<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
</TABLE>
CKE 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] Fee not required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(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> 2
CKE RESTAURANTS, INC.
401 WEST CARL KARCHER WAY
ANAHEIM, CALIFORNIA 92801
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 15, 1999
To the Stockholders of CKE Restaurants, Inc.:
The Annual Meeting of Stockholders of CKE Restaurants, Inc. ("CKE" or the
"Company"), will be held at the Irvine Marriott, 18000 Von Karman Avenue,
California, on Tuesday, June 15, 1999 at 9:30 a.m. for the following purposes:
1. To elect two directors, each for a term of three years;
2. To consider and vote upon a proposal to approve CKE's 1999 Stock
Incentive Plan (the "Plan") and to ratify grants made under the Plan;
and
3. To transact such other business as may properly come before the meeting
or any adjournments or postponements thereof.
Only stockholders of record at the close of business on April 29, 1999 will
be entitled to notice of and to vote at the meeting or any postponement or
adjournment thereof.
By Order of the Board of Directors,
/s/ ANDREW F. PUZDER
-----------------------------------
Andrew F. Puzder,
Secretary
Anaheim, California
May 14, 1999
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, TO ASSURE THAT YOUR SHARES WILL
BE VOTED AT THE MEETING, YOU ARE REQUESTED TO SIGN THE ATTACHED PROXY AND RETURN
IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID, ADDRESSED ENVELOPE. NO ADDITIONAL
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING,
YOU MAY VOTE IN PERSON EVEN THOUGH YOU HAVE SENT IN YOUR PROXY.
<PAGE> 3
CKE RESTAURANTS, INC.
401 W. CARL KARCHER WAY
ANAHEIM, CALIFORNIA 92801
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JUNE 15, 1999
------------------------
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of CKE Restaurants, Inc., a Delaware
corporation ("CKE" or the "Company"), for use at the Annual Meeting of
Stockholders to be held at the Irvine Marriott, 18000 Von Karman Avenue, Irvine,
California on Tuesday, June 15, 1999 at 9:30 a.m. (the "Meeting"), and at any
postponements or adjournments thereof.
This Proxy Statement and accompanying proxy card are first being mailed to
stockholders on or about May 14, 1999.
SOLICITATION OF PROXIES
At the Meeting, the stockholders of CKE will be asked (1) to vote upon the
election of two directors, each for a term of three years, (2) to approve the
CKE Restaurants, Inc. 1999 Stock Incentive Plan and ratify grants made
thereunder, and (3) to act upon such other matters as may properly come before
the Meeting or any postponements or adjournments thereof. CKE's Board of
Directors is asking for your proxy for use at the Meeting. All shares of CKE
Common Stock represented by any properly executed proxy that is not revoked will
be voted at the Meeting in accordance with the instructions indicated in such
proxy. If no instructions are marked on a properly executed returned proxy, the
shares represented thereby will be voted FOR the election of the director
nominees listed below and FOR the proposed 1999 Stock Incentive Plan and the
grants made thereunder. Although management does not know of any other matter to
be acted upon at the Meeting, shares represented by valid proxies will be voted
by the persons named on the Proxy Card in accordance with their best judgment
with respect to any other matters that may properly come before the Meeting. A
stockholder giving a proxy may revoke it at any time before it is exercised by
filing with CKE's Secretary either a written notice of revocation or a duly
executed proxy bearing a later date or by attending the Meeting and voting in
person. Attendance at the meeting will not, in itself, constitute revocation of
a previously granted proxy.
The cost of solicitation of proxies in the enclosed form will be paid by
CKE. In addition, following the mailing of this Proxy Statement, directors,
officers and regular employees of CKE may solicit proxies by mail, telephone,
telegraph or personal interview. Such persons will receive no additional
compensation for such services. Brokerage houses and other nominees, fiduciaries
and custodians nominally holding shares of CKE Common Stock of record will be
requested to forward proxy soliciting material to the beneficial owners of such
shares and will be reimbursed by CKE for their charges and expenses in
connection therewith. In addition, CKE may use the services of individuals or
companies it does not regularly employ in connection with the solicitation of
proxies if management determines that it is advisable to do so, at an estimated
cost of $5,000 plus out-of-pocket expenses.
RECORD DATE AND VOTING
Only holders of CKE Common Stock of record at the close of business on
April 29, 1999 (the "Record Date") are entitled to notice of, and to vote at,
the Meeting. There were 51,866,131 shares of CKE Common Stock outstanding on the
Record Date. The presence at the Meeting, in person or by proxy, of the holders
of a majority of the shares of Common Stock outstanding on the Record Date will
constitute a quorum, and abstentions and broker non-votes will be included in
the calculation of the number of shares considered to be
1
<PAGE> 4
present at the Meeting. On all matters to come before the Meeting, each holder
of Common Stock will be entitled to one vote per share, except that voting for
directors may be cumulative. In the election of directors, holders of Common
Stock are entitled to as many votes as shall equal the number of votes that he
or she would be entitled to cast (but for the cumulative voting provision)
multiplied by the number of directors to be elected, and may cast all of such
votes for a single director or may distribute them among the number to be voted
for, or for any two or more of them, as he or she may see fit.
Election of directors will be determined by the vote of the holders of a
plurality of the shares voting on such election. Approval of Proposal 2 will
require the affirmative vote of the majority of shares represented in person or
by proxy at the Meeting and entitled to vote on such matters. A proxy may
indicate that all or a portion of the shares represented by such proxy are not
being voted with respect to a specific proposal. This could occur, for example,
when a broker is not permitted to vote shares held in street name on a proposal
in the absence of instructions from the beneficial owner. Neither broker
non-votes nor abstentions will have any effect on the vote required to elect
directors. With respect to Proposal 2, abstentions will be treated as shares
that are present and entitled to vote for purposes of determining a quorum and
will have the effect of a vote against the proposal. Broker non-votes will be
considered as present for quorum purposes, but not as shares entitled to vote
with respect to Proposal 2. Accordingly, broker non-votes will have no effect on
such matters.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of CKE is divided into three classes, as nearly
equal in number as possible. Each class serves for a period of three years, with
the terms of office of the respective classes expiring in successive years. The
foregoing notwithstanding, directors serve until their successors have been duly
elected and qualified or until they resign, become disqualified or disabled, or
are otherwise removed. The class of directors whose term expires as of the date
of the Meeting consists of Peter Churm and Daniel D. ("Ron") Lane.
The proxies solicited hereby are intended to be voted for the nominees
whose names are listed below. Discretionary authority to cumulate votes
represented by proxies is solicited by the Board of Directors because, in the
event nominations are made in opposition to the nominees of the Board of
Directors, it is the intention of the persons named in the accompanying Proxy
Card to cumulate votes represented by proxies for individual nominees in
accordance with their best judgment in order to assure the election of as many
of the Board's nominees as possible. The two nominees are presently directors
and have indicated their willingness to continue to serve as directors, if
elected. The persons named in the proxy will have discretionary authority to
vote for others if any nominee becomes unable or unwilling to serve prior to the
Meeting. To the knowledge of CKE, both nominees are and will be able to serve.
INFORMATION CONCERNING NOMINEES AND OTHER DIRECTORS
NOMINEES FOR ELECTION
<TABLE>
<CAPTION>
FIRST YEAR
BECAME
NAME AGE PRINCIPAL OCCUPATION DIRECTOR OTHER CORPORATE DIRECTORSHIPS
---- --- -------------------- ---------- -----------------------------
<S> <C> <C> <C> <C>
Peter Churm............. 73 Chairman Emeritus, 1979 Furon Company; Diedrichs
Furon Company Coffee, Inc.
Daniel D. (Ron) Lane.... 64 Chairman and Chief 1993 Fidelity National Financial,
Executive Officer, Inc.
Lane/Kuhn Pacific, Inc
</TABLE>
PETER CHURM was Chairman of the Board of Furon Company from May 1980
through February 1992 and was President of that company for more than 16 years.
Since February 1992, he has been Chairman Emeritus and a member of the Board of
Directors of Furon Company. Mr. Churm is also a member of the Board of Directors
of Diedrichs Coffee, Inc.
2
<PAGE> 5
DANIEL D. (RON) LANE became Vice Chairman of the Board of CKE in October
1994. Since February 1983, he has been a principal, Chairman and Chief Executive
Officer of Lane/Kuhn Pacific, Inc. Mr. Lane is a director of Fidelity National
Financial, Inc.
THE BOARD OF DIRECTORS OF CKE RECOMMENDS A VOTE "FOR" THE ELECTION OF BOTH OF
THE ABOVE NOMINEES.
DIRECTORS CONTINUING TO SERVE UNTIL 2000
<TABLE>
<CAPTION>
FIRST YEAR
BECAME
NAME AGE PRINCIPAL OCCUPATION DIRECTOR OTHER CORPORATE DIRECTORSHIPS
---- --- -------------------- ---------- -----------------------------
<S> <C> <C> <C> <C>
William P. Foley II... 54 Chairman of the Board and Chief 1993 Rally's Hamburgers, Inc.;
Executive Officer, CKE; Chairman Checkers Drive-In
of the Board and Chief Executive Restaurants, Inc.; Santa
Officer, Fidelity National Barbara Restaurant Group,
Financial, Inc. Inc.; Fresh Foods, Inc.;
Micro General Corporation;
Miravant Medical
Technologies, Inc.; American
National Financial, Inc.
Carl N. Karcher....... 82 Chairman Emeritus, CKE 1966 --
W. Howard Lester...... 63 Chairman of the Board and Chief 1996 Williams-Sonoma, Inc.; The
Executive Officer, Good Guys, Inc.; Harold's
Williams-Sonoma, Inc. Stores, Inc.; Il Fornaio
America Corp.
</TABLE>
WILLIAM P. FOLEY II became Chief Executive Officer of CKE in October 1994
and Chairman of the Board of Directors in March 1994. Since 1981, Mr. Foley has
been Chairman of the Board of Directors, President (until January 1995) and
Chief Executive Officer of Fidelity National Financial, Inc. Mr. Foley also
serves as Chairman of the Board of Santa Barbara Restaurant Group, Inc.,
American National Financial, Inc., Rally's Hamburgers, Inc. and Checkers
Drive-In Restaurants, Inc. and as a member of the Boards of Directors of Fresh
Foods, Inc., Micro General Corporation and Miravant Medical Technologies, Inc.
CARL N. KARCHER, the Company's founder, purchased his first hot dog stand
on July 17, 1941 and has been developing the Carl's Jr. concept since that time.
He first became a director of CKE in 1966 and has served as Chairman Emeritus
since January 1994. He was Chairman of the Board of CKE until October 1993 and
Chief Executive Officer until December 1992. Prior to 1980, he served as
President of CKE. Carl N. Karcher is Carl L. Karcher's father.
W. HOWARD LESTER was appointed as a director of CKE in January 1996. Mr.
Lester became Chief Executive Officer of San Francisco based Williams-Sonoma,
Inc. in 1978 and Chairman of its Board in 1986. Mr. Lester also serves as a
director of The Good Guys, Inc., Harold's Stores, Inc. and Il Fornaio America
Corp.
3
<PAGE> 6
DIRECTORS CONTINUING TO SERVE UNTIL 2001
<TABLE>
<CAPTION>
FIRST YEAR
BECAME
NAME AGE PRINCIPAL OCCUPATION DIRECTOR OTHER CORPORATE DIRECTORSHIPS
---- --- -------------------- ---------- -----------------------------
<S> <C> <C> <C> <C>
Carl L. Karcher......... 50 President, CLK, Inc. 1992 --
Frank P. Willey......... 45 President, Fidelity 1994 Fidelity National Financial,
National Financial, Inc. Inc.; Southern Pacific Funding
Corporation; Ugly Duckling
Holdings, Inc.; Santa Barbara
Restaurant Group, Inc.
Byron Allumbaugh........ 67 Business Consultant 1996 El Paso Energy Company;
Ultramar Diamond Shamrock
Incorporated.
</TABLE>
CARL L. KARCHER is the President of CLK, Inc., a Carl's Jr. franchisee. Mr.
Karcher has been a Carl's Jr. franchisee since May 1985. For more than 17 years
prior to that time, Mr. Karcher was employed by CKE in several capacities,
including Vice President, Manufacturing and Distribution. Mr. Karcher first
became a director in May 1992. Carl L. Karcher is Carl N. Karcher's son.
FRANK P. WILLEY became President of Fidelity National Financial, Inc. in
January 1995 and has been a director and Executive Vice President of Fidelity
National Financial, Inc. since February 1984. Mr. Willey was General Counsel of
Fidelity National Financial, Inc. from 1984 to January 1995. Mr. Willey also
serves on the Boards of Directors of Southern Pacific Funding Corporation, Ugly
Duckling Holdings, Inc. and Santa Barbara Restaurant Group, Inc. Southern
Pacific Funding Corporation filed a petition for reorganization under Chapter 11
of the Bankruptcy Code on October 1, 1998.
BYRON ALLUMBAUGH retired as Chairman of the Board of Ralphs Grocery Company
on January 31, 1997, where he held numerous management positions from 1958,
serving as Chairman of the Board and Chief Executive Officer from 1976 to 1995,
and Chairman of the Board from 1995 until his retirement. Currently a
self-employed business consultant, Mr. Allumbaugh is also a member of the Boards
of Directors of El Paso Energy Company and Ultramar Diamond Shamrock
Incorporated.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Executive Committee of the Board of Directors, comprised of Messrs.
Foley and Lane, is empowered by the Board of Directors to take all actions that
may otherwise be taken by the Board of Directors, to the extent permitted by
law. In addition to the Executive Committee, the Board of Directors has three
standing committees: the Audit Committee, the Compensation Committee and the
Franchise Committee. The Board does not have a nominating committee or other
committee performing similar functions. The Audit Committee, whose current
members are Messrs. Churm, Willey (Chairman), and Allumbaugh, monitors CKE's
basic accounting policies and their related system of internal control, reviews
CKE's audit and management reports and makes recommendations regarding the
appointment of independent auditors. The Compensation Committee, whose current
members are Messrs. Churm (Chairman) and Willey, considers the hiring and
election of corporate officers, salary and incentive compensation policies for
officers and directors, and the granting of stock options to employees. The
Franchise Committee, whose current members are Messrs. Foley, Willey and Lane,
considers potential repurchases of franchised restaurants.
During fiscal 1999, the Board of Directors held four meetings, the Audit
Committee held one meeting and the Compensation Committee held one meeting.
During fiscal 1999, no director attended fewer than 75% of the aggregate
meetings of the Board of Directors and the committee or committees on which he
served, except W. Howard Lester, who attended two Board meetings.
