plan. While not required under the
terms of the Plan, all existing stock options were granted with an exercise
price at least equal to the market value of the stock at the time of the grant
and generally included vesting periods which the Stock Option Committee believed
would encourage the employee to remain with the Company. The benefits derived
from each stock option granted under the Plan is directly attributable to a
future increase in the value of the Company's Common Stock.
Effective December 14, 1999, Daniel J. Dorsch became President and
Chief Executive Officer of the Company. In addition, Mr. Dorsch was elected as a
Director of the Company in December 1999. Mr. Dorsch is eligible to participate
in the same executive compensation plans available to the Company's other senior
executives. Pursuant to the terms of his employment agreement, Mr. Dorsch's
salary is $200,000 per year. In determining Mr. Dorsch's compensation for 1999
as provided in his employment agreement, the Compensation Committee applied the
policies described above and considered other factors as well, such as Mr.
Dorsch's previous work experience and positions of responsibility and authority.
The Committee also determined to grant him options to purchase 100,000 shares of
Common Stock.
James J. Gillespie served as the Company's Chief Executive Officer
until November 1999 and, prior to August 1999, as the Chief Executive Officer of
both the Company and Rally's Hamburgers, Inc. Rally's was merged with and into
the Company effective August 9, 1999. Payments that Mr. Gillespie has received
in connection with his resignation are described under the heading "Employment
Agreements." The Compensation Committee's actions taken with respect to Mr.
Gillespie's resignation reflect the Committee's reasonable judgment of Mr.
Gillespie's service and position with the Company since November 1997.
The Company is required to disclose its policy regarding qualifying
executive compensation deductibility under Section 162(m) of the Internal
Revenue Code of 1986, as amended, which provides that, for the purposes of the
regular income tax and the alternative minimum tax, the otherwise allowable
deduction for compensation paid or accrued with respect to a covered employee of
a public corporation is limited to no
<PAGE>
more than $1 million per year. It is not expected that the compensation to be
paid to the Company's executive officers for fiscal 1999 will exceed the $1
million limit per officer. The Company's 1991 Stock Option Plan is structured so
that any compensation deemed paid to an executive officer when he exercises an
outstanding option under the plan, with an exercise price equal to the fair
market value of the option shares on the grant date, will qualify as
performance-based compensation that will not be subject to the $1 million
limitation.
COMPENSATION COMMITTEE MEMBERS
William P. Foley, II
Willie D. Davis
Peter C. O'Hara
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURN*
AMONG CHECKERS DRIVE-IN RESTAURANTS, INC.,
S&P 500 INDEX AND S&P RESTAURANT INDEX**
[CHART]
* Total return assumes reinvestment of any dividends for all companies
considered within the comparison and is adjusted for a one-for-12 reverse stock
split of the Company's Common Stock in August 1999.
** The Standard and Poor's Restaurant Index includes McDonald's
Corporation and Wendy's International, Inc. among others.
The foregoing graph assumes $100 invested on December 30, 1994, in
the Company, the S&P 500 Index and the S&P Restaurant Index.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is responsible
for executive compensation decisions. The Committee was comprised of Messrs.
Foley and McKee through August 1999 at which time a new Committee was elected
comprised of Messrs. Foley, Davis and O'Hara. Mr. Foley is Chairman of the
Board and Chief Executive Officer of Fidelity National Financial, Inc.
("Fidelity") and Chairman of the Board of both Santa Barbara Restaurant
Group, Inc. and CKE Restaurants, Inc. ("CKE"), which, as of August 18,
<PAGE>
2000, beneficially owned approximately 3.8%, 3.0%, and 19.0%, respectively,
of the outstanding shares, or warrants to purchase shares, of the Company's
Common Stock.
On November 22, 1996, the Company entered into an Amended and
Restated Credit Agreement (the "Restated Credit Agreement") with CKE, as
agent of the various lenders named therein (the "Lenders"). The Lenders
include CKE, Fidelity, C. Thomas Thompson, William R. Foley, Burt Sugarman
and KCC Delaware Company, a wholly owned subsidiary of GIANT GROUP, LTD.
