SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JULY 31, 1994
OR
[] TRANSITION REPORT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-4183
CHOCK FULL O' NUTS CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 13-0697025
(State of Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
370 Lexington Avenue, New York, New York 10017
(Address of Principal Executive Offices) (Zip Code)
(212) 532-0300
(Registrant's Telephone Number, Including Area Code)
Securities Registered Pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title Of Each Class On Which Registered
Common Stock, par value $.25 per share New York Stock Exchange
8% Convertible Subordinated Debentures, American Stock Exchange
due September 15, 2006
7% Convertible Senior Subordinated Debentures, New York Stock Exchange
due April 1, 2012
Securities Registered Pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
filing requirements for the past 90 days.
Yes x No
Aggregate market value of the Common Stock ($.25 par value) held by
nonaffiliates of the registrant as of October 13, 1994: $45,508,000
Number of Shares of Common Stock ($.25 par value) outstanding as of
October 13, 1994:
10,422,000
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual proxy statement for the year ended July 31, 1994 are
incorporated by reference into Part III.
PART I
Item 1. BUSINESS
Item 101 (a) and (c) of Regulation S-K
The Company's primary business is the roasting, packing and marketing of a
broad range of regular and decaffeinated, ground roast, instant and specialty
coffees for the Foodservice and Retail Grocery Industries. These products
are sold regionally throughout the United States and Canada under various
well known trademarks, including Chock full o' Nuts, LaTouraine and Cain's.
Best known among its products is Chock full o' Nuts brand premium, vacuum
packed, all-method grind coffee. The Company is also one of the largest
marketers of food service and private label coffees. The balance of the
Company's business is derived from its Retail Restaurant and Cafe division
(commencing in fiscal 1994) and from real estate operations.
Incorporated in 1932, for many years, the Company's primary business was the
operation of counter service restaurants, under the Chock full o' Nuts name.
In 1953, the Company expanded its business by marketing the coffee made
famous in its restaurants to consumers via supermarkets and other Retail
Grocery outlets. Impactful advertising, featuring the "Heavenly Coffee"
jingle, made Chock full o' Nuts brand premium coffee a market leader. In
1983, Management discontinued the Company's restaurant operations and
concentrated its efforts on the sale of coffee and related food products.
Since 1984, the Company's overall strategy has been to diversify within its
core areas of strength by lessening its dependence on Retail Coffee.
In December 1992, the Company acquired the stock of Cain's Coffee Co.
("Cain's") and certain trademarks related to that business. Cain's business
consists primarily of sales of coffee and related products to Foodservice
customers in parts of the Midwest and Southwest. Cain's also sells coffee
and tea to Retail Grocery Customers using a direct store distribution system.
In November 1992, the Company acquired a controlling interest in a
partnership, which owns Dana Brown Private Brands, Inc., a company which
markets and sells private label coffee and tea products to food retailers
and distributors, located primarily in the Midwest.
In December 1986, the Company acquired Greenwich Mills Company ("Greenwich").
Established in 1912, Greenwich is a leading manufacturer and supplier of
coffee, tea and allied products to Foodservice and private label customers,
the majority of which are in the Eastern United States. Greenwich's best
known trademark is LaTouraine.
In November 1993, the Company sold Hillside Coffee of California, Inc., whose
business consisted of roasting, packing, distributing and marketing specialty
coffee under the Hillside name, primarily to supermarkets. See Note 6 of
notes to consolidated financial statements.
In July 1993, the Company sold its interest in Jimbo's Jumbos, Incorporated
("JJI"). The business of JJI consisted primarily of (1) shelling farmers'
stock peanuts into commercial and seed grades of raw peanuts for sale to
commercial processors of peanuts, seed dealers and farmers and (2) processing
and packaging of in-the-shell peanuts and nuts, and shelled peanuts and nuts,
for sale to supermarkets. See Note 5 of notes to consolidated financial
statements.
Corporate Management is currently focused on the following growth
initiatives: (i) Expansion of its Retail Restaurant and Cafe division;
(ii) Maximizing the Company's Foodservice franchise by significantly
broadening its customer base for Cain's, Chock full o' Nuts and LaTouraine
brand coffee, tea and allied products; (iii) Increasing Retail Grocery Market
shares for Chock full o' Nuts brand Cafe Blend, decaffeinated, instant and
rich french roast coffees, which generate higher margins than ground roast,
regular and economy blend coffees; and, (iv) Selectively pursuing new
business development opportunities, as appropriate, which will deliver
significant volume and profit growth.
The following table sets forth revenues and operating results from continuing
operations before interest and corporate expenses attributable to the
Company's food products sales and real estate operations, for the fiscal
years ended July 31, 1994, 1993 and 1992:
Fiscal Years Ended July 31,
1994 1993 1992
(In Thousands)
Revenues
Net Sales - Food Products $263,638 $251,641 $203,640
Rentals from Real Estate 2,060 1,876 1,205
Operating Profit/(Loss):
Food Products (1) 10,389 11,532 (2) (1,688) (2)
Real Estate Operations 317 (9) (783)
(1) See Note 6 of notes to consolidated financial statements regarding
product line sold.
(2) Includes restructuring charges of $3,598,000 and $5,500,000 and
officers' termination benefits of $818,000 and $1,974,000 in fiscal 1993
and 1992, respectively (see Notes 11(c) and 11(d) of notes to consolidated
financial statements).
COFFEE AND RELATED PRODUCTS
Description of Coffee Market
According to certain available industry surveys and Company estimates, total
United States coffee sales by manufacturers in 1993 were approximately $5
billion. Approximately 35% of total United States coffee sales in 1993 were
to Foodservice customers.
Foodservice Sales and Marketing
In January 1985, the Company began marketing its coffee and allied products
through Company sales personnel and independent food brokers to chain and
independent restaurants, hospitals, airlines, schools, governmental
institutions, vending and office coffee service operators and other
institutional distributors ("Foodservice Customers"). In December 1986, the
Company acquired Greenwich, which is a major supplier in the Eastern United
States of coffee, tea and allied products to Foodservice Customers and
private label customers. Greenwich's best-known label is LaTouraine which
enjoys a reputation for high quality. LaTouraine also distributes hot
chocolate, iced and hot tea, powdered soft drinks, soup bases, and portion
controlled jams, jellies and condiments.
In December 1992, the Company acquired Cain's, which is a major supplier in
the Midwest and Southwest of products similar to those sold by Greenwich and
LaTouraine to Foodservice Customers.
Approximately 47% of sales are currently derived from processing and
marketing coffee and allied products for sale to Foodservice Customers.
Sales of coffee products to Foodservice Customers have traditionally been
less price-sensitive and depend more on the level of customer service. They
also tend to generate higher operating margins, due to lower marketing and
advertising expenses, than do sales of such products to Retail customers.
In addition, the absence of competitors with a dominant market position makes
the Company's pricing to Foodservice Customers less susceptible, as compared
to pricing to Retail customers, to changes in price in response to pricing
actions of any single competitor.
Retail Sales and Marketing
The Company currently sells most of its Retail Grocery coffee products to
supermarket chains, wholesalers and independent food outlets ("Retail
Customers") through independent food brokers. The Company's retail products
include coffees sold under the Chock full o' Nuts, Cain's and Safari labels.
The Company's best known product, Chock full o' Nuts premium, vacuum packed,
all-method grind coffee, is superior to most competitors in being able to
produce more consistent, better tasting finished brews from a single,
"all-method grind", regardless of the coffee maker used. The Company also
sells an "extended yield" coffee, which produces more cups than equivalent
quantities of standard yield coffee. Additionally the Company sells
decaffeinated, instant, a Cafe blend and rich french roast coffees as well
as a ready to drink iced cappuccino product, called Chock o'ccino. Finally,
the Company and Greenwich roast, pack and market regular, decaffeinated and
instant coffees for sale by others under a variety of private labels.
In fiscal 1994 the Company's coffee sales (other than Hillside) to Retail
Customers accounted for approximately 47% of sales and represented
approximately 4% of total Retail Grocery coffee sales in the United States.
Chock full o' Nuts all-method grind coffee is sold in most major metropolitan
areas of the United States and in the provinces of Ontario and Quebec,
Canada. Sales are concentrated in the New York metropolitan area, upstate
New York, New England, Philadelphia, Washington, D.C. and Florida. The
Company believes that its distinctive packaging design and one grind concept
are important factors in the marketing of its coffee products. Marketing a
single grind coffee has enabled the Company's all-method grind coffee to be
consistently one of the fastest moving items off supermarket shelves in its
core markets. The sales of Cain's and Safari brand products are concentrated
in the Midwest and Southwest.
Suppliers and Manufacturing
The Company's coffee is primarily a blend of readily available Central and
South American coffees. The Company purchases approximately 100 million
pounds of green coffee beans annually. All such coffee is purchased from
approximately 25 importers located in New York City, New Orleans and Miami,
who assume the risk of delivering beans that meet the Company's quality
requirements at a guaranteed price. The Company generally buys its coffee
pursuant to contracts providing for delivery in 4 to 12 weeks and supplements
such contracts with purchases on the spot market. All purchases are subject
to inspection and approval by the United States Food and Drug Administration.
Manufacturing activities for coffee and related products are presently
conducted at the following facilities:
Location Principal Use
Brooklyn, New York............Coffee Roasting Plant, Warehouse
St. Louis, Missouri...........Coffee Roasting Plant, Warehouse
Hialeah, Florida..............Coffee Roasting Plant, Warehouse
Rochester, New York...........Coffee Roasting Plant, Warehouse
Oklahoma City, Oklahoma.......Coffee Roasting Plant and Processing
Plant for Tea and Related Food
Products, Warehouse
Springfield, Missouri.........Processing Plant for Spices, Warehouse
All of the above facilities are owned, except the Rochester, New York and
Springfield, Missouri facilities, which are leased. The Company rents
executive office space in New York City and maintains warehousing facilities
in over forty-five locations throughout the United States. The Company
believes that it has sufficient production capacity to meet its current and
future needs.
Competition
The coffee business is highly competitive. The Company competes for Retail
Customers with a number of nationally and regionally established brands. Its
largest competitors are General Foods (Maxwell House, Yuban & Sanka coffees),
Procter & Gamble (Folger's coffees) and The Nestle Company (Hills, MJB &
Chase & Sanborn coffees), with combined annual sales accounting for
approximately 80% of the United States coffee market. The profitability of
the Company's coffee sales to Retail Customers is largely dependent on
competitive pricing conditions. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations".
There are many competitors in the business of selling coffee to Foodservice
Customers. However, the Company believes that no single competitor's sales
constitute more than 15% of this market. Sales of coffee, tea and allied
products to Foodservice Customers have traditionally been less
price-sensitive and more dependent on the level of service provided to such
customers than sales of such products to Retail Customers. In addition, the
absence of direct competitors with a dominant market position has
traditionally made the Company's pricing to Foodservice Customers less
susceptible, as compared to pricing to Retail Customers, to changes in price
in response to pricing actions of any single competitor.
Retail Restaurant and Cafe Division
In June 1994, with the opening of a flagship store in Midtown Manhattan, the
Company entered the business of operating retail cafes which offer specialty
coffees, sandwiches, salads, bakery products, snacks, and other assorted food
and beverage products. The cafe has an upscale motif, with woods and
granite, and utilizes a quick-service format, at a moderate price structure.
The Company has developed a number of formats for expansion of this retail
cafe concept, including the full cafe (2500 to 3500 square feet with seating
for 45-75), the mini-cafe (400-1000 square feet with limited seating), and
Chock Full O'Nuts EXPRESS-Osm (a modular kiosk of 150 square feet). The
Company intends to open additional locations utilizing the above formats, in
central business districts, and high-volume public locations.
In March 1994, the Company acquired Quikava, Inc., an operator and franchisor
of double-drive thru buildings, which offer a variety of specialty coffees,
espresso-based drinks, baked goods, and snacks. Quikava units are situated
on major commuter thoroughfares and offer quick-service of quality beverages
and snacks. The Company intends to develop additional Quikava units, both
company-operated and franchised.
RESEARCH AND DEVELOPMENT
The Company invested a nominal amount in research and development for the
three years ended July 31, 1994.
EMPLOYEES
The Company employs approximately 1,150 employees, 15% of whom are
represented by labor unions. The Company believes that its relations
with both union and non-union employees are good.
REAL ESTATE OPERATIONS
The Company is both lessor and lessee on certain properties and an owner of
one property in New York City. Such properties had been part of the
Company's former restaurant operations.
OTHER MATTERS
Reference is made to Notes 2, 5 and 6 of notes to consolidated financial
statements with respect to the acquisition and disposition of certain assets.
Item 101 (b) of Regulation S-K
Segment Information is incorporated herein by reference.
Item 101 (d) of Regulation S-K
All of the Company's operations are located in the United States. Export
sales are not significant.
Item 2. PROPERTIES
The Company leases certain premises which are under long-term leases expiring
on various dates through 2009 and certain of which contain renewal options.
Reference should be made to Note 7 of the notes to consolidated financial
statements for additional information about these leases. The following table
sets forth the location and certain information with respect to the Company's
plants and certain other properties as of October 13, 1994, all of which
premises the Company considers adequate for its present and anticipated needs.
PLANTS AND OTHER PROPERTIES
Approximate
Square Feet Whether
of Owned Or
Location Principal Use Floor Space Leased (1)
Brooklyn, New York Coffee Roasting Plant,
Warehouse 55,000 Owned
St. Louis, Missouri Coffee Roasting Plant,
Warehouse 77,000 Owned
Secaucus, New Jersey Warehouse and Offices 110,000 Owned
Hialeah, Florida Coffee Roasting Plant,
Warehouse 50,000 Owned
Rochester, New York Coffee Roasting Plant,
Warehouse 50,000 Leased
Oklahoma City, Oklahoma Coffee Roasting Plant
and Processing Plant for
Tea and Related Food
Products, Warehouse 150,000 Owned
Springfield, Missouri Processing Plant for
Spices, Warehouse 30,000 Leased
574 Fifth Avenue Real Estate
New York, New York Operation 13,000 Leased
422 Madison Avenue Real Estate and Restaurant
New York, New York Operation 8,750 Leased
532 Madison Avenue Real Estate
New York, New York Operation 12,250 Leased
49 Broadway Real Estate
New York, New York Operation 12,000 Leased
1420 Broadway Real Estate
New York, New York Operation 6,750 Leased
370 Lexington Avenue Corporate
New York, New York Headquarters 11,000 Leased
Waverly Place corner
Green Street Real Estate
New York, New York Operation 2,500 Leased
336 Broadway Real Estate
New York, New York Operation 10,500 Owned
Castroville, California Real Estate 66,000 Owned
Operation
Mebane, North Carolina Real Estate Operation 138,000 Owned
Queen Ann Plaza Restaurant Operation 250 Leased
Norwell, Mass
190 Old Derby Street Headquarters, Quikava 1,196 Leased
Hingham, Mass
(1) --No Company-leased premises are owned by any officer or director of the
Company. See Note 7 of notes to the consolidated financial statements.
Item 3. LEGAL PROCEEDINGS
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS
Not applicable.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND
RELATED SECURITY HOLDER MATTERS
"Common Share Prices" and related security holder matters are incorporated
herein by reference.
Item 6. SELECTED FINANCIAL DATA
"Selected Financial Data" is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this Item is submitted in a separate section of this report.
Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
Not applicable.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
and
Item 11. EXECUTIVE COMPENSATION
and
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
and
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Omitted, per General Instruction G. The information required by Part III
shall be incorporated by reference from the Registrant's definitive proxy
statement pursuant to Regulation 14A for the fiscal year ended July 31, 1994
which is to be filed with the Commission.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) and (2) The response to this portion of Item 14 is submitted as a
separate section of this report.
(3) The response to this portion of Item 14 is submitted as a separate
section of this report (see below).
(b) Reports on Form 8-K:
None
(c) The response to this portion of Item 14 is submitted as a separate
section of this report (see below).
(d) The response to this portion of Item 14 is submitted as a separate
section of this report.
Pursuant to Regulation S-K Item 601, following is a list of Exhibits.
Exhibit 3 Articles of incorporation and by laws.
(a) Articles of incorporation filed herewith.
(b) By-laws, filed herewith.
Exhibit 4 Instruments defining the rights of security holders,
including indentures.
(a) Indenture dated as of September 15, 1986 between the Company
and Manufacturers Hanover Trust Company ("Manufacturers")
filed herewith.
(b) Form of the Company's 8% Convertible Subordinated Debenture
included in Exhibit 4(a) filed herewith.
(c) Instrument of resignation, appointment and acceptance dated
August 9, 1993 among the Company, Manufacturers and Liberty
Bank and Trust Company of Oklahoma City filed herewith.
(d) Indenture dated as of April 1, 1987 between the Company and
IBJ Schroder Bank and Trust Company filed herewith.
(e) Form of the Company's 7% Convertible Senior Subordinated
Debenture included in Exhibit 4(d) filed herewith.
Exhibit 9 Voting Trust Agreement, not applicable.
Exhibit 10 Material contracts
(a) Rights Agreement, dated as of December 30, 1987, with IBJ Schroder
Bank and Trust Company, as Rights Agent, the form of Rights Certificate and
Summary of Rights to Purchase Common Stock filed herewith.
(b) Benefits protection trust with National Westminster Bank USA filed
herewith.
(c) Resolution of the Board of Directors adopting severance policy filed
herewith.
(d) Chock full o' Nuts Corporation Employees' Stock Ownership Plan dated
December 16, 1988 filed as an exhibit to form 10-K for the fiscal year ended
July 31, 1989 is incorporated herein by reference.
(e) Agreement with Leon Pordy, M.D. dated July 8, 1992 filed as an
Exhibit to Form 10-K for the fiscal year ended July 31, 1992 is incorporated
herein by reference.
(f) Stock purchase agreement dated October 16, 1992 by and between Chock
full o' Nuts Corporation and Nestle' Beverage Corporation filed herewith.
(g) Amended and Restated Credit Agreement dated December 4, 1992 among
Chock full o' Nuts Corporation and its Subsidiaries and National Westminster
Bank USA and Chemical Bank filed as an Exhibit to Form 8-K dated December 10,
1992 is incorporated herein by reference.
(h) Agreement and Plan of Merger by and among JJJ Acquisition Corp.,
Chock full o' Nuts Corporation and Jimbo's Jumbos, Incorporated dated
April 22, 1993 filed as an Exhibit to Form 8-K dated July 8, 1992 is
incorporated herein by reference.
(i) Agreement with Joseph Breslin dated August 5, 1993 filed as an
Exhibit to Form 10-K for the fiscal year ended July 31, 1993 is incorporated
herein by reference.
(j) Stock Purchase Agreement between Chock full o' Nuts Corporation,
Hillside Holding Corporation and Gourmet Coffees of America, Inc. dated
October 8, 1993 filed as an Exhibit to Form 10-K for the fiscal year ended
July 31, 1993 is incorporated herein by reference.
(k) Agreement dated November 7, 1989 by and between Chock full o'Nuts
Corporation and Tetley, Inc. for the purchase of Tetley's instant Coffee
business filed as an Exhibit to Form 10-K for the fiscal year ended July
31, 1990 is incorporated herein by reference.
(l) Standstill Agreement by and among Chock full o'Nuts Corporation and
Steven Schulman and Leon Pordy, MD dated June 21, 1991 filed as an Exhibit to
Form 10-K for the fiscal year ended July 31, 1991 is incorporated herein
by reference.
(m) Form of restricted stock agreement dated January 2, 1988 with key
employees (including certain officers and directors) filed herewith.
Exhibit 11 Statement re: Computation of Per Share Earnings
Exhibit 12 Statement re: Computation of ratios, not applicable.
Exhibit 13 Not applicable.
Exhibit 18 Letter re change in accounting principles, not applicable.
Exhibit 21 Subsidiaries of the registrant.
Exhibit 22 Published report regarding matter submitted to vote of security
holders, not applicable.
Exhibit 23 Consent of experts and counsel, not applicable.
Exhibit 24 Power of attorney, not applicable.