STOCKHOLDER NOMINATIONS
The Bylaws of CKE provide that any stockholder entitled to vote for the
election of directors at a meeting may nominate persons for election as
directors only if timely written notice of such stockholder's intent to
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<PAGE> 7
make such nomination is given, either by personal delivery or United States
mail, postage prepaid, to the Secretary, CKE Restaurants, Inc., P.O. Box 4349,
Anaheim, California 92803-4349. To be timely, a stockholder's notice must be
delivered to, or mailed and received at, the address provided not later than 90
days in advance of such meeting, or, if later, the seventh day following the
first public announcement of the date of such meeting. A stockholder's notice to
the Secretary must set forth: (i) the name and address of the stockholder who
intends to make the nomination and of the person or persons to be nominated,
(ii) a representation that the stockholder is a holder of record of CKE's Common
Stock entitled to vote at such meeting and intends to appear in person or by
proxy at the meeting and nominate the person or persons specified in the notice,
(iii) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the stockholder, (iv) such other information relating to the person that is
required to be disclosed in solicitations for proxies for election of directors
pursuant to the Securities Exchange Act of 1934, as amended, and (v) the consent
of each nominee to serve as a director of CKE if so elected. CKE may require the
stockholders making such nomination to furnish such other information as may be
reasonably requested by CKE.
COMPENSATION OF DIRECTORS
For their services as directors in fiscal 1999, each non-employee director
received a base fee of $18,000 for attendance at the quarterly Board meetings.
For attendance at each special Board meeting (meetings other than quarterly
Board meetings), each non-employee director received a fee of $1,000. For
attendance at Board Committee meetings which are held on a day other than the
date of a scheduled Board meeting, each non-employee director received a fee of
$1,000. For participation in telephonic Board meetings, each non-employee
director received a fee of $500. Each non-employee director is expected to
receive a fee of $18,000 in fiscal 2000 and $1,000 ($500 for telephonic
meetings) for each Board meeting or committee meeting other than regular
meetings attended in fiscal 2000.
PROPOSAL 2
APPROVAL OF THE CKE RESTAURANTS, INC.
1999 STOCK INCENTIVE PLAN AND RATIFICATION OF STOCK OPTION GRANTS
The Board of Directors of the Company has adopted, subject to stockholder
approval, the CKE Restaurants, Inc. 1999 Stock Incentive Plan (the "1999 Plan")
and the Compensation Committee of the Board of Directors has approved grants
made thereunder, subject to ratification of the stockholders. The Board of
Directors believes that the 1999 Plan will enhance the ability of the Company or
an Affiliated Company (as defined in the 1999 Plan) to attract and retain the
services of qualified employees, officers and directors (including non-employee
officers and directors), and consultants and other service providers upon whose
judgment, initiative and efforts the successful conduct and development of the
business of the Company or an Affiliated Company largely depends, by providing
them with an opportunity to participate in the ownership of the Company and
thereby have an interest in the success and increased value of the Company.
VOTE REQUIRED FOR APPROVAL OF CKE RESTAURANTS, INC. 1999 STOCK INCENTIVE PLAN
AND RATIFICATION OF GRANTS MADE THEREUNDER
Approval of a majority of the shares of Common Stock present or represented
by proxy and entitled to vote at the Annual Meeting is required to approve the
1999 Plan and ratify the grants made thereunder. Broker non-votes with respect
to this matter will not be deemed to have been cast either "for" or "against"
the matter, although they will be counted in determining if a quorum is present.
Proxies marked "abstain" or a vote to abstain by a stockholder present in person
at the Annual Meeting will have the same legal effect as a vote "against" the
matter because it represents a share present or represented at the meeting and
entitled to vote, thereby increasing the number of affirmative votes required to
approve this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE 1999 PLAN
AND RATIFICATION OF THE GRANTS MADE THEREUNDER ON MARCH 24, 1999 AND APRIL 1,
1999.
5
<PAGE> 8
DESCRIPTION OF THE 1999 PLAN
The following description of the principal features of the 1999 Plan is
qualified in its entirety by reference to the text of the 1999 Plan, which is
attached to this Proxy Statement as Appendix A.
The 1999 Plan authorizes up to 1,500,000 shares of Common Stock, plus, an
additional 350,000 shares of Common Stock on the date of each annual meeting of
the stockholders of the Company, for issuance under the terms of the 1999 Plan.
The authorized number of shares is subject to adjustment in the event of stock
splits, stock dividends or certain other similar changes in the capital
structure of the Company. The 1999 Plan provides for grants of "incentive stock
options" as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), nonqualified stock options and rights to purchase shares
of Common Stock ("Purchase Rights"). Incentive stock options, nonqualified stock
options and Purchase Rights may be granted to employees of the Company and its
subsidiaries and affiliates. Nonqualified stock options and Purchase Rights may
be granted to employees, or prospective employees in connection with their
hiring, retention or otherwise, of the Company and its subsidiaries and
affiliates, non-employee directors and officers, consultants and other service
providers; provided, however, that no such Nonqualified stock options or
Purchase Rights granted to prospective employees shall vest before the employee
first performs services for the Company, its subsidiaries or affiliates. All of
the Company's employees and non-employee directors are eligible to participate
in the 1999 Plan.
The Board of Directors, or a committee consisting of two or more members of
the Board of Directors, will administer the 1999 Plan (the "Compensation
Committee"). The Compensation Committee will have the full power and authority
to interpret the 1999 Plan, select the recipients of options and Purchase
Rights, determine and authorize the type, terms and conditions of, including
vesting provisions, and the number of shares subject to, grants under the 1999
Plan, and adopt, amend and rescind rules relating to the 1999 Plan. The term of
options may not exceed 10 years from the date of grant (5 years in the case of
an incentive stock option granted to a person who owns more than 10% of the
combined voting power of all classes of stock of the Company). The option
exercise price for each share granted pursuant to an incentive stock option may
not be less than 100% of the fair market value of a share of Common Stock at the
time such option is granted (110% of fair market value in the case of an
incentive stock option granted to a person who owns more than 10% of the
combined voting power of all classes of stock of the Company). There is no
minimum purchase price for shares of Common Stock purchased pursuant to a
Purchase Right, and any such purchase price shall be determined by the
Compensation Committee. The maximum number of shares for which options or
Purchase Rights may be granted to any one person during any one calendar year
under the 1999 Plan is 500,000 and in no event shall the aggregate number of
shares subject to incentive stock options exceed 4,650,000. The aggregate fair
market value of the Common Stock (determined as of the date of grant) with
respect to which incentive stock options granted under the 1999 Plan or any
other stock option plan of the Company become exercisable for the first time by
any optionee during any calendar year may not exceed $100,000.
The option price of an incentive stock option or nonqualified stock option
is payable in full upon exercise, and the purchase price of stock purchased
pursuant to a Purchase Right must be paid in full upon the acceptance of the
Purchase Right. Payment of the option price upon exercise of a stock option or
for shares purchased pursuant to a Purchase Right may be made in cash, by check,
by the delivery of shares of Common Stock (valued at their fair market value as
of the date of the exercise of an option or Purchase Right), by the optionee's
or purchaser's promissory note in a form and on terms acceptable to the
Compensation Committee, by the cancellation of indebtedness of the Company to
the optionee or purchaser, by the waiver of compensation due or accrued to the
optionee or purchaser for services rendered, or by any combination of the
foregoing methods of payment. In addition, the option price for options granted
under the 1999 Plan may be made by a "same day sale" commitment from the
optionee and a broker-dealer that is a member of the National Association of
Securities Dealers, Inc. ("NASD Dealer") whereby the optionee irrevocably elects
to exercise his or her option and to sell a portion of the shares so purchased
to pay for the exercise price and whereby the NASD Dealer irrevocably commits
upon receipt of such shares to forward the Exercise Price directly to the
Company, by a "margin" commitment from the optionee and an NASD Dealer whereby
the optionee irrevocably elects to exercise his or her option and to pledge the
shares so purchased to the NASD Dealer in a margin account as security for a
loan from the NASD Dealer in the amount of the exercise price,
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<PAGE> 9
and whereby the NASD Dealer irrevocably commits upon receipt of such shares to
forward the exercise price directly to the Company, or any combination of the
foregoing methods of payment.
Except as otherwise provided by the Compensation Committee, neither options
nor Purchase Rights granted under the 1999 Plan may be transferred other than by
will or by the laws of descent and distribution. Shares purchased pursuant to
Purchase Rights generally shall be restricted for a period of time, during which
such shares may be repurchased by the Company, and therefore these shares may
not be sold, assigned, pledged or transferred until such time as the Company no
longer has the right to reacquire any such shares.
In the event that the outstanding shares of Common Stock are increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of merger, consolidation or
reorganization in which the Company is the surviving corporation, or of a
recapitalization, stock split, combination of shares, reclassification,
reincorporation, stock dividend (in excess of 2%) or other change in the
corporate structure of the Company while the 1999 Plan is in effect, appropriate
adjustments shall be made by the Board of Directors to the aggregate number and
kind of shares subject to the 1999 Plan, and the number and kind of shares and
the price per share subject to outstanding incentive options, nonqualified
options and restricted shares in order to preserve, but not to increase, the
benefits to persons then holding incentive options, nonqualified options or
restricted shares.
In the event of a Change of Control (as defined below) of the Company the
time period relating to the exercise or realization of all outstanding options
and Purchase Rights shall automatically accelerate immediately prior to the
consummation of such Change of Control. For purposes of the 1999 Plan, "Change
in Control" means (i) the acquisition, directly or indirectly, by any person or
group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended) of the beneficial ownership of securities of the Company
possessing more than fifty percent (50%) of the total combined voting power of
all outstanding securities of the Company; (ii) a merger or consolidation in
which the Company is not the surviving entity, except for a transaction in which
the holders of the outstanding voting securities of the Company immediately
prior to such merger or consolidation hold, in the aggregate, securities
possessing more than fifty percent (50%) of the total combined voting power of
all outstanding voting securities of the surviving entity immediately after such
merger or consolidation; (iii) a reverse merger in which the Company is the
surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of all outstanding voting securities of
the Company are transferred to or acquired by a person or persons different from
the persons holding those securities immediately prior to such merger; (iv) the
sale, transfer or other disposition (in one transaction or a series of related
transactions) of all or substantially all of the assets of the Company; or (v)
the approval by the stockholders of a plan or proposal for the liquidation or
dissolution of the Company.
The Board of Directors may alter, amend, suspend or terminate the 1999 Plan
at any time. However, any changes which affect or impair the rights of any
person who holds an outstanding stock option or Purchase Right may not be
effected without such person's consent. Unless sooner terminated by the Board of
Directors, the 1999 Plan will terminate on March 16, 2009.
NEW PLAN BENEFITS
The Compensation Committee has adopted resolutions granting options to
purchase a total of 1,070,000 shares under the 1999 Plan to certain executive
officers of CKE, subject to stockholder approval of the 1999 Plan and
ratification of such grants. The following table summarizes the benefits which
would have been received by those executive officers of the 1999 Plan had it
been in effect in fiscal 1999:
7
<PAGE> 10
CKE RESTAURANTS, INC.
1999 STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
DOLLAR VALUE
NAME AND POSITION ($)(1)(2) NUMBER OF UNITS DATE OF GRANT
----------------- ------------ --------------- ----------------
<S> <C> <C> <C>
William P. Foley II................................. $1,325,000 200,000 March 24, 1999
Chairman of the Board and Chief Executive Officer
William P. Foley II................................. 2,050,000 200,000 April 9, 1999
Chairman of the Board and Chief Executive Officer
C. Thomas Thompson.................................. 662,500 100,000 March 24, 1999
President and Chief Operating Officer
C. Thomas Thompson.................................. 2,050,000 200,000 April 9, 1999
President and Chief Operating Officer
Rory J. Murphy...................................... 463,750 70,000 March 24, 1999
President and Chief Operating Officer
of Hardee's Food Systems, Inc.
Rory J. Murphy...................................... 1,025,000 100,000 April 9, 1999
President and Chief Operating Officer
of Hardee's Food Systems, Inc.
Robert W. Wisely.................................... 512,500 50,000 April 9, 1999
Executive Vice President, Marketing
Carl A. Strunk...................................... 512,500 50,000 April 9, 1999
Executive Vice President, Chief Financial Officer
Executive Group(3).................................. 9,626,250 1,070,000
</TABLE>
- ---------------
(1) Based on $24.75, the closing price of CKE Common Stock on January 25, 1999,
the last day of fiscal 1999.
(2) The grant price for the March 24, 1999 and April 9, 1999 grants was $18.125
and $14.50, respectively. The grants were priced at the fair market value on
the date of grant.
(3) Seven executives comprise this group.
Except as described in the above table, it is not possible to determine who
may be selected to receive options or Purchase Rights, nor is it possible to
determine the number of options or Purchase Rights that may be granted to any
individual under the 1999 Plan. Such selections and determinations shall be made
by the Compensation Committee of the Board of Directors.
FEDERAL INCOME TAX CONSEQUENCES
The federal income tax discussion set forth below is intended for general
information only. State and local income tax consequences are not discussed, and
may vary from locality to locality.
Incentive Stock Options. There is no taxable income to an employee when an
incentive stock option is granted or when that option is exercised; however,
generally the amount by which the fair market value of the shares at the time of
exercise exceeds the option price will be included in the optionee's alternative
minimum taxable income upon exercise. If stock received on exercise of an
incentive stock option is disposed of in the same year the option was exercised,
and the amount realized is less than the stock's fair market value at the time
of exercise, the amount includable in the alternative minimum taxable income
will be the amount realized upon the sale or exchange of the stock, less the
taxpayer's basis in the stock. Gain or loss realized by an optionee upon the
sale of stock issued upon exercise of an incentive stock option is taxable as
long-term capital gain or loss, and no tax deduction is available to the
Company, unless the optionee disposes of the stock within two years after the
date of grant of the option or within one year after the date of exercise. In
such event, an amount equal to the lesser of (i) the difference between the
option exercise price and the fair market value of the shares on the date of the
optionee's exercise, or (ii) the amount realized on disposition minus the
exercise price will be taxed at ordinary income rates, and, subject to Section
162(m) of the Code (which limits the deductibility of compensation in excess of
$1,000,000 for certain executive officers), the Company
8
<PAGE> 11
will be entitled to a deduction to the extent the employee must recognize
ordinary income. Additionally, if the amount realized exceeds the fair market
value of the stock on the date of exercise, the gain realized in excess of the
amount taxed as ordinary income will be taxed as capital gain.
Nonqualified Stock Options. The recipient of a nonqualified stock option
will not realize taxable income upon the grant of the option, nor will the
Company be entitled to take any deduction. Upon the exercise of a nonqualified
stock option, the optionee will realize ordinary income and, subject to Section
162(m) of the Code, the Company will be entitled to a deduction in an amount
equal to the difference between the option exercise price and the fair market
value of the stock on the date of exercise. The Company will be entitled to a
tax deduction equal to the amount of ordinary income recognized by the optionee,
provided certain reporting requirements are met. An optionee's basis for the
stock for purposes of determining gain or loss on any subsequent disposition of
the shares generally will be the fair market value of the stock on the date of
exercise of the nonqualified stock option.