Pursuant to the Restated Credit Agreement, the Company's primary debt
aggregating approximately $35.8 million principal amount, which had been
acquired by the Lenders on November 14, 1996, was restructured by, among
other things, extending its maturity by one year to July 31, 1999, fixing the
interest rate at 13.0% per annum, eliminating or relaxing certain covenants,
delaying scheduled principal payments until May 19, 1997 and eliminating $6.0
million in restructuring fees and charges. In connection with the
restructuring, the Company issued to the Lenders warrants to purchase an
aggregate of 20 million shares of Common Stock at an exercise price of $0.75
per share, the approximate market price of the Common Stock on the day prior
to the announcement of the acquisition of the Company's debt by the Lenders.
The Lenders specified above received warrants in the following amounts: CKE,
7,350,428; Fidelity, 2,108,262; C. Thomas Thompson, 28,490; William P. Foley,
II, 854,700; Burt Sugarman, 712,250; and KCC Delaware Company, 2,849,002. The
Lenders also received certain piggyback and demand registration rights with
respect to the shares of Common Stock underlying their warrants.
On December 1, 1998, the Company entered into two lease agreements,
which have been recorded as obligations under capital lease, with Granite
Financial, Inc. (a wholly owned subsidiary of Fidelity), whereby the Company
leased $659,000 of security equipment for its restaurants in the aggregate.
The first lease agreement is payable monthly at approximately $13,000
including effective interest at 13.08%. The second lease is payable at
approximately $9,000, including effective interest at 10.90%. Both of these
leases have terms of three years.
Prior to the merger of Rally's Hamburgers, Inc. and the Company in
August 1999, the Company and Rally's were parties to a management services
agreement pursuant to which the Company provided key services to Rally's,
including executive management, financial planning and accounting, franchise
support, purchasing and human resources. In addition, the Company and Rally's
shared certain of their executive officers, including the Chief Executive
Officer and the Chief Operating Officer. The total cost of the services
provided by the Company to Rally's in 1999 was $4.7 million.
The Company and Santa Barbara Restaurant Group, Inc. share certain
officers and directors. During 1999, the Company paid Santa Barbara
Restaurant Group, Inc. $104,408 for salary payments made by Santa Barbara
Restaurant Group, Inc. to certain officers on behalf of the Company.
On August 5, 1999, the Company entered into a Purchasing Services
Agreement with CKE Restaurants, Inc. pursuant to which the parties agreed to
cooperate with one another for purposes of gaining pricing discounts in
connection with the Company's purchasing of food and supplies from outside
vendors.
Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP, a
law firm in which Mr. Christensen is a named partner, performed legal
services for the Company during 1999 and will perform legal services for the
Company in 2000. Such services relate to the defense of certain litigation,
compliance with securities laws and other business matters.
<PAGE>
PROPOSAL NO. 2
APPROVAL OF AMENDMENT OF THE COMPANY'S 1991 STOCK OPTION PLAN
DESCRIPTION OF THE AMENDMENT
The Board of Directors of the Company adopted and the stockholders
approved, the Company's 1991 Stock Option Plan (the "Plan"). The Plan
enhances the Company's ability to attract and retain the services of
competent executive personnel, key employees and employee directors of the
Company or its affiliates and provides an incentive to all such personnel,
employees and employee directors to devote their utmost effort and skill to
advancement and betterment of the Company.
The Board of Directors, or the Stock Option Committee, administers
the Plan (the "Committee"). The Committee has the full power and authority to
interpret the Plan, select the recipients of options and purchase rights,
determine and authorize the type, terms and conditions of, including vesting
provisions, grants under the Plan, and adopt, amend and rescind rules
relating to the Plan.