Exhibit 99 Additional exhibits, not applicable.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
CHOCK FULL O' NUTS CORPORATION
(Registrant)
October 13, 1994 ------------------------------
Howard M. Leitner, President,
Chief Financial and Accounting Officer
and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
October 13, 1994 October 13, 1994
Norman E. Alexander Mark A. Alexander
Chairman of the Board Director
October 13, 1994 October 13, 1994
Virgil Gladieux Martin J. Cullen
Director Vice President and
Director
October 13, 1994 October 13, 1994
Stuart Z. Krinsly Marvin I. Haas
Director Chief Executive Officer
Vice Chairman of the
Board and Chief
Operating Officer
October 13, 1994 October 13, 1994
Howard M. Leitner Henry Salzhauer
President and Chief Director
Financial Officer and
Director
October 13, 1994 October 13, 1994
R. Scott Schafler David S. Weil
Director Director
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14(a)(1) AND (2), (c) and (d)
LIST OF FINANCIAL STATEMENTS, SUPPLEMENTARY DATA
AND FINANCIAL STATEMENT SCHEDULES
CERTAIN EXHIBITS
YEAR ENDED JULY 31, 1994
CHOCK FULL O' NUTS CORPORATION
NEW YORK, NEW YORK
FORM 10-K--ITEM 14(a)(1) and (2)
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS AND SCHEDULES
The following consolidated financial statements of the Registrant and its
subsidiaries are included in Item 8
Page
Report of Independent Auditors 16
Consolidated Balance Sheets--July 31, 1994 and 1993 17 and 18
Consolidated Statements of Operations--Years Ended
July 31, 1994, 1993 and 1992 19
Consolidated Statements of Cash Flows--
Years Ended July 31, 1994, 1993 and 1992 20 and 21
Consolidated Statements of Stockholders' Equity--
Years Ended July 31, 1994, 1993 and 1992 22 and 23
Notes to Consolidated Financial Statements 24 to 35
The following consolidated financial statement schedules of the registrant
and its subsidiaries are included in Item 14(d):
Page
Schedule I--Marketable Securities 41
Schedule II--Amounts Receivable from Related Parties and
Underwriters, Promoters, and Employees Other
Than Related Parties 42
Schedule V--Property, Plant and Equipment 43
Schedule VI--Accumulated Depreciation and Amortization
of Property, Plant and Equipment 44
Schedule VIII--Valuation and Qualifying Accounts 45
Schedule X--Supplementary Income Statement
Information 46
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable, and therefore have been omitted.
Ernst & Young LLP
Report of Independent Auditors
The Board of Directors and Stockholders
Chock full o'Nuts Corporation
New York, NY
We have audited the accompanying consolidated balance sheets of Chock full
o'Nuts Corporation and subsidiaries as of July 31, 1994 and 1993, and the
related consolidated statements of operations, stockholders' equity, and
cash flows for each of the three years in the period ended July 31, 1994.
Our audits also included the financial statement schedules listed in the
index at Item 14(a). These financial statements and schedules are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and schedules based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards required that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial satements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Chock full o'Nuts Corporation and subsidiaries at July 31, 1994
and 1993, and the consolidated results of their operations and their cash
flows for each of the three year in the period ended July 31, 1994 in
conformity with generally accepted accounting principles. Also, in our
opinion, the related financial statment schedules, when considered in
relation to the basic financial statements taken as a whole, present fairly
in all material respects the information set forth therein.
As discussed in Note 4 to the consolidated financial statements, in 1994 the
Company changed its method of accounting for income taxes.
ERNST & YOUNG LLP
October 13, 1994
CONSOLIDATED BALANCE SHEETS
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
July 31, 1994 and 1993
ASSETS 1994 1993
CURRENT ASSETS:
Cash and cash equivalents $ 5,939,456 $ 5,469,159
Receivables, principally trade, less
allowances for doubtful accounts and
discounts of $928,000 and $1,081,000--
Notes 3 and 11(a) 31,935,437 25,319,816
Inventories--Notes 1 and 3 45,543,048 38,385,397
Net assets of product line sold -- Note 6 24,970,356
Investments in marketable securities,
at cost (market value of $25,649,000) 25,786,080
Prepaid expenses and other -- Note 4 3,466,246 3,222,586
TOTAL CURRENT ASSETS 112,670,267 97,367,314
PROPERTY, PLANT AND EQUIPMENT, at cost-
Note 3:
Land 3,754,639 3,754,639
Buildings and improvements 18,652,079 18,241,851
Leaseholds and leasehold improvements 1,795,326 842,011
Machinery and equipment 72,603,462 68,259,875
96,805,506 91,098,376
Less allowances for depreciation and
amortization 41,510,772 35,502,700
55,294,734 55,595,676
REAL ESTATE HELD FOR SALE OR DEVELOPMENT,
at cost 5,404,243 5,404,243
OTHER ASSETS AND DEFERRED CHARGES--Note 11(b) 29,367,430 31,040,452
EXCESS OF COST OVER NET ASSETS
ACQUIRED, net --Notes 1 and 2 6,070,268 5,896,404
$208,806,942 $195,304,089
See notes to consolidated financial statements
CONSOLIDATED BALANCE SHEETS
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
July 31, 1994 and 1993
1994 1993
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 11,851,998 $ 10,804,095
Accrued expenses 17,381,839 13,605,564
Income taxes--Note 4 1,698,293 935,359
TOTAL CURRENT LIABILITIES 30,932,130 25,345,018
LONG-TERM DEBT -- Note 3 110,427,265 108,092,174
OTHER NON-CURRENT LIABILITIES--
Notes 9 and 11(c) 4,743,855 5,003,738
DEFERRED INCOME TAXES -- Note 4 4,442,000 3,878,000
STOCKHOLDERS' EQUITY--Notes 3, 8 and 9:
Common stock, par value $.25 per share;
Authorized 50,000,000 shares;
Issued 10,898,130 and 10,592,264
shares 2,724,533 2,648,066
Additional paid-in capital 49,322,585 47,255,836
Retained earnings 16,217,803 10,457,264
68,264,921 60,361,166
Deduct:
Cost of 475,522 and 275,522 shares in
treasury (6,573,719) (4,723,719)
Deferred compensation under stock
bonus plan and employees' stock
ownership plan (1,663,510) (2,227,288)
Unfunded pension losses (1,766,000) (425,000)
TOTAL STOCKHOLDERS' EQUITY 58,261,692 52,985,159
LEASES--Note 7
$208,806,942 $195,304,089
See notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF OPERATIONS
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
Years ended July 31, 1994, 1993 and 1992
1994 1993 1992
Revenues:
Net sales $263,638,453 $251,641,474 $203,640,151
Rentals from real estate 2,059,647 1,875,578 1,204,708
265,698,100 253,517,052 204,844,859
Costs and expenses:
Cost of sales 175,664,343 157,206,889 143,643,978
Selling, general and
administrative expenses 77,851,623 78,687,340 54,629,684
Expenses of real estate 1,742,462 1,884,106 1,987,573
Restructuring charge -- Note 11(c) 3,597,769 5,500,000
Officers' termination benefits
-- Note 11(d) 817,535 1,974,000
255,258,428 242,193,639 207,735,235
OPERATING PROFIT/(LOSS)--Note 6 10,439,672 11,323,413 (2,890,376)
Interest and dividend income 867,517 861,076 2,345,803
Interest expense (8,802,413) (10,228,159) (8,683,115)
Gain on sale
of product line -- Note 6 12,475,246
Gain on sales of
marketable securities 455,558 919,603
Other income/
(deductions)-- Note 11(g) 775,292 (1,063) 71,343
INCOME/(LOSS) BEFORE INCOME TAXES 15,755,314 2,410,825 (8,236,742)
Income taxes--Note 4:
Current:
Federal 6,742,000 1,648,000 (153,000)
State and local 348,000 348,000 175,000
Deferred 781,000 (647,000) (2,437,000)
7,871,000 1,349,000 (2,415,000)
INCOME/(LOSS) FROM CONTINUING
OPERATIONS 7,884,314 1,061,825 (5,821,742)
Discontinued operations -- Note 5:
Income from operations, net of income
taxes of $1,339,000 and $2,012,000 1,103,029 1,909,720
Loss on disposition (3,171,240)
(2,068,211) 1,909,720
NET INCOME/(LOSS) $ 7,884,314 $ (1,006,386) $(3,912,022)
Earnings/(loss) per share--Note 1:
Primary:
Continuing operations $ .75 $ .10 $(.55)
Discontinued operations (.20) .18
Net income/(loss) $ .75 $(.10) $(.37)
Fully diluted:
Continuing operations $ .56 $ .10 $(.55)
Discontinued operations (.20) .18
Net income/(loss) $ .56 $(.10) $(.37)
See notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF CASH FLOWS
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
Years Ended July 31, 1994, 1993 and 1992
1994 1993 1992
Operating Activities -
Continuing Operations:
Net income/(loss) $ 7,884,314 $1,061,825 $(5,821,742)
Adjustments to reconcile
net income/(loss)
to net cash provided by operating
activities:
Depreciation and amortization of
property, plant and equipment 6,187,476 6,983,539 5,467,831
Amortization of deferred
compensation and deferred
charges 4,430,010 5,311,264 3,372,716
Restructuring charge 2,900,000 5,500,000
(Gain) on sales of marketable
securities (455,558) (919,603)
Deferred income taxes 781,000 (647,000) (2,437,000)
Gain on sale of product line (12,475,246)
Other, net (1,533,353) (2,844,800) (2,377,905)
Changes in operating assets and
liabilities, net of effects from
acquired companies:
(Increase)in accounts
receivable (4,226,971) (307,577) (2,514,355)
(Increase)/decrease in
inventory (7,151,651) (3,631,870) 2,416,342
Decrease in prepaid expenses 617,452 149,693 1,678,146
Increase in accounts
payable, accrued expenses and
income taxes 659,932 4,309,899 4,029,030
NET CASH (USED IN)/PROVIDED
BY OPERATING ACTIVITIES (4,827,037) (1) 12,829,415 8,393,460
Investing Activities -
Continuing Operations:
Purchases of marketable
securities (29,117,568) (275,591) (40,720,414)
Proceeds from sale and
collection of principal
of marketable securities 3,331,488 23,595,522 41,770,674
Purchases of property, plant
and equipment (5,680,956) (8,057,739) (8,436,695)
Acquisition of businesses (473,788) (56,019,777)
Proceeds from sale of product
line 38,055,704
Increase in net assets of
product line sold (1,265,892)
Sale of business 32,917,500
Dividend from discontinued
operations 2,637,864
NET CASH PROVIDED BY/(USED IN)
INVESTING ACTIVITIES 4,848,988 (7,840,085) (4,748,571)
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
Years Ended July 31, 1994, 1993 and 1992
FINANCING ACTIVITIES - CONTINUING OPERATIONS
Purchase of treasury stock (1,850,000)
Principal payments of
long-term debt (35,497,348) (2,486,335)
Proceeds from long-term debt 2,355,091 36,578,345
Other (56,745) (2,400,459)
NET CASH PROVIDED BY/
(USED IN) FINANCING
ACTIVITIES 448,346 (1,319,462) (2,486,335)
INCREASE IN CASH AND CASH
EQUIVALENTS - CONTINUING
OPERATIONS 470,297 3,669,868 1,158,554
Cash and cash equivalents at
beginning of year -
continuing operations 5,469,159 2,529,123 1,370,569
CASH AND CASH EQUIVALENTS AT
END OF YEAR - CONTINUING
OPERATIONS $5,939,456 $6,198,991 (2) $2,529,123
Supplemental Information
Cash paid during the year: 1994 1993 1992
Interest $8,103,742 $9,769,319 $8,335,165
Income taxes 5,129,630 $1,611,825 $ 968,499
(1) Net cash used in operating activities in 1994 is, large part, due to
income taxes of approximately $6,000,000 related to the gain on sale of
product line. Under FASB Statement No. 95, "Statement of Cash Flows", the
pre-tax gain on sale of the product line was deducted in arriving at
cash flow from operating activities but the related income taxes were
not similarly treated.
(2) Includes $729,832 of cash and cash equivalents included in net assets of
product line sold.
See notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
Years Ended July 31, 1994, 1993 and 1992
Common Stock
Issued In Treasury
Shares Amount Shares Amount
In Thousands
Balance at July 31, 1991,
as reported 9,846 $2,462 291 $4,981
Restatement due to adoption
of FASB 109
Balance at July 31, 1991,
as restated 9,846 2,462 291 4,981
Net (loss)
3% stock dividend 279 70
Conversion of debentures 67 16
Deferred compensation under stock
bonus plan and employees' stock
ownership plan:
Issuance of shares (15) (257)
Amortization
Decrease in proportionate share of
subsidiary's equity related to
public offering of subsidiary's
stock
Other
Reversal of unfunded pension
losses
Balance at July 31, 1992 10,192 2,548 276 4,724
Net (loss)
3% stock dividend 300 75
Conversion of debentures 100 25
Deferred compensation under stock
bonus plan and employees' stock
ownership plan:
Amortization
Other
Increase in unfunded pension losses
Balance at July 31, 1993 10,592 $2,648 276 $4,724
Net income
3% stock dividend 303 76
Conversion of debentures 3 1
Purchase of treasury stock 200 1,850
Deferred compensation under stock
bonus plan and employees' stock
ownership plan:
Amortization
Increase in unfunded pension losses
Balance at July 31, 1994 10,898 $2,725 476 $6,574
See notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - Continued
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
Years Ended July 31, 1994, 1993, and 1992
Deferred
Compensation
Under Stock
Bonus Plan
and Employees' Unfunded Additional
Stock Ownership Pension Paid-In Retained
Plan Losses Capital Earnings
In Thousands
Balance at July 31,
1991,as reported $3,531 $217 $44,928 $21,430
Restatement due to
adoption of FASB 109 1,646
Balance at July 31, 1991,
as restated 3,531 217 44,928 19,784
Net (loss) (3,912)
3% stock dividend 1,849 (1,919)
Conversion of debentures 553
Deferred compensation under stock
bonus plan and employees' stock
ownership plan:
Issuance of shares 1,070 813
Amortization (1,512)
Decrease in proportionate
share of subsidiary's
equity related to
public offering of
subsidiary's stock (4,406)
Other 131
Reversal of unfunded
pension losses (67)
Balance at July 31, 1992 3,089 150 43,868 13,953
Net (loss) (1,006)
3% stock dividend 2,415 (2,490)
Conversion of debentures 825
Deferred compensation
under stock bonus plan
and employees' stock
ownership plan:
Amortization (862)
Other 148
Increase in unfunded
pension losses 275
Balance at July 31, 1993 2,227 425 47,256 10,457
Net income 7,884
3% stock dividend 2,048 (2,123)
Conversion of debentures 19
Purchase of treasury stock
Deferred compensation under stock
bonus plan and employees' stock
ownership plan:
Amortization (563)
Increase in unfunded
pension losses 1,341
Balance at July 31, 1994 $1,664 $1,766 $49,323 $16,218
See notes to consolidated financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
July 31, 1994, 1993 and 1992
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The consolidated financial statements include
the accounts of the Company and its subsidiaries, all of which are
wholly-owned, except for one subsidiary Jimbo's Jumbos, Incorporated ("JJI")
as to which the Company owned 73% and which was sold in July 1993
(see Note 5). Significant intercompany accounts and transactions have been
eliminated in consolidation.
Cash Equivalents: The Company considers all highly liquid investments with
a maturity of three months or less when purchased to be cash equivalents.
Inventories: Inventories are stated at the lower of cost (first-in,
first-out) or market and consist of:
July 31, 1994 1993
Finished goods $24,684,609 $24,657,182
Raw materials 16,889,428 9,139,425
Supplies 3,969,011 4,588,790
$45,543,048 $38,385,397
Property, Plant and Equipment: Depreciation and amortization of property,
plant and equipment are computed by the straight-line method for financial
reporting purposes and by accelerated methods for income tax purposes.
Pre-opening Costs: Retail restaurant and cafe pre-opening costs are charged
to operations as incurred.
Excess of Cost over Net Assets Acquired: Excess of cost over net assets
acquired is being amortized on a straight-line basis over periods of 40 and
15 years. Accumulated amortization amounted to $1,353,000 and $1,168,000 at
July 31, 1994 and 1993, respectively.
Other Intangibles: Other intangibles consist principally of trademarks,
covenants not to compete and customer lists. Such items are being amortized
on a straight-line basis over periods of 40, 5 and 7.5 years, respectively.
Per Share Data: Primary per share data is based on the following weighted
average number of common shares outstanding during each year retroactively
adjusted for stock dividends:10,482,000 in 1994, 10,567,000 in 1993 and
10,490,000 in 1992.
Fully diluted per share data, assuming conversion of debentures, is based on
21,960,000 common shares outstanding for the year ended July 31, 1994.
Assumed conversion of debentures would have had an anti-dilutive effect for
the years ended July 31, 1993 and 1992.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- continued
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
NOTE 2--ACQUISITIONS
On March 11, 1994, the Company acquired for approximately $467,000 all the
operating assets and liabilities of a company engaged in the commercial
franchising and operation of drive-through food service establishments
primarily engaged in the sale of gourmet coffee complimented by fresh bakery
goods, sandwiches and ancillary products. The acquisition is being accounted
for as a purchase. Based on a preliminary allocation of the purchase price,
the excess of cost over net assets acquired (approximately $360,000) is being
amortized over a period of 15 years using the straight-line method. The pro
forma effects on the Company's operations as if this business had been
acquired on August 1, 1992 are not material.
In December 1992, the Company acquired the stock of Cain's Coffee Co.
("Cains") and certain trademarks related to that business from Nestle'
Beverage Company and an affiliate for approximately $52,000,000 in cash.
Cain's business consists primarily of sales of coffee and related products to
food service customers in parts of the Midwest and Southwest. In connection
with the acquisition, which has been accounted for as a purchase transaction,
the Company acquired assets with a fair value of approximately $55,750,000
(including trademarks, covenant not to compete and customer list of
$20,900,000, included in other assets and deferred charges on the
consolidated balance sheet at July 31, 1994) and assumed liabilities of
approximately $3,750,000. The Company used the proceeds (approximately
$20,500,000) from the sale of a substantial portion of its marketable
securities to finance a portion of the purchase price and financed the
remainder through additional borrowings from its banks.
In November 1992, the Company acquired a controlling interest in a
partnership which owns Dana Brown Private Brands, Inc., a company which
markets and sells coffee and tea products, servicing food retailers and
distributors located primarily in the Midwest. The purchase price was
$2,000,000, plus approximately $2,500,000 for the cost of inventory. The
pro forma effects on the Company's operations as if this business had been
acquired on August 1, 1991 are not material.
The following pro forma unaudited results of operations assume the
acquisition of Cain's occurred at the beginning of fiscal 1992 and gives
effect to certain adjustments, including depreciation of property, plant and
equipment, amortization of intangibles and interest expense, resulting from
the acquisition and related financing. Amounts for 1992 and 1993 include
the pre-acquisition results of operations for Cain's for the year ended
June 30, 1992 and the four months ended October 31, 1992.
Year Ended July 31 (in thousands, except per share) 1993 1992
Net sales $275,000 $269,325
Income/(loss) from continuing operations 1,269 (4,323)
Income/(loss) from continuing operations per share .12 (.41)
Net (loss) (799) (2,413)
Net (loss) per share (.08) (.23)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- continued
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
NOTE 3--LONG TERM DEBT
Long-term debt consists of the following:
July 31
1994 1993
7% Convertible senior subordinated
debentures due 2012 $ 51,693,000 $ 51,713,000
8% Convertible subordinated
debentures due 2006 43,268,000 43,268,000
Revolving credit and term loan 15,466,265 13,111,174
$110,427,265 $108,092,174
The 7% and 8% debentures require annual sinking fund payments of $3,000,000
and $3,750,000, respectively, which after giving effect to previous
conversions and redemptions, commence April 1, 2000 and September 15, 1998,
respectively. The debentures are convertible at the option of the debenture
holders into shares of the Company's common stock at a price of $8.48 per
share and $8.04 per share, respectively (subject to adjustment).
During the years ended July 31,1993 and 1992, $437,000 and $437,000 of 8%
debentures were converted into 51,000 and 50,000 shares of common stock,
respectively. During the years ended July 31,1994, 1993 and 1992, $20,000,
$438,000 and $150,000 of 7% debentures were converted into 2,000, 49,000 and
17,000 shares of common stock, respectively. As of July 31, 1994,
approximately 11,477,000 common shares are reserved for issuance upon
conversion of debentures
Under the Company's amended and restated revolving credit and term loan
agreements (collectively the "Loan Agreements") with National Westminster
Bank USA and Chemical Bank (the "Banks"), the Company may, from time to time,
borrow funds from the Banks, provided that the total principal amount of all
such loans outstanding at any time may not exceed $40,000,000. Interest
(7.25% at July 31, 1994) on all such loans is equal to the prime rate,
subject to adjustment based on the level of loans outstanding. Outstanding
borrowings under the Loan Agreements may not exceed certain percentages of
and are collateralized by, among other things, the trade accounts receivable
and inventories, and substantially all of the machinery and equipment and
real estate of the Company and its subsidiaries. All loans made under the
term loan agreement ($10,000,000 at July 31, 1994) are to be repaid in
December 1997. Outstanding loans under the revolving credit agreements are
to be repaid in December 1997. Pursuant to the terms of the Loan Agreements,
the Company and its subsidiaries, among other things, must maintain a minimum
net worth and meet ratio tests for liabilities to net worth and coverage of
fixed charges and interest, all as defined.
The Loan Agreements also provide, among other things, for restrictions on
dividends (except for stock dividends) and requires repayment of outstanding
loans with excess cash flow, as defined.