Purchase Rights. The receipt of restricted stock pursuant to a Purchase
Right will not cause a recipient to realize taxable income until the expiration
of any repurchase rights retained by the Company with respect to such stock,
unless the recipient makes an election under Section 83(b) of the Code to be
taxed as of the date of purchase. If no repurchase rights are retained or if a
Section 83(b) election is made, the participant will recognize ordinary income
in an amount equal to the difference between the purchase price paid for the
shares and the fair market value of such shares on the date of purchase. If no
Section 83(b) election is made or if repurchase rights are retained, the
recipient will realize taxable income on each date that the recipient's
ownership rights vest (i.e., when the Company no longer has the right to
repurchase all or a portion of the shares). The recipient will recognize
ordinary income, and, subject to Section 162(m) of the Code, the Company will be
entitled to a deduction on each date shares vest in an amount equal to the
excess of the fair market value of such shares on that date over the purchase
price paid for such shares.
TAX WITHHOLDING
The 1999 Plan grants the Company the power to withhold, or require a
participant to remit to the Company, an amount sufficient to satisfy Federal,
state and local tax withholding requirements with respect to any options
exercised or restricted stock issued under the 1999 Plan. To the extent
permissible under applicable tax, securities, and other laws, the Compensation
Committee may, in its sole discretion, permit a participant to satisfy an
obligation to pay any such tax, in whole or in part, up to an amount determined
on the basis of the highest marginal tax rate applicable to such participant, by
(i) directing the Company to apply shares of Common Stock to which the
participant is entitled as a result of the exercise of an option or as a result
of the lapse of restrictions on restricted stock, or (ii) delivering to the
Company shares of Common Stock owned by the participant.
OTHER BUSINESS
Presented by Management. Management does not know of any matter to be acted
upon at the Meeting other than the matters described above, but if any other
matter properly comes before the Meeting, the persons named on the enclosed
Proxy Card will vote thereon in accordance with their best judgment.
Presented by Stockholders. Pursuant to CKE's Bylaws, only such business
shall be conducted at an annual meeting of stockholders as is properly brought
before the meeting. For business to be properly brought before an annual meeting
by a stockholder, in addition to any other applicable requirements, timely
notice of the matter must be first given to the Secretary of CKE. To be timely,
written notice must be received by the Secretary not later than 90 days in
advance of such meeting or, if later, the seventh day following the public
announcement of the date of such meeting. Any notice to the Secretary must
include as to each matter the stockholder proposes to bring before the meeting:
(a) a brief description of the business desired to be brought before the meeting
and the reason for conducting such business at the annual meeting; (b) the name
and record address of the stockholder proposing such business; (c) the class and
number of shares of CKE which are beneficially owned by the stockholder; and (d)
any material interest of the stockholder in such business. In addition, the
stockholders making such proposal shall promptly provide any other information
reasonably requested by CKE.
9
<PAGE> 12
OWNERSHIP OF THE COMPANY'S SECURITIES
The following table sets forth certain information regarding beneficial
ownership of CKE's Common Stock as of April 29, 1999, by (i) each person who is
known by CKE to beneficially own more than five percent of the outstanding CKE
Common Stock, (ii) each director of CKE, (iii) CKE's Chief Executive Officer and
each of its four most highly compensated executives (collectively, the "Named
Executive Officers") and (iv) all directors and executive officers of CKE as a
group. Except as otherwise indicated, beneficial ownership includes both voting
and investment power.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP (#) CLASS (%)(1)
------------------------------------ ----------------- ------------
<S> <C> <C>
FMR Corp............................................ 4,479,604(2) 8.6%
82 Devonshire Street
Boston, Massachusetts 02109
Capital Growth Management Limited Partnership....... 4,425,040(3) 8.5%
One International Place
Boston, Massachusetts 02110
Cannae Limited Partnership.......................... 3,893,881(4) 7.5%
500 N. Rainbow Boulevard, #100
Las Vegas, Nevada 89107
Carl N. Karcher..................................... 1,212,428(5) 2.3%
William P. Foley II................................. 1,445,327(6) 2.7%
Daniel D. (Ron) Lane................................ 583,048(7) 1.1%
Frank P. Willey..................................... 59,311(8) *
Peter Churm......................................... 84,402(9) *
Carl L. Karcher..................................... 179,450(10) *
W. Howard Lester.................................... 50,235(11) *
Byron Allumbaugh.................................... 28,455(12) *
C. Thomas Thompson.................................. 732,612(13) 1.4%
Rory J. Murphy...................................... 569,592(14) 1.1%
Carl A. Strunk...................................... 68,166(15) *
Robert W. Wisely.................................... 92,743(16) *
All executive officers and directors as a group (15
persons).......................................... 5,731,811(17) 10.4%
</TABLE>
- ---------------
* Less than one percent.
(1) Calculated based on 51,866,131 shares of CKE Common Stock outstanding on
April 29, 1999.
(2) Based on a Schedule 13D, as amended, filed by FMR Corp., Edward C. Johnson,
Abigail P. Johnson, Fidelity Management & Research Company, and Fidelity
Growth Company Fund. The aggregate number of shares set forth above
includes: (a) 4,124,756 beneficially held by Fidelity Management & Research
Company, a wholly-owned subsidiary of FMR Corp. and an investment adviser
registered under Section 203 of the Investment Advisers Act of 1940; and
(b) 354,308 shares beneficially held by Fidelity Management Trust Company,
a wholly-owned subsidiary of FMR Corp. and a bank. Edward C. Johnson 3d,
FMR Corp., has sole power to dispose of the 4,124,756 shares; however,
voting power resides with the Funds' Boards of Trustees. Edward C. Johnson
3d has sole dispositive power over the 354,308 shares and sole power to
vote 169,838 of said shares, and no power to vote the remaining 184,470 of
said shares. Members of the Edward C. Johnson 3d family and trusts for
their benefit are the predominant owners of Class B shares of common stock
of FMR Corp., representing approximately 49% of the voting power of FMR
Corp.
(3) Based on Schedule 13D filed by Capital Growth Management Limited
Partnership ("CGM") which has sole voting power over 2,923,440 shares and
shared dispositive power over 4,425,040. CGM disclaims any beneficial
interest in the shares, and is of the view that the client accounts it
manages are not acting as a "group" for purposes of Section 13(d) of the
Securities Exchange Act of 1934 (the
10
<PAGE> 13
"1934 Act") and it and such clients are not otherwise required to attribute
to each other the "beneficial ownership" of securities "beneficially owned"
under Rule 13d-3 promulgated under the 1934 Act.
(4) Based on a Form 4 filed by Cannae Limited Partnership ("Cannae"). A
Schedule 13D states that each of the limited partners of Cannae, including
without limitation, Messrs. Foley, Lane, Willey and Carl N. Karcher, has
sole voting and dispositive power with respect to the Cannae shares
directly held by him. The General Partner of the Partnership is Bognor
Regis, Inc., a Nevada corporation, of which Mr. Foley is a director.
(5) Includes (a) 1,054,027 shares beneficially held by the Carl N. and Margaret
M. Karcher Trust (the "Trust"); (b) 113 shares held by Mrs. Karcher; and
(c) 153,075 shares subject to currently exercisable options. Excludes
shares held by Cannae which is reported in footnote (4) above, of which Mr.
Karcher is a limited partner, and 11,000 shares held by the Carl N. and
Margaret M. Karcher Foundation, the beneficial ownership of which the Trust
and Mr. and Mrs. Karcher disclaim.
(6) Includes 478,705 shares held directly by Folco Development Corporation,
owned and controlled by Mr. Foley, and 947,539 shares subject to currently
exercisable options. Excludes shares held by Cannae which is reported in
footnote (4) above, of which Mr. Foley is a limited partner, 627,155 shares
held by Fidelity National Financial, Inc. ("Fidelity"), of which Mr. Foley
is a director and an executive officer, and 274,900 shares held by Santa
Barbara Restaurant Group, Inc. ("SBRG"), of which Mr. Foley is a director.
Mr. Foley disclaims beneficial ownership of the shares held by Fidelity and
SBRG.
(7) Includes 54,450 shares held directly by the Daniel D. Lane Revocable Trust
U/D/T July 10, 1992 and 202,310 shares subject to currently exercisable
options. Excludes shares held by Cannae which is reported in footnote (4)
above, of which Mr. Lane is a limited partner, and 627,155 shares held by
Fidelity, of which Mr. Lane is a director. Mr. Lane disclaims beneficial
ownership of the shares held by Cannae and Fidelity.
(8) Includes 59,311 shares subject to currently exercisable options. Excludes
shares held by Cannae which is reported in footnote (4) above, of which Mr.
Willey is a limited partner, 627,155 shares held by Fidelity, of which Mr.
Willey is a director and an executive officer, and 274,900 shares held by
SBRG, of which Mr. Willey is a director. Mr. Willey disclaims beneficial
ownership of the shares held by Cannae, Fidelity and SBRG.
(9) Includes 62,941 shares subject to currently exercisable options.
(10) Includes (a) 118,394 shares held by Carl L. Karcher and Peggy L. Karcher,
as trustees under a trust for the benefit of Carl L. and Peggy L. Karcher,
(b) 50,235 shares subject to currently exercisable options, and (c) 6,864
shares owned by Carl L. Karcher's minor children.
(11) Includes 50,235 shares subject to currently exercisable options.
(12) Includes 2,420 shares beneficially owned by the Byron E. and Sharon K.
Allumbaugh Living Trust and 26,035 shares subject to currently exercisable
options.
(13) Includes 697,793 shares subject to currently exercisable options and 182
shares owned by Mr. Thompson's minor children.
(14) Includes 562,412 shares subject to currently exercisable options and 1,901
shares held for Mr. Murphy's benefit under CKE's voluntary contributory
profit sharing and savings investment plan.
(15) Includes 66,351 shares subject to currently exercisable options. Excludes
shares held by Cannae which is reported in footnote (4) above, of which Mr.
Strunk is a limited partner, 627,155 shares held by Fidelity, of which Mr.
Strunk is an executive officer, and 274,900 shares held by SBRG, of which
Mr. Strunk is an executive officer. Mr. Strunk disclaims beneficial
ownership of the shares held by Cannae, Fidelity and SBRG.
(16) Includes 81,981 shares subject to currently exercisable options.
(17) Includes shares described in footnotes (5) through (16) above and 276,931
shares subject to currently exercisable options which are held by executive
officers not listed in the above table.
11
<PAGE> 14
STOCKHOLDER PERFORMANCE GRAPH
COMPARISON OF FIVE YEAR
CUMULATIVE TOTAL STOCKHOLDER RETURN
AMONG CKE RESTAURANTS, INC., S&P 500 INDEX AND
SELECTED RESTAURANT PEER GROUP INDEX(1)
This graph compares the Company's cumulative total return to stockholders
during the past five years with that of the S&P 500 Index and a Selected
Restaurant Peer Group Index. In the past years, such comparison has been made
with the Russell 2000 Index and a Selected Restaurant Peer Group Index. The
Company selected four quick service restaurants with similar menu offerings and
complimentary geographic markets.
<TABLE>
<CAPTION>
CKE RESTAURANTS, INC. S&P 500 INDEX PEER GROUP
--------------------- ------------- ----------
<S> <C> <C> <C>
Jan 94 100.00 100.00 100.00
Jan 95 50.88 100.53 106.38
Jan 96 124.45 139.40 163.33
Jan 97 238.78 176.12 150.84
Jan 98 557.68 223.51 158.16
Jan 99 330.61 296.13 260.15
</TABLE>
- ---------------
(1) Peer Group is comprised of the following companies: Foodmaker, Inc.;
McDonalds Corp.; Tricon Global Restaurants; and Wendy's International, Inc.
The Stock Performance Graph shall not be deemed incorporated by reference
by any general statement incorporating by reference this Proxy Statement into
any filing under the Securities Act of 1933 or under the Securities Exchange Act
of 1934, except to the extent that CKE specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
12
<PAGE> 15
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth, for the years indicated, the compensation
awarded to, earned by or paid to the Named Executive Officers of CKE who were so
employed by CKE as of January 25, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
----------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
FISCAL SALARY COMPENSATION OPTIONS COMPENSATION
NAME AND TITLE YEAR ($) BONUS ($) ($)(1) (#)(2) ($)(3)
-------------- ------ ------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
William P. Foley II.......... 1999 500,000 700,000 -- 165,000 12,782
Chairman, 1998 330,817 1,121,000 -- 242,000 10,577
Chief Executive Officer 1997 200,000 150,000 -- 226,875 --
C. Thomas Thompson........... 1999 650,000 700,000 38,398 137,500 27,851
President and 1998 462,830 1,402,000 33,044 242,000 38,040
Chief Operating Officer 1997 280,077 550,000 14,550 226,875 4,012
Rory J. Murphy............... 1999 435,577 500,000 64,532 82,500 9,134
President, 1998 308,510 123,730 26,272 242,000 7,677
Hardee's Food Systems, Inc. 1997 200,085 229,141 16,154 72,600 1,087
Robert W. Wisely............. 1999 232,692 218,980 35,893 22,000 9,802
Executive Vice President, 1998 195,641 132,755 32,212 12,100 15,830
Marketing 1997 170,465 173,520 8,604 36,300 --
Carl A. Strunk............... 1999 150,000 87,473 33,360 22,000 --
Executive Vice President, 1998 109,615 63,000 7,470 63,525 --
Chief Financial Officer 1997 -- -- -- -- --
</TABLE>
- ---------------
(1) "Other Annual Compensation" for fiscal 1999 includes the following amounts
for Messrs. Thompson, Murphy, Wisely and Strunk: (a) auto related payments
of $8,966, $13,452, $9,960, and $9,960, respectively, (b) reimbursements
for medical and dental costs of $5,035, $5,000, $2,772 and $0,
respectively, (c) housing allowances of $19,965, $40,919, $20,768 and
$23,400, respectively, and (d) payments of life insurance premiums of
$3,607, $4,331, $2,393 and $0, respectively.
(2) The number of securities underlying options has been adjusted to reflect
CKE's 10% stock dividends in January 1999 and February 1998 and its
three-for-two stock split in January 1997.
(3) "All Other Compensation" includes matching and voluntary contributions by
CKE to CKE's employee stock purchase plan for Messrs. Foley, Thompson,
Murphy and Wisely. For fiscal 1999, the amounts matched by CKE in the
employee stock purchase plan were $12,782, $27,851, $9,134 and $9,802,
respectively.
13
<PAGE> 16
STOCK OPTIONS
The following table sets forth certain information with respect to the
stock options granted during fiscal 1999 to the Named Executive Officers and the
potential realizable value of such stock options.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENTAGE STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(2)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED(#) FISCAL YEAR ($/SHARE)(1) DATE 5%($) 10%($)
---- ---------- ------------- ------------ ----------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
William P. Foley II...... 165,000 14.4% $36.65 February 17, 2008 $3,809,768 $9,615,128
C. Thomas Thompson....... 137,500 12.0% $36.65 February 17, 2008 $3,174,806 $8,012,606
Rory J. Murphy........... 82,500 7.2% $36.65 February 17, 2008 $1,904,884 $4,807,564
Robert W. Wisely......... 22,000 1.9% $36.65 February 17, 2008 $ 507,969 $1,282,017
Carl A. Strunk........... 22,000 1.9% $36.65 February 17, 2008 $ 507,969 $1,282,017
</TABLE>
- ---------------
(1) The fair market value of the Company's Common Stock on the date of grant.