Stockholders had previously approved the issuance of up to 9,500,000
shares of stock for option grants under the Plan; however, such allocation
was reduced to 791,667 shares in conjunction with the one-for-12 reverse
split of the Company's Common Stock which occurred in August 1999. In June
2000, option grants of 325,229 shares were made to certain officers and key
employees in excess of the 791,667 share limit. These excess option grants
were conditioned upon the ratification by, and approval of, the Company's
stockholders. If approved by the Company's stockholders, the Plan will be
amended to increase the maximum number of shares available under the Plan
from 791,667 shares to 1,500,000 shares. This increase in the number of
shares available under the Plan will cover the options that have already been
granted and that are discussed below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT OF THE
1991 OPTION PLAN.
DESCRIPTION OF THE 1991 OPTION PLAN
The Committee has sole discretion to determine the employees to
receive options under the 1991 Option Plan and the timing and amount of
options granted under the 1991 Option Plan. The Committee may grant options
pursuant to the 1991 Option Plan which are intended to meet the requirements
of incentive stock options "ISOs") as defined in Section 422 of the Internal
Revenue Code of 1986, as amended ("IRC"), or options not intended to be ISOs
("Non-Qualified Options"). In addition, the Company may issue stock
appreciation rights ("SARs") pursuant to the 1991 Option Plan. SARs are
issued in tandem with options and require the payment upon exercise of an
amount equal to the strike price of the option and the fair market value of
the stock on the date of exercise. Such payment can be made by the Company in
either cash or stock. The Committee has the discretion to determine the
exercise price of any option, although in the case of an ISO the price may
not be less than 100% of the fair market value of the Common Stock at the
time of grant, as determined by the closing price of the Common Stock on the
NASDAQ National Market on such date. Shares subject to, but not delivered
under an option terminating or expiring for any reason prior to its exercise
in full are available for the grant of future options under the 1991 Option
Plan.
The total number of shares with respect to which options may be
granted to any employee during any one fiscal year may not exceed 300,000
shares. As to ISOs, the IRC limits the maximum aggregate value of the Common
Stock for which ISOs may become exercisable in any one calendar year to
$100,000 for any employee. The term of an ISO is determined by the Committee,
but may not exceed ten years from the date of grant. An ISO must be exercised
by an employee either during employment or within three months of termination
of employment. No ISO may be granted to any employee who immediately after
the granting of
<PAGE>
such ISO would own more than 10% of the issued and outstanding Common Stock
("10% Stockholder"), unless the exercise price of the ISO is at least 110% of
the fair market value of the Common Stock at the time of such grant and the
ISO is not exercisable after five years from the date of such grant.
In the event any change is made in the Company's capitalization that
results from a stock dividend, recapitalization, reorganization, merger,
consolidation, split-up, combination or exchange of shares or any similar
change affecting the Common Stock, appropriate adjustment, as determined by
the Committee, will be made in the exercise price and in the number and
class of shares subject to the option.
The Board of Directors may amend or terminate the 1991 Option Plan
from time to time in such respects as the Board may deem advisable; provided
that the Board may not: (i) increase the number of shares subject to the 1991
Option Plan without stockholder approval; (ii) materially modify the
requirements as to eligibility for participation; or (iii) materially
increase the benefits accruing to participants under the 1991 Option Plan.
An optionee who is granted an ISO generally will not recognize
taxable income either upon the grant or the exercise of an ISO, although the
exercise may be subject to the alternative minimum tax as the difference
between the fair market value of the Common Stock at the time of exercise and
the exercise price is a tax preference item. No deduction will ordinarily be
available to the Company as a result of the grant or exercise of ISOs. Upon
the sale or exchange of the shares underlying an ISO more than two years
after the date of grant and one year after the date of exercise, the optionee
will recognize capital gain (or loss) in the amount by which the sale price
exceeds (or is less than) the adjusted basis of the shares. Such gain (or
loss) will be long-term gain (or loss) if the shares are held for more than
12 months from the date of exercise. If the shares are sold prior to the end
of the holding period discussed above, the optionee will recognize ordinary
income at the time of sale or exchange equal to the difference between the
exercise price and the lower of (i) the fair market value of the shares on
the date of exercise or (ii) the sale price of the shares.