As of July 31, 1994, long-term debt matures as follows: $16,234,265 (year
ending July 31, 1998), $3,750,000 (year ending July 31, 1999)and $90,443,000
thereafter.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
NOTE 4--INCOME TAXES
The provision for income taxes for continuing operations differs from the
expected Federal income tax for the reasons shown in the following table:
1994 1993 1992
Federal income tax provision/(credit)
expected at the statutory rate $5,514,360 $ 819,681 $(2,800,492)
Effect on Federal income tax of:
Difference between tax and
book basis of product line sold 1,721,214
State and local income taxes,
net of Federal income tax
benefit 226,200 229,680 115,500
Amortization of excess of cost over
net assets acquired 88,200 178,160 178,160
Other 321,026 121,479 91,832
$7,871,000 $1,349,000 $(2,415,000)
Deferred tax liabilities and assets in thousands are comprised of the
following at July 31,
1994 1993
Net deferred non-current tax liabilities:
Net difference between tax and book basis
of property, plant and equipment $6,216 $6,465
Unfunded pension liabilities (931)
Compensation under stock bonus plan and
employees' stock ownership plan (358) (329)
Restructuring charges (1,990)
Other (485) (268)
$4,442 $3,878
Net deferred current tax assets:
Restructuring charges $1,767
Net difference between tax and book
basis of inventory 410 $ 410
Officers' termination benefits 211 299
Allowance for doubtful accounts and discounts 400 400
Other (166) 424
Accrued cash bonus 233
$2,622 $1,766
In February 1992, the Financial Accounting Standards Board issued Statement
No. 109, "Accounting for Income Taxes" ("FASB 109"). The Company adopted the
new method of accounting for income taxes in the first quarter of its fiscal
year ended July 31, 1994 and restated its fiscal 1993, 1992, 1991 and 1990
financial statements. The effect of adopting FASB 109 was to increase income
from continuing operations by $147,000 in 1993 and 1992 and $12,000 in 1991
and 1990. The cumulative effect of adopting FASB 109 as of July 31, 1990,
decreased the beginning balance of retained earning by $1,670,000.
Under FASB 109, the liability method is used in accounting for income taxes.
Under this method, deferred tax assets and liabilities are determined based
on differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will
be in effect when the differences are expected to reverse. Prior to the
adoption of FASB 109, income tax expense was determined using the deferred
method. Deferred tax expense was based on items of income and expense that
were reported in different years in the financial statements and tax returns
and were measured at the tax rate in effect in the year the differences
originated.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
NOTE 5--DISCONTINUED OPERATIONS
In April 1993, the Company and Jimbo's Jumbos, Incorporated ("JJI") entered
into an agreement and plan of merger to merge JJI with and into JJJ
Acquisition Corp. (a company controlled by John W. Kluge and his affiliates).
Pursuant to the merger, which was consummated on July 8, 1993, the Company,
as well as all other stockholders of JJI, received $6.93 per share for each
share owned. The proceeds ($32,917,500) were used to reduce outstanding bank
debt incurred for the acquisition of Cain's (see Note 2). A loss of
$3,171,000 was incurred in connection with the sale and was charged to
discontinued operations for the year ended July 31, 1993. The business of
JJI consisted primarily of (1) shelling farmers' stock peanuts into
commercial and seed grades of raw peanuts for sale to commercial processors
of peanuts, seed dealers and farmers and (2) processing and packaging of
in-shell peanuts and nuts, and shelled peanuts and nuts, for sale to
supermarkets.
The Company restated its financial statements to present the operating
results of JJI as a discontinued operation.
Operating profits from discontinued operations were as follows:
1993 1992
Net sales $45,722,099 $55,033,125
Costs and expenses:
Cost of sales 37,240,237 43,187,627
Selling, general and administrative expenses 5,413,440 7,363,184
42,653,677 50,550,811
Operating profit $ 3,068,422 $ 4,482,314
On December 13, 1991, JJI, a then wholly owned subsidiary, completed an
initial public offering of 1,500,000 of its common shares at $6 a share.
The transaction, together with 250,000 restricted common shares issued by JJI
to its executive officers, reduced the Company's ownership interest to 73%.
JJI realized net cash proceeds of approximately $8,000,000 from sale of
shares, after underwriting discounts and commissions and expenses of the
offering. The sales resulted in a decrease of $4,406,000 in the Company's
proportionate share of JJI's equity, which amount was charged to additional
paid-in capital.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
NOTE 6--PRODUCT LINE SOLD
In October 1993, the Company and Gourmet Coffees of America ("GCA") entered
into an agreement to sell Hillside Coffee of California, Inc. ("Hillside") to
GCA. Hillside's business consisted of roasting, packing, distributing and
marketing specialty coffee to supermarkets. Pursuant to the agreement which
was consummated on November 19, 1993, the Company received (a) $38,500,000
and (b) shares of stock representing approximately one-half of one percent of
the equity of GCA. The net assets and liabilities of Hillside were
reflected as a current asset at July 31, 1993 reflecting the intended use of
proceeds as short-term investments. The Company recorded an approximate
$6,200,000 after tax gain upon consummation of the sale. The operating
profits of Hillside, before intercompany management charges, for the period
August 1, 1993 to November 19, 1993 and fiscal 1993 and 1992 included in the
results of operations are as follows:
Period From
August 1, 1993 to July 31, July 31,
November 19, 1993 1993 1992
Net sales $9,556,000 $ 27,720,163 $ 25,594,869
Costs and expenses:
Cost of sales 4,089,000 10,974,986 11,624,256
Selling, general and
administrative expenses 3,288,000 11,240,716 9,418,619
7,377,000 22,215,702 21,042,875
Operating profit $2,179,000 $ 5,504,461 $ 4,551,994
NOTE 7 -- LEASES
The Company and subsidiaries lease manufacturing plants, warehouses, office
space and restaurant locations and related premises. Leases which provide
for payment of property taxes, utilities and certain other expenses, expire
on various dates through 2009 and contain renewal options. As of July 31,
1994, the Company's obligation for future minimum rental payments, assuming
the exercise of renewal options, aggregated $16,575,000. Payments required
in the following five fiscal years amount to $4,188,000 (1995), $3,560,000
(1996), $2,058,000 (1997), $1,607,000 (1998) and $1,352,000 (1999). Rental
expense charged to continuing operations under operating leases for the years
ended July 31, 1994, 1993 and 1992 was $4,496,000, $1,797,000 and $2,517,000,
respectively.
As of July 31, 1994, future minimum rental payments due from tenants under
sub-leases of retail facilities and related premises aggregated $12,659,000.
Amounts receivable in the following five fiscal years amount to $1,870,000
(1995), $1,621,000 (1996), $1,403,000 (1997), $1,395,000 (1998) and
$1,326,000 (1999).
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
NOTE 8 -- STOCKHOLDERS' EQUITY
A non-contributory employee stock ownership plan ("ESOP") has been
established to acquire shares of the Company's common stock for the benefit
of all eligible employees. The Company has made loans to the ESOP to be
repaid in equal annual installments over 8 years with interest primarily at
9% and 10%. Deferred compensation equal to the loans has been recorded as a
reduction of stockholders' equity representing the Company's prepayment of
future compensation expense. As the Company makes annual contributions to
the ESOP, these contributions will be used to repay the loans to the Company,
together with accrued interest. As the loans are repaid, common stock is
allocated to ESOP participants and deferred compensation is reduced by the
amount of the principal payment on the loans.
The Company has a Warrant Dividend Plan which provides for distribution to
shareholders of a right to purchase one share of the Company's common stock
currently for $24.85 (subject to anti-dilution adjustments) as a dividend on
each of the Company's outstanding common shares. These rights are not
currently exercisable and will only become exercisable upon the happening of
certain events. Under certain circumstances, the rights entitle the holders
to receive, upon payment of the then current exercise price of the right,
that number of shares of Company common stock having a market value of two
times the then current exercise price of the right. The rights will expire
on December 30, 1997 and are redeemable at $.05 per right at any time prior
to the occurrence of certain events.
The Company's incentive compensation plan provides, among other things, for
incentive or non-qualified stock options, stock appreciation rights,
performance units, restricted stock and incentive bonus awards. During the
year ended July 31, 1994, non-qualified stock options for the purchase of
109,000 shares, at a price of $8.50 per share, were granted to key executives
under the plan. At July 31, 1994, there were outstanding options for the
aforementioned shares. On August 29, 1994, a non qualified stock option for
the purchase of 250,000 shares, at a price of $5.75 per share, was granted to
the Chief Executive Officer under the plan. Approximately 26,000 of such
shares are subject to stockholder approval. Options granted are exercisable
at the fair market value at date of grant and, subject to termination of
employment, expire ten years from the date of grant, are non-transferable
other than on death, and are exercisable in three equal annual installments
commencing three years from date of grant.
Under the incentive compensation plan, as of July 31, 1994, 63,000 common
shares are outstanding which were issued to key executives in 1987 and 1988.
These shares are subject to restricted stock agreements which provide that
the shares will vest ratably over periods through 2001. Such shares are
subject, upon the occurrence of certain events, to either forfeiture or
accelerated vesting. The fair value of the shares on the dates of issuance
is being charged to operations as compensation during the period the
restrictions remain in effect. At July 31, 1994, 224,000 shares were
available under the plan.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
NOTE 9--PENSION PLANS
The Company has non-contributory defined benefit pension plans covering all
employees who have completed one year of service, have attained age twenty
and one-half and are not covered by union-sponsored plans. The benefits are
based on years of service and the employee's compensation during the last 60
months of employment. The pension plans are funded to accumulate sufficient
assets to provide for accrued benefits. In addition, contributions are made
to multi-employer plans which provide defined benefits to union employees.
A summary of the components of net periodic pension cost for the defined
benefit plans for the three years ended July 31, 1994 and total contributions
charged to pension expense for the union-sponsored plans follows (in
thousands):
1994 1993 1992
Service cost-benefits earned
during the year $1,471 $1,058 $ 897
Interest cost on projected benefit
obligation 1,782 1,599 1,580
Actual return on plan assets (1,654) (1,600) (1,575)
Net amortization and deferral 156 (4) (29)
NET PENSION COST OF DEFINED PLANS 1,755 1,053 873
UNION-SPONSORED PLANS 422 505 1,397
TOTAL PENSION EXPENSE $2,177 $1,558 $2,270
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
NOTE 9--PENSION PLANS--Continued
The following table sets forth the funded status and amounts recognized in
the consolidated balance sheet at July 31, for the defined benefit pension
plans (in thousands):
1994 1993
Plans Plan Plans
Whose Whose Whose
Accumulated Assets Exceed Accumulated
Benefits Accumulated Benefits
Exceed Assets Benefits Exceed Assets
Actuarial present value of
benefit obligations:
Vested benefit obligation $(21,780) $( 174) $(19,991)
Accumulated benefit
obligation $(22,124) $( 174) $(20,363)
Projected benefit
obligation $(24,320) $( 174) $(21,933)
Plan assets, consisting
primarily of U.S. treasury
notes, other U.S. agency
issues, guaranteed insurance
contracts and corporate obli-
gations, at fair value 20,202 291 19,178
Projected benefit obligation
(in excess of)/less than plan
assets (4,118) 117 (2,755)
Unrecognized prior service cost 395 449
Unrecognized net loss 5,884 36 4,537
Unrecognized net asset at
August 1, 1987;
net of amortization (745) (75) (757)
Adjustment required to recognize
minimum liability (3,338)
Net pension (liability) asset
recognized in the consolidated
balance sheet $ (1,922) $ 78 $ 1,474
The weighted-average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation were 8.25% and 4%, respectively, at
July 31, 1994 and 1993. The expected long-term rate of return on plan assets
was 8.5%, 8.5% and 9% in 1994, 1993 and 1992, respectively.
Provisions of FASB Statement No. 87 (the Statement) require the Company,
under certain circumstances, to record a minimum pension liability relating
to unfunded accumulated benefit obligations, establish an intangible asset
relating thereto and reduce stockholders' equity, net of future tax benefits.
At July 31, 1994, this minimum pension liability was remeasured, as required
by the Statement. As a result, the minimum pension liability was adjusted to
$1,922,000; the related intangible asset was adjusted to $395,000; and the
amount by which stockholders' equity had been reduced was adjusted to
$1,766,000 (net of applicable deferred income taxes of $1,177,000 in 1994).
The minimum pension liability at July 31, 1994 arises from an increase in
pension fund liabilities due to the inclusion of Cain's employees in the Plan
effective January 1, 1994 (see Note 2) and unrecognized net losses in
periodic pension cost due to experience losses, Plan amendments, changes in
actuarial assumptions regarding assumed returns on pension fund assets and
related discounts of accumulated benefit obligations.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
NOTE 10--QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a summary of the unaudited quarterly results of continuing
operations for the years ended July 31, 1994 and 1993:
Fiscal 1994
Three Months Ended
October 31 January 31 April 30 July 31
(Thousands of Dollars Except Per Share Data)
Net sales $70,936 $62,108 $61,467 $69,127
Gross profit $25,505 $20,662 $20,160 $21,647
INCOME/(LOSS) FROM CONTINUING
OPERATIONS $ 506 $ 7,244(1) $ (270) $ 404
Per share:
Primary $ .05 $ .69(1) $ (.03) $ .04
Fully diluted $ .05 $ .39 $ (.03) $ .04
Fiscal 1993
Three Months Ended
October 31 January 31 April 30 July 31
(Thousands of Dollars Except Per Share Data)
Net sales $50,373 $65,726 $67,668 $67,874
Gross profit $17,479 $24,395 $25,766 $26,795
INCOME/(LOSS) FROM CONTINUING
OPERATIONS $ 705 $ 1,621 $ 488 $(1,752) (2)
Per share:
Primary $ .07 $ .16 $ .05 $ (.18) (2)
Fully diluted $ .07 $ .12 $ .05 $ (.18) (2)
(1) Includes gain on sale of Hillside Coffee of California, Inc. of
$7,068,000 ($.67 per share). See Note 6.
(2) Includes restructuring charge of $2,232,000 ($.21 per share) and
officers' termination benefits of $507,000 ($.05 per share), each net of
income tax benefit. See Notes 11(c) and (d).
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
NOTE 11--OTHER ITEMS
a. Receivables other than trade at July 31, 1994 and 1993 amount to $3,242,000
and $964,000, respectively. See Note 11(c).
b. Other assets and deferred charges consist of (in thousands):
July 31, 1994 1993
Deferred financing costs (1) $ 4,065 $ 4,665
Non-compete agreements 6,170 7,862
Trademarks 4,793 4,923
Customer lists 6,972 8,126
Real estate and equipment held for rental, at
cost net of accumulated depreciation and
amortization of $1,654 and $1,628 617 643
Other 6,750 4,821
$29,367 $31,040
(1) Being amortized over the terms of the related indebtedness (see Note 3).
c. The Company recorded a charge in the fourth quarter of fiscal 1993
and 1992 of $3,598,000 and $5,500,000, respectively, to provide for the
estimated cost of consolidating and closing certain production facilities.
Such charge consists primarily in fiscal 1993 of accrued expenses (of which
$2,100,000 is included in current liabilities at July 31, 1993 and $800,000,
in addition to the amount provided in fiscal 1992, is included in other
non-current liabilities at such date) and in fiscal 1992 of a loss of
$3,272,000 on the write-down of machinery and equipment and certain other
assets and accrued expenses of $2,228,000 (included in other non current
liabilities at July 31, 1992) related to closing such facilities. The
Company expects the restructuring to be completed during fiscal 1995. The
after tax charge for such restructuring was $2,232,000 ($.21 per share) in
fiscal 1993 and $3,630,000 ($.35 per share) in fiscal 1992. As of July 31,
1994, the balance of these accrued expenses is included in current
liabilities in the amount of $4,726,000.
In connection with closing a business and termination of a pension plan the
Company has recorded a liability for an underfunded pension plan of
approximately $1,500,000 and a similar amount receivable from the previous
owner of such business pursuant to the acquisition agreement. The previous
owner of the business is contesting the liability to the Company. The
Company, based upon its interpretation of the acquisition agreement, believes
the previous owner of the business is responsible for an amount approximating
the underfunded pension liability and has commenced litigation seeking such
amount.
d. In August 1993 and July 1992, respectively, Joseph Breslin and Dr.
Leon Pordy, then Chairman of the Board and Chief Executive Officer terminated
their employment with the Company. In connection therewith, $818,000 and
$1,974,000, respectively, was charged to operations in the fourth quarter of
fiscal 1993 and 1992 for compensation benefits (including 5,714 and 200,000
restricted shares of the Company's common stock which became subject to
accelerated vesting) to which Joseph Breslin and Dr. Pordy were entitled as
a result of their terminations. The after-tax charge for such benefits was
$507,000 ($.05 per share) and $1,303,000 ($.12 per share), respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
NOTE 11--OTHER ITEMS--Continued
e. In December 1990, The Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions" ("FASB 106") which was
adopted in fiscal 1994. The Company does not provide postretirement benefits
other than pensions to its employees and, accordingly, FASB 106 does not have
a material effect on the Company's financial condition or results of
operations.
f. The Company believes that the fair value of its 7% and 8% convertible
subordinated debentures approximates $42,905,000 and $40,239,000,
respectively, as indicated by the public trading prices of such debt.
g. In fiscal 1994, other income includes $700,000 from the sale of the
Company's private label tea and drink mix business.
NOTE 12 -- INDUSTRY SEGMENT INFORMATION
The Company's financial information by industry segment for 1994, 1993 and
1992 may be found on page 40 and is incorporated herein.
SELECTED FINANCIAL DATA (1)
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
YEAR ENDED JULY 31
1994 1993 1992 1991 1990
(Dollar Amounts in Thousands, Except Per Share Amounts)
Net sales $263,638 $251,641 $203,640 $200,037 $196,393
Income/(loss) from
continuing
operations 7,884 1,062 (5,822) 1,380 1,173
Working capital 81,738 72,022 45,027(2) 44,947(2) 70,482
Working capital ratio 3.6 to 1 3.8 to 1 3.2 to 1 3.9 to 1 4.7 to 1
Total assets 208,807 195,304 184,648 183,260 170,896
Long-term debt 110,427 108,092 107,053 108,862 106,097
Stockholders' equity 58,262 52,985 52,406 58,445 43,352
Per common share (3):
Income/(loss) from
continuing
operations .75 .10 (.55) .15 .13
Stock dividends
declared 3% 3% 3% 3% 3%
Stockholders' equity 5.59 4.99 4.98 5.60 4.59
(1) Restated to reflect discontinued operations (see Note 5 of notes to
consolidated financial statements).
(2) Does not include $23,053 in 1992 and $23,184 in 1991 of marketable
securities classified as non current.
(3) Per share data has been retroactively adjusted for a 3% stock
dividend in July of each year.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
RESULTS OF OPERATIONS
On October 8, 1993, the Company and Gourmet Coffees of America, Inc. ("GCA")
entered into an agreement to sell Hillside Coffee of California, Inc.
("Hillside") to GCA. Pursuant to the agreement, which was consummated on
November 19, 1993, the Company received (a) $38,500,000 in cash and (b)
75,000 shares of stock representing approximately one-half of one percent of
the equity of GCA. A pre-tax gain of approximately $12,475,000 was recorded
on the sale and approximately $25,000,000 of the proceeds have been invested
in short term marketable securities. Hillside's business consisted of
roasting, packing, distributing and marketing specialty coffee to
supermarkets.
In December 1992, the Company acquired the stock of Cain's Coffee Co.
("Cains") and certain trademarks related to that business from Nestle'
Beverage Co. and an affiliate for $52,000,000 in cash. The business of Cains
consists primarily of sales of coffee and related products to Foodservice
customers in parts of the Midwest and Southwest.
In November 1992, the Company acquired a controlling interest in a
partnership which owns Dana Brown Private Brands, Inc. ("Dana Brown"), a
company which markets and sells coffee and tea products, servicing food
retailers and distributors located primarily in the Midwest. The purchase
price was $2,000,000, plus approximately $2,500,000 for the cost of inventory.
In July 1993, the Company consummated the sale of its interest in Jimbo's
Jumbos, Incorporated ("JJI"). The Company has presented the operating
results of JJI as a discontinued operation in the consolidated financial
statements for the two years ended July 31, 1993.
The discussion and analysis that follows relates solely to continuing
operations of the Company, including those of specialty coffee (see Note
6 of notes to consolidated financial statements).
Net sales increased $11,997,000 or 4.8% for the year ended July 31, 1994,
compared to the prior year. The increase in net sales was primarily due to
sales of Cains and Dana Brown (both acquired in the second quarter of the
prior fiscal year)and increased selling prices on operations included in both
the current and prior year, partially offset by the loss of sales from
Hillside (due to its disposition) and reduced coffee pounds sold in
operations included in both the current and the prior year. Cain's and Dana
Brown were accounted for as purchases, and, therefore, were not included
prior to their respective dates of acquisition.
Operating profits from food products were $10,389,000, a decrease of 35% for
the year ended July 31, 1994, compared to $15,948,000 for the prior year
before deducting restructuring charges and officer's termination benefits.
The decrease in operating profits resulted primarily from decreased gross
margins in operations included in both the current and prior year and reduced
operating profits from Hillside (due to its disposition), partially offset by
the operations of Cain's (included for the entire period for the current
year) and reduced selling, general and adminstrative expenses for operations
included in both the current and prior year. The reduced gross margins were
attributable to the inability to increase selling prices (due to competition)
commensurate with the increased costs of coffee and a decrease in coffee
pounds sold. Selling, general and administrative expenses decreased due to
reduced advertising, brokerage and payroll costs.