(2) The options vest 33 1/3% on the first anniversary of the date of grant,
33 1/3% on the second anniversary of the date of grant and 33 1/3% on the
third anniversary of the date of grant.
(3) Calculated over a ten-year period, representing the terms of the options.
These are assumed rates of appreciation, and are not intended to forecast
future appreciation of the Company's Common Stock.
OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information with respect to stock
options exercised during fiscal 1999 and year-end stock option values for each
of the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END AT FISCAL YEAR-END
SHARES ACQUIRED (#) ($)
ON EXERCISE VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($)(1) UNEXERCISABLE UNEXERCISABLE(1)
---- --------------- -------------- ------------------- ----------------------
<S> <C> <C> <C> <C>
William P. Foley II......... -- -- 745,205/346,958 $13,660,123/$4,689,731
C. Thomas Thompson.......... -- -- 504,626/328,624 $ 7,626,729/$3,939,071
Rory J. Murphy.............. 34,038 $1,133,134 420,912/159,866 $ 7,443,788/$1,984,180
Robert W. Wisely............ -- -- 53,947/42,166 $ 1,180,334/$441,226
Carl A. Strunk.............. -- -- 21,175/64,350 $ 23,144/$46,289
</TABLE>
- ---------------
(1) In accordance with the rules of the Securities and Exchange Commission,
values are calculated by subtracting the exercise price from the fair
market value of the underlying Common Stock. For purposes of this table,
the fair market value is deemed to be $24.75, the closing price of the
Common Stock of CKE reported by the New York Stock Exchange on January
25,1999.
EMPLOYMENT AGREEMENTS
On April 9, 1999, CKE entered into a five-year employment agreement with
William P. Foley II. Mr. Foley's annual base salary under this agreement is
$500,000 subject to periodic increases at the discretion of the Compensation
Committee of the Board of Directors. Mr. Foley's agreement also provides for
annual
14
<PAGE> 17
cash bonuses during his employment term. For the fiscal year ended January 31,
2000, Mr. Foley's bonus will be equal to 100% of his annual base salary if the
Company achieves 30% growth in earnings per share during fiscal 2000 over
earnings per share during fiscal 1999. In all subsequent years, Mr. Foley's
annual bonus will be calculated by first determining the amount by which the
Company's net income increases over the prior fiscal year. If such increase is
15%, Mr. Foley shall receive a bonus equal to 25% of his then current annual
base salary. For each 5% increase in the Company's net income over the 15% base
increase, Mr. Foley's annual bonus will increase by an amount equal to 25% of
his annual base salary. In no event shall the annual bonus exceed 100% of Mr.
Foley's minimum annual base salary. If net income increases less than 15% or
decreases, Mr. Foley will not receive a bonus for that year. The employment
agreement entitled Mr. Foley to participate in CKE's stock incentive plan and
granted him an option to purchase 200,000 shares under CKE's 1999 Stock
Incentive Plan. The options vest 33 1/3% on the effective date of the employment
agreement and 33 1/3% on each of the next two anniversaries of the grant date,
and are for a ten year term. The employment agreement allows Mr. Foley to
fulfill duties with certain other public companies including Fidelity, SBRG,
Rally's, Checkers and American National Financial, Inc. ("ANFI"). The employment
agreement can be terminated by the Company for cause as defined in the
employment agreement. In the event CKE terminates Mr. Foley's employment without
cause, CKE will be obligated to pay a lump sum consisting of Mr. Foley's minimum
annual base salary then in effect times one, plus annual bonus assuming a 30%
increase in net income (100% of employee's minimum annual base salary times
one), and maintain for one year any benefits plans and programs in which Mr.
Foley was entitled to participate immediately prior to the date of termination.
In the event of a change in control of the Company resulting in Mr. Foley's
termination, the Company shall pay Mr. Foley, as severance, a lump sum
consisting of, in addition to his base salary due him through the date of
termination an amount equal to the product of his minimum annual base salary
multiplied by the number of years remaining in the term or the number two (2),
whichever is greater, plus an annual bonus equal to 100% of Mr. Foley's annual
base salary multiplied by the number of years remaining in the term or the
number two (2), whichever is greater. Additionally, all options granted which
had not vested as of the date of termination shall vest immediately, and the
Company shall maintain, for the number of years remaining in the term, all
employee benefit plans and programs in which Mr. Foley was entitled to
participate immediately prior to the date of termination. In the event of his
death, Mr. Foley's legal representatives will receive the minimum annual base
salary for the remainder of the term, and all unvested options will immediately
vest and be exercisable for 90 days from Mr. Foley's death.
On April 9, 1999, CKE entered into a five-year employment agreement with C.
Thomas Thompson. Mr. Thompson's annual base salary under this agreement is
$650,000 subject to periodic increases at the discretion of the Compensation
Committee of the Board of Directors. Mr. Thompson's agreement also provides for
annual cash bonuses during his employment term. For the fiscal year ended
January 31, 2000, Mr. Thompson's bonus will be equal to 100% of his annual base
salary if the Company achieves 30% growth in earnings per share during fiscal
2000 over earnings per share during fiscal 1999. In all subsequent years, Mr.
Thompson's annual bonus will be calculated by first determining the amount by
which the Company's net income increases over the prior fiscal year. If such
increase is 15%, Mr. Thompson shall receive a bonus equal to 25% of his then
current annual base salary. For each 5% increase in the Company's net income
over the 15% base increase, Mr. Thompson's annual bonus will increase by an
amount equal to 25% of his annual base salary. In no event shall the annual
bonus exceed 100% of Mr. Thompson's minimum annual base salary. If net income
increases less than 15% or decreases, Mr. Thompson will not receive a bonus for
that year. The employment agreement entitled Mr. Thompson to participate in
CKE's stock incentive plan and granted him an option to purchase 200,000 shares
under CKE's 1999 Stock Incentive Plan. The options vest 33 1/3% on the effective
date of the Employment Agreement and 33 1/3% on each of the next two
anniversaries of the grant date, and are for a ten year term. The employment
agreement allows Mr. Thompson to fulfill duties with certain other public
companies including SBRG, Rally's and Checkers. The employment agreement can be
terminated by the Company for cause as defined in the employment agreement. In
the event CKE terminates Mr. Thompson's employment without cause, CKE will be
obligated to pay a lump sum consisting of Mr. Thompson's minimum annual base
salary then in effect times one, plus annual bonus assuming a 30% increase in
net income (100% of employee's minimum annual base salary times one), and
maintain for one year any benefits plans and programs in which Mr. Thompson was
entitled to participate immediately prior to
15
<PAGE> 18
the date of termination. In the event of a change in control of the Company
resulting in Mr. Thompson's termination, the Company shall pay Mr. Thompson, as
severance, a lump sum consisting of, in addition to his base salary due him
through the date of termination, an amount equal to the product of his minimum
annual base salary multiplied by the number of years remaining in the term or
the number two (2), whichever is greater, plus an annual bonus equal to 100% of
Mr. Thompson's annual base salary multiplied by the number of years remaining in
the term or the number two (2), whichever is greater. Additionally, all options
granted which had not vested as of the date of termination shall vest
immediately, and the Company shall maintain, for the number of years remaining
in the term, all employee benefit plans and programs in which Mr. Thompson was
entitled to participate immediately prior to the date of termination. In the
event of his death, Mr. Thompson's legal representatives will receive the
minimum annual base salary for the remainder of the term, and all unvested
options will immediately vest and be exercisable for 90 days from Mr. Thompson's
death.
On April 9, 1999, CKE entered into a four-year employment agreement with
Rory J. Murphy. Mr. Murphy's annual base salary under this agreement is $450,000
subject to periodic increases at the discretion of the Compensation Committee of
the Board of Directors. Mr. Murphy's agreement also provides for annual cash
bonuses during his employment term. For the fiscal year ended January 31, 2000,
Mr. Murphy's bonus will be equal to 100% of his annual base salary if the
Company achieves 30% growth in earnings per share during fiscal 2000 over
earnings per share during fiscal 1999. In all subsequent years, Mr. Murphy's
annual bonus will be calculated by first determining the amount by which the
Company's net income increases over the prior fiscal year. If such increase is
15%, Mr. Murphy shall receive a bonus equal to 25% of his then current annual
base salary. For each 5% increase in the Company's net income over the 15% base
increase, Mr. Murphy's annual bonus will increase by an amount equal to 25% of
his annual base salary. In no event shall the annual bonus exceed 100% of Mr.
Murphy's minimum annual base salary. If net income increases less than 15% or
decreases, Mr. Murphy will not receive a bonus for that year. The employment
agreement entitled Mr. Murphy to participate in CKE's stock incentive plan and
granted him an option to purchase 100,000 shares under CKE's 1999 Stock
Incentive Plan. The options vest 33 1/3% on the effective date of the employment
agreement and 33 1/3% on each of the next two anniversaries of the grant date,
and are for a ten year term. The employment agreement can be terminated by the
Company for cause as defined in the employment agreement. In the event CKE
terminates Mr. Murphy's employment without cause, CKE will be obligated to pay a
lump sum consisting of Mr. Murphy's minimum annual base salary then in effect
times one, plus annual bonus assuming a 30% increase in net income (100% of
employee's minimum annual base salary times one), and maintain for one year any
benefits plans and programs in which Mr. Murphy was entitled to participate
immediately prior to the date of termination. In the event of a change in
control of the Company resulting in Mr. Murphy's termination, the Company shall
pay Mr. Murphy, as severance, a lump sum consisting of, in addition to his base
salary due him through the date of termination, an amount equal to the product
of his minimum annual base salary multiplied by the number of years remaining in
the term or the number two (2), whichever is greater, plus an annual bonus equal
to 100% of Mr. Murphy's annual base salary multiplied by the number of years
remaining in the term or the number two (2), whichever is greater. Additionally,
all options granted which had not vested as of the date of termination shall
vest immediately, and the Company shall maintain for the number of years
remaining in the term, all employee benefit plans and programs in which Mr.
Murphy was entitled to participate immediately prior to the date of termination.
In the event of his death, Mr. Murphy's legal representatives will receive the
minimum annual base salary for the remainder of the term, and all unvested
options will immediately vest and be exercisable for 90 days from Mr. Murphy's
death.
On April 9, 1999, CKE entered into a three-year employment agreement with
John J. Dunion. Mr. Dunion's annual base salary under this agreement is $190,000
subject to periodic increases at the discretion of the Compensation Committee of
the Board of Directors. Mr. Dunion's agreement also provides for annual cash
bonuses during his employment term. For the fiscal year ended January 31, 2000,
Mr. Dunion's bonus will be equal to 100% of his annual base salary if the
Company achieves 30% growth in earnings per share during fiscal 2000 over
earnings per share during fiscal 1999. In all subsequent years, Mr. Dunion's
annual bonus will be calculated by first determining the amount by which the
Company's net income increases over the prior fiscal year. If such increase is
15%, Mr. Dunion shall receive a bonus equal to 25% of
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his then current annual base salary. For each 5% increase in the Company's net
income over the 15% base increase, Mr. Dunion's annual bonus will increase by an
amount equal to 25% of his annual base salary. In no event shall the annual
bonus exceed 100% of Mr. Dunion's minimum annual base salary. If net income
increases less than 15% or decreases, Mr. Dunion will not receive a bonus for
that year. The employment agreement entitled Mr. Dunion to participate in CKE's
stock incentive plan and granted him an option to purchase 50,000 shares under
CKE's 1999 Stock Incentive Plan. The options vest 33 1/3% on the effective date
of the employment agreement and 33 1/3% on each of the next two anniversaries of
the grant date, and are for a ten year term. The employment agreement can be
terminated by the Company for cause as defined in the employment agreement. In
the event CKE terminates Mr. Dunion's employment without cause, CKE will be
obligated to pay a lump sum consisting of Mr. Dunion's minimum annual base
salary then in effect times one, plus annual bonus assuming a 30% increase in
net income (100% of employee's minimum annual base salary times one), and
maintain for one year any benefits plans and programs in which Mr. Dunion was
entitled to participate immediately prior to the date of termination. In the
event of a change in control of the Company resulting in Mr. Dunion's
termination, the Company shall pay Mr. Dunion, as severance, a lump sum
consisting of, in addition to his base salary due him through the date of
termination, an amount equal to the product of his minimum annual base salary
multiplied by the number of years remaining in the term or the number two (2),
whichever is greater, plus an annual bonus equal to 100% of Mr. Dunion's annual
base salary multiplied by the number of years remaining in the term or the
number two (2), whichever is greater. Additionally, all options granted which
had not vested as of the date of termination shall vest immediately, and the
Company shall maintain for the number of years remaining in the term, all
employee benefit plans and programs in which Mr. Dunion was entitled to
participate immediately prior to the date of termination. In the event of his
death, Mr. Dunion's legal representatives will receive the minimum annual base
salary for the remainder of the term, and all unvested options will immediately
vest and be exercisable for 90 days from Mr. Dunion's death.
On April 9, 1999, CKE entered into a three-year employment agreement with
Andrew F. Puzder. Mr. Puzder's annual base salary under this agreement is
$312,500 subject to periodic increases at the discretion of the Compensation
Committee of the Board of Directors. Mr. Puzder's agreement also provides for
annual cash bonuses during his employment term. For the fiscal year ended
January 31, 2000, Mr. Puzder's bonus will be equal to 100% of his annual base
salary if the Company achieves 30% growth in earnings per share during fiscal
2000 over earnings per share during fiscal 1999. In all subsequent years, Mr.
Puzder's annual bonus will be calculated by first determining the amount by
which the Company's net income increases over the prior fiscal year. If such
increase is 15%, Mr. Puzder shall receive a bonus equal to 25% of his then
current annual base salary. For each 5% increase in the Company's net income
over the 15% base increase, Mr. Puzder's annual bonus will increase by an amount
equal to 25% of his annual base salary. In no event shall the annual bonus
exceed 100% of Mr. Puzder's minimum annual base salary. If net income increases
less than 15% or decreases, Mr. Puzder will not receive a bonus for that year.
The employment agreement entitled Mr. Puzder to participate in CKE's stock
incentive plan and granted him an option to purchase 50,000 shares under CKE's
1999 Stock Incentive Plan. The options vest 33 1/3% on the effective date of the
Employment Agreement and 33 1/3% on each of the next two anniversaries of the
grant date, and are for a ten year term. The employment agreement allows Mr.