An optionee granted Non-Qualified Options is not subject to many of
the restrictions involving ISOs. An optionee will not recognize any taxable
income at the grant of the Non-Qualified Option, but will generally realize
ordinary income for federal income tax purposes at the time of exercise of
such option equal to the difference between the fair market value of the
Common Stock on the date of exercise and the exercise price. Any taxable
income recognized in connection with a Non-Qualified Option exercised by an
optionee who is an employee of the Company will be subject to tax
withholding. Upon resale of such shares by the optionee, any difference
between the sale price and the optionee's exercise price, to the extent not
recognized as taxable income as described above, will be treated as
long-term or short-term capital gain or loss, depending upon the holding
period. The Company will be entitled to a tax deduction in the same amount as
the ordinary income recognized by the optionee with respect to shares
acquired upon exercise of a Non-Qualified Option.
The foregoing is only a summary of certain effects of federal income
taxation upon the optionee and the Company with respect to the grant and
exercise of options under the 1991 Option Plan, does not purport to be
complete and does not discuss the tax consequences of the optionee's death or
the income tax laws of any local, state or foreign jurisdiction in which any
optionee may reside.
<PAGE>
AMENDED PLAN BENEFITS
The following table sets forth certain information with respect to
the 325,229 stock options granted pursuant to the 1991 Option Plan, which are
in excess of the amount of options currently available under the Plan to: (i)
the Named Executive Officers; (ii) all current executive officers as a group;
and (iii) all non-Executive Officer employees as a group. The options shown
below are not necessarily indicative of the number of options that may be
granted in the future.
<TABLE>
<CAPTION>
NAME OR GROUP GRANT PRICE (1) NUMBER OF OPTIONS
------------- --------------- -----------------
<S> <C> <C>
Daniel J. Dorsch $2.12 75,000
David Miller $2.12 35,000
Steve Cohen $2.12 15,000
Wendy Beck $2.12 15,000
Executive Officers as a Group (3 persons) $2.12 100,000(2)
Non-Executive Officer Employees as a
Group (6 persons) $2.12 85,229
</TABLE>
---------------------
(1) Based upon the closing price of the Common Stock of $2.12 as reported
on the NASDAQ National Market on June 1, 2000, the grant date.
(2) Excludes options granted to Named Executive Officers (Miller, Cohen and
Beck) which are listed separately.
<PAGE>
PROPOSAL 3
RATIFICATION AND APPROVAL OF AMENDMENT TO CHECKERS STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
GENERAL
Checkers' 1994 stock option plan for non-employee directors was
originally adopted by the Checkers board in 1994 and approved by the Checkers
stockholders at their 1995 annual meeting. We believe that the issuance of
options under the directors' plan has been of substantial value in
facilitating our efforts to attract and retain qualified persons to serve as
directors. By providing directors with an opportunity to acquire an ownership
interest in Checkers, we believe the directors' plan also accomplishes the
purpose of more closely aligning the interests of directors and stockholders.
The directors' plan was originally structured as an "automatic grant" plan
whereby eligible directors were automatically granted a set number of options
upon becoming directors and annually thereafter. This structure was adopted
in order to comply with the requirements of Rule 16b-3 under the Securities
Exchange Act of 1934 in effect at the time the directors' plan was adopted.
Rule 16b-3 has since been amended, and directors may receive grants of
options that are not automatic and still receive the benefits of Rule 16b-3.