Income from continuing operations was $7,884,000 or $.75 per share, compared
to $1,062,000 or $.10 per share for the prior year. The difference was
primarily due to the gain on sale of Hillside Coffee of California, Inc. (the
Company's specialty coffee product line) in fiscal 1994 of $6,224,000 after
tax effect or $.59 per share, the restructuring charges and officer's
termination benefits in fiscal 1993 aggregating $2,737,000 after tax effect
or $.27 per share and reduced interest expense, partially offset by decreased
operating profits from food products and reduced income taxes on the income
excluding the gain on sale in fiscal 1994 and the aforementioned unusual
charges in fiscal 1993.
Net sales increased $48,001,000 or 24% for the year ended July 31, 1993
compared to the prior year. The increase in net sales was due to the
business of Cains and Dana Brown (which generated net sales of $51,014,000
in the year ended July 31, 1993) and increased coffee pounds sold, partially
offset by a decrease in the average selling price of coffee.
For the year ended July 31, 1993, operating profits from food products,
before deducting restructuring charges and officer's termination benefits,
were $15,948,000 or an increase of 176% from the prior year. The increases
resulted primarily from increased gross margins, partially offset by
increases in selling, general and administrative expenses for operations
included in both fiscal 1993 and 1992, and the operations of Cain's and Dana
Brown. Increased gross margins were due to an increase in coffee pounds sold
and a decrease in average cost of green coffee greater than the decrease in
the average selling price of coffee. Selling, general and administrative
expenses increased primarily due to greater advertising, promotion, coupon
and delivery costs, partially offset by decreased compensation costs and
professional fees.
The Company has provided in 1993 for the estimated cost ($3,598,000) of
consolidating and closing certain production facilities. The charges consist
primarily of accrued expenses and a loss on the write down of certain assets
related to the restructing. Operations have also been charged for
compensation benefits ($818,000) relating to the termination of employment of
the Company's former Chairman of the Board and Chief Executive Officer.
Income from continuing operations was $1,062,000 or $.10 per share for the
year ended July 31, 1993 compared to a loss of ($5,822,000) or ($.55) per
share for the prior year. The primary reasons for the difference are the
increased operating profits from food products operations, partially offset
by increased interest expense and reduced investment income, as well as the
loss from real estate operations in fiscal 1992 and the provision for income
taxes in fiscal 1993 versus the income tax credit in fiscal 1992.
In recent years, inflation has been relatively low and has not had a
significant impact on the Company's sales or profitability. The effect of
specific price inflation on inventory and related cost of sales is generally
not significant because of rapid inventory turnover for coffee.
LIQUIDITY AND CAPITAL RESOURCES
As of July 31, 1994, working capital was approximately $81,738,000 and the
ratio of current assets to current liabilities was 3.6 to 1.
As of July 31, 1994, the Company had unused borrowing capacity of
approximately $24 million under its credit facilities of $40 million with
National Westminster Bank USA and Chemical Bank (see Note 3 of notes to
consolidated financial statements).
The Company received proceeds from the sale of Hillside, after applicable
income taxes, of approximately $30,000,000 (see Note 6 of notes to
consolidated financial statements) which will be used for working capital,
expansion of the Retail Restaurant and Cafe division and other business
purposes.
The Company believes that its cash flow from operations and its amended and
restated revolving credit and term loan agreements with its banks provide
sufficient liquidity to meet its working capital, expansion and capital
requirements.
The Company does not have any material commitments for capital expenditures
or environmental matters.
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
COMMON SHARE PRICES
The Company's Common Stock is traded on the New York Stock Exchange under
the symbol CHF. The Company has approximately 14,000 shareholders of
record as of October 15, 1994.
1994 1993
High Low High Low
1st Quarter 9 5/8 7 1/8 7 7/8 6 3/4
2nd Quarter 10 1/4 7 1/2 10 1/4 6 3/4
3rd Quarter 8 3/8 6 7/8 10 8 3/8
4th Quarter 7 3/8 5 5/8 9 3/4 7 3/4
The Company distributed a 3% stock dividend on July 29, 1994 and
July 30, 1993.
Pursuant to certain provisions of a revolving credit and term loan
agreement, the Company may not declare or pay any dividend (except for stock
dividends).
SEGMENT INFORMATION
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
Year Ended July 31
1994 1993 1992
(Amounts in Thousands)
Net sales - food products $263,638 $ 251,641 $203,640
Rental revenues $ 2,060 $ 1,876 $ 1,205
Operating profit/(loss):
Food products $ 10,389 $ 11,532(1) $ (1,688)(1)
Real estate 317 (9) (783)
Eliminations (266) (200) (419)
$ 10,440 $ 11,323 $ (2,890)
Identifiable assets:
Food products $153,751 $ 170,287 $105,692
Real estate 9,913 7,356 7,268
Corporate 45,143 17,661 71,688
$208,807 $ 195,304 $184,648
Depreciation and amortization:
Food products $ 6,077 $ 6,901 $ 5,377
Real estate 56 24 34
Corporate 55 59 57
$ 6,188 $ 6,984 $ 5,468
Capital expenditures:
Food products $ 5,643 $ 7,887 $ 8,397
Corporate 38 171 40
$ 5,681 $ 8,058 $ 8,437
(1) Includes restructuring charge in fiscal 1993 and 1992, respectively,
of $3,598,000 and $5,500,000 and officer's termination benefits in fiscal
1993 and 1992, respectively, of $818,000 and $1,974,000.
The food products segment is engaged in the (a) roasting, packing and
marketing of regular, instant, decaffeinated and specialty coffees and (b)
packing and marketing of regular and decaffeinated tea for sale to retail,
Foodservice and private label customers. Additionally, other related food
products are marketed and sold to Foodservice customers. See Notes 5 and 6.
Operations of real estate represent rental and other income principally from
the Company's former restaurant facilities.
All of the Company's operations are located in the United States. Export
sales are not significant.
Identifiable assets under the caption "Corporate" include cash and cash
equivalents, investments in marketable securities and short-term investments
of $31,726,000 (1994), $5,469,000 (1993) and $25,883,000 (1992).
Item 14 (d)
CHOCK FULL O'NUTS CORPORATION AND SUBISIDIARIES
SCHEDULE 1 -- MARKETABLE SECURITIES
Column A Column B Column C Column D Column E
Issuer and Title Balance
of Each Issue Principal Market Sheet
Amount Cost Value Amount
Year Ended July 31, 1994:
U.S. Government and
U.S. Government agency
Obligations $18,534,000 $18,548,374 $18,499,552 $18,548,374
Toyota Mtr Cr Corp 5,000,000 5,035,816 5,018,150 5,035,816
Quebec Prov CDA Deb 1,000,000 1,011,288 1,007,260 1,011,288
Corporate Bonds
and other 276,000 190,602 124,152 190,602
Commercial Paper 1,000,000 1,000,000 1,000,000 1,000,000
$25,810,000 $25,786,080 $25,649,114 $25,786,080
Item 14 (d)
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
SCHEDULE II--AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
Column A Column B Column C Column D Column E
Balance at (1) (2) (1) (2)
Beginning of Amounts Amounts Not
Name of Debtor Period Additions Collected Written Off Current Current
Year ended
July 31, 1994:
Amount receivable
Dennis Duke $28,655 $28,655
Year ended
July 31, 1993:
Amount receivable
Dennis Duke $130,233 $101,578 $ 28,655
Year ended
July 31, 1992:
Amount receivable
Dennis Duke $220,233 $ 90,000 $130,233
Item 14(d)
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT
Column A Column B Column C Column D Column E Column F
Balance at Other Changes Balance
Beginning Additions at Add at End
Classification of Period Cost Retirements (Deduct) of Period
Year Ended July 31, 1994:
Land $ 3,754,639 $3,754,639
Buildings and
improvements 18,241,851 $207,373 $202,855 (e) 18,652,079
Leaseholds and lease- 6,931 (f)
hold improvements 842,011 823,873 $12,489 135,000 (a) 1,795,326
Machinery and equip- 30,000 (a)
ment 68,259,875 4,649,710 133,268 (202,855)(e) 72,603,462
$91,098,376 $5,680,956 $145,757 $171,931 $96,805,506
Year Ended July 31, 1993:
Land $ 3,419,639 $ 335,000 (b) $3,754,639
Buildings and 1,965,000 (b)
improvements 15,283,858 $368,322(b) 624,671 (e) 18,241,851
Leaseholds and 194,000 (b)
leasehold (59,844)(e)
improvements 1,026,443 750,884(b) $ 33,254 (1,036,218)(g) 842,011
Machinery 18,028,541 (b)
and (9,893,939)(g)
equipment 55,012,991 6,938,533(b) 1,261,424 (564,827)(e) 68,259,875
$74,742,931 $8,057,739 $1,294,678 $9,592,384 $91,098,376
Year Ended July 31, 1992:
Land $ 3,119,639 $ 300,000 $ 3,419,639
Buildings and
improvements 13,066,097 2,242,342(b) $ 24,581 15,283,858
Leaseholds and lease-
hold
improvements 1,013,434 13,009 1,026,443
Machinery and equip- $ 9,348 (f)
ment 44,835,129 5,920,116(b) 132,602 4,381,000 (d) 55,012,991
$62,034,299 $8,475,467 $157,183 $4,390,348 $74,742,931
(a) Acquisition of drive - through food service establishments.
(b) Acquisition of Cain's Coffee Company, Inc.
(c) Principally additions to coffee manufacturing plants.
(d) Acquisition of Hillside Coffee of California, Inc., including in
1992 final allocation purchase price.
(e) Reclassifications.
(f) Reclassification from/(to) Other Assets.
(g) Reclassification to net assets of product line held for sale.
Depreciation and amortization are based on the following estimated useful
lives:
Life Years
Buildings and improvements 33 to 40
Leaseholds and leasehold improvements 15 to 50
Machinery and equipment 5 to 20
Item 14 (d)
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
SCHEDULE VI--ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY PLANT AND EQUIPMENT
Column A Column B Column C Column D Column E Column F
Balance at Other Changes Balance
Beginning Additions at Add at End
Classification of Period Cost Retirements (Deduct) of Period
Year Ended July 31, 1994:
Buildings and
improvements $ 3,529,865 $605,249 $ 4,135,114
Leaseholds and
lease-hold
improvements 248,066 93,017 $12,489 $2,225 (b) 330,819
Machinery and
equipment 31,724,769 5,489,210 169,140 37,044,839
$35,502,700 $6,187,476 $181,629 $2,225 $41,510,772
Year Ended July 31, 1993:
Buildings and
improvements $ 2,964,120 $ 565,745 $3,529,865
Leaseholds and
lease- $ (20,471)(d)
hold
improvements 210,207 120,800 $ 31,495 (30,975)(a) 248,066
Machinery and equip- 30,975 (a)
ment 28,971,199 6,296,994 945,680 (2,628,719)(d) 31,724,769
$32,145,526 $6,983,539 $977,175 $(2,649,190) $35,502,700
Year Ended July 31, 1992:
Buildings and
improvements $ 2,475,510 $ 488,610 $2,964,120
Leaseholds and
lease-hold
improvements 139,877 67,077 $3,253 (a) 210,207
Machinery 4,671 (b)
and (3,253)(a)
equipment 21,460,308 4,877,884 $118,411 2,750,000 (c) 28,971,199
$24,075,695 $5,433,571 $118,411 $2,754,671 $32,145,526
(a) Reclassifications.
(b) Reclassifications from/(to) Other Assets.
(c) Write-down of machinery and equipment included in restructuring charge
(see Note 11(c) of notes to consolidated financial statements).
(d) Reclassification to net assets of product line held for sale.
Item 14(d)
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
SCHEDULE VIII-VALUATION AND QUALIFYING ACCOUNTS
Column A Column B Column C Column D Column E
Additions
Balance at Charged to Balance
Beginning Costs and at End
Description of Period Expenses Other Deductions(1) of Period
Year ended July 31, 1994:
Allowance for
doubtful accounts
and discounts $1,081,000 $1,940,779 $24,664 $2,118,443 $928,000
Year ended July 31, 1993:
Allowance for
doubtful accounts
and discounts $1,043,000 $1,787,000 $142,000(2) $1,891,000 $1,081,000
Year ended July 31, 1992:
Allowance for
doubtful accounts
and discounts $1,088,000 $4,288,000 $4,333,000 $1,043,000
(1) Discounts taken by customers and uncollectible accounts written-off,
net of recoveries.
(2) Net addition due to acquisition of Cain's Coffee Co. and
reclassification to net assets held for sale.
Item 14(d)
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION
Column A Column B
Charged to
Costs and
Item Expenses
Year ended July 31, 1994:
Advertising $4,099,533
Depreciation and amortization of
intangible assets $3,159,448
Maintenance and repairs $3,100,763
Year ended July 31, 1993:
Advertising $5,361,972
Depreciation and amortization
of intangible assets $4,544,096
Maintenance and repairs $2,662,914
Year ended July 31, 1992:
Advertising $2,717,467
Depreciation and amortization
of intangible assets $2,770,988
Items not presented are either not applicable or less than 1% of net sales.
EXHIBIT 11 - STATMENT RE: COMPUTATION OF PER SHARE EARNINGS
YEAR ENDED JULY 31,
1994 1993 1994
(AMOUNTS IN THOUSANDS,
EXCEPT PER SHARE DATA)
PRIMARY
AVERAGE SHARES OUTSTANDING 10,482 10,567 10,490
INCOME/(LOSS) FROM CONTINUING
OPERATIONS $7,884 $1,062 ($5,822)
NET INCOME/(LOSS) $7,884 ($1,006) ($3,912)
PER SHARE AMOUNTS:
INCOME/(LOSS) FROM CONTINUING
OPERATIONS $0.75 $0.10 ($0.56)
NET INCOME/(LOSS) $0.75 ($0.10) ($0.37)
FULLY DILUTED
AVERAGE SHARES OUTSTANDING 10,482 10,567 10,490
ASSUMED CONVERSION OF
CONVERTIBLE DEBENTURES 11,478 11,206 11,277
TOTAL 21,960 21,773 21,767
INCOME/(LOSS) FROM CONTINUING
OPERATIONS $7,884 $1,062 $(5,822)
ADD CONVERTIBLE DEBENTURES
INTEREST AND AMORTIZATION
OF DEFERRED CHARGES, NET
OF INCOME TAXES 4,373 4,796 4,755
TOTAL $12,257 $5,858 $(1,067)
NET INCOME/(LOSS) $7,884 ($1,006) ($3,912)
ADD CONVERTIBLE DEBENTURES
INTEREST AND AMORTIZATION
OF DEFERRED CHARGES, NET
OF INCOME TAXES 4,373 4,796 4,755
TOTAL $12,257 $3,790 $843
PER SHARE AMOUNTS:
INCOME/(LOSS) FROM CONTINUING
OPERATIONS $0.56 $0.27 ($0.05)
NET INCOME $0.56 $0.17 $0.04
EXHIBIT 21 - SUBSIDIARIES OF THE REGISTRANT
As of October 13, 1994, the Company had directly and indirectly the following
active subsidiaries, all of which are included in the Company's consolidated
financial statements furnished herewith:
Subsidiaries of
Chock full o'Nuts Corporation
Hillside Holding Corporation Delaware 100%
Chock Realty Corporation California 100%
Chock Coffeemaker Acquisition, Inc. New York 100%
CFN of New York, Inc. New York 100%
Cain's Coffee Co. Delaware 100%
Cain's Holding Company Delaware 100%
DB Private Brands, Inc. Missouri 100%
Quikava, Inc. Massachusetts 100%
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________
EXHIBITS
TO
FORM 10-K
ANNUAL REPORT
(Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934)
For Fiscal Year Ended July 31, 1994 Commission File Number 1-4183
______________________________________
CHOCK FULL O'NUTS CORPORATION
(Exact name of Registrant as specified in its charter)
EXHIBIT 3(a)
CERTIFICATE OF INCORPORATION
- - -of-
FEDERAL NUT CO., INC.
(Pursuant to Article Two of
the Stock Corporation Law)
WE THE UNDERSIGNED, for the purpose of forming
a corporation pursuant to Article two of the Stock
Corporation Law of the State of New York, do hereby certify
as follows:
FIRST: The name of the proposed
corporation is: FEDERAL NUT CO., INC.
SECOND: The purposes for which this
corporation is formed, are to do any all things set forth,
to the same extent as natural born persons might or could
do, to wit;
(1) For the purpose of selling wholesale and
retail, nuts, shelled and unshelled, candies, fruits, ice
cream, soda water, drinks, sandwiches and other kindred merchandise.
(2) To purchase, own, hold, sell and lease real
estate and real property of every kind and nature, which may be necessary
for the conduct of business of this corporation.
(3) To acquire the good will, patents,
copyrights, rights and property of any person, firm, association or
corporation, and to pay for the same in cash, stock of this company, bonds
or otherwise, and to hold or in any manner dispose of the whole or part of
the property so purchased excepting as herein before set forth; or to conduct
in any manner that is lawful the whole or part of the business acquired,
provided said business is within the authorization of the stock corporation
law and to exercise all the powers necessary or convenient in and about the
conducting and management of said business.
(4) In general, to do all things, to the same
extent as are incidental and conducive to the attainment of the objects of
the said corporation in the furtherance of its business the said corporation
or a private party might or could do, in or about carrying out of the
aforesaid purpose.
(5) To borrow money without or with pledge or mortgage upon all
or any of its property real or personal as security,
and to loan and advance money upon mortgages on real and personal property
or on either of them.
(6) To take, buy, purchase, exchange, hire, lease or otherwise
acquire real estate and property, either improved or unimproved, and any
interest or right therein, and to own, hold, control, maintain, manage and
develop the same in any State of the United States.
(7) To purchase, exchange, hire or otherwise acquire such
personal property chattels, rights, easements, permits, privileges and
franchises as may be lawfully purchased, exchanged, hired or acquired under
Article Two of the Stock Corporation Law of the State of New York.
(8) To sell, manage, improve, develop, assign, transfer, convey,
lease, sub-lease, pledge or otherwise alienate or dispose of, and to mortgage
or otherwise encumber the lands, buildings, real property, chattels real and
personal, and other property of the corporation, real and personal,
wheresoever situate, and any and all legal and equitable rights therein.
(9) To transact the business of buying, selling, dealing in,
leasing and renting and managing real estate and any interest therein for its
own account, as agent or broker, or upon commission.
(10) To purchase, acquire, hold, sell, assign, and transfer,
mortgage pledge and otherwise dispose or the shares of the capital stock,
bonds, debentures or other evidences of indebtedness of any corporation,
domestic or foreign and while the holder thereof, to exercise all rights and
privileges of ownership, including the right to vote thereon, and to issue in
exchange therefor its own stock, bonds and other obligations.
The foregoing enumeration of specific powers shall not be held to
limit or restrict in any manner the general powers of the company and the
enjoyment thereof as conferred by the Laws of the State of New York, upon
corporations organized under Article Two of the Stock Corporation Law of the
State of New York.
THIRD: The amount of the capital stock shall be $20,000.00
and is to consist of 200 shares of the par value of $100.00.
FOURTH: The office of the corporation is to be located in the
County of New York City and State of New York.
FIFTH: The duration of the said corporation shall be
perpetual.
SIXTH: The number of directors shall be three and the said
directors need not be stockholders of the corporation.
- - -2-
SEVENTH: The names and post office addresses of the directors
until the first annual meeting of the stockholders are:
NAMES POST-OFFICE ADDRESSES
JESSE L. GOLDBERG 305 Broadway, Borough Of
Manhattan, City of New York
SYDNEY H. SILVERMAN 305 Broadway, Borough Of
Manhattan, City of New York
JULIUS GAFFNER 305 Broadway, Borough Of
Manhattan, City of New York
EIGHTH: The names and post office addresses of the subscribers
of this certificate of incorporation and a statement of the number of
shares which each agrees to take in the corporation, are as follows.
NAMES P.O. OFFICE ADDRESSES NO. OF SHARES
JESSE L. GOLDBERG 305 Broadway, Borough Of
Manhattan, City of New York ONE
SYDNEY H. SILVERMAN 305 Broadway, Borough Of
Manhattan, City of New York ONE
JULIUS GAFFNER 305 Broadway, Borough Of
Manhattan, City of New York ONE
NINTH: All of the subscribers of this certificate are of full
age, and that at least two-thirds of them are citizens of the United
States, and at least one of them is a resident of the State of New York,
and at least one of the persons named as a director is a citizen of the
United States and a resident of the State of New York.
TENTH: That the meeting of the Board of Directors shall be
held in the State of New York only.
IN WITNESS WHEREOF, we have signed and acknowledged this
certificate in duplicate, this 3rd day of November.
- - -3-
STATE OF NEW YORK
COUNTY OF NEW YORK SS:
On this 3rd day of November, 1938, before me personally came
JESSE L. GOLDBERG, SYDNEY H. SILVERMAN, AND JULIUS GAFFNER, to know to be
the persons described in and who executed the foregoing certificate of
incorporation and they thereupon severally duly acknowledged to me that they
executed the same.