Puzder to fulfill duties with certain other public companies including SBRG and
Fidelity. The employment agreement can be terminated by the Company for cause as
defined in the employment agreement. In the event CKE terminates Mr. Puzder's
employment without cause, CKE will be obligated to pay a lump sum consisting of
Mr. Puzder's minimum annual base salary then in effect times one, plus annual
bonus assuming a 30% increase in net income (100% of employee's minimum annual
base salary times one), and maintain for one year any benefits plans and
programs in which Mr. Puzder was entitled to participate immediately prior to
the date of termination. In the event of a change in control of the Company
resulting in Mr. Puzder's termination, the Company shall pay Mr. Puzder, as
severance, a lump sum consisting of, in addition to his base salary due him
through the date of termination, an amount equal to the product of his minimum
annual base salary multiplied by the number of years remaining in the term or
the number two (2), whichever is greater, plus an annual bonus equal to 100% of
Mr. Puzder's annual base salary multiplied by the number of years remaining in
the term or the number two (2), whichever is greater. Additionally, all options
granted which had not vested as of the date of termination shall vest
immediately, and the company
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shall maintain, for the number of years remaining in the term, all employee
benefit plans and programs in which Mr. Puzder was entitled to participate
immediately prior to the date of termination. In the event of his death, Mr.
Puzder's legal representatives will receive the minimum annual base salary for
the remainder of the term, and all unvested options will immediately vest and be
exercisable for 90 days from Mr. Puzder's death.
On April 9, 1999, CKE entered into a three-year employment agreement with
Carl A. Strunk. Mr. Strunk's annual base salary under this agreement is $312,500
subject to periodic increases at the discretion of the Compensation Committee of
the Board of Directors. Mr. Strunk's agreement also provides for annual cash
bonuses during his employment term. For the fiscal year ended January 31, 2000,
Mr. Strunk's bonus will be equal to 100% of his annual base salary if the
Company achieves 30% growth in earnings per share during fiscal 2000 over
earnings per share during fiscal 1999. In all subsequent years, Mr. Strunk's
annual bonus will be calculated by first determining the amount by which the
Company's net income increases over the prior fiscal year. If such increase is
15%, Mr. Strunk shall receive a bonus equal to 25% of his then current annual
base salary. For each 5% increase in the Company's net income over the 15% base
increase, Mr. Strunk's annual bonus will increase by an amount equal to 25% of
his annual base salary. In no event shall the annual bonus exceed 100% of Mr.
Strunk's minimum annual base salary. If net income increases less than 15% or
decreases, Mr. Strunk will not receive a bonus for that year. The employment
agreement entitled Mr. Strunk to participate in CKE's stock incentive plan and
granted him an option to purchase 50,000 shares under CKE's 1999 Stock Incentive
Plan. The options vest 33 1/3% on the effective date of the employment agreement
and 33 1/3% on each of the next two anniversaries of the grant date, and are for
a ten year term. The employment agreement allows Mr. Strunk to fulfill duties
with certain other public companies including SBRG, Fidelity and ANFI. The
employment agreement can be terminated by the Company for cause as defined in
the employment agreement. In the event CKE terminates Mr. Strunk's employment
without cause, CKE will be obligated to pay a lump sum consisting of Mr.
Strunk's minimum annual base salary then in effect times one, plus annual bonus
assuming a 30% increase in net income (100% of employee's minimum annual base
salary times one), and maintain for one year any benefits plans and programs in
which Mr. Strunk was entitled to participate immediately prior to the date of
termination. In the event of a change in control of the Company resulting in Mr.
Strunk's termination, the Company shall pay Mr. Strunk, as severance, a lump sum
consisting of, in addition to his base salary due him through the date of
termination, an amount equal to the product of his minimum annual base salary
multiplied by the number of years remaining in the term or the number two (2),
whichever is greater, plus an annual bonus equal to 100% of Mr. Strunk's annual
base salary multiplied by the number of years remaining in the term or the
number two (2), whichever is greater. Additionally, all options granted which
had not vested as of the date of termination shall vest immediately, and the
Company shall maintain, for the number of years remaining in the term, all
employee benefit plans and programs in which Mr. Strunk was entitled to
participate immediately prior to the date of termination. In the event of his
death, Mr. Strunk's legal representatives will receive the minimum annual base
salary for the remainder of the term, and all unvested options will immediately
vest and be exercisable for 90 days from Mr. Strunk's death.
On April 9, 1999, CKE entered into a three-year employment agreement with
Robert W. Wisely. Mr. Wisely's annual base salary under this agreement is
$300,000 subject to periodic increases at the discretion of the Compensation
Committee of the Board of Directors. Mr. Wisely's agreement also provides for
annual cash bonuses during his employment term. For the fiscal year ended
January 31, 2000, Mr. Wisely's bonus will be equal to 100% of his annual base
salary if the Company achieves 30% growth in earnings per share during fiscal
2000 over earnings per share during fiscal 1999. In all subsequent years, Mr.
Wisely's annual bonus will be calculated by first determining the amount by
which the Company's net income increases over the prior fiscal year. If such
increase is 15%, Mr. Wisely shall receive a bonus equal to 25% of his then
current annual base salary. For each 5% increase in the Company's net income
over the 15% base increase, Mr. Wisely's annual bonus will increase by an amount
equal to 25% of his annual base salary. In no event shall the annual bonus
exceed 100% of Mr. Wisely's minimum annual base salary. If net income increases
less than 15% or decreases, Mr. Wisely will not receive a bonus for that year.
The employment agreement entitled Mr. Wisely to participate in CKE's stock
incentive plan and granted him an option to purchase 50,000 shares under CKE's
1999 Stock Incentive Plan. The options vest 33 1/3% on the effective date of the
employment agreement and 33 1/3% on each of the next two anniversaries of the
grant date, and are for a ten year term. The
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employment agreement can be terminated by the Company for cause as defined in
the employment agreement. In the event CKE terminates Mr. Wisely's employment
without cause, CKE will be obligated to pay a lump sum consisting of Mr.
Wisely's minimum annual base salary then in effect times one, plus annual bonus
assuming a 30% increase in net income (100% of employee's minimum annual base
salary times one), and maintain for one year any benefits plans and programs in
which Mr. Wisely was entitled to participate immediately prior to the date of
termination. In the event of a change in control of the Company resulting in Mr.
Wisely's termination, the Company shall pay Mr. Wisely, as severance, a lump sum
consisting of, in addition to his base salary due him through the date of
termination, an amount equal to the product of his minimum annual base salary
multiplied by the number of years remaining in the term or the number two (2),
whichever is greater, plus an annual bonus equal to 100% of Mr. Wisely's annual
base salary multiplied by the number of years remaining in the term or the
number two (2), whichever is greater. Additionally, all options granted which
had not vested as of the date of termination shall vest immediately, and the
Company shall maintain for the number of years remaining in the term, all
employee benefit plans and programs in which Mr. Wisely was entitled to
participate immediately prior to the date of termination. In the event of his
death, Mr. Wisely's legal representatives will receive the minimum annual base
salary for the remainder of the term, and all unvested options will immediately
vest and be exercisable for 90 days from Mr. Wisely's death.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1999, the members of the Compensation Committee of CKE's
Board of Directors were Messrs. Churm, Willey and Lester. Neither Messrs. Churm,
Willey or Lester was an officer, former officer or employee of CKE during fiscal
1999. During fiscal 1999, Mr. Foley served as Chairman of the Board and Chief
Executive Officer of Fidelity and Chairman of the Board of SBRG, Mr. Lane served
as a director of Fidelity and Mr. Willey served as President and a director of
Fidelity and a director of SBRG.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires CKE's
executive officers and directors, and persons who own more than 10% of a
registered class of CKE's equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC").
Executive officers, directors and greater than 10% stockholders are required by
SEC regulations to furnish CKE with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, CKE believes that, during fiscal 1999, all filing
requirements applicable to its executive officers, directors and greater than
10% stockholders were satisfied.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION FOR THE FISCAL YEAR
ENDED JANUARY 25, 1999.
The Committee, currently comprised of two non-employee directors, is
responsible for administering the executive compensation policies, administering
the various management incentive programs (including option plans), and making
recommendations to the Board of Directors with respect to these policies and
programs. In addition, the Committee makes annual recommendations to the Board
of Directors concerning the compensation paid to the Chief Executive Officer and
to each of the other executive officers of CKE (each, an "Executive Officer"),
including the Named Executive Officers. Set forth below is a report submitted by
the Committee addressing compensation policies for fiscal 1999 as they affected
(i) William P. Foley II, the Chief Executive Officer of CKE, and (ii) the other
Executive Officers.
Compensation Policies Toward Executive Officers. The Committee believes
that the most effective executive compensation program is one that provides
incentives to achieve both current and long-term strategic management goals,
with the ultimate objective of enhancing stockholder value. In this regard, the
Committee believes executive compensation should be comprised of cash as well as
equity-based programs.
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Base salaries are generally set at market levels in order to attract and retain
qualified and experienced executives. With respect to equity-based compensation,
the Committee believes that an integral part of CKE's compensation program is
the ownership and retention of CKE's Common Stock by its Executive Officers. By
providing Executive Officers with a meaningful stake in CKE, the value of which
is dependent on CKE's long-term success, a commonality of interests between
CKE's Executive Officers and its stockholders is fostered. On April 9, 1999,
pursuant to the approval of the Compensation Committee, seven Executive
Officers, including William P. Foley, II, C. Thomas Thompson, Rory J. Murphy,
John J. Dunion, Andrew F. Puzder, Carl A. Strunk and Robert W. Wisely entered
into employment agreements with the Company.
Relationship of Performance to Compensation. Compensation that may be
earned by the Executive Officers in any fiscal year consists primarily of base
salary, cash bonus and stock options. The significant factors that were
considered in establishing the components of each Executive Officer's
compensation package for fiscal 1999 are summarized below. The Committee, in its
discretion, may apply entirely different factors, particularly different
measures of financial performance, in setting executive compensation for future
fiscal years, but all compensation decisions will be designed to further the
general compensation policies indicated above.
- Base Salary. The base salary for each Executive Officer is set on
the basis of personal performance, the salary levels in effect for
comparable positions with CKE's principal competitors (including,
but not limited to, CKE's self-determined peer group set forth in
the "Stockholder Performance Graph") and CKE's financial performance
relative to such competitors. Factors relating to individual
performance that are assessed in setting base compensation are based
on the particular duties and areas of responsibility of the
individual Executive Officer. Factors relating to CKE's financial
performance that may be related to increasing or decreasing base
salary include revenues and earnings. The establishment of base
compensation involves a subjective assessment and weighing of the
foregoing criteria and is not based on any specific formula. After
reviewing the major events and changes that occurred in fiscal 1998,
the Committee approved increases in some base salaries to remain
competitive with market base salaries and to reflect new
responsibilities for some Executive Officers.
- Cash Bonus. Annual bonuses are earned by each Executive Officer on
the basis of CKE's achievement of earnings per share increases based
on targets established at the start of each fiscal year and on the
basis of the particular Executive Officer's duties and areas of
responsibility. Bonus amounts are established based on various
levels of performance against such targets. The Committee assesses
CKE and individual performance against the established targets and
provides for bonuses based on the targeted performance levels
actually achieved. Because CKE achieved the targeted levels of
earnings per share growth for fiscal 1999, the Committee approved
bonuses for CKE's Executive Officers in the total amount of
$2,370,785, of which $2,238,305 was paid subsequent to the fiscal
1999 year end.
- Stock Options. Stock option grants motivate Executive Officers to
manage the business to improve long-term CKE performance and align
the interests of Executive Officers with stockholder value.
Customarily, option grants are made with exercise prices equal to
the fair market value of the shares on the grant date and will be of
no value unless the market price of CKE's shares of Common Stock
appreciates, thereby aligning a substantial part of the Executive
Officer's compensation package with the return realized by the
stockholders. Options generally vest in equal installments over a
period of time, contingent upon the Executive Officer's continued
employment with CKE. Accordingly, an option will provide a return to
the Executive Officer only if the Executive Officer remains employed
by CKE and the market price of the underlying shares appreciates
over the option term. The size of an option grant is designed to
create a meaningful opportunity for stock ownership and is based
upon the individual's current position with CKE, internal
comparability with option grants made to other CKE executives and
the individual's potential for future responsibility and promotion
over the option term. The Committee has established an award program
which takes into account the level of responsibility in the
organization and total compensation compared to comparable companies
in making option grants
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to the Executive Officers, in an attempt to target a fixed number of
unvested option shares based upon the individual's position with CKE
and the Executive Officer's existing holdings of unvested options. As
such, the award of stock options requires subjective judgment as to the
amount of the option. However, the Committee does not adhere strictly
to these guidelines and will occasionally vary the size of the option
grant, if any, made to each Executive Officer as circumstances warrant.
Chief Executive Officer Compensation. William P. Foley II became CKE's
Chief Executive Officer in October 1994. Mr. Foley did not receive any
compensation during fiscal 1995 for such position. In March 1995, Mr. Foley's
base compensation was established at $200,000 for fiscal 1996. In June 1997, Mr.
Foley's base compensation was increased to $500,000 by the Compensation
Committee of the Board of Directors. Mr. Foley was paid $500,000 in salary for
fiscal 1999. In fiscal 1999, Mr. Foley received a bonus pursuant to his bonus
program. Mr. Foley's compensation under that bonus program was substantially
related to the Company's performance and was determined pursuant to a specific
formula based on the achievement of certain financial goals of the Company. On
April 9, 1999 Mr. Foley entered into an employment agreement with the Company.
Pursuant to this employment agreement, Mr. Foley's base compensation in fiscal
2000 will be $500,000.
Corporate Deduction for Compensation. Section 162(m) of the Internal
Revenue Code generally limits to $1.0 million the corporate deduction for
compensation paid to certain executive officers, unless certain requirements are
met. The Company's policy with respect to the deductibility limit of Section
162(m) generally is to preserve the federal income tax deductibility of
compensation paid to executive officers. However, while the tax impact of any
compensation arrangement is an important factor to be considered, the impact is
evaluated in light of the Company's overall compensation philosophy.
Accordingly, the Company will authorize the payment of non-deductible
compensation if it deems that it is consistent with its compensation philosophy
and in the best interests of the Company and its stockholders.
Dated: April 23, 1999 Compensation Committee
Peter Churm (Chairman)
Frank P. Willey
The report of the Compensation Committee of the Board of Directors shall
not be deemed incorporated by reference by any general statement incorporating
by reference this Proxy Statement into any filing under the Securities Act of
1933 or under the Securities Exchange Act of 1934, except to the extent that CKE
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
TRANSACTIONS WITH OFFICERS AND DIRECTORS
William P. Foley, the Company's Chairman and Chief Executive Officer, Carl
A. Strunk, its Executive Vice President and Chief Financial Officer, and Andrew
F. Puzder, its Executive Vice President, General counsel and Secretary are
executive officers or directors of SBRG. Frank Willey, one of the Company's
directors, is also a director of SBRG. Mr. Foley is also the Chairman and Chief
Executive Officer and principal stockholder of Fidelity. Messrs. Puzder and
Strunk are officers of Fidelity, and Mr. Willey is a director and executive
officer of Fidelity. Daniel D. Lane, one of the Company's directors, is also a
director of Fidelity. CKE and Fidelity are the beneficial owners of
approximately 11% and 41%, respectively of the outstanding shares of SBRG. CKE
paid $596,519 in royalties to SBRG in fiscal 1999. Carl Karcher Enterprises,
Inc. has dual brand agreements with SBRG for the dual branding of Carl's Jr.
with Green Burrito.