Adoption of this proposal would ratify and approve: (i) a special
one-time grant of options, which the Checkers Board approved on April 10,
2000, of 50,000 shares to Messrs. Christensen, Davis, Gotterer, Maggard,
McKee, Puzder, Sugarman and Thompson, 25,000 shares to Mr. O'Hara (Vice
Chairman) and 125,000 shares to Mr. Foley (Chairman); and (ii) an amendment
to the directors' plan permitting the Board of Directors, in its sole
discretion, to make additional discretionary grants under the plan. The
amendment will not affect the automatic option grants under the directors'
plan. Therefore, eligible directors will continue to receive automatic option
grants, as described below, on an annual basis.
DESCRIPTION OF THE DIRECTORS' PLAN
There are 5,000,000 shares of Checkers common stock authorized for
the grant of options under the directors' plan. Shares subject to options
will be authorized but unissued shares of Checkers common stock and may
include treasury shares. Shares subject to options which expire or are
canceled will be available for future grants under the directors' plan.
The directors' plan is administered by the Checkers board or a board
committee consisting of at least two members selected by, and serving at
the pleasure of, the Checkers board. The committee has the discretion to
adopt rules and regulations and to impose conditions upon the exercise of the
options which it deems appropriate to administer the directors' plan which
are not inconsistent with its terms. "Non-employee directors" are eligible to
participate in the directors' plan. There are currently 10 non-employee
directors. Non-employee directors are members of the Checkers board who are
not employed by Checkers or any of its subsidiaries and have not been so
employed for at least the last year. The term of the plan is ten years,
commencing July 26, 1994. No options may be granted after July 26, 2004, but
the exercise periods of previously granted options may extend beyond that
date.
Each non-employee director serving on the Checkers board as of July
26, 1994 received options to purchase 12,000 shares. Each new non-employee
director elected or appointed subsequent to that date also received options
to purchase 12,000 shares. Previously, each non-employee director had
received additional options to purchase 3,000 shares of Checkers common stock
on the first day of each fiscal year. Pursuant to an amendment to the plan in
August 1997, each new non-employee director receives options for 8,333 shares
when elected or appointed and options for 1,667 shares at the beginning of
each fiscal year. A special one-time grant of options to purchase 25,000
shares of Checkers common stock was made to each person who was a
<PAGE>
non-employee director both before and after the 1997 annual meeting of
stockholders. In addition, after the merger acquisition of Rally's
Hamburgers, Inc. and a one-for-12 reverse stock split in August 1999,
Checkers granted options to purchase 40,000 shares of Checkers common stock
to the Chairman of the Board, 20,000 shares to the Vice Chairman of the Board
and 10,000 shares to each other non-employee director.
The exercise price of each option is the closing price of Checkers
common stock as reported on the NASDAQ National Market system or other
established securities exchange on the date of the grant. Options expire ten
years after the date of the grant. For options granted prior to the August
1997 amendment to the plan, one-fifth of the options initially granted became
exercisable each year, and one-third of the options received annually became
exercisable each year. Options granted on or after the August 1997 amendment
become exercisable immediately upon grant. Options are exercisable whether or
not the non-employee director is, at the time of exercise, an eligible member
of the Checkers board, unless the non-employee director is removed for cause.
In the event of the death of a non-employee director, options may be
exercised by his or her estate. The purchase price for all options is payable
in full upon exercise and may be paid in cash or in Checkers common stock or
in a combination of cash and common stock, at the optionee's election.
Options may not be transferred or assigned except upon the death of the
optionee.
The Checkers board may discontinue, amend, alter or suspend the plan
at any time, except that stockholder approval is required for any amendment
required to be approved by Rule 16b-3 under the Exchange Act. In addition,
provisions of the plan related to eligibility and participation may not be
amended more than once every six months, except to comport with changes in
the Internal Revenue Code and regulations.