- - -4-
CERTIFICATE
OF
INCORPORATION
- - -of-
FEDERAL NUT CO. INC.
(Pursuant to Article Two
of the Stock Corporation
Law of the State of New
York).
CERTIFICATE OF DESIGNATION
TO THE SECRETARY OF STATE
ALBANY, NEW YORK
The undersigned corporation, FEDERAL NUT CO., INC., pursuant to
Section 24 of the Stock Corporation Law, does hereby designate and
appoint the Secretary of State of New York as its agent upon whom
process in any action or proceeding against it may be served within the
State of New York, pursuant to law.
The address to which the Secretary of State shall mail a copy of
any process against the corporation which may be served upon him is
Federal Nut Co., Inc., 250 West 54th Street, in the Borough of
Manhattan, City, County and State of New York.
IN WITNESS WHEREOF, the corporation has caused this Certificate of
Designation to be duly executed by its authorized officer, to wit, its
President, and the seal of the corporation hereunto affixed this 29 day
of November, 1949.
FEDERAL NUT CO., INC.
By:________________________
William Schwarz - President
STATE OF NEW YORK
COUNTY OF NEW YORK as: ______________________________________
On this 29 day of November, 1949, before me came WILLIAM SCHWARZ, to
me known, who being by me duly sworn, did depose and say that he resides at
No. 15 Shore Road, Mamaronack, Westchester County, New York; that he is the
President of Federal Nut Co., Inc., the corporation described in and which
executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the board of directors of said corporation
and that he signed his name thereto by like order.
FEDERAL NUT CO., INC.
- - ----------------------------------------
CERTIFICATE OF DESIGNATION
Pursuant to Section 24 of the
Stock Corporation Law.
- - -----------------------------------------
STATE OF NEW YORK
DEPARTMENT OF STATE
JESSE L. GOLDBERG
ATTORNEY AT LAW
305 BROADWAY
NEW YORK, NY
STATE OF NEW YORK
CITY OF NEW YORK
COUNTY OF NEW YORK
Lillian Mandl, being duly sworn, deposes and says: That she is the
Secretary of FEDERAL NUT CO., INC., the corporation described in the
foregoing certificate and as such, is the custodian of the stock book
and ledger of the said corporation.
That there do not appear on the books of the aforesaid corporation
the names of any other holders and owners of the capital stock of the
aforesaid corporation, except those mentioned herein, and that the same
are all of the stockholders of record of the said corporation.
That the persons who executed the annexed consent, to increase the
capital stock of the said corporation are all of the stockholders of
record of the said corporation. Sworn to before me this 22nd day of
November, 1949.
STATE OF NEW YORK
CITY OF NEW YORK
COUNTY OF NEW YORK
WILLIAM SCHWARZ and LILLIAN MANDL, President and Treasurer,
respectively, of FEDERAL NUT CO., INC., the corporation described in the
foregoing certificate, being duly sworn, depose and say:
1. The number of additional shares which the corporation is
hereby authorized to issue are 24,800 shares, and that such additional
24,800 shares shall have the par value of $100.00 each. The original
number of shares, namely 200, of the par value of $100.00 each,are
hereby increased by 24,800 shares of the par value $100.00 each, as
aforesaid.
2. That the total number of shares which the corporation shall
now have shall be 25,000 shares of the par value of $100.00 each, and
that the original 200 shares of the par value of $100.00 each shall
remain as such.
FEDERAL NUT CO., INC.
BY:_____________________
WILLIAM SCHWARZ - PRESIDENT
_____________________
LILLIAN MANDL - TREASURER
Sworn to me before this
29 day of November, 1949.
11. The total number of shares which the corporation shall
henceforth have will be 25,000 shares, each of the par value of $100.00
and none with no par value.
IN WITNESS WHEREOF, we have executed the foregoing certificate in
duplicate this 22nd day of November, 1949.
_____________________L.S.
_____________________L.S.
STATE OF NEW YORK
CITY OF NEW YORK
COUNTY OF NEW YORK
On this 22nd day of November, 1949, before me personally came
WILLIAM SCHWARZ and LILLIAN MANDL, to me known to be the individuals
described in and who executed the foregoing certificate of increase of
capital stock, and they duly severally acknowledged to me that they
executed the same.
CERTIFICATE OF INCREASE OF THE CAPITAL STOCK OF
FEDERAL NUT CO., INC.
(Pursuant to Section 36 of the Stock Corporation Law.)
WE, the undersigned, being all of the stockholders of FEDERAL NUT
CO., INC., for the purposes of increasing the capital stock of FEDERAL
NUT CO., INC., do hereby certify as follows:
1. The name of the corporation is FEDERAL NUT CO., INC.
2. The certificate of incorporation was filed in the Office of
the Secretary of State on the 7th day of November, 1932 and in the
Office of the Clerk of the County of New York on the 11th day of
November, 1932.
3. That the certificate of incorporation is amended in order to
increase the capital stock and to authorize additional shares of the
same class stock now existing, namely, common stock of the par value of
$100.00 each.
4. That the original Certificate filed herein is amended so
that same shall read, 25,000 shares of the par value of $100.00 each
instead and in lieu of the present provision of 200 shares of the par
value of $100.00 each.
5. That the provision in the original Certificate providing for
200 shares of stock of the par value of $100.00 each is hereby stricken
out.
6. The total amount of the authorized capital stock is the sum
of $20,000.00, consisting of 200 shares of the par value of $100.00
each.
7. Total number of shares which it already authorized to issue
is 200 shares, and the total number thereof having a par value of
$100.00, and there are no shares with no par value.
8. The shares already authorized are common shares, consisting
of 200 shares.
9. The number of shares issued and outstanding are 50 shares of
common stock.
10. The amount to which the capital stock is increased is
$2,500,000.00
- - -1-
CERTIFICATE OF INCREASE OF THE CAPITAL STOCK
- - -OF-
FEDERAL NUT CO., INC.
(Pursuant to Section 36 of the Stock Corporation Law.)
JESSE L. GOLDBERG
ATTORNEY AT LAW
305 BROADWAY
NEW YORK, NY
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
- - -of-
FEDERAL NUT CO., INC.
Pursuant to Section 36 of the Stock Corporation Law.
We, WILLIAM SCHWARZ AND MICHAEL J. OKOLA, BEING RESPECTIVELY, the
President of FEDERAL NUT CO., INC. and the Secretary thereof, hereby
certify:
1. The name of the corporation is FEDERAL NUT CO., INC.
2. The Certificate of Incorporation was filed in the Office of
the Office of the Secretary of the State on the 7th day of November,
1932, and in the Office of the Clerk of the County of New York on the
11th day of November, 1932.
3. That the Certificate of Incorporation was amended on
December 1st, 1949, and that such Certificate of Increase of the Capital
Stock of the said Corporation was duly filed with the Secretary of State
at Albany, New York, on the 1st day of December, 1949.
4. That the original Certificate filed herein provided for two
hundred (200) shares of stock of the par value of One Hundred ($100.00)
Dollars each.
5. That the Certificate of Increase of the Capital Stock of
FEDERAL NUT CO., INC. filed December 1st, 1949 had stricken from the
said Certificate the provision therein providing for two hundred (200)
shares of stock of the par value of One Hundred ($100.00) Dollars each
and in lieu
- - -1-
thereof, provided for the authority to issue capital stock in the sum of
Two Million Five Hundred Thousand ($2,500,000.00) Dollars consisting of
twenty-five thousand (25,000) shares each of the par value of One
Hundred ($100.00) Dollars and none with no par value.
6. That the Certificate of Incorporation is further amended
herein in order to increase the capital stock and to authorize additional
shares of a different class of stock now existing, namely, preferred stock
having a par value of One Hundred ($100.00) Dollars each and none have been
or shall be issued having no par value.
7. The amount of the capital stock which the Corporation is
hereafter to have shall be twenty-five thousand (25,000) shares of common
stock each of the par value of One Hundred ($100.00) Dollars, and ten
thousand (10,000) shares of preferred stock each of the par value of One
Hundred ($100.00) Dollars making a total authorized capital stock of Three
Million Five Hundred Thousand ($3,500,000.00) Dollars consisting of
twenty-five thousand (25,000) shares of common stock of the par value of One
Hundred ($100.00) Dollars aggregating Two Million Five Hundred Thousand
($2,500,000.00) Dollars, and ten thousand (10,000) shares of preferred stock
each of the par value of One Hundred ($100.00) Dollars having an aggregate of
One Million ($1,000,000.00) Dollars, and no stock whether common or preferred
shall be issued having no par value.
8. (a) The total number of shares which the Corporation may
henceforth have is twenty-five thousand (25,000) shares of common stock as
previously authorized, each of the
- - -2-
par value of One Hundred ($100.00) Dollars, and shall continue to have
said par value of One Hundred ($100.00) Dollars, and ten thousand
(10,000) new shares which shall be preferred each of the par value of
One Hundred ($100.00) Dollars, as hereinafter provided. The twenty-five
thousand (25,000) shares of common stock already authorized are to
continue to be the common or voting stock and all existing privileges
and rights of voting of such stock are to remain as heretofore.
(b) The designations, preferences, privileges and voting
powers of the preferred stock and the restrictions and qualifications
thereof are as follows:
The holders of the preferred stock shall be
entitled to cumulative dividends at the rate
four and one-half (4 () per cent per annum
on the par value thereof in preference and
priority to the payment of any dividends on
common stock.
The holders of the preferred stock shall be
entitled to the redemption of their stock, in
whole or in part, immediately upon the acqui-
sition by the corporation of surplus, and shall
be paid for such stock the sum of One Hundred
($100.00) Dollars for each share together with
all accrued dividends due thereon at the time
of redemption.
In the event of dissolution or liquidation of
the corporation of the sale of its assets,
whether voluntary or involuntary, and/or upon
the distribution of the company's capital,
there shall first be paid to the holders of
said preferred stock, the par value thereof and
the amount of all unpaid accrued dividends; the
remaining assets and funds of the corporation
shall be divided among and paid to the holders
of the common stock, wholly, solely and entirely.
The corporation shall have the right at any time
to redeem or purchase the said preferred stock,
or any number of shares thereof, issued and out-
standing at the price herein above set forth, and
the corporation may apply, pursuant to Section 28
of the Stock Corporation Law, toward the redemp-
tion or purchase of its preferred stock as here-
in provided any part of its surplus funds
- - -3-
and/or an amount of its capital which shall
not be greater than the capital represented
by the shares redeemed or purchased, but
under no circumstances shall the corporation
apply any other or further part of its capi-
tal toward the redemption of purchase of such
stock. The redemption or purchase shall not
be effected where the effect of any such re-
demption or purchase and application of capital
thereto shall be to reduce the actual
value of the assets of the corporation to an
amount less than the total amount of its debts
and liabilities plus the amount of its capital
reduced by the amount of the capital so applied.
Whenever any shares of such preferred stock
shall be redeemed or purchased out of capital
or surplus, the corporation may, by resolution
of its Board of Directors, retire said shares,
thereupon this corporation shall in con-
nection with retirement of such shares cause
to be filed pursuant to Section 28 of the
Stock Corporation Law a certificate of
reduction capital.
IN WITNESS WHEREOF, we have made and subscribed this
certificate this 20 day of July 1950.
_________________________
President
__________________________
Secretary
STATE OF NEW YORK
CITY OF NEW YORK
COUNTY OF NEW YORK
On this 20 day of July, 1950, before me personally came WILLIAM
SCHWARZ and MICHAEL J. OKOLA, to me known and known to me to be the same
persons described in and who executed the foregoing certificate and they
duly severally acknowledged to me that they executed the same.
________________________
- - -4-
STATE OF NEW YORK
CITY OF NEW YORK
COUNTY OF NEW YORK
WILLIAM SCHWARZ and MICHAEL J. OKOLA, being duly sworn, depose and
say:
That he, WILLIAM SCHWARZ, is the President, and he, MICHAEL J.
OKOLA, is the Secretary of FEDERAL NUT CO., INC.
That they have been duly authorized to execute and file the
foregoing Certificate of Amendment of the Certificate of Incorporation
of FEDERAL NUT CO., INC. for the increase in the number of shares, namely,
by ten thousand (10,000) shares of preferred stock each of the par value of
One Hundred ($100.00) Dollars, by the votes cast in person or by proxy of the
holders of record of all the outstanding shares of stock of FEDERAL NUT CO.,
INC. entitled to vote thereon with relation to the proceedings provided for
in the above Certificate; and that they gave been authorized to execute and
file the same by the votes cast in person or by proxy of the holders of
record of all of the outstanding shares of the common stock effected by the
change entitled to vote thereon; and that they have been duly authorized to
execute the foregoing Certificate of Amendment increasing the capital stock
by the creation of preferred stock as therein provided by the votes of the
holders of record of all of the outstanding stock of the said corporation
entitled to vote at a stockholders' meeting at which such votes were cast
with relation the proceedings provided for in the foregoing Certificate.
That such votes were cast at a stockholders' meeting on the 21st day
of June, 1950, at No. 250 West 54th Street, in the Borough of Manhattan, City
and State of New York,
- - -5-
upon notice pursuant to Section 45 of the Stock Corporation Law.
Sworn to before me this 20th day of July, 1950.
__________________________
PRESIDENT
__________________________
SECRETARY
- - -6-
STATE OF NEW YORK
COUNTY OF NEW YORK
WILLIAM SCHWARZ and SAMUEL OSTROVE, being duly severally sworn, do
depose and say, and each for himself, deposes and says:
That he, WILLIAM SCHWARZ, is the President of FEDERAL NUT CO., INC.,
and he, SAMUEL OSTROVE, is the Assistant-Treasurer thereof.
That the number of additional shares which the Corporation is
authorized to issue by virtue of the foregoing Certificate of Amendment is,
ten thousand (10,000) shares of preferred stock each of the par value of One
Hundred ($100.00) Dollars, thus making a total authorized capital stock of
Three Million Five Hundred Thousand ($3,500,000.00) Dollars, consisting of
twenty-five thousand (25,000) shares of common stock of the par value of One
Hundred ($100.00) Dollars aggregating Two Million Five Hundred Thousand
($2,500,000.00) Dollars and ten thousand (10,000) shares of preferred stock
each of the par value of One Hundred ($100.00) Dollars having an aggregate of
One Million ($1,000,000.00) Dollars, and no stock whether common or preferred
shall be issued having no par value.
The amended Certificate of Incorporation seeks authorization to issue
new and additional ten thousand (10,000) shares of preferred stock each of
the par value of One Hundred ($100.00) Dollars, thus increasing the total
authorized capital stock of this Corporation to Three Million Five Hundred
Thousand ($3,500,000.00) Dollars. None of the shares of stock are changed.
The par value of shares of stock which the Corporation is authorized to issue
is not increased.
- - -1-
The sum total of the increased authorization is to empower the
Corporation to issue ten thousand (10,000) shares of preferred stock of the
par value of One Hundred ($100.00) Dollars in addition to the twenty-five
thousand (25,000) shares of common stock of the par value of One Hundred
($100.00) Dollars which it had heretofore been authorized to issue.
Sworn to before me this 24th day of July, 1950.
____________________________________
William Schwarz - President
____________________________________
Samuel Ostrove - Assistant Treasurer
- - ------------------------------------
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INFORMATION
- - -OF-
FEDERAL NUT CO., INC.
(Pursuant to section 36 of
the Stock Corporation Law.)
- - ----------------------------------------
Dated: July 20, 1950.
Jesse L. Goldberg
Attorney at Law
305 Broadway
New York, N.Y.
CERTIFICATE OF CHANGE OF NAME OF
FEDERAL NUT CO. INC.
TO
CHOCK FULL O'NUTS CORP.
(Pursuant to Sec. 40 of the General
Corporation Law)
WE, the undersigned, constituting the holders of record of all of the
outstanding shares of capital stock entitled to vote on a change in the name
of said corporation, CERTIFY:
1. The name of this corporation is Federal Nut Co. Inc.
2. The certificate of incorporation was filed in the office of
Secretary of State on November 7, 1932.
3. The new name to be assumed by this corporation is CHOCK FULL
O'NUTS CORP.
IN WITNESS WHEREOF, the undersigned have subscribed and acknowledged
this certificate in duplicate this 27th day of December 1955.
__________________________L.S.
__________________________L.S.
STATE OF NEW YORK
COUNTY OF NEW YORK
On this 27th day of December 1955, before me came WILLIAM BLACK and
L. MANDL, to me known to me to be the individuals mentioned and described in
and who executed the foregoing certificate and they duly acknowledged to me
that they executed the same.
STATE OF NEW YORK
COUNTY OF NEW YORK
MICHAEL J. OKOLA, being duly sworn, deposes and says:
That he is the Secretary of FEDERAL NUT CO. Inc.
That the persons who executed the foregoing certificate of change
of name of said corporation constitute the holders of all of the
outstanding shares of stock of the corporation entitled to vote on
change in the name of said corporation.
Subscribed and sworn to me before me this 27th day of December 1955.
_________________________
- - ----------------------------------------
CERTIFICATE OF CHANGE OF NAME
OF
FEDERAL NUT CO. INC.
TO
CHOCK FULL O'NUTS CORP.
(Pursuant to Sec. 40 of the General
Corporation Law)
- - ----------------------------------------
STATE OF NEW YORK
DEPARTMENT OF STATE
GOLDBERG & LAPAN
425 LEXINGTON AVE.
NEW YORK, N.Y.
RESTATED CERTIFICATE OF INCORPORATION
OF CHOCK FULL O'NUTS CORP.
_________________
Pursuant to Section 40 of the Stock Corporation Law
_________________
We, the undersigned, WILLIAM BLACK and LILLIAN MANDL, being the
holders of record of all the outstanding shares of Chock Full O'Nuts Corp.,
a New York stock corporation (hereinafter sometimes referred to as the
"Corporation") entitled to vote with relation to the proceedings provided for
in this Certificate, do hereby certify as follows:
1. The name of the Corporation is
CHOCK FULL O'NUTS CORP.
The name under which the Corporation was originally incorporated was
FEDERAL NUT CO., INC.
2. The Certificate of Incorporation of the Corporation was filed
in the Office of the Secretary of State of New York on November 7, 1932.
3. The Certificate of Incorporation as now in full force and
effect is hereby amended to effect changes authorized in subdivision 2 of
Section 35 of the Stock Corporation Law, namely to change the name of the
Corporation to Chock Full O'Nuts Corporation; to change the address to which
the Secretary of State shall mail a copy of process in any action or
proceeding against the Corporation which may be served upon him; to eliminate
from the enumeration and descriptions of shares which the Corporation is
authorized to issue all of the previously authorized shares, of Preferred
Stock, par value $100 per share, none of which has been issued; to change all
of the 25,000 previously authorized and presently outstanding shares of
Common Stock, par value $100 per share, of the Corporation from 25,000
shares, par value $100 per share, of the Corporation to 800,000 shares, par
value $1 per share, to authorize 200,000 additional shares of Common Stock,
par value $1 per share, and in conformity therewith to decrease the capital
stock of the Corporation to $1,000,000; to provide that no holder of Common
Stock shall be entitled to any preemptive right to subscribe for shares or
other securities of the Corporation; to change the purposes and powers of the
Corporation; to increase the number of directors so as to provide that the
number of directors of the Corporation shall be not less than five (5) nor
more than eleven (11); and to insert provisions for the regulation and
conduct of the Corporation; and said Certificate of Incorporation, as amended
and supplemented by all certificate heretofore filed pursuant to law and as
further amended hereby, is restated to set forth its entire text as follows:
CERTIFICATE OF INCORPORATION
OF
CHOCK FULL O'NUTS CORPORATION
FIRST: The name of the Corporation is
CHOCK FULL O'NUTS CORPORATION
SECOND: The purposes of the Corporation are as follows:
(1) To manufacture, produce, purchase or otherwise acquire,
prepare, sell at wholesale or retail, distribute and deal in coffee,
sandwiches, doughnuts, cakes, pies,
- - -1-
nuts, shelled and unshelled, candies, fruits, ice cream, soda water, drinks
and all kinds of foods, food products and all products, by products,
ingredients and commodities of every kind and description; to engage in any
type of food business and in any activity necessary of incidental to any
business of the Corporation.
(2) To manufacture, produce, purchase, lease or otherwise
acquire, hold, own, mortgage, pledge, sell, lease or otherwise dispose of,
import, export, distribute and deal in and with goods, wares, merchandise and
personal property of every kind and description; to engage in the business of
wholesale and retail merchants dealing in all types of commodities and
merchandise; to establish, operate and manage stores, warehouses, disposition
depots, purchasing offices and other facilities; to grant to others the right
to carry on any kind of lawful business on premises of the Corporation; to
carry on a general trading, manufacturing, mercantile, commercial and
industrial business, or any part thereof, in any part of the world.