Messrs. Foley, Thompson and Puzder are directors or executive officers of
Rally's and Messrs. Foley and Thompson are directors of Checkers. CKE, Fidelity
and SBRG beneficially own approximately 32%, 4% and 8%, respectively, of the
outstanding shares of Rally's Common Stock. Rally's beneficially owns 26% of the
outstanding shares of Checkers Common Stock, and CKE and Fidelity hold $6.0
million (net of related discount) and $2.2 million, respectively, principal
amount of Checkers' senior secured indebtedness, and warrants to purchase
7,350,423 shares and 2,108,262 shares, respectively, of Checkers Common Stock.
SBRG beneficially owns $4.9 million principal amount of Checker's senior secured
indebtedness. The Company's
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executive officers and directors beneficially own, in the aggregate,
approximately 3% of Rally's outstanding shares, approximately 2% of Checkers
outstanding shares and approximately $1.7 million aggregate principal amount of
Checkers' senior secured indebtedness.
CKE leases the land and buildings, which include the headquarters of CKE,
its distribution center and one restaurant location in Carl Karcher Plaza,
located at 401 West Carl Karcher Way, Anaheim, California from Carl N. Karcher,
as sole trustee of the Trust. The term of the lease expires in April 2008, and
CKE has the option to renew the lease for one additional five-year term. The
lease was amended in March 1999, increasing the land area of the restaurant and
distribution center parcels, and increasing the rent and general insurance
requirements. The current rent under this lease is: (a) $15,580 per month and
6.5% of annual gross sales in excess of $2,436,369 for the restaurant; (b)
$67,835 per month for the distribution center, subject to adjustment every five
years; and (c) $21,296 per month for the headquarters offices, subject to
adjustment every five years. CKE also leases two adjacent parcels of land in
Carl Karcher Plaza from the Trust. One parcel is being utilized by CKE for its
training facilities and parking. The rent is $5,987 per month, subject to
adjustment every five years. The other parcel is being utilized, in part, for
the distribution center parking and storage. The unused portion of this parcel
has been subleased to various small commercial tenants. The rent for this second
parcel is $6,875 per month, also subject to adjustment every five years. The
term for both leases expires in April 2003, and CKE has the option to renew each
of these leases for two additional five-year terms. The aggregate rents paid by
CKE to the Trust for the corporate offices and adjacent facilities during fiscal
1999 were $1,299,397.
CKE presently has two leases with the Trust with respect to restaurant
properties. The terms of these leases range from 20 to 35 years. The minimum
monthly rental is the greater of $6,799 or 5.5% of annual gross sales in one of
the leases, and a minimum monthly rental for improvements of $2,871 or 4% of
annual gross sales, and a fixed monthly rental of $5,699 for the land in the
other lease. The leases expire in May 2004 and May 2010. The aggregate rents
paid by CKE to the Trust for these restaurant properties during fiscal 1999 were
$247,957.
In January 1994, CKE entered into an Employment Agreement with Carl N.
Karcher which was amended in November 1997 and expires December 31, 2003. The
Employment Agreement, as amended, provides that Mr. Karcher will be employed as
the Chairman Emeritus of the Board as a non-executive officer reporting to the
Chief Executive Officer at a base salary of $400,000 and that if Mr. Karcher is
terminated or exercises his right to terminate employment following a change in
control of CKE following a merger, sale of assets or acquisition, Mr. Karcher
becomes entitled to payments due under the agreement as they become due for the
remainder of the term without the obligation of further services. The Employment
Agreement, as amended, also provides for a retirement benefit for Mr. Karcher in
the amount of $200,000 per year for life after the end of the employment term,
eligibility to participate in any management incentive compensation bonus pool
plans, death benefits to include payment of any compensation due Mr. Karcher for
services rendered prior to the date of termination as a result of his death to
his estate and payment of Mr. Karcher's base salary for one full year following
his death to Mrs. Karcher.
During fiscal 1995, CKE made two advances to Carl N. Karcher aggregating
$714,756. CKE accepted a promissory note in payment of the first, totaling
$250,000, which was paid in full in fiscal 1997. The second advance, which
totaled $464,756, was paid in full in July 1998. During fiscal 1999, the largest
amount outstanding under this advance was $115,651, of which $0. remained
outstanding at the end of fiscal 1999.
CKE leases a restaurant property from Pannier Enterprises, LP. Loren C.
Pannier, an Executive Officer of CKE, is an affiliate of Pannier Enterprises,
LP. This lease expires in July 2004 and provides for a minimum monthly rental
equal to the greater of $4,910 or 5% of annual gross sales of the Carl's Jr.
restaurant at that location. CKE leases two additional restaurant properties in
which Pannier Enterprises, LP has a 56% and a 33% undivided interest,
respectively. These leases expire between January 2001 and February 2002 and
provide for minimum monthly rentals equal to (a) the greater of $3,290 or 5.5%
of annual gross sales of the Carl's Jr. restaurant at one location and (b) the
greater of $3,440 or 6% of annual gross sales of the Carl's Jr. restaurant at
the other location. The aggregate rents paid by CKE to Pannier Enterprises, LP
under all three leases during fiscal 1999 were $129,615.
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CLK, Inc. ("CLK") is a franchisee of CKE and currently operates 23 Carl's
Jr. restaurants, four of which are Carl's Jr./Green Burrito dual-brand
restaurants. Carl L. Karcher is a son of Carl N. Karcher, a director of CKE, and
an affiliate of CLK. In connection with the operation of its 23 franchised
restaurants, CLK regularly purchases food and other products from CKE on the
same terms and conditions as other franchisees. During fiscal 1999, these
purchases totaled approximately $6,513,808. During fiscal 1999, CLK paid royalty
fees of $839,858, including royalties fees paid to CKE for the Green Burrito
dual-brand restaurants, and advertising and promotional fees of $839,765, for
all 23 restaurants combined. CLK is also a lessee or sublessee of CKE with
respect to 15 restaurant locations. Rental payments equal the greater of a
percentage of the annual gross sales, ranging from 0% to 10%, of the restaurant
and/or minimum monthly rentals ranging from $4,157 to $9,611. The leases expire
between July 1999 and June 2011. The rents paid under these leases during fiscal
1999 aggregated $1,221,425. CLK also licenses one restaurant from CKE under
which CLK is obligated to remit 50% of the restaurant's net profit to CKE.
During fiscal 1999, CLK paid CKE $85,728 under this license agreement.
JCK, Inc. ("JCK") is a franchisee of CKE and currently operates nine Carl's
Jr. restaurants. Joseph C. Karcher is a son of Carl N. Karcher and an affiliate
of JCK. In fiscal 1999 JCK entered into a Development Agreement with CKE for the
development of six Carl's Jr. restaurants. Of the six development obligations,
JCK has satisfied one and is obligated to develop and become a franchisee with
respect to five additional Carl's Jr. restaurants at varying times between 1999
and 2004. JCK paid an aggregate of $75,000 to CKE in franchise and development
fees in fiscal 1999. In connection with the operation of its nine franchised
restaurants, JCK regularly purchases food and other products from CKE on the
same terms and conditions as other franchisees. During fiscal 1999, these
purchases totaled approximately $1,466,148. During fiscal 1999, JCK paid royalty
fees of $123,895 and advertising and promotional fees of $239,876 for all nine
restaurants combined.
Wiles Restaurants, Inc. ("Wiles") is a franchisee of CKE and currently
operates nine Carl's Jr. restaurants, two of which are Carl's Jr./Green Burrito
dual-brand restaurants. Anne M. Wiles is a daughter of Carl N. Karcher and an
affiliate of Wiles. Wiles is obligated, pursuant to a Development Agreement with
CKE, to develop and become a franchisee with respect to three additional Carl's
Jr. restaurants at varying times between 2000 and 2004. In connection with the
operation of its nine franchised restaurants, Wiles regularly purchases food and
other products from CKE on the same terms and conditions as other franchisees.
During fiscal 1999, these purchases totaled approximately $2,624,159. During
fiscal 1999, Wiles paid royalty fees of $332,714, including royalty fees paid to
CKE for the Green Burrito dual-brand restaurants, and advertising and
promotional fees of $340,679, for all nine restaurants combined. Wiles is also a
lessee of CKE with respect to one restaurant location. Rental payments equal the
greater of 8% of the annual gross sales of the restaurant or a minimum monthly
rental equal to $10,270. The lease expires in August 2011. The rents paid under
this lease during fiscal 1999 aggregated $109,726.
Bernard Karcher Investments, Inc. ("BKI") is a franchisee of CKE and
currently operates 12 Carl's Jr. restaurants. Bernard W. Karcher is a brother of
Carl N. Karcher and an affiliate of BKI. In connection with the operation of its
12 franchised restaurants, BKI regularly purchases food and other products from
CKE on the same terms and conditions as other franchisees. During fiscal 1999,
these purchases totaled approximately $3,958,042. During fiscal 1999, BKI paid
royalty fees of $536,846 and advertising and promotional fees of $593,193 for
all 12 restaurants combined. BKI is also a lessee of CKE with respect to two
restaurant locations. Rental payments equal a percentage of annual gross sales
ranging from 7.5% to 10% on one lease, and a minimum monthly rental of $9,600 on
the other. The leases expire in January 2006 and September 2012. The rentals
paid under these two leases during fiscal 1999 aggregated $174,515.
B&J, LLC ("B&J") is a franchisee of CKE and currently operates three Carl's
Jr. restaurants. Bernard W. Karcher is a brother of Carl N. Karcher and an
affiliate of B&J. In fiscal 1999, B&J entered into a Development Agreement with
CKE for the development of four Carl's Jr. restaurants. Of the four development
obligations, B&J has satisfied two, and is obligated to develop and become a
franchisee with respect to two additional Carl's Jr. restaurants at varying
times between 2000 and 2002. B&J paid an aggregate of $80,000 to CKE in
franchise and development fees in fiscal 1999. In connection with the operation
of its three franchised restaurants, B&J regularly purchases food and other
products from CKE on the same terms
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and conditions as other franchisees. During fiscal 1999, these purchases totaled
approximately $698,528. During fiscal 1999, B&J paid royalty fees of $45,885 and
advertising and promotional fees of $68,327 for all three restaurants combined.
B&J is also a sublessee of CKE with respect to one restaurant location. Rental
payments equal the greater of $3,900 per month or 4% of annual gross sales. This
lease expires in January 2018. Total rents paid under this lease during fiscal
1999 aggregated $32,110.
R.W.W., Inc. ("RWW") is a franchisee of CKE and currently operates nine
Carl's Jr. restaurants. Robert W. Wisely, an Executive Officer of CKE, is an
affiliate of RWW. In connection with the operation of its nine restaurants, RWW
regularly purchases food and other products from CKE on the same terms and
conditions as other franchisees. During fiscal 1999, these purchases totaled
approximately $2,444,774. During fiscal 1999, RWW paid royalty fees of $277,311
and advertising and promotional fees of $416,946 for all nine restaurants
combined. RWW is also a sublessee of CKE with respect to six restaurant
locations. Rental payments equal a percentage of the annual gross sales of the
restaurant ranging from 4% to 12.5%, or minimum monthly rentals ranging from
$10,084 to $10,382. The leases expire between June 2001 and July 2006. Total
rents paid under these six leases during fiscal 1999 aggregated $583,474.
TWM Industries ("TWM") is a franchisee of CKE and currently operates 17
Carl's Jr. restaurants, three of which are Carl's Jr./Green Burrito dual-brand
restaurants. C. Thomas Thompson, an Executive Officer of CKE, is an affiliate of
TWM. In fiscal 1999, TWM entered into a Development Agreement with CKE for the
development of seven restaurants. Of the seven development obligations, TWM has
satisfied one, and is obligated to develop and become a franchisee with respect
to six additional Carl's Jr. restaurants at varying times between 1999 and 2003.
TWM paid an aggregate of $140,000 to CKE in franchise and development fees in
fiscal 1999. In connection with the operation of its 17 franchised restaurants,
TWM regularly purchases food and other products from CKE on the same terms and
conditions as other franchisees. During fiscal 1999, these purchases totaled
approximately $3,941,264. During fiscal 1999, TWM paid royalty fees of $548,413,
including royalties fees paid to CKE for the Green Burrito dual-brand
restaurants, and advertising and promotional fees of $761,855, for all 17
restaurants combined. TWM was also a lessee or sublessee of CKE with respect to
10 restaurant locations during fiscal 1999. Rental payments equal a percentage
of the annual gross sales of the restaurants ranging from 3.5% to 8% or a
minimum monthly rental ranging from $4,266 to $8,056. The leases expire between
April 2000 and January 2012. Total rents paid under these 10 leases during
fiscal 1999 aggregated $624,851.
KWK Foods, L.L.C. ("KWK") is a franchisee of CKE and currently operates
seven Carl's Jr. restaurants, one of which is a Carl's Jr./Green Burrito
dual-brand restaurant. Carl L. Karcher is the son of Carl N. Karcher, a Director
of CKE and an affiliate of KWK. Joseph C. Karcher is the son of Carl N. Karcher
and an affiliate of KWK. Anne M. Wiles is a daughter of Carl N. Karcher and an
affiliate of KWK. KWK is obligated, pursuant to a Development Agreement with
CKE, as amended, to develop and become a franchisee with respect to six
additional Carl's Jr. restaurants at varying times between 2000 and 2004. In
connection with the operation of its seven franchised restaurants, KWK regularly
purchases food and other products from CKE on the same terms and conditions as
other franchisees. During fiscal 1999, these purchases totaled approximately
$1,773,312. During fiscal 1999, KWK paid royalty fees of $158,349, including
royalties paid to CKE for its Green Burrito dual-brand restaurant, and
advertising and promotional fees of $293,299, for all seven restaurants
combined. KWK was also a sublessee of CKE with respect to three restaurant
locations during fiscal 1999. Rental payments equal a percentage of annual gross
sales of the restaurants of 1% and/or fixed monthly rentals ranging from $4,583
to $8,183. The leases expire between September 2015 and February 2018. Total
rents paid under these leases during fiscal 1999 aggregated $241,362.
In December 1995, CKE sold certain of its franchise notes receivable, with
recourse, to an independent third party. Included in the franchise notes
receivable sold were notes in the aggregate principal amount of $1,379,689
payable to CKE from CLK, Wiles and RWW. In connection with this transaction, CKE
also agreed to guarantee the payment obligations of CLK, Wiles and RWW under
these notes in fiscal 1999 up to a maximum amount of $189,882 In addition, CKE
entered into two limited-term guarantees with independent third parties on
behalf of certain of its Carl's Jr. franchisees. CKE agreed to guarantee the
payment obligations
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of RWW, Wiles, BKI, JCK and KWK under these arrangements in fiscal 1999 up to a
maximum amount of $245,362.