A holder of an option granted under the plan does not realize
taxable income when the holder receives a grant of options. Checkers may not
claim a tax deduction in connection with these grants. When an optionee
exercises an option, he will be deemed to have received taxable income in an
amount equal to the difference between the market value of the underlying
Checkers common stock on the date of exercise and the exercise price. The
income realized will be subject to withholding. Checkers may claim a tax
deduction with respect to the withholding. When an optionee sells stock
acquired by the exercise of an option and held for more than one year
following the date of exercise, the gain or loss (equal to the difference
between the sale price and the market value on the date of exercise) will be
taxed at long term capital gain or loss rates. If the stock was held for one
year or less, the gain or loss will be treated as short term capital gain or
loss. If and to the extent that the exercise price is paid with shares of
Checkers common stock, the optionee will not realize any income as a result,
but his unrealized appreciation in the stock tendered will be excluded from
his basis in the stock acquired.
On April 10, 2000, pursuant to the recommendation of the Stock
Option Committee, the Board of Directors approved the grant of options to
purchase a total of 550,000 shares of Common Stock to Checkers non-employee
directors, as set forth in the following table.
<PAGE>
OPTION GRANTS TO
NON-EMPLOYEE DIRECTORS
<TABLE>
<CAPTION>
NAME GRANT PRICE ($)(1) NUMBER OF OPTIONS
---- ------------------ -----------------
<S> <C> <C>
William P. Foley $1.93 125,000
Andrew F. Puzder $1.93 50,000
Terry N. Christensen $1.93 50,000
Willie D. Davis $1.93 50,000
David Gotterer $1.93 50,000
Ronald B. Maggard $1.93 50,000
Clarence McKee $1.93 50,000
Burt Sugarman $1.93 50,000
C. Thomas Thompson $1.93 50,000
Peter C. O'Hara $1.93 25,000
</TABLE>
------------------
(1) Based on the closing price of the Common Stock of $1.93 as reported on the
NASDAQ National Market on April 10, 2000.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION AND APPROVAL
OF THE AMENDMENT TO THE COMPANY'S NON-EMPLOYEE DIRECTORS.
<PAGE>
PROPOSAL NO. 4
RATIFICATION AND APPROVAL OF APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Company has engaged the firm of KPMG Peat Marwick LLP,
independent certified public accountants, to report upon the financial
statements included in the Annual Report submitted herewith. A representative
from said firm will be in attendance at the Meeting, will have the
opportunity to make a statement if desired, and will be available to respond
to any questions from those in attendance. The Company has appointed KPMG
Peat Marwick LLP to report upon its financial statements for the fiscal year
ending January 1, 2001, subject to ratification of such appointment by the
stockholders at the Meeting. Stockholder ratification of the Company's
independent certified public accountants is not required by the Company's
By-Laws or otherwise. The Board of Directors has elected to seek such
ratification as a matter of good corporate practice and unanimously
recommends that you vote "FOR" such ratification. If the stockholders do not
ratify this appointment, other certified public accountants will be
considered by the Board of Directors upon recommendation of the Audit
Committee.
OTHER BUSINESS
Management of the Company does not know of any other business that
may be presented at the Meeting. If any matter not described herein should be
presented for stockholder action at the Meeting, the persons named in the
enclosed Proxy will vote the shares represented thereby in accordance with
their best judgment.
STOCKHOLDER PROPOSALS FOR
PRESENTATION AT THE 2001 ANNUAL MEETING
The Board of Directors requests that any stockholder proposals
intended for presentation at the 2001 Annual Meeting be submitted to Andrew
D. Simons, Secretary, in writing no later than April 27, 2001, for
consideration for inclusion in the Company's proxy materials for such meeting.
The Company's By-Laws require certain advance notice to the Company
of any nominations by stockholders of persons to stand for election as
directors at stockholders' meetings. Notice of director nominations must be
timely given in writing to the Secretary of the Company prior to the meeting
at which the directors are to be elected. To be timely, notice must be
received at the principal executive offices of the Company not less than 60
nor more than 90 days prior to the meeting of stockholders; provided,
however, that in the event that less than 70 days' notice or prior public
disclosure of the date of the meeting us given or made to the stockholders,
notice by the stockholder in order to be timely must be so received not
later than the close of business on the tenth day following the day on which
such notice of the date of the annual meeting was mailed or public disclosure
of the date of the annual meeting was made, whichever first occurs.