(3) To purchase, lease or otherwise acquire, hold, own, improve,
maintain, develop, encumber, mortgage, pledge, sell, exchange, lease or
otherwise dispose of and to deal and trade in, any and all lands, real
property, leaseholds, and any and all interests and rights in land or other
property, real, personal, or mixed; to build erect, construct, purchase,
lease, or otherwise acquire, hold, own, maintain, operate, develop, improve,
alter, repair, lease, mortgage, pledge, sell, convey, exchange or otherwise
dispose of, buildings, plants, structures, facilities and improvements of
every kind and description.
(4) To acquire, by purchase, underwriting, subscription,
participation in syndicates or otherwise, become interested in, invest in,
hold, own, sell, exchange, mortgage, pledge, hypothecate or otherwise dispose
of, turn to account or realize upon, all forms of securities, including
shares of stock, bonds, debentures, notes, evidences of indebtedness,
certificates of interest and other rights, interests and obligations, and to
deal in and with the same, and to issue in exchange, therefor or in payment
thereof its own stocks, bonds or other obligations or securities, or
otherwise pay therefor, or to acquire the same in any lawful manner without
any such exchange or other payment; to exercise in respect thereof any and
all rights, powers and privileges or individual ownership or interest
therein, including the right to vote thereon for any and all purposes and to
consent or otherwise act with respect thereto; to do any and all acts and
things for the preservation, protection, improvement and enhancement in value
of such securities or designed to accomplish any such purpose; to aid by
loan, subsidy, guaranty, or in any other manner, those issuing, creating or
responsible for any such securities, all to such extent as a corporation
organized under Article Two of the Stock Corporation Law may then lawfully
do.
(5) To acquire all or any part of the good will, rights,
property, and business of any person, entity, partnership, association or
corporation; to pay for the same in cash or in stock, bonds, or other
securities or obligations of the Corporation, or otherwise; to hold, utilize
and in any manner dispose of the whole or any part of the rights and
property so acquired, and to assume in connection therewith any liabilities
of any such person, entity, partnership, association or corporation and to
conduct in any lawful manner the whole or any part of the business thus
acquired.
(6) To apply for, obtain, register, purchase, lease, or otherwise
acquire, hold, own, use, introduce, develop, and sell, assign, lease, pledge,
or otherwise dispose of or turn to account letters patent of the United
States of America or of any foreign country,
- - -2-
inventions, improvements, formulae, processes, patents rights, licenses, and
privileges, copyrights, trade-marks and trade names, or pending applications
therefor, and any and all labels, designs, prints and brands, and to use,
exercise, develop and take or grant licenses or other rights in respect of or
otherwise turn to account any of the foregoing.
(7) To the extent permitted by law, to borrow money for its
corporate purposes; to draw, make, accept, endorse, execute, issue and
negotiate promissory notes, bills of exchange, warrants, warehouse receipts,
bonds; debentures and other negotiable or transferable instruments.
(8) To make advances or loans with or without security so far as
may be permitted to a corporation organized under Article Two of the Stock
Corporation Law.
(9) To the extent permitted by law, to guarantee the payment of
dividends upon stocks, or the principal of and/or interest upon bonds, notes
and other evidences of indebtedness of, or to guarantee the performance of
the contracts or other undertakings of, or otherwise aid, in any manner, any
corporation, firm or individual in which the Corporation shall be directly or
indirectly interested either through ownership of its stock, bonds,
securities, or other obligations, or otherwise.
(10) To cause to be formed, consolidated, merged, reorganized or
liquidated, and to promote, take charge of and aid in by way permitted by law
the formation, consolidation, merger, reorganization or liquidation of any
corporation, association, firm or entity.
(11) To make, execute and carry out any and all contracts and
agreements which may deemed proper by its officers in the conduct of its
business.
(12) To purchase, acquire, hold, sell and reissue shares of its
own capital stock to the extent permitted by the Certificate of Incorporation
as amended, and the laws of the State of New York.
In general, to do any and all of the acts and things herein set forth
to the same extent as natural persons could do, and in any part of the world,
as principal, factor, agent, contractor, or otherwise, either alone or in
company with any person, trustee, entity, syndicate, partnership; association
or corporation; to establish and maintain offices and agencies within and
anywhere outside of, the State of New York and to exercise all or any of its
corporate powers and rights in the State of New York and in any and all other
states, territories, districts, possessions or dependencies of the United
States of America and in any other countries or places.
To do everything necessary, proper, advisable or convenient for the
accomplishment of any of the purposes herein set forth and to do every other
act and thing incidental thereto of command therewith provided the same be
not forbidden by the laws of New York to corporations organized under Article
Two of the Stock Corporation Law.
THIRD: The total authorized amount of capital stock of the
Corporation shall be $1,000,000 consisting of 1,000,000 shares of the par
value of $1 each, all of the same class, designated Common Stock.
No holder of Common Stock of the Corporation shall be entitled, as
such, as matter of right, to subscribe for or purchase any part of any new or
additional issue of stock of any class whatsoever, or of securities
convertible into stock of any class whatsoever whether now or hereafter
authorized and whether issued for cash or other consideration or by way of
dividend.
- - -3-
FOURTH: The office of the Corporation shall be located in the County
of New York, City and State of New York. The Secretary of State of the State
of New York shall mail a copy of process in any action or proceeding against
the Cooperation which may be served upon him is 425 Lexington Avenue,
New York 17, New York.
FIFTH: The duration of the Corporation shall be perpetual.
SIXTH: The number of directors of the Corporation shall be not less
than five (5) not more than eleven (11). Directors need not be stockholders.
SEVENTH: The names and post-office addresses of the directors
until the first annual meeting of the stockholders are.
NAMES POST OFFICE ADDRESSES
JESSE L. GOLDBERG 305 BROADWAY BOROUGH OF
MANHATTAN, CITY OF NEW YORK
SYDNEY H. SILVERMAN 305 BROADWAY BOROUGH OF
MANHATTAN, CITY OF NEW YORK
JULIUS GAFFNER 305 BROADWAY BOROUGH OF
MANHATTAN, CITY OF NEW YORK
EIGHTH: The names and post office addresses of the subscribers of
this Certificate of Incorporation and a statement of the number of shares
which each agrees to take in the Corporation are as follows:
NAME P.O. ADDRESS NO. OF SHARES
Jesse L. Goldberg 305 Broadway, NYC One
Sydney H. Silverman 305 Broadway, NYC One
Julius Gaffner 305 Broadway, NYC One
NINTH: All of the subscribers of this Certificate of Incorporation
are of full age, and that at least two-thirds of them are citizens of the
United States, and at least one of them is a resident of the State of New
York and at least one of the persons named as a director is a citizen of the
United States and a resident of the State of New York.
TENTH: The meetings of the Board of Directors shall be held in the
State of New York only.
ELEVENTH: The following provisions are inserted for the
regulation and conduct of the Corporation and expressly provided that they
are intended to be in furtherance and not in limitation or exhaustion of the
powers conferred by statute:
(1) The Board of Directors may designate three or more of its
number to constitute an Executive Committee, which shall have and they
exercise, subject to such limitations, if any, as may be prescribed by the By
Laws or by resolution of the Board of Directors, the powers of the Board of
Directors in the management of the business and affairs of the Corporation
which may lawfully be delegated, provided such Executive Committee shall act
only at such times as the Board of Directors is not in session and
- - -4-
in no case to the exclusion of the right of the Board of Directors at any
time to act as a Board upon any business of the Corporation.
(2) Meetings of the stockholders and directors of the Corporation
for all purposes may be held at places in the State of New York other than
the principal office of the Corporation or at such principal office.
(3) The By Laws may prescribe the number of directors necessary
to constitute a quorum, which number may be less than a majority of the whole
Board of Directors but not less than the number required by law.
(4) The Board of Directors from time to time shall decide
whether and to what extent and at what times and under what conditions and
requirements the accounts and books of the Corporation, or any of them,
except the stock book, shall be open to the inspection of the stockholders,
and no stockholder shall have any right to inspect any books or documents of
the Corporation, except as conferred by the laws of the State of New York or
authorized by the Board of Directors.
(5) A director of the Corporation shall not, in the absence of
fraud, be disqualified by his office from dealing with or contracting with
the Corporation either as vendor, purchaser or otherwise, nor, in the absence
of fraud, shall any transaction or contract of the Corporation be void or
avoidable or affected by reason of the fact that any director or any firm of
which any director is a member, or any corporation of which the director is
an officer, director of stockholder, is in any way interested in such
transaction or contract; provided, that at the meeting of the Board of
Directors or of the Committee thereof having authority in the premises to
authorize or confirm said contract or transaction, the interest of such
director, firm or corporation is disclosed or known, and there shall be
present a quorum of directors or of the directors constituting such Committee
not so interested or connected and such contract or transaction shall be
approved by a majority of such quorum, which majority shall consist of
directors not so interested or connected. Any director or directors so
interested or connected shall not be liable to the Corporation or to any
stockholder or creditor thereof of to any other person for any loss incurred
by it under or by reason of any such contract or transaction and any such
director or directors shall not be accountable for any gains or profits
realized on any such contract or transaction always provided however, that
such contract or transaction shall at the time it was entered into have been
a reasonable one to have been entered into and shall have been upon terms
that at the time were fair.
(6) The Board of Directors shall have power from time to time to
fix and determine and vary the amount of the working capital of the
Corporation and to direct and determine the use and disposition of any
surplus or net profits over and above the capital stock paid in and in its
discretion the Board of Directors may use and apply any such surplus or
accummulated profits in purchasing or acquiring bonds or other obligations
of the Corporation shares of its own capital stock to such extent and in such
manner and upon such terms as the Board of Directors shall deem expedient,
but unless otherwise expressly provided in the Certificate of Incorporation
as amended any shares so such capital stock so purchased or acquired may be
resold or reissued unless such shares shall have been retired in the manner
provided by law for the purpose of decreasing the Corporation's capital
stock.
(7) Any contract, transaction or act of the Corporation or of
the Board of Directors or of the Executive Committee or of any other duly
constituted committee and of which
- - -5-
disclosure shall be made in the notice of the meeting and which shall be
approved or ratified by a majority in interest of a quorum of the
stockholders of the Corporation having voting power at any annual or special
meeting called for such purpose shall except as otherwise provided by the
laws of the State of New York be as valid and as binding as though approved
or ratified by every stockholder of the Corporation; provided however, that
any failure of the stockholders to approve or ratify such contract,
transaction or act, when and if submitted, shall not be deemed in any way to
invalidate the same or to deprive the Corporation; its directors or officers
of their right to proceed with such contract, transaction or action. Any
director of the Corporation may vote upon any contract or other transaction
between Corporation and subsidiary or affiliated corporation without regard
to the fact that he is also a director of such subsidiary or affiliated
corporation.
(8) The Board of Directors may determine from time to time the
amount of compensation which shall be paid to its members for attendance at
meetings of the Board or of any committee of the Board. The Board of
Directors shall also have power, in its discretion to provide for and to pay
to directors rendering services to the Corporation not ordinarily rendered
by directors, as such, special compensation appropriate to the value of such
services, as determined by the Board from time to time.
(9) Each director of the Corporation shall be indemnified by the
Corporation against expenses actually and necessarily incurred by him in
connection with the defense of any action, suit or proceeding in which he is
made a party by reason of his being or having been a director of the
Corporation, except in relation to matters as to which he shall be adjudged
in such action, suit or proceeding to be liable for negligence or misconduct
in the performance of his duties as such director; such right of
indemnification shall not be deemed exclusive of any other rights to which he
may be entitled apart from the General Corporation Law of the State of New
York.
(10) Subject to the by-laws made by stockholders, the Board of
Directors may make by-laws and from time to time may alter, amend or repeal
any by-laws, but any by-law made by the Board of Directors may be altered or
repealed by the stockholders.
4: The 25,000 shares of previously authorized Common Stock, par
value $100 per share, all of which are issued, are hereby changed into
800,000 shares of Common Stock, par value $1 per share, on a 32 for 1 basis.
IN WITNESS WHEREOF, we have made and subscribed this Certificate this
20th day of August 1958.
___________________________
WILLIAM BLACK
___________________________
LILLIAN MANDL
- - -6-
STATE OF NEW YORK
COUNTY OF NEW YORK
On this 20th day of August 1958, before me personally came WILLIAM
BLACK and LILLIAN MANDL, to me known and known to me to be, the persons
described in and who executed the foregoing Certificate and each of said
persons duly acknowledged to me that he executed the same.
_____________________
NOTARY PUBLIC
STATE OF NEW YORK
COUNTY OF NEW YORK
MICHAEL J. OKOLA, being duly sworn, deposes and says, that he is the
Secretary of CHOCK FULL O'NUTS CORP., a corporation mentioned in the
foregoing Certificate, and that the persons who have executed the foregoing
Certificate constitute the holders of record of all the outstanding shares of
said Corporation entitled to vote with relation to the proceedings provided
for in said Certificate.
_____________________
Secretary
Subscribed and sworn to before me this 25th day of August. 1958.
_________________________
NOTARY PUBLIC
STATE OF NEW YORK
COUNTY OF NEW YORK
WILLIAM BLACK, being duly sworn deposes and says, that he is the
President of CHOCK FULL O'NUTS CORP; the number and par value of the shares
changed is 25,000 shares, par value $100 per share and the number of shares
resulting therefrom is 800,000 shares, par value $1 per share and the number
of additional shares not resulting from a change of shares which the
Corporation is authorized to issue is 200,000 shares of the par value of $1
per share.
___________________________
WILLIAM BLACK
Sworn to me this 20th day of August, 1958.
___________________________
NOTARY PUBLIC
- - -7-
RESTATED CERTIFICATE OF INCORPORATION
OF
CHOCK FULL O'NUTS CORP.
______________
Pursuant to Section 40 of the Stock Corporation Law
_______________
WHITE & CASE
14 WALL STREET
NEW YORK, NY
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CHOCK FULL O'NUTS CORPORATION
___________________
Pursuant to Section Thirty-six of the Stock Corporation Law.
___________________
The undersigned being the holders of record of all of the outstanding shares
of Chock Full O'Nuts Corporation entitled to vote with relation to the
proceedings provided for herein, hereby certify:
1. The name of the corporation is:
CHOCK FULL O'NUTS CORPORATION
2. The Certificate of Incorporation was filed in the Department
of State of the State of New York on November 7, 1932, under the name of
Federal Nut Co., Inc.
3. The Certificate of Incorporation is amended as set forth in
this certificate to effect the following changes authorized in subdivision
two of Section Thirty-five of the Stock Corporation Law. (a) To eliminate
from the enumeration and description of shares which the corporation is
authorized to issue, 798,400 issued shares of Common Stock of the par value
of 1$ per share, each held in its treasury, and (b) to reduce the amount of
the capital stock by the amount of $798,400 in connection with such
elimination of shares. The capital of the corporation is reduced as set
forth in this certificate by eliminating the aforesaid 798,400 issued shares
of Common Stock from the enumeration and description of shares which the
corporation is authorized to issue.
4. Article THIRD of the Certificate of Incorporation, setting
forth the amount of the capital stock and the number and par value of the
shares of which it consists, is hereby amended to read as follows:
"THIRD: The total authorized amount of capital stock of the
company shall be $201,600, consisting of 201,600 shares of the par value of
$1 each, all of the same class, designated Common Stock.
5. The capital of the corporation is hereby reduced by
$798,400 , being an amount equal to the amount of capital represented by the
798,400 issued shares of Common Stock of the par value of $1 per share hereby
eliminated. The surplus resulting from such reduction shall be available to
be used for any purpose for which surplus may be used.
IN WITNESS WHEREOF, the undersigned have made, subscribed and
acknowledged this certificate.
_______________________
WILLIAM BLACK
_______________________
LILLIAN MANDL
STATE OF NEW YORK
COUNTY OF NEW YORK
On this ______ day of September, 1958, before me personally came
WILLIAM BLACK and LILLIAN MANDL, to me known, and known to me to be the
person described in and who executed the foregoing Certificate and each of
said persons duly acknowledged to me that he executed the same.
_______________________
NOTARY PUBLIC
STATE OF NEW YORK
COUNTY OF NEW YORK
MICHAEL J. OKOLA, being duly sworn, deposes and says, that he is the
Secretary of CHOCK FULL O'NUTS CORPORATION, a corporation mentioned in the
foregoing Certificate and that the persons who have executed the foregoing
Certificate constitute the holders of record of all the outstanding shares
of said Corporation entitled to vote with relation to the proceedings
provided for in said Certificate.
______________________
MICHAEL J. OKOLA
Subscribed and sworn to before me this
____ day of September, 1958.
__________________________
NOTARY PUBLIC
STATE OF NEW YORK
COUNTY OF NEW YORK
WILLIAM BLACK, being duly sworn, deposes and says that he is the
President of Chock Full O'Nuts Corporation; that the actual value of the
assets of said corporation is not less than the total amount of the debts
and liabilities of the corporation plus the proposed amount of its capital.
____________________
WILLIAM BLACK
Sworn to me before me this _____
day of September, 1958.
________________________
NOTARY PUBLIC
STATE OF NEW YORK
COUNTY OF NEW YORK
LILLIAN MANDL, being duly sworn, deposes and says that he is the
Treasurer of Chock Full O'Nuts Corporation; that the actual value of the
assets of said corporation is not less than the total amount of the debts
and liabilities of the corporation plus the proposed amount of its capital.
________________________
LILLIAN MANDL
Sworn to before me this
26th day of September, 1958
________________________
NOTARY PUBLIC
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CHOCK FULL O'NUTS CORPORATION
_________________________________________
Pursuant to Section Thirty-six of the Stock Corporation Law
___________________
WHITE & CASE
14 WALL STREET
NEW YORK, N.Y.
RESTATED CERTIFICATE OF INCORPORATION
OF CHOCK FULL O'NUTS CORP.
_________________
Pursuant to Section 40 of the Stock Corporation Law
_________________
We, the undersigned, WILLIAM BLACK and LILLIAN MANDL, being the
holders of record of all the outstanding shares of Chock Full O'Nuts Corp.,
a New York stock corporation (hereinafter sometimes referred to as the
"Corporation") entitled to vote with relation to the proceedings provided for
in this Certificate, do hereby certify as follows:
1. The name of the Corporation is
CHOCK FULL O'NUTS CORP.
The name under which the Corporation was originally incorporated was FEDERAL
NUT CO., INC.
2. The Certificate of Incorporation of the Corporation was filed
in the Office of the Secretary of State of New York on November 7, 1932.
3. The Certificate of Incorporation as now in full force and
effect is hereby amended to effect changes authorized in subdivision 2 of
Section 35 of the Stock Corporation Law, namely to change 1,600 previously
authorized shares of Common Stock, par value $1 per share of the Corporation
which are issued into 800,000 shares of Common Stock, par value $1 per share
and in conformity therewith to increase the capital stock of the Corporation
from $201,600 to $1,000,000; and said Certificate of Incorporation, as
amended and supplemented by all certificates heretofore filed pursuant to law
and as further amended hereby, is restated to set forth its entire text as
follows:
CERTIFICATE OF INCORPORATION
OF
CHOCK FULL O'NUTS CORPORATION
FIRST: The name of the Corporation is
CHOCK FULL O'NUTS CORPORATION
SECOND: The purposes of the Corporation are as follows:
(1) To manufacture, produce, purchase or otherwise acquire,
prepare, sell at wholesale or retail, distribute and deal in coffee,
sandwiches, doughnuts, cakes, pies, nuts, shelled and unshelled, candies,
fruits, ice cream, soda water, drinks and all kinds of foods, food products
and all products, by products, ingredients and commodities of every kind and
description; to engage in any type of food business and in any activity
necessary of incidental to any business of the Corporation.
(2) To manufacture, produce, purchase, lease or otherwise
acquire, hold, own, mortgage, pledge, sell, lease or otherwise dispose of,
import, export, distribute and deal in and with goods, wares, merchandise
and personal property of every kind and description; to engage in the
business of wholesale and retail merchants dealing in all types
1
of commodities and merchandise; to establish, operate and manage stores,
warehouses, disposition depots, purchasing offices and other facilities; to
grant to others the right to carry on any kind of lawful business on premises
of the Corporation; to carry on a general trading,
manufacturing, mercantile, commercial and industrial business, or any part
thereof, in any part of the world.
(3) To purchase, lease or otherwise acquire, hold, own, improve,
maintain, develop, encumber, mortgage, pledge, sell, exchange, lease or
otherwise dispose of and to deal and trade in, any and all lands, real
property, leaseholds, and any and all interests and rights in land or other
property, real, personal, or mixed; to build erect, construct, purchase,
lease, or otherwise acquire, hold, own, maintain, operate, develop, improve,
alter, repair, lease, mortgage, pledge, sell, convey, exchange or otherwise
dispose of, buildings, plants, structures, facilities and improvements of
every kind and description.