Restaurants leased from related parties generally were constructed by CKE
on land acquired by CKE. The properties were then sold to these parties and
leased back by CKE. CKE believes that these sale and leaseback arrangements are
at rental rates generally similar to those with unaffiliated third parties.
Except as noted above, CKE presently does not intend to enter into leases for
new restaurants with related parties. Except as described above, all of the
foregoing franchise and lease arrangements are on terms generally similar to
those with unaffiliated parties.
INDEPENDENT AUDITORS
Selection of an independent auditor is made by the Board of Directors upon
consultation with the Audit Committee. CKE's independent auditor for the fiscal
year ended January 25, 1999 was KPMG LLP. The Board of Directors will vote upon
the selection of an auditor for the current fiscal year at a future Board
meeting.
Representatives of KPMG LLP are expected to attend the Meeting and be
available to respond to appropriate questions. The representatives of KPMG LLP
also will have an opportunity to make a formal statement, if they so desire.
STOCKHOLDERS' PROPOSALS FOR 2000 ANNUAL MEETING
Pursuant to the rules of the Securities and Exchange Commission, proposals
by eligible stockholders (as defined below) which are intended to be presented
at CKE's Annual Meeting of Stockholders in 2000 must be received by CKE by
January 14, 2000 in order to be considered for inclusion in CKE's proxy
materials. The Board of Directors of CKE will determine whether any such
proposal will be included in its 2000 proxy solicitation materials. An eligible
stockholder is one who is the record or beneficial owner of at least 1% or
$1,000 in market value of securities entitled to be voted at the 2000 Annual
Meeting and has held such securities for at least one year, and who shall
continue to own such securities through the date on which the meeting is held.
ANNUAL REPORT
CKE's 1999 Annual Report, including consolidated financial statements for
fiscal 1999, accompanies this Proxy Statement. The Annual Report is not to be
regarded as proxy solicitation material.
Stockholders are urged to sign and return their proxies without delay.
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED JANUARY 25, 1999, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
WILL BE PROVIDED TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO INVESTOR
RELATIONS, CKE RESTAURANTS, INC., P. O. BOX 4349, ANAHEIM, CALIFORNIA 92803.
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APPENDIX A
CKE RESTAURANTS, INC.
1999 STOCK INCENTIVE PLAN
CKE RESTAURANTS, INC.
1999 STOCK INCENTIVE PLAN
This 1999 STOCK INCENTIVE PLAN (the "Plan") is hereby established by CKE
RESTAURANTS, INC., a Delaware corporation (the "Company"), and adopted by its
Board of Directors as of the 16th day of March, 1999 (the "Effective Date").
ARTICLE 1.
PURPOSES OF THE PLAN
1.1 PURPOSES. The purposes of the Plan are (a) to enhance the Company's
ability to attract and retain the services of qualified employees, officers and
directors (including non-employee officers and directors), and consultants and
other service providers upon whose judgment, initiative and efforts the
successful conduct and development of the Company's business largely depends,
and (b) to provide additional incentives to such persons or entities to devote
their utmost effort and skill to the advancement and betterment of the Company,
by providing them an opportunity to participate in the ownership of the Company
and thereby have an interest in the success and increased value of the Company.
ARTICLE 2.
DEFINITIONS
For purposes of this Plan, the following terms shall have the meanings
indicated:
2.1 ADMINISTRATOR. "Administrator" means the Board or, if the Board
delegates responsibility for any matter to the Committee, the term Administrator
shall mean the Committee.
2.2 AFFILIATED COMPANY. "Affiliated Company means any subsidiary of the
Company, or any business venture which the Company has a significant interest,
as determined at the discretion of the Administrator. However, for purposes of
eligibility to receive Incentive Options, "Affiliated Company" means any "parent
corporation" or "subsidiary corporation" of the Company, whether now existing or
hereafter created or acquired, as those terms are defined in Sections 424(e) and
424(f) of the Code, respectively.
2.3 BOARD. "Board" means the Board of Directors of the Company.
2.4 CHANGE IN CONTROL. "Change in Control" shall mean (i) the acquisition,
directly or indirectly, by any person or group (within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended) of the beneficial
ownership of securities of the Company possessing more than fifty percent (50%)
of the total combined voting power of all outstanding securities of the Company;
(ii) a merger or consolidation in which the Company is not the surviving entity,
except for a transaction in which the holders of the outstanding voting
securities of the Company immediately prior to such merger or consolidation
hold, in the aggregate, securities possessing more than fifty percent (50%) of
the total combined voting power of all outstanding voting securities of the
surviving entity immediately after such merger or consolidation; (iii) a reverse
merger in which the Company is the surviving entity but in which securities
possessing more than fifty percent (50%) of the total combined voting power of
all outstanding voting securities of the Company are transferred to or acquired
by a person or persons different from the persons holding those securities
immediately prior to such merger; (iv) the sale, transfer or other disposition
(in one transaction or a series of related transactions) of all or substantially
all of the assets of the Company; or (v) the approval by the shareholders of a
plan or proposal for the liquidation or dissolution of the Company.
2.5 CODE. "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
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2.6 COMMITTEE. "Committee" means a committee of two or more members of the
Board appointed to administer the Plan, as set forth in Section 7.1 hereof.
2.7 COMMON STOCK. "Common Stock" means the Common Stock, $.0001 par value
of the Company, subject to adjustment pursuant to Section 4.2 hereof.
2.8 DISABILITY. "Disability" means permanent and total disability as
defined in Section 22(e)(3) of the Code. The Administrator's determination of a
Disability or the absence thereof shall be conclusive and binding on all
interested parties.
2.9 EFFECTIVE DATE. "Effective Date" means the date on which the Plan is
adopted by the Board, as set forth on the first page hereof.
2.10 EXERCISE PRICE. "Exercise Price" means the purchase price per share
of Common Stock payable upon exercise of an Option.
2.11 FAIR MARKET VALUE. "Fair Market Value" on any given date means the
value of one share of Common Stock, determined as follows:
(a) If the Common Stock is then listed or admitted to trading on a
national stock exchange or a NASDAQ market system which reports closing
sale prices, the Fair Market Value shall be the closing sale price on the
date of valuation on the principal stock exchange or NASDAQ market system
on which the Common Stock is then listed or admitted to trading, or, if no
closing sale price is quoted on such day, then the Fair Market Value shall
be the closing sale price of the Common Stock on such exchange or NASDAQ
market system on the next preceding day for which a closing sale price is
reported.
(b) If the Common Stock is not then listed or admitted to trading on a
national stock exchange or NASDAQ market system which reports closing sale
prices, the Fair Market Value shall be the average of the closing bid and
asked prices of the Common Stock in the over-the-counter market on the date
of valuation.
(c) If neither (a) nor (b) is applicable as of the date of valuation,
then the Fair Market Value shall be determined by the Administrator in good
faith using any reasonable method of evaluation, which determination shall
be conclusive and binding on all interested parties.
2.12 INCENTIVE OPTION. "Incentive Option" means any Option designated and
qualified as an "incentive stock option" as defined in Section 422 of the Code.
2.13 INCENTIVE OPTION AGREEMENT. "Incentive Option Agreement" means an
Option Agreement with respect to an Incentive Option.
2.14 NASD DEALER. "NASD Dealer" means a broker-dealer that is a member of
the National Association of Securities Dealers, Inc.
2.15 NONQUALIFIED OPTION. "Nonqualified Option" means any Option that is
not an Incentive Option. To the extent that any Option designated as an
Incentive Option fails in whole or in part to qualify as an Incentive Option,
including, without limitation, for failure to meet the limitations applicable to
a 10% Shareholder or because it exceeds the annual limit provided for in Section
5.6 below, it shall to that extent constitute a Nonqualified Option.
2.16 NONQUALIFIED OPTION AGREEMENT. "Nonqualified Option Agreement" means
an Option Agreement with respect to a Nonqualified Option.
2.17 OFFEREE. "Offeree" means a Participant to whom a Right to Purchase
has been offered or who has acquired Restricted Stock under the Plan.
2.18 OPTION. "Option" means any option to purchase Common Stock granted
pursuant to the Plan.
2.19 OPTION AGREEMENT. "Option Agreement" means the written agreement
entered into between the Company and the Optionee with respect to an Option
granted under the Plan.
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2.20 OPTIONEE. "Optionee" means a Participant who holds an Option.
2.21 PARTICIPANT. "Participant" means an individual or entity who holds an
Option, a Right to Purchase or Restricted Stock under the Plan.
2.22 PURCHASE PRICE. "Purchase Price" means the purchase price per share
of Restricted Stock payable upon acceptance of a Right to Purchase.
2.23 RESTRICTED STOCK. "Restricted Stock" means shares of Common Stock
issued pursuant to Article 6 hereof, subject to any restrictions and conditions
as are established pursuant to such Article 6.
2.24 RIGHT TO PURCHASE. "Right to Purchase" means a right to purchase
Restricted Stock granted to an Offeree pursuant to Article 6 hereof.
2.25 SERVICE PROVIDER. "Service Provider" means a consultant or other
person or entity who provides services to the Company or an Affiliated Company
and who the Administrator authorizes to become a Participant in the Plan.
2.26 STOCK PURCHASE AGREEMENT. "Stock Purchase Agreement" means the
written agreement entered into between the Company and the Offeree with respect
to a Right to Purchase offered under the Plan.
2.27 10% SHAREHOLDER. "10% Shareholder" means a person who, as of a
relevant date, owns or is deemed to own (by reason of the attribution rules
applicable under Section 424(d) of the Code) stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or of an
Affiliated Company.
ARTICLE 3.
ELIGIBILITY
3.1 INCENTIVE OPTIONS. Officers and other key employees of the Company or
of an Affiliated Company (including members of the Board if they are employees
of the Company or of an Affiliated Company) are eligible to receive Incentive
Options under the Plan.
3.2 NONQUALIFIED OPTIONS AND RIGHTS TO PURCHASE. Officers and other key
employees of the Company or of an Affiliated Company, members of the Board
(whether or not employed by the Company or an Affiliated Company), and Service
Providers are eligible to receive Nonqualified Options or Rights to Purchase
under the Plan. Nonqualified Options or Rights to Purchase may also be granted
to an employee, in connection with the hiring, retention or otherwise, prior to
the date the employee first performs services for the Company or an Affiliated
Company, provided that no such Options or shares of Restricted Stock shall
become vested prior to the date the employee first performs such services.
3.3 LIMITATION ON SHARES. In no event shall any Participant be granted
Options or Rights to Purchase in any one calendar year pursuant to which the
aggregate number of shares of Common Stock that may be acquired thereunder
exceeds 500,000 shares. In no event shall the aggregate number of shares subject
to Incentive Options exceed 4,650,000.
ARTICLE 4.
PLAN SHARES
4.1 SHARES SUBJECT TO THE PLAN. A total of 1,500,000 shares of Common
Stock[, plus, on the date of each annual meeting of the stockholders an
additional 350,000 shares of Common Stock,] may be issued under the Plan subject
to adjustment as to the number and kind of shares pursuant to Section 4.2
hereof. For purposes of this limitation, in the event that (a) all or any
portion of any Option or Right to Purchase granted or offered under the Plan can
no longer under any circumstances be exercised, or (b) any shares of Common
Stock are reacquired by the Company pursuant to an Incentive Option Agreement,
Nonqualified Option Agreement or Stock Purchase Agreement (including shares
received as payment of Exercise Price), the
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shares of Common Stock allocable to the unexercised portion of such Option or
such Right to Purchase, or the shares so reacquired, shall again be available
for grant or issuance under the Plan.
4.2 CHANGES IN CAPITAL STRUCTURE. In the event that the outstanding shares
of Common Stock are hereafter increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of a recapitalization, stock split, combination of shares,
reclassification, stock dividend, or other change in the capital structure of
the Company, then appropriate adjustments shall be made by the Administrator to
the aggregate number and kind of shares subject to this Plan, and the number and
kind of shares and the price per share subject to outstanding Option Agreements,
Rights to Purchase and Stock Purchase Agreements in order to preserve, as nearly
as practical, but not to increase, the benefits to Participants.
ARTICLE 5.
OPTIONS
5.1 OPTION AGREEMENT. Each Option granted pursuant to this Plan shall be
evidenced by an Option Agreement which shall specify the number of shares
subject thereto, the Exercise Price per share, and whether the Option is an
Incentive Option or Nonqualified Option. As soon as is practical following the
grant of an Option, an Option Agreement shall be duly executed and delivered by
or on behalf of the Company to the Optionee to whom such Option was granted.
Each Option Agreement shall be in such form and contain such additional terms
and conditions, not inconsistent with the provisions of this Plan, as the
Administrator shall, from time to time, deem desirable, including, without
limitation, the imposition of any rights of first refusal and resale obligations
upon any shares of Common Stock acquired pursuant to an Option Agreement. Each
Option Agreement may be different from each other Option Agreement.
5.2 EXERCISE PRICE. The Exercise Price per share of Common Stock covered
by each Option shall be determined by the Administrator, subject to the
following: (a) the Exercise Price of an Incentive Option shall not be less than
100% of Fair Market Value on the date the Incentive Option is granted, and (b)
if the person to whom an Incentive Option is granted is a 10% Shareholder on the
date of grant, the Exercise Price shall not be less than 110% of Fair Market
Value on the date the Option is granted.
5.3 PAYMENT OF EXERCISE PRICE. Payment of the Exercise Price shall be made
upon exercise of an Option and may be made, in the discretion of the
Administrator, subject to any legal restrictions, by: (a) cash; (b) check; (c)
the surrender of shares of Common Stock owned by the Optionee that have been
held by the Optionee for at least six (6) months, which surrendered shares shall
be valued at Fair Market Value as of the date of such exercise; (d) the
Optionee's promissory note in a form and on terms acceptable to the
Administrator; (e) the cancellation of indebtedness of the Company to the
Optionee; (f) the waiver of compensation due or accrued to the Optionee for
services rendered; (g) provided that a public market for the Common Stock
exists, a "same day sale" commitment from the Optionee and an NASD Dealer
whereby the Optionee irrevocably elects to exercise the Option and to sell a
portion of the shares so purchased to pay for the Exercise Price and whereby the
NASD Dealer irrevocably commits upon receipt of such shares to forward the
Exercise Price directly to the Company; (h) provided that a public market for
the Common Stock exists, a "margin" commitment from the Optionee and an NASD
Dealer whereby the Optionee irrevocably elects to exercise the Option and to
pledge the shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the Exercise Price,
and whereby the NASD Dealer irrevocably commits upon receipt of such shares to
forward the Exercise Price directly to the Company; or (i) any combination of
the foregoing methods of payment or any other consideration or method of payment
as shall be permitted by applicable corporate law.