A stockholder's notice with respect to a director nomination must
set forth (i) certain information about the nominee, (ii) the consent of the
nominee to serve as a director if elected, (iii) the name and record address
of the nominating stockholder, (iv) the class or series and number of shares
of the Company which are beneficially owned by such stockholder, (v) a
description of all arrangements or understandings between such stockholder
and each proposed nominee and any other person pursuant to which the
nominations are to be made, (vi) a representation that such stockholder
intends to appear in person or by proxy at the meeting to nominate the
persons named, and (vii) certain other information.
The complete By-Law provisions governing these requirements are
available to any stockholder without charge upon request from the Secretary
of the Company.
<PAGE>
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL PROVIDE WITHOUT CHARGE, UPON WRITTEN REQUEST, A
COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
JANUARY 3, 2000, AS AMENDED, INCLUDING THE FINANCIAL STATEMENTS AND THE
FINANCIAL STATEMENT SCHEDULES, AND THE COMPANY'S QUARTERLY REPORT ON FORM
10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 19, 2000. WRITTEN REQUESTS,
ACCOMPANIED BY A GOOD FAITH REPRESENTATION THAT, AS OF AUGUST 24, 2000, THE
PERSON MAKING THE REQUEST WAS THE BENEFICIAL OWNER OF COMMON STOCK, SHOULD BE
DIRECTED TO CHECKERS DRIVE-IN RESTAURANTS, INC., 14255 49th STREET NORTH,
BUILDING 1, CLEARWATER, FLORIDA 33762, ATTENTION: CORPORATE SECRETARY.
By Order of the Board of Directors,
/s/ Andrew D. Simons
ANDREW D. SIMONS
Secretary
Dated: August 25, 2000
<PAGE>
PROXY
CHECKERS DRIVE-IN RESTAURANTS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS - SEPTEMBER 15, 2000
The undersigned hereby appoints___________________________, and each of
them, proxies with full power of substitution, for and in the name of the
undersigned to vote all shares of Common Stock of Checkers Drive-In Restaurants,
Inc., a Delaware corporation (the "Company"), that the undersigned would be
entitled to vote at the Company's 2000 Annual Meeting of Stockholders to be held
on September 15, 2000 (the "Meeting"), and at any adjournments thereof, upon the
matters set forth in the Notice of the Meeting as stated hereon, hereby revoking
any proxy heretofore given. In their discretion, the proxies are further
authorized to vote upon such other business as may properly come before the
Meeting or any adjournments thereof.
The undersigned acknowledges receipt of the Notice of the Meeting and
the accompanying Proxy Statement, Annual Report and Form 10-Q.
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
<PAGE>
A /X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
THE BOARD RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2, 3 AND 4
WITHOLD
FOR THE AUTHORITY
NOMINEES (TO VOTE FOR
LISTED TO THE RIGHT NOMINEES DESIGNATED)
1. Election of Directors at Right. / / / /
For, except vote withheld from the following nominee(s):
__________________________________________
NOMINEES:
David Gotterer
Ronald B. Maggard
Burt Sugarmen
FOR AGAINST ABSTAIN
2. Ratify and approve the amendment to the Company's
1991 Employee Stock Option Plan. / / / / / /
3. To ratify and approve an amendment to the Company's
1994 Plan for Non-Employee Directors / / / / / /
4. Ratify and approve the appointment of KPMG Peat
Marwick LLP as independent auditors. / / / / / /
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTORS LISTED ABOVE, FOR
APPROVAL OF THE PROPOSALS SET FORTH ABOVE AND AS SAID PROXIES DEEM ADVISABLE ON
SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING.
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE
SIGNATURE____________ DATE:___________SIGNATURE_____________ DATE:___________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