(4) To acquire, by purchase, underwriting, subscription,
participation in syndicates or otherwise, become interested in, invest in,
hold, own, sell, exchange, mortgage, pledge, hypothecate or otherwise
dispose of, turn to account or realize upon, all forms of securities,
including shares of stock, bonds, debentures, notes, evidences of
indebtedness, certificates of interest and other rights, interests and
obligations, and to deal in and with the same, and to issue in exchange,
therefor or in payment thereof its own stocks, bonds or other obligations or
securities, or otherwise pay therefor, or to acquire the same in any lawful
manner without any such exchange or other payment; to exercise in respect
thereof any and all rights, powers and privileges or individual ownership or
interest therein, including the right to vote thereon for any and all
purposes and to consent or otherwise act with respect thereto; to do any and
all acts and things for the preservation, protection, improvement and
enhancement in value of such securities or designed to accomplish any such
purpose; to aid by loan, subsidy, guaranty, or in any other manner, those
issuing, creating or responsible for any such securities, all to such extent
as a corporation organized under Article Two of the Stock Corporation Law
may then lawfully do.
(5) To acquire all or any part of the good will, rights,
property, and business of any person, entity, partnership, association or
corporation; to pay for the same in cash or in stock, bonds, or other
securities or obligations of the Corporation, or otherwise; to hold, utilize
and in any manner dispose of the whole or any part of the rights and
property so acquired, and to assume in connection therewith any liabilities
of any such person, entity, partnership, association or corporation and to
conduct in any lawful manner the whole or any part of the business thus
acquired.
(6) To apply for, obtain, register, purchase, lease, or otherwise
acquire, hold, own, use, introduce, develop, and sell, assign, lease, pledge,
or otherwise dispose of or turn to account letters patent of the United
States of America or of any foreign country, inventions, improvements,
formulae, processes, patents rights, licenses, and privileges, copyrights,
trade-marks and trade names, or pending applications therefor, and any and
all labels, designs, prints and brands, and to use, exercise, develop and
take or grant licenses or other rights in respect of or otherwise turn to
account any of the foregoing.
(7) To the extent permitted by law, to borrow money for its
corporate purposes; to draw, make, accept, endorse, execute, issue and
negotiate promissory notes, bills of exchange, warrants, warehouse receipts,
bonds; debentures and other negotiable or transferable instruments.
(8) To make advances or loans with or without security so far as
may be permitted to a corporation organized under Article Two of the Stock
Corporation Law.
- - -2-
(9) To the extent permitted by law, to guarantee the payment of
dividends upon stocks, or the principal of and/or interest upon bonds, notes
and other evidences of indebtedness of, or to guarantee the performance of
the contracts or other undertakings of, or otherwise aid, in any manner, any
corporation, firm or individual in which the Corporation shall be directly or
indirectly interested either through ownership of its stock, bonds,
securities, or other obligations, or otherwise.
(10) To cause to be formed, consolidated, merged, reorganized or
liquidated, and to promote, take charge of and aid in by way permitted by
law the formation, consolidation, merger, reorganization or liquidation of
any corporation, association, firm or entity.
(11) To make, execute and carry out any and all contracts and
agreements which may deemed proper by its officers in the conduct of its
business.
(12) To purchase, acquire, hold, sell and reissue shares of its
own capital stock to the extent permitted by the Certificate of Incorporation
as amended, and the laws of the State of New York.
In general, to do any and all of the acts and things herein set forth
to the same extent as natural persons could do, and in any part of
the world, as principal, factor, agent, contractor, or otherwise,
either alone or in company with any person, trustee, entity,
syndicate, partnership; association or corporation; to establish and
maintain offices and agencies within and anywhere outside of, the
State of New York and to exercise all or any of its corporate
powers and rights in the State of New York and in any and all other
states, territories, districts, possessions or dependencies of the
United States of America and in any other countries or places.
To do everything necessary, proper, advisable or convenient for the
accomplishment of any of the purposes herein set forth and to do every other
act and thing incidental thereto of command therewith provided the same be
not forbidden by the laws of New York to corporations organized under Article
Two of the Stock Corporation Law.
THIRD: The total authorized amount of capital stock of the
Corporation shall be $1,000,000 consisting of 1,000,000 shares of the par
value of $1 each, all of the same class, designated Common Stock.
No holder of Common Stock of the Corporation shall be entitled, as
such, as matter of right, to subscribe for or purchase any part of any new
or additional issue of stock of any class whatsoever, or of securities
convertible into stock of any class whatsoever whether now or hereafter
authorized and whether issued for cash or other consideration or by way of
dividend.
FOURTH: The office of the Corporation shall be located in the County
of New York, City and State of New York. The Secretary of State of the State
of New York shall mail a copy of process in any action or proceeding against
the Corporation which may be served upon him is 425 Lexington Avenue,
New York 17, New York.
- - -3-
FIFTH: The duration of the Corporation shall be perpetual.
SIXTH: The number of directors of the Corporation shall be not
less than five (5) not more than eleven (11). Directors need not be
stockholders.
SEVENTH: The names and post-office addresses of the directors
until the first annual meeting of the stockholders are.
NAMES POST OFFICE ADDRESSES
JESSE L. GOLDBERG 305 BROADWAY BOROUGH OF
MANHATTAN, CITY OF NEW YORK
SYDNEY H. SILVERMAN 305 BROADWAY BOROUGH OF
MANHATTAN, CITY OF NEW YORK
JULIUS GAFFNER 305 BROADWAY BOROUGH OF
MANHATTAN, CITY OF NEW YORK
EIGHTH: The names and post office addresses of the subscribers of
this Certificate of Incorporation and a statement of the number of shares
which each agrees to take in the Corporation are as follows:
NAME P.O. ADDRESS NO. OF SHARES
Jesse L. Goldberg 305 Broadway, NYC One
Sydney H. Silverman 305 Broadway, NYC One
Julius Gaffner 305 Broadway, NYC One
NINTH: All of the subscribers of this Certificate of Incorporation
are of full age, and that at least two-thirds of them are citizens of the
United States, and at least one of them is a resident of the State of New
York and at least one of the persons named as a director is a citizen of the
United States and a resident of the State of New York.
TENTH: The meetings of the Board of Directors shall be held in the
State of New York only.
ELEVENTH: The following provisions are inserted for the
regulation and conduct of the Corporation and expressly provided that they
are intended to be in furtherance and not in limitation or exhaustion of the
powers conferred by statute:
(1) The Board of Directors may designate three or more of its
number to constitute an Executive Committee, which shall have and they
exercise, subject to such limitations, if any, as may be prescribed by the
By Laws or by resolution of the Board of Directors, the powers of the Board
of Directors in the management of the business and affairs of the Corporation
which may lawfully be delegated, provided such Executive Committee shall act
only at such times as the Board of Directors is not in session and in no
case to the exclusion of the right of the Board of Directors at any time to
act as a Board upon any business of the Corporation.
(2) Meetings of the stockholders and directors of the Corporation
for all purposes may be held at places in the State of New York other than
the principal office of the Corporation or at such principal office.
(3) The By Laws may prescribe the number of directors necessary
to constitute a quorum, which number may be less than a majority of the whole
Board of Directors but not less than the number required by law.
- - -4-
(4) The Board of Directors from time to time shall decide whether
and to what extent and at what times and under what conditions and
requirements the accounts and books of the Corporation, or any of them,
except the stock book, shall be open to the inspection of the stockholders,
and no stockholder shall have any right to inspect any books or documents of
the Corporation, except as conferred by the laws of the State of New York or
authorized by the Board of Directors.
(5) A director of the Corporation shall not, in the absence of
fraud, be disqualified by his office from dealing with or contracting with
the Corporation either as vendor, purchaser or otherwise, nor, in the absence
of fraud, shall any transaction or contract of the Corporation be void or
avoidable or affected by reason of the fact that any director or any firm of
which any director is a member, or any corporation of which the director is
an officer, director of stockholder, is in any way interested in such
transaction or contract; provided, that at the meeting of the Board of
Directors or of the Committee thereof having authority in the premises to
authorize or confirm said contract or transaction, the interest of such
director, firm or corporation is disclosed or known, and there shall be
present a quorum of directors or of the directors constituting such Committee
not so interested or connected and such contract or transaction shall be
approved by a majority of such quorum, which majority shall consist of
directors not so interested or connected. Any director or directors so
interested or connected shall not be liable to the Corporation or to any
stockholder or creditor thereof of to any other person for any loss incurred
by it under or by reason of any such contract or transaction and any such
director or directors shall not be accountable for any gains or profits
realized on any such contract or transaction always provided however, that
such contract or transaction shall at the time it was entered into have been
a reasonable one to have been entered into and shall have been upon terms
that at the time were fair.
(6) The Board of Directors shall have power from time to time to
fix and determine and vary the amount of the working capital of the
Corporation and to direct and determine the use and disposition of any
surplus or net profits over and above the capital stock paid in and in its
discretion the Board of Directors may use and apply any such surplus or
accumulated profits in purchasing or acquiring bonds or other obligations of
the Corporations shares of its own capital stock to such extent and in such
manner and upon such terms as the Board of Directors shall deem expedient,
but unless otherwise expressly provided in the Certificate of Incorporation
as amended any shares so such capital stock so purchased or acquired may be
resold or reissued unless such shares shall have been retired in the manner
provided by law for the purpose of decreasing the Corporation's capital
stock.
(7) Any contract, transaction or act of the Corporation or of the
Board of Directors or of the Executive Committee or of any other duly
constituted committee and of which disclosure shall be made in the notice of
the meeting and which shall be approved or ratified by a majority in interest
of a quorum of the stockholders of the Corporation having voting power at any
annual or special meeting called for such purpose shall except as otherwise
provided by the laws of the State of New York be as valid and as binding as
though approved or ratified by every stockholder of the Corporation; provided
however, that any failure of the stockholders to approve or ratify such
contract, transaction or act, when and if submitted, shall not be deemed in
any way to invalidate the same or to deprive the Corporation; its directors
or officers of their right to proceed with such contract, transaction or
action. Any director of the Corporation may vote upon any contract or other
transaction between Corporation and subsidiary or
- - -5-
affiliated corporation without regard to the fact that he is also a director
of such subsidiary or affiliated corporation.
(8) The Board of Directors may determine from time to time the
amount of compensation which shall be paid to its members for attendance at
meetings of the Board or of any committee of the Board. The Board of
Directors shall also have power, in its discretion to provide for and to pay
to directors rendering services to the Corporation not ordinarily rendered by
directors, as such, special compensation appropriate to the value of such
services, as determined by the Board from time to time.
(9) Each director of the Corporation shall be indemnified by the
Corporation against expenses actually and necessarily incurred by him in
connection with the defense of any action, suit or proceeding in which he is
made a party by reason of his being or having been a director of the
Corporation, except in relation to matters as to which he shall be adjudged
in such action, suit or proceeding to be liable for negligence or misconduct
in the performance of his duties as such director; such right of
indemnification shall not be deemed exclusive of any other rights to which he
may be entitled apart from the General Corporation Law of the State of New
York.
(10) Subject to the by-laws made by stockholders, the Board of
Directors may make by-laws and from time to time may alter, amend or repeal
any by-laws, but any by-law made by the Board of Directors may be altered or
repealed by the stockholders.
4. The 1,600 previously authorized shares of Common Stock, par value $1
per share which are issued are hereby changed into 800,000 shares of Common
Stock, par value $1 per share on a 500 for 1 basis. The 200,000 previously
authorized shares of Common Stock, par value $1 per share, which are unissued
shall remain unchanged.
IN WITNESS WHEREOF, we have made and subscribed this Certificate this
____ day of September, 1958.
_______________________
WILLIAM BLACK
_______________________
LILLIAN MANDL
- - -6-
STATE OF NEW YORK
COUNTY OF NEW YORK
On this ______ day of September, 1958, before me personally came
WILLIAM BLACK and LILLIAN MANDL, to me known, and known to me to be the
person described in and who executed the foregoing Certificate and each of
said persons duly acknowledged to me that he executed the same.
______________________
NOTARY PUBLIC
STATE OF NEW YORK
COUNTY OF NEW YORK
MICHAEL J. OKOLA, being duly sworn, deposes and says, that he is the
Secretary of CHOCK FULL O'NUTS CORPORATION, a corporation mentioned in the
foregoing Certificate and that the persons who have executed the foregoing
Certificate constitute the holders of record of all the outstanding shares
of said Corporation entitled to vote with relation to the proceedings
provided for in said Certificate.
______________________
MICHAEL J. OKOLA
Subscribed and sworn to before me this
____ day of September, 1958.
__________________________
NOTARY PUBLIC
STATE OF NEW YORK
COUNTY OF NEW YORK
WILLIAM BLACK and LILLIAN MANDL, being severally sworn, do depose
and say and each for himself of herself deposes and says that he, the said
William Black, is the President and she, the said Lillian Mandl is Treasurer
of CHOCK FULL O'NUTS CORPORATION; that by resolution of the directors of
said corporation a sum at least equal to the amount of the increase in the
aggregate par value of the issued shares provided for in the foregoing
Certificate has been transferred from surplus to capital.
_______________________
WILLIAM BLACK
_______________________
LILLIAN MANDL
Subscribed and sworn to before me
this ____ day of September, 1958.
__________________________
NOTARY PUBLIC
STATE OF NEW YORK
COUNTY OF NEW YORK
- - -7-
WILLIAM BLACK, being duly sworn deposes and says, that he is the
President of CHOCK FULL O'NUTS CORPORATION; the number and par value of the
shares changed is 1,600 shares, par value $1 per share, and the number of
shares resulting there from is 800,000 shares, par value $1 per share.
______________________
WILLIAM BLACK
Sworn to before me this
____ day of _________ 1958
________________________
NOTARY PUBLIC
- - -8-
RESTATED CERTIFICATE OF INCORPORATION
OF
CHOCK FULL O'NUTS CORP.
______________
Pursuant to Section 40 of the Stock Corporation Law
_______________
WHITE & CASE
14 WALL STREET
NEW YORK, NY
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CHOCK FULL O'NUTS CORPORATION
___________________
Pursuant to Section Thirty-six of the Stock Corporation Law.
___________________
The undersigned being respectively the Executive Vice-President and
the Assistant Secretary of Chock Full O'Nuts Corporation, hereby certify:
1. The name of this corporation is
CHOCK FULL O'NUTS CORPORATION
The name under which it was originally incorporated was FEDERAL NUT CO.
INC.
2. The Certificate of Incorporation of the Corporation
was filed in the office of the Secretary of State of New York on
November 7, 1932.
3. The Restated Certificate of Incorporation was filed
in said office on September 30, 1958.
4. The provision of said Restated Certificate of
Incorporation contained in ARTICLE ELEVENTH, Section (8) thereof, which is
hereby amended, presently reads as follows:
"(8) The Board of Directors may determine from time to time
the amount of compensation which shall be paid to its
members for attendance at meetings of the Board or of any
committee of the Board. The Board of Directors shall also
have power, in its discretion, to provide for and to pay to
directors rendering services to the Corporation not
ordinarily rendered by directors, as such, special
compensation appropriate to the value of such services, as
determined by the Board from time to time."
5. The Certificate of Incorporation is hereby amended
pursuant to subdivision 2(J) of Section 35 of the Stock Corporation
1.
Law, so that said provision is to read in full as follows:
"(8) The Board of Directors may determine from time to time
the amount of compensation which shall be paid to its members
for attendance at meetings of the Board or of any committee
of the Board. The Board of Directors shall also have power,
in its discretion, to provide for and to pay to directors
rendering services to the Corporation not ordinarily rendered
by directors, as such, special compensation appropriate to the
value of such services, as determined by the Board from time
to time."
IN WITNESS WHEREOF, we have subscribed this Certificate this 9th
day of November, 1959.
___________________________
FREDERIC T. TANSILL
___________________________
HERBERT WATSON
STATE OF NEW YORK
CITY OF NEW YORK
On this 9th day of November, 1959, before me personally came
FREDERIC T. TANSILL and HERBERT WATSON, to me known and known to me to
persons described in and who executed the foregoing Certificate of
Amendment, and they thereupon severally duly acknowledged to me that
they executed the same.
2.
STATE OF NEW YORK
COUNTY OF NEW YORK
FREDERIC T. TANSILL and HERBERT WATSON, being severally sworn, do
depose and say and each for himself deposes and says:
1. That he, Frederic T. Tansill, is the Executive Vice-
President, and that he, Herbert Watson, is Assistant Secretary of Chock
Full O'Nuts Corporation, referred to in the foregoing Certificate of
Amendment, who subscribed and acknowledged said Certificate of Amendment
on behalf of said Corporation.
2. That they have been authorized to execute and file such
Certificate of Amendment by the votes cast in person or by proxy of the
holders of record of two-thirds of the outstanding shares of each class
entitled to vote at the stockholders meeting at which such votes were cast
with relation to the proceedings provided for in said Certificate of
Amendment and that neither the Certificate of Incorporation nor the Restated
Certificate of Incorporation, filed pursuant to law, requires a larger
proportion of votes.
3. That such votes were cast at a stockholders meeting held on
November 5, 1959, upon notice, pursuant to Section 45 of the Stock
Corporation Law.
Sworn to before me this
9th day of November 1959.
_________________________
FREDERIC T. TANSILL
_________________________
HERBERT WATSON
3.
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CHOCK FULL O'NUTS CORPORATION
(Pursuant to Section 36 of the Stock
Corporation Law)
ISIDORE LAPIN
ATTORNEY AT LAW
425 LEXINGTON AVENUE
NEW YORK, N.Y.
4.
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CHOCK FULL O'NUTS CORPORATION
__________________
Pursuant to Section Thirty-six of
Stock Corporation Law
___________________
We, the undersigned, FREDERICK T. TANSILL, Executive Vice President,
and MICHAEL J. OKOLA, Secretary of CHOCK FULL O'NUTS CORPORATION, a New York
Stock Corporation (hereinafter sometimes referred to as the "Corporation"),
do hereby certify as follows:
1. The name of the Corporation is
CHOCK FULL O'NUTS CORPORATION and the name under
which it was originally incorporated was Federal Nuts Co., Inc.
2. The Certificate of Incorporation of the Corporation was
filed in the Office of the Secretary of State of New York on
November 7, 1932.
3. The Certificate of Incorporation is hereby amended, effective
as of the close of business on November 10, 1960, as set forth in this
Certificate to effect changes authorized in subdivision 2 of Section 35 of
the Stock Corporation Law, namely, to change all of the
1.
previously authorized shares of Common Stock, par value $1 per share,
issued and unissued, of the Corporation, from 1,000,000 shares, par value
$1.00 per share, to 4,000,000 shares, par value $.25 per share, to authorize
1,000,000 new shares of such Common Stock, par value $.25 per share, and in
conformity therewith to increase the amount of capital stock of the
Corporation form $1,000,000 to $1,250,000.
4. To accomplish such amendment the first paragraph of Article
THIRD of the Certificate of Incorporation, setting forth the amount of th
e capital stock and the number and par value of the shares of which it
consists, is hereby amended to read as follows:
"THIRD: The total authorized amount of the capital stock of
capital stock of the Corporation shall be $1,250,000 of 5,000,000 shares of
the par value of $.25 each, all of the same class, designated Common Stock."
5. The 1,000,000 previously authorized shares of Common Stock, par
value $1 per share, of which 854,295 are issued and 145,705 are unissued,
are hereby changed into 4,000,000 shares of Common Stock, par value $.25 per
share, upon the following terms: Each issued and unissued share of
previously authorized Common Stock, pare value $1 per share, is changed into
four shares of Common Stock par value $.25 per share, authorized hereby.
In addition, 1,000,000 new shares of such Common Stock, par value $.25 per
share, are authorized hereby, making a total of 5,000,000 shares of such
Common Stock.
2.
IN WITNESS WHEREOF, we have made subscribed and acknowledged this
Certificate this 7th day of November 1960.
Frederic T. Tansill
Executive Vice President
Michael J. Okola
Secretary
3.
STATE OF NEW YORK )
COUNTY OF NEW YORK )
On this 7th day of November, 1960, before me personally came
Frederic T. TANSILL and MICHAEL J. OKOLA, to me known and know to me to be
the persons described in and who executed the foregoing Certificate and they
severally duly acknowledged to me that the executed the same.
Isidore Lapan
Notary Public
4.
STATE OF NEW YORK )
COUNTY OF NEW YORK )
FREDERIC T. TANSILL and MICHAEL J. OKOLA, being duly and severally
sworn, each for himself, deposes and says: that he, the said Frederic T.
Tansill, is Executive Vice President, and he, the said Michael J. Okola, is
Secretary of Chock Full o'Nuts Corporation; that they have been authorized
to execute and file the foregoing Certificate of Amendment by the votes,
cast in person or by proxy, of the holders of record of two-thirds of the
outstanding shares entitled to vote at the Stockholders' meeting at which
such votes were cast with relation to the proceedings provided for in the
foregoing Certificate of Amendment; that neither the Certificate of
Incorporation nor any other certificates filed pursuant to law requires a
larger proportion of votes; and that such votes were cast at a stockholders'
meeting held on the 3rd day of November, 1960, upon notice pursuant to
Section 45 of the Stock Corporation Law.
Frederic T. Tansill
Michael J. Okola
Subscribed and sworn to
before me this 7th day of
November, 1960
Isidore Lapan
Notary Public
5.