5.4 TERM AND TERMINATION OF OPTIONS. The term and provisions for
termination of each Option shall be as fixed by the Administrator, but no Option
may be exercisable more than ten (10) years after the date it is granted. An
Incentive Option granted to a person who is a 10% Shareholder on the date of
grant shall not be exercisable more than five (5) years after the date it is
granted.
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5.5 VESTING AND EXERCISE OF OPTIONS. Each Option shall vest and become
exercisable in one or more installments at such time or times and subject to
such conditions, including without limitation the achievement of specified
performance goals or objectives, as shall be determined by the Administrator.
5.6 ANNUAL LIMIT ON INCENTIVE OPTIONS. To the extent required for
"incentive stock option" treatment under Section 422 of the Code, the aggregate
Fair Market Value (determined as of the time of grant) of the Common Stock shall
not, with respect to which Incentive Options granted under this Plan and any
other plan of the Company or any Affiliated Company become exercisable for the
first time by an Optionee during any calendar year, exceed $100,000.
5.7 NONTRANSFERABILITY OF OPTIONS. Except as otherwise provided by the
Administrator, no Option shall be assignable or transferable except by will or
the laws of descent and distribution, and during the life of the Optionee shall
be exercisable only by such Optionee.
5.8 RIGHTS AS SHAREHOLDER. An Optionee or permitted transferee of an
Option shall have no rights or privileges as a shareholder with respect to any
shares covered by an Option until such Option has been duly exercised and
certificates representing shares purchased upon such exercise have been issued
to such person.
ARTICLE 6.
RIGHTS TO PURCHASE
6.1 NATURE OF RIGHT TO PURCHASE. A Right to Purchase granted to an Offeree
entitles the Offeree to purchase, for a Purchase Price determined by the
Administrator, shares of Common Stock subject to such terms, restrictions and
conditions as the Administrator may determine at the time of grant ("Restricted
Stock"). Such conditions may include, but are not limited to, continued
employment or the achievement of specified performance goals or objectives.
6.2 ACCEPTANCE OF RIGHT TO PURCHASE. An Offeree shall have no rights with
respect to the Restricted Stock subject to a Right to Purchase unless the
Offeree shall have accepted the Right to Purchase within ten (10) days (or such
longer or shorter period as the Administrator may specify) following the grant
of the Right to Purchase by making payment of the full Purchase Price to the
Company in the manner set forth in Section 6.3 hereof and by executing and
delivering to the Company a Stock Purchase Agreement. Each Stock Purchase
Agreement shall be in such form, and shall set forth the Purchase Price and such
other terms, conditions and restrictions of the Restricted Stock, not
inconsistent with the provisions of this Plan, as the Administrator shall, from
time to time, deem desirable. Each Stock Purchase Agreement may be different
from each other Stock Purchase Agreement.
6.3 PAYMENT OF PURCHASE PRICE. Subject to any legal restrictions, payment
of the Purchase Price upon acceptance of a Right to Purchase Restricted Stock
may be made, in the discretion of the Administrator, by: (a) cash; (b) check;
(c) the surrender of shares of Common Stock owned by the Offeree that have been
held by the Offeree for at least six (6) months, which surrendered shares shall
be valued at Fair Market Value as of the date of such exercise; (d) the
Offeree's promissory note in a form and on terms acceptable to the
Administrator; (e) the cancellation of indebtedness of the Company to the
Offeree; (f) the waiver of compensation due or accrued to the Offeree for
services rendered; or (g) any combination of the foregoing methods of payment or
any other consideration or method of payment as shall be permitted by applicable
corporate law.
6.4 RIGHTS AS A SHAREHOLDER. Upon complying with the provisions of Section
6.2 hereof, an Offeree shall have the rights of a shareholder with respect to
the Restricted Stock purchased pursuant to the Right to Purchase, including
voting and dividend rights, subject to the terms, restrictions and conditions as
are set forth in the Stock Purchase Agreement. Unless the Administrator shall
determine otherwise, certificates evidencing shares of Restricted Stock shall
remain in the possession of the Company until such shares have vested in
accordance with the terms of the Stock Purchase Agreement.
6.5 RESTRICTIONS. Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided in the Stock Purchase Agreement. In the
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event of termination of a Participant's employment, service as a director of the
Company or Service Provider status for any reason whatsoever (including death or
disability), the Stock Purchase Agreement may provide, in the discretion of the
Administrator, that the Company shall have the right, exercisable at the
discretion of the Administrator, to repurchase (i) at the original Purchase
Price, any shares of Restricted Stock which have not vested as of the date of
termination, and (ii) at Fair Market Value, any shares of Restricted Stock which
have vested as of such date, on such terms as may be provided in the Stock
Purchase Agreement.
6.6 VESTING OF RESTRICTED STOCK. The Stock Purchase Agreement shall
specify the date or dates, the performance goals or objectives which must be
achieved, and any other conditions on which the Restricted Stock may vest.
6.7 DIVIDENDS. If payment for shares of Restricted Stock is made by
promissory note, any cash dividends paid with respect to the Restricted Stock
may be applied, in the discretion of the Administrator, to repayment of such
note.
6.8 NONASSIGNABILITY OF RIGHTS. No Right to Purchase shall be assignable
or transferable except by will or the laws of descent and distribution or as
otherwise provided by the Administrator.
ARTICLE 7.
ADMINISTRATION OF THE PLAN
7.1 ADMINISTRATOR. Authority to control and manage the operation and
administration of the Plan shall be vested in the Board, which may delegate such
responsibilities in whole or in part to a committee consisting of two (2) or
more members of the Board (the "Committee"). Members of the Committee may be
appointed from time to time by, and shall serve at the pleasure of, the Board.
As used herein, the term "Administrator" means the Board or, with respect to any
matter as to which responsibility has been delegated to the Committee, the term
Administrator shall mean the Committee.
7.2 POWERS OF THE ADMINISTRATOR. In addition to any other powers or
authority conferred upon the Administrator elsewhere in the Plan or by law, the
Administrator shall have full power and authority: (a) to determine the persons
to whom, and the time or times at which, Incentive Options or Nonqualified
Options shall be granted and Rights to Purchase shall be offered, the number of
shares to be represented by each Option and Right to Purchase and the
consideration to be received by the Company upon the exercise thereof; (b) to
interpret the Plan; (c) to create, amend or rescind rules and regulations
relating to the Plan; (d) to determine the terms, conditions and restrictions
contained in, and the form of, Option Agreements and Stock Purchase Agreements;
(e) to determine the identity or capacity of any persons who may be entitled to
exercise a Participant's rights under any Option or Right to Purchase under the
Plan; (f) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Option Agreement or Stock Purchase
Agreement; (g) to accelerate the vesting of any Option or release or waive any
repurchase rights of the Company with respect to Restricted Stock; (h) to extend
the exercise date of any Option or acceptance date of any Right to Purchase; (i)
to provide for rights of first refusal and/or repurchase rights; (j) to amend
outstanding Option Agreements and Stock Purchase Agreements to provide for,
among other things, any change or modification which the Administrator could
have provided for upon the grant of an Option or Right to Purchase or in
furtherance of the powers provided for herein; and (k) to make all other
determinations necessary or advisable for the administration of the Plan, but
only to the extent not contrary to the express provisions of the Plan. Any
action, decision, interpretation or determination made in good faith by the
Administrator in the exercise of its authority conferred upon it under the Plan
shall be final and binding on the Company and all Participants.
7.3 LIMITATION ON LIABILITY. No employee of the Company or member of the
Board or Committee shall be subject to any liability with respect to duties
under the Plan unless the person acts fraudulently or in bad faith. To the
extent permitted by law, the Company shall indemnify each member of the Board or
Committee, and any employee of the Company with duties under the Plan, who was
or is a party, or is threatened to be made a party, to any threatened, pending
or completed proceeding, whether civil, criminal, administrative or
investigative, by reason of such person's conduct in the performance of duties
under the Plan.
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<PAGE> 34
ARTICLE 8.
CHANGE IN CONTROL
8.1 CHANGE IN CONTROL. In order to preserve a Participant's rights in the
event of a Change in Control of the Company, (i) the time period relating to the
exercise or realization of all outstanding Options, Rights to Purchase and
Restricted Stock shall automatically accelerate immediately prior to the
consummation of such Change in Control, and (ii) with respect to Options and
Rights to Purchase, the Administrator in its discretion may, at any time an
Option or Right to Purchase is granted, or at any time thereafter, take one or
more of the following actions: (A) provide for the purchase or exchange of each
Option or Right to Purchase for an amount of cash or other property having a
value equal to the difference, or spread, between (x) the value of the cash or
other property that the Participant would have received pursuant to such Change
in Control transaction in exchange for the shares issuable upon exercise of the
Option or Right to Purchase had the Option or Right to Purchase been exercised
immediately prior to such Change in Control transaction and (y) the Exercise
Price of such Option or the Purchase Price under such Right to Purchase, (B)
adjust the terms of the Options and Rights to Purchase in a manner determined by
the Administrator to reflect the Change in Control, (C) cause the Options and
Rights to Purchase to be assumed, or new rights substituted therefor, by another
entity, through the continuance of the Plan and the assumption of outstanding
Options and Rights to Purchase, or the substitution for such Options and Rights
to Purchase of new options and new rights to purchase of comparable value
covering shares of a successor corporation, with appropriate adjustments as to
the number and kind of shares and Exercise Prices, in which event the Plan and
such Options and Rights to Purchase, or the new options and rights to purchase
substituted therefor, shall continue in the manner and under the terms so
provided, or (D) make such other provision as the Administrator may consider
equitable. If the Administrator does not take any of the forgoing actions, all
Options and Rights to Purchase shall terminate upon the consummation of the
Change in Control, unless the Common Stock remains listed or admitted to trading
on a national stock exchange or a NASDAQ market system. The Administrator shall
cause written notice of the proposed Change in Control transaction to be given
to all Participants not less than fifteen (15) days prior to the anticipated
effective date of the proposed transaction.
ARTICLE 9.
AMENDMENT AND TERMINATION OF THE PLAN
9.1 AMENDMENTS. The Board may from time to time alter, amend, suspend or
terminate the Plan in such respects as the Board may deem advisable. The Board
may alter or amend the Plan to comply with requirements under the Code relating
to Incentive Options or other types of options which give Optionees more
favorable tax treatment than that applicable to Options granted under this Plan
as of the date of its adoption. Upon any such alteration or amendment, any
outstanding Option granted hereunder may, if the Administrator so determines and
if permitted by applicable law, be subject to the more favorable tax treatment
afforded to an Optionee pursuant to such terms and conditions.
9.2 PLAN TERMINATION. Unless the Plan shall theretofore have been
terminated, the Plan shall terminate on the tenth (10th) anniversary of the
Effective Date and no Options or Rights to Purchase may be granted under the
Plan thereafter, but Option Agreements, Stock Purchase Agreements and Rights to
Purchase then outstanding shall continue in effect in accordance with their
respective terms.
ARTICLE 10.
TAX WITHHOLDING
10.1 WITHHOLDING. The Company shall have the power to withhold, or require
a Participant to remit to the Company, an amount sufficient to satisfy any
applicable Federal, state, and local tax withholding requirements with respect
to any Options exercised or Restricted Stock issued under the Plan. To the
extent permissible under applicable tax, securities and other laws, the
Administrator may, in its sole discretion and upon such terms and conditions as
it may deem appropriate, permit a Participant to satisfy his or her obligation
to pay any such tax, in whole or in part, up to an amount determined on the
basis of the highest marginal tax rate applicable to such Participant, by (a)
directing the Company to apply shares of Common Stock to which the Participant
is entitled as a result of the exercise of an Option or as a result of the
purchase
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<PAGE> 35
of or lapse of restrictions on Restricted Stock or (b) delivering to the Company
shares of Common Stock owned by the Participant. The shares of Common Stock so
applied or delivered in satisfaction of the Participant's tax withholding
obligation shall be valued at their Fair Market Value as of the date of
measurement of the amount of income subject to withholding.
ARTICLE 11.
MISCELLANEOUS
11.1 BENEFITS NOT ALIENABLE. Other than as provided above, benefits under
the Plan may not be assigned or alienated, whether voluntarily or involuntarily.
Any unauthorized attempt at assignment, transfer, pledge or other disposition
shall be without effect.
11.2 NO ENLARGEMENT OF EMPLOYEE RIGHTS. This Plan is strictly a voluntary
undertaking on the part of the Company and shall not be deemed to constitute a
contract between the Company and any Participant to be consideration for, or an
inducement to, or a condition of, the employment of any Participant. Nothing
contained in the Plan shall be deemed to give the right to any Participant to be
retained as an employee of the Company or any Affiliated Company or to limit the
right of the Company or any Affiliated Company to discharge any Participant at
any time.
11.3 APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of Common Stock pursuant to Option Agreements and Stock Purchase
Agreements, except as otherwise provided herein, will be used for general
corporate purposes.
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<PAGE> 36
PROXY
CKE RESTAURANTS, INC.
401 WEST CARL KARCHER WAY
ANAHEIM, CALIFORNIA 92801
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CKE RESTAURANTS,
INC. The undersigned hereby appoints William P. Foley II and Carl A. Strunk, and
each of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes each of them to represent and to vote as designated below, all
the shares of Common Stock of CKE Restaurants, Inc. held of record by the
undersigned on April 29, 1999, at the Annual Meeting of Stockholders to be held
on June 15, 1999 and any postponements or adjournments thereof.
PLEASE DATE, SIGN ON REVERSE SIDE AND RETURN IN THE ACCOMPANYING ENVELOPE.
- --------------------------------------------------------------------------------
-FOLD AND DETACH HERE-
<PAGE> 37
Please mark your
votes as indicated [X]
in this example.
Election of Directors:
<TABLE>
<S> <C> <C> <C>
(Instruction: To withhold FOR WITHHOLD 2. In their discretion, the
authority to vote for any all of the nominees AUTHORITY Proxies are authorized to
individual nominee strike a listed below (except to vote for vote upon such other
line through the nominee's as withheld to the all nominees business as may properly
name in the list below.) contrary below) listed below come before such meeting
[ ] [ ] or any and all postponements
or adjournments thereof.
</TABLE>
Peter Churm THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED
Daniel D. (Ron) Lane IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
STOCKHOLDER. IF NO DIRECTION IN GIVEN, THE PROXIES
WILL VOTE FOR THE NOMINEES LISTED ABOVE, AND IN
THEIR DISCRETION ON MATTERS DESCRIBED IN ITEM 2.
DO YOU PLAN TO ATTEND YES NO
THE MEETING? [ ] [ ]
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
Signature ____________________________
Signature if held jointly __________________________ Dated: ______________, 1999
Please sign exactly as the name appears below. When shares are held by joint
tenants, both should sign. When signing as an attorney, executor, administrator,
trustee or guardian, please give your full title as such. If a corporation,
please sign in full corporate name by the President or other authorized officer.
If a partnership, please sign in the partnership name by an authorized person.
-FOLD AND DETACH HERE-
