1
EXHIBIT (a)(3)
Dear Key Cooker Team Member,
We are very excited to announce an offer to exchange certain of the stock
options you hold for Restricted Stock to be issued pursuant to our new 2001
Restricted Stock Plan and enclose the documents for you to complete in order to
participate. We are making this offer in appreciation for your hard work and
loyalty during the tough times we have experienced, so you can participate in
the growth in the value of the Company over the coming years.
You now hold certain stock options, which currently have no value because
Cooker's stock price is below the option price. The offer gives you the
opportunity to exchange your current stock options for shares of Restricted
Stock. The number of shares you will receive was calculated assuming that Cooker
stock would grow to $20 per share over the next five years (although this is
obviously not a prediction of the future stock price). We calculated the gain
that you would realize on your present options, assuming that you held them for
five years. We then determined the number of shares, priced at $.906 (the price
of Cooker stock on the day the Board of Directors approved it, January 29,
2001), that it would take to realize the same gain over the same five-year
period.
If you choose to exchange your options for Restricted Stock, four stock
certificates will be issued in your name, each for approximately one quarter of
the shares of Restricted Stock that you receive. The certificates will be held
in escrow by the company. At the end of each year, for four years, so long as
you continue as a Cooker employee or as a director, you will receive one of
these certificates. At that time the certificates that you received may continue
to be owned by you or you may sell the stock. You will own the actual shares, as
opposed to having to buy shares, as with your present options.
Receipt of these shares is taxable income to you. You have two alternatives for
paying tax on this income. You may pay tax on all the shares in 2001 at the
value of the shares on May 14, 2001, in which case that will become your cost
basis in the shares and you will owe no more tax until you sell the shares. In
order to elect this alternative you must file an election under Section 83(b) of
the tax code within 30 days. Alternatively, you can wait and pay tax each year
on the one quarter of the shares as you receive them, but you will then owe tax
on the value of the shares at that time and that value will become your cost
basis. Please contact your tax advisor for any guidance on making this tax
election.
You will find attached to the enclosed Transmittal Letter a list of your current
stock options and the amount of Restricted Stock you will receive in its place
if you choose to do so. Also enclosed is an Offer to Exchange. If you choose to
accept this offer, please
- 1 -
2
read all the pages of the enclosed documents carefully and make sure you sign
the Transmittal Letter in each place where appropriate. If you wish to accept
the offer, please return the executed Transmittal Letter and the specified
enclosures to Dave Sanford in the West Palm Beach office.
If you have any questions, please call Dave Sanford or Diane Schutz at the West
Palm Beach office at 800-426-3402.
If you accept the offer, welcome as a Cooker stockholder! Thank you for your
hard work and your loyalty to Cooker.
Sincerely yours,
Henry R. Hillenmeyer, Chairman & CEO
Daniel A. Clay, Executive Vice President & COO
Mark W. Mikosz, Vice President & CFO
/ld
Enclosures
- 2 -
3
MEMORANDUM
TO: Employee or Director Receiving Restricted Stock from Cooker
Restaurant Corporation
FROM: Cooker Restaurant Corporation
DATE: April 2001
RE: Procedures for Making Section 83(b) Elections
================================================================================
The purpose of this memorandum is to advise you as to the procedures
necessary to make an election pursuant to Section 83(b) of the Internal Revenue
Code should you choose to make such an election in connection with the transfer
of Restricted Stock to you. Attached to this memorandum is a Section 83(b)
Election prepared on your behalf.
1. Complete Paragraph 1 of the Election by inserting your address and your
social security number in the space provided.
2. Complete Paragraph 2 of the Election by inserting the number of shares
transferred to you for which the Section 83(b) election is effective.
3. Complete Paragraph 5 of the Election by inserting the value of the
shares transferred to you on May 14, 2001.
4. Execute three (3) copies of the Election.
5. On or before June 13, 2001, mail via the U.S. Postal Service one (1)
signed copy of the Election to the Internal Revenue Service Center at
which you normally file your individual income tax returns. We
recommend that you mail the copy certified mail with a return receipt
requested.
6. Retain one (1) signed copy of the Election to be filed with your 2001
federal income tax return.
7. Return one (1) signed copy of the Election to Cooker Restaurant
Corporation.
4
ELECTION TO INCLUDE VALUE OF RESTRICTED PROPERTY IN GROSS INCOME
IN YEAR OF TRANSFER UNDER CODE SECTION 83(B)
The undersigned hereby elects pursuant to section 83(b) of the
Internal Revenue Code with respect to the property described below and supplies
the following information in accordance with the regulations promulgated
thereunder:
1. The name, address and taxpayer identification number of the undersigned
is:
---------------------
---------------------
---------------------
SSN:
----------------
2. Description of the property with respect to which the election is being
made:
___ Shares of Cooker Restaurant Corporation Common Stock
3. The date on which the property was transferred is May 14, 2001. The
taxable year to which this election relates is calendar year 2001.
4. The property is subject to forfeiture upon the occurrence of any of the
following:
Should the transferee's employment with or term as a director
of Cooker Restaurant Corporation terminate for any reason other than death,
disability or a change in control of Cooker Restaurant Corporation, the
transferred property shall be forfeited immediately; provided that, the
forfeiture provisions described herein shall lapse on 25% of the transferred
property each calendar year following the year in which the property is
transferred to the transferee.
5. The fair market value of the property at the time of transfer
(determined without regard to any restrictions other than restrictions which by
their terms will never lapse) of the property with respect to which this
election is made is $ ___________.
6. The taxpayer paid $ - 0 - for the property.
7. A copy of this statement has been furnished to Cooker Restaurant
Corporation.
Dated: , 2001
---------------