STATE OF NEW YORK )
COUNTY OF NEW YORK )
MICHAEL J. OKOLA, being duly sworn, for himself, deposes and says;
that he, the said Michael J. Okola, is Secretary of Chock Full O'Nuts
Corporation; that (a) the number of additional shares not resulting from a
change of shares which the Corporation is authorized by the foregoing
Certificate to issue, is 1,000,000 shares and the par value thereof is $.25
per share; (b) the number of shares changed as provided in subparagraph 5 of
paragraph (c) of subdivision 2 of Section 35 of the Stock Corporation Law is
1,000,000 shares and the par value thereof is $1 per share, and the number of
shares resulting from such change is 4,000,000 shares and the par value
thereof is $.25 per share; and (c) the number of shares not resulting from a
change of shares of which the par value has been increased, is none.
Michael J. Okola
Subscribed and sworn to
before me this 7th day
of November, 1960
Isidore Lapan
6.
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CHOCK FULL O'NUTS CORPORATION
Pursuant to Section Thirty-six
of the Stock Corporation
White & Case
14 Wall Street
New York, NY
7.
CERTIFICATE OF MERGER OF 180TH BRINKERHOFF
REALTY CORP., WITH CHOCK FULL O'NUTS CORPORATION
================================================
Certificate of Merger of 180th Brinkerhoff Realty corp.,
with Chock Full O'Nuts Corporation, pursuant to Section 85, of the Stock
Corporation Law.
The undersigned, FREDERIC T. TANSILL, Executive Vice
President, and MICHAEL J. OKOLA, Secretary, pursuant to Section 85 of the
Stock corporation Law, certify:
1. Chock Full o'Nuts Corporation is a stock corporation
duly organized and existing under the laws of the State of New York.
2. This Corporation owns all of the capital stock of 180th
Brinkerhoff Realty Corp., which is a stock corporation organized under the
laws of the State of New York, for, and engaged in business incidental to
that of this corporation.
3. At a meeting of the Board of Directors of this
corporation duly called and held on the 28th day of November, 1962 the
following resolution was adopted:
WHEREAS, the corporation, Chock Full o'Nuts Corporation now owns all of the
stock of 180th Brinkerhoff Realty Corp., organized under the laws of the
State of New York, and engaged in business incidental to that of this
corporation, and it is deemed expedient that this corporation shall acquire
and become, and be possessed of all the estate, property, rights, privileges
and franchises of the said 180th Brinkerhoff Realty Corp; now, therefore, be
it
RESOLVED, that Chock Full O'Nuts Corporation merge such other corporation,
and assume all of its obligations; and be it further
RESOLVED, that the president, or a vice president, and the secretary, or an
assistant secretary, of this corporation be directed to execute in the name
and under the seal of this corporation, a certificate of ownership and of
the adoption of this resolution and the date of the adoption thereof and file
the same in the office of Secretary of State of New York; and be it further
1.
RESOLVED, that the officers of this corporation be empowered and
directed to do all other acts and things whatsoever, whether within the
State of New York or elsewhere, which may be in any way requisite or proper
for the full and complete accomplishment of said merger.
IN WITNESS WHEREOF, this certificate is executed under the
seal and signature of this corporation, affixed by its Executive
Vice-President and its Secretary, this 24th day of December 1962.
BY:
Executive Vice President
BY:
Secretary
STATE OF NEW YORK )
COUNTY OF NEW YORK )
On this 24th day of December, in the year 1962, before me
personally came Frederic T. Tansill and Michael J. Okola, to me know who,
being by me duly sworn, did depose and say and each for himself deposes and
says that he, Frederic T. Tansill resides in the Borough of Manhattan, City
and State of New York, and is the Executive Vice President of Chock Full
o'Nuts Corporation, the corporation described in and which executed the
foregoing instrument ; that he Michael J. Okola, resides in Westchester
County, State of New York; and is the Secretary thereof; that he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporation seal; that it was so affixed by order of the Board of Directors
of said corporation, and that he signed his name thereto by like order.
Isidore Lapan
Notary Public
2.
CERTIFICATE OF MERGER
OF
180TH BRIKNERHOFF REALTY CORP.
WITH
CHOCK FULL O'NUTS CORPORATION
Pursuant to Section 85, of the Stock Corporation Law
- - ---00000---
Isidore Lapan
Attorney at Law
425 Lexington Avenue
New York, New York
3.
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
CHOCK FULL O'NUTS CORPORATION
Under Section 805 of the Business Corporation
- - ---00000----
We, the undersigned, GAYLORD M. LaMOND and MICHAEL J. OKOLA,
the President and Secretary respectively of CHOCK FULL O'NUTS CORPORATION,
hereby certify:
1. The same of the corporation is CHOCK FULL O'NUTS
CORPORATION. The name under which it was formed is Federal Nut Co., Inc.
2. The Certificate of Incorporation of the corporation was
filed by the Department of State on November 7, 1932.
3. The Certificate of Incorporation is amended as authorized
by Section 801 of the Business Corporation Law to effect the following
amendment:
ARTICLE ELEVENTH, Section 2 of the Certificate of
Incorporation, dealing with the place of meetings of directors and
stockholders and providing generally that such meetings are to be held in
the State of New York is hereby amended to read as follows:
"ELEVENTH (2): Meetings of the Stockholders and Directors
may be held at such times and places as shall be determined from the time to
time by the Board of Directors."
1.
4. The foregoing amendment to the Certificate of
Incorporation was authorized by vote of the holders of a majority of all the
outstanding shares entitled to vote thereon at a meeting of shareholders
held on November 3, 1966.
IN WITNESS WHEREOF, the undersigned have hereunto signed
this Certificate this 9th day of November, 1966.
Gaylord M. LaMond, President
Michael J. Okola, Secretary
VERIFICATION OF CERTIFICATE
OF AMENDMENT
- - ----------------------------------
STATE OF NEW YORK )
COUNTY OF NEW YORK )
MICHAEL J. OKOLA, being duly sworn, deposes and says; that
he is one of the persons who signed the foregoing Certificate; that he signed
said Certificate of Amendment in the capacity set forth under his signature
thereon; that he has read the foregoing Certificate of Amendment and knows
that contents thereof; and the statements contained therein are true to his
own knowledge.
Michael J. Okola, Secretary
Sworn before me this
9th day of November, 1966.
Alan R. Geist
Notary Public
3.
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
CHOCK FULL O'NUTS CORPORATION
Under Section 805 of the Business
Corporation Law
- - -------000000------
Alan R. Geist
Attorney-at-Law
425 Lexington Avenue
New York, New York
CERTIFICATE OF MERGER
OF
ACME NUT PRODUCTS, INC., CENTRAL NUT PRODUCTS, INC., CIRCLE NUT PRODUCTS,
INC., COUNTY NUT PRODUCTS, INC., COURT NUT PRODUCTS, INC., EXCHANGE NUTS
PRODUCTS, INC., FIFTY-FOURTH MADISON CORP., 532 CORP., 52 LEX CORP., 451
FULTON CORP., FULTON NUT PRODUCTS, INC., 1420-40 CORP, HOYT NUT PRODUCTS,
INC., INERBOROUGH NUT PRODUCTS, INC., MADISON NUT PRODUCTS, INC., MODERN NUT
PRODUCTS, INC., PARK CHOCK CORP., PEARL NUT PRODUCTS, INC., PERWAL REALTY
CORP., RITZ NUT PRODUCTS, INC., SUPREME NUT PRODUCTS, INC., WALL NUT
PRODUCTS, INC., W.B. CORP., WORTH NUT PRODUCTS, INC., 521 LEX CORP., PARK
BROADWAY CORP., 300 MADISON CORP. AND 60 WEST 34TH ST. CORP.
INTO
CHOCK FULL O'NUTS CORPORATION
=============================
Under Section 905 of the Business
Corporation Law
- - ----------------------------------------
Pursuant to the provisions of Section 905 of the Business
Corporation Law, the undersigned hereby certify:
FIRST: That the name of each of the subsidiary corporations
is: ACME NUT PRODUCTS, INC., CENTRAL NUT PRODUCTS, INC., CIRCLE NUT
PRODUCTS, INC., COUNTY NUT PRODUCTS, INC., COURT NUT PRODUCTS, INC.,
EXCHANGE NUT PRODUCTS, INC., FIFTY-FOURTH MADISON CORP., 532 CORP., 52 LEX
CORP., 451 FULTON CORP., FULTON NUT PRODUCTS, INC., 1420-40 CORP., HOYT NUT
PRODUCTS, INC., INTERBOROUGH NUT PRODUCTS, INC., MADISON NUT PRODUCTS, INC.,
MODERN NUT PRODUCTS, INC., PARK CHOCK CORP., PEARL NUT PRODUCTS, INC., PERWAL
REALTY CORP., RITZ NUT PRODUCTS, INC., SUPREME NUT PRODUCTS, INC., WALL NUT
PRODUCTS, INC., W.B. CORP., WORTH NUT PRODUCTS, INC.
1.
421 LEX CORP., PARK BROADWAY CORP., (formed under the name 152 WEST 34TH ST.
CORP.,), 300 MADISON CORP., AND 60 WEST 34TH STREET, CORP., and the name of
the surviving corporation is CHOCK FULL O'NUTS CORPORATION (formed under the
name FEDERAL NUT CORPORATION.)
SECOND: That the designation and number of outstanding
shares of each class of each subsidiary corporation and the number of each
class owned by the surviving corporation are as follows:
Name of Corporation Number of Designation Number of
Shares of Class Shares Owned
Outstanding by Surviving
Corporation
_____________________ _________ ____________ ___________
Acme Nut Products, Inc. 5 Common Stock 5
$100 Par Value
Central Nut Products, Inc. 5 Common Stock 5
$100 Par Value
Circle Nut Products, Inc. 5 Common Stock 5
$100 Par Value
County Nut Products, Inc. 5 Common Stock 5
$100 Par Value
Court Nut Products, Inc. 5 Common Stock 5
$100 Par Value
Exchange Nut Products, Inc. 5 Common Stock 5
$100 Par Value
Fifty-Fourth Madison Corp. 5 Common Stock 5
No Par Value
532 Corp. 5 Common Stock 5
No Par Value
52 Lex Corp. 5 Common Stock 5
No Par value
451 Fulton Corp. 5 Common Stock 5
No Par Value
Fulton Nut Products, Inc. 5 Common Stock 5
$100 Par Value
1420-40 Corp. 5 Common Stock 5
No Par Value
2.
Hoyt Nut Products, Inc. 5 Common Stock 5
No Par Value
Interborough Nut Products, Inc. 5 Common Stock 5
$100 Par Value
Madison Nut Products, Inc. 5 Common Stock 5
$100 Par Value
Modern Nut Products, Inc. 5 Common Stock 5
$100 Par Value
Park Chock Corp. 5 Common Stock 5
$100 Par Value
Pearl Nut Products, Inc. 5 Common Stock 5
$100 Par Value
Perwal Realty Corp. 5 Common Stock 5
$100 Par Value
Ritz Nut Products, Inc. 5 Common Stock 5
$100 Par Value
Supreme Nut Products, Inc. 5 Common Stock 5
$100 Par Value
Wall Nut Products, Inc. 5 Common Stock 5
$100 Par Value
W.B. Corp. 5 Common Stock 5
No Par Value
Worth Nut Products, Inc. 5 Common Stock 5
No Par Value
521 Lex Corp. 5 Common Stock 5
No Par Value
Park Broadway Corp. 5 Common Stock 5
No Par Value
300 Madison Corp. 5 Common Stock 5
No Par Value
60 West 34th St. Corp. 5 Common Stock 5
No Par Value
THIRD: The merger shall be effective on July 31, 1967.
3.
FOURTH: That the date when the Certificate of Incorporation
of each of said corporation was filed in the Office of the Department of
State of New York, is as follows:
Name of Corporation Date of Incorporation
Chock Full o'Nuts Corporation November 7, 1932
Acme Nut Products, Inc. November 2, 1950
Central Nut Products, Inc. March 19, 1935
Circle Nut Products, Inc. September 17, 1934
County Nut Products, Inc. May 15, 1950
Court Nut Products, Inc. March 13, 1952
Exchange Nut Products, Inc. May 8, 1952
Fifty-fourth Madison Corp. October 24, 1957
532 Corp. August 18, 1958
52 Lex Corp. February 18, 1960
451 Fulton Corp. August 19, 1964
Fulton Nut Products, Inc. July 17, 1945
1420-40 Corp. November 30, 1959
Hoyt Nut Products, Inc. June 11, 1958
Interborough Nut Products, Inc. November 17, 1932
Madison Nut Products, Inc. January 4, 1940
Modern Nut Products, Inc. March 25,1936
Park Chock Corp. November 12, 1959
Pearl Nut Products, Inc. November 2, 1958
Perwal Realty Corp. April 13, 1951
Ritz Nut Products, Inc. December 6, 1950
Supreme Nut Products, Inc. November 2, 1950
Wall Nut Products September 22, 1950
W.B. Corp. November 24, 1958
Worth Nut Products, Inc. June 2, 1947
521 Lex Corp. March 23, 1962
Park Broadway Corp. May 4, 1962
300 Madison Corp. June 8, 1962
60 West 34th St. Corp. July 5, 1962
FIFTH: That the merger was adopted by the Directors of the
surviving corporation.
IN WITNESS WHEREOF, we hereunto sign our names and affirm
that the statements made herein are true under the penalties of perjury,
this 24th day of July, 1967.
CHOCK FULL O'NUTS CORPORATION
Gaylord M. LaMond, President
Michael J. Okola, Secretary
4.
CERTIFICATE OF MERGER
OF
ACME NUT PRODUCTS, INC., CENTRAL NUT PRODUCTS, INC., CIRCLE NUT PRODUCTS,
INC., COUNTY NUT PRODUCTS, INC., COURT NUT PRODUCTS, INC., EXCHANGE NUTS
PRODUCTS, INC., FIFTY-FOURTH MADISON CORP., 532 CORP., 52 LEX CORP., 451
FULTON CORP., FULTON NUT PRODUCTS, INC., 1420-40 CORP, HOYT NUT PRODUCTS,
INC., INERBOROUGH NUT PRODUCTS, INC., MADISON NUT PRODUCTS, INC., MODERN NUT
PRODUCTS, INC., PARK CHOCK CORP., PEARL NUT PRODUCTS, INC., PERWAL REALTY
CORP., RITZ NUT PRODUCTS, INC., SUPREME NUT PRODUCTS, INC., WALL NUT
PRODUCTS, INC., W.B. CORP., WORTH NUT PRODUCTS, INC., 521 LEX CORP., PARK
BROADWAY CORP., 300 MADISON CORP. AND 60 WEST 34TH ST. CORP.
INTO
CHOCK FULL O'NUTS CORPORATION
=============================
Under Section 905 of the Business
Corporation Law
- - ----------------------------------------
Alan R. Geist
Attorney-at-Law
425 Lexington Avenue
New York, New York
5.
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
CHOCK FULL O'NUTS CORPORATION
____________
Under Section 805 of the Business Corporation Law
___________
Pursuant to the provisions of Section 805 of the Business
Corporation Law, the undersigned Harry Giest and Stanley Cohen, being
respectively President and Secretary of CHOCK FULL O'NUTS CORPORATION,
hereby certify:
FIRST: The name of the Corporation is Chock Full Corporation.
The name under which the Corporation was formed is Federal Nut Co., Inc.
SECOND: The Certificate of Incorporation of the Corporation was
filed by the Department of State on November 7, 1932.
THIRD: The Certificate of Incorporation of the Corporation is
hereby amended with respect to the number of directors of the Corporation.
To effect such amendment, Article SIXTH of the Certificate of Incorporation
of the Corporation,
1.
as heretofore amended, relating to the number of directors of the
Corporation, is hereby further amended to read as follows:
"SIXTH: The number of directors of the Corporation
shall be determined in the manner prescribed by the by-laws. Directors
need not be stockholders."
FOURTH: The foregoing amendment of the Certificate of
Incorporation of the Corporation was authorized by the vote of the holders
of a majority of all outstanding shares of the Corporation entitled to vote
on an amendment to the Certificate of Incorporation of the Corporation at a
meeting of shareholders.
IN WITNESS WHEREOF, this Certificate has been signed this 18th day of
December, 1969.
Harry Geist, President
Stanley Cohen
2.
STATE OF NEW YORK )
COUNTY OF NEW YORK )
STANLEY COHEN, being duly sworn, deposes and says that he is
Secretary of CHOCK FULL O'NUTS CORPORATION, the Corporation described in the
foregoing Certificate, that he has read and signed said Certificate and that
the statements contained therein are true.
Stanley Cohen
Sworn to before me this
12th day of December 1969
Sheila Lynne, Notary Public
3.
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
CHOCK FULL O'NUTS CORPORATION
________________
Under Section 805 of the Business Corporation Law
________________
4.
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CHOCK FULL O'NUTS CORPORATION
_______________
under Section 805 of the
Business Corporation Law
______________
Pursuant to the provisions of Section 805 of the Business Corporation Law,
the undersigned, being the President and Secretary, respectively, of Chock
Full o'Nuts Corporation, a New York corporation, hereby certify that:
FIRST: The name of the corporation is Chock Full o'Nuts Corporation.
The name under which the corporation was originally incorporated was Federal
Nut Co., Inc.
THIRD: the aggregate number of shares which the Corporation shall
have authority to issue is 6,000,000 of Common Stock, par value $.25 per
share.
1.
FOURTH: The amendment of the Certificate of Incorporation was
authorized by a vote of the holders of a majority of all outstanding shares
entitled to vote on an amendment to the Certificate of Incorporation at a
meeting of the shareholders.
IN WITNESS WHEREOF, the undersigned have duly executed this
Certificate this 10th day of January, 1975 and do hereby affirm that the
statements contained herein are true under the penalties of perjury.
Seymour Mindel, President
Michael J. Okola, Secretary
2.
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CHOCK FULL O'NUTS CORPORATION
_________________
Under Section 805 of the
Business Corporation Law
__________________
PROSKAUER ROSE GOETZ & MENDELSOHN
COUNSELORS AT LAW
800 PARK AVENUE
NEW YORK, NEW YORK
3.
CERTIFICATE OF MERGER
OF
574 -5TH CORP.
INTO
CHOCK FULL O'NUTS CORPORATION
(Under Section 905 of the Business Corporation Law)
- - ------------------------------
We, the undersigned, being the President and Secretary, respectively,
of CHOCK FULL O'NUTS CORPORATION, the corporation named herein as the
surviving corporation, pursuant to Section 905 of The Business Corporation
Law of the State of New York, do hereby certify that:
1. The Board of Directors has adopted a Plan of Merger setting
forth the terms and conditions of merging 574 -5th Corp., the corporation
named herein as the subsidiary corporation, into said surviving corporation.
2. The name of the subsidiary corporation to be merged, the
Certificate of Incorporation of which was filed by the Department of State
on August 12, 1959, is 574 - 5th CORP.
3. The mane of the surviving corporation, the Certificate of
Incorporation of which was filed by the Department of State on November 7,
1932, is CHOCK FULL O'NUTS CORPORATION. The name which said corporation was
formed is FEDERAL NUT CO., INC.
1.
4. The designation and number of outstanding shares of each class
of the subsidiary corporation, all of which shares are owned by the surviving
corporation, as set forth in the Plan of Merger, are as follows:
Number of outstanding
Designation Shares
Common Stock, no par value 5
IN WITNESS WHEREOF, we have subscribed this Certificate of Merger
this 6th day of May, 1980 and do hereby affirm, under the penalties of
perjury, that the statements contained herein have been examined by us and
are true, complete and correct.
Benedict P. Cutrone, President
of the Surviving Corporation
William Cusumano, Secretary of
the Surviving Corporation
2.
CERTIFICATE OF MERGER
OF
574 - 5TH CORP.
INTO
CHOCK FULL O' NUTS CORPORATION
(Under Section 905 of the Business Corporation Law)
Dreyer & Traub
90 Park Avenue
New York, New York 10016
3.
CERTIFICATE OF MERGER
OF
CHOCK FULL O' NUTS CORPORATION
Under Section 805-A of the Business Corporation Law
- - -----------------
FIRST: The name of the Corporation is CHOCK FULL O' NUTS
CORPORATION. The name under which the corporation was originally
incorporated was FEDERAL NUT CO. INC.
SECOND: The Certificate of Incorporation of the corporation
was filed by the Department of State on November 7, 1932. The Restated
Certificate of Incorporation was filed by the Department of State on
September 30, 1958.
THIRD: The change in the Restated Certificate of Incorporation
effected by this Certificate of Change is to change the post office address
to which the Secretary of State of New York shall mail a copy of any process
against the corporation served upon said Secretary of State.
FOURTH: To accomplish the foregoing change, Article FOURTH of the
Restated Certificate of Incorporation relating to the address to which a copy
of any process served upon the Secretary of State shall be mailed is hereby
stricken out in its entirety, and the following new Article FOURTH is
substituted in lieu thereof:
FOURTH: The office of the Corporation
shall be located in the Country of New York, City and State of New York. The
Secretary of State of the State of New York is designated as the agent of the
Corporation upon whom process in any action or proceeding against it may be
served. The address to which the Secretary of State of the State of New York
shall mail a copy of process in any action or proceeding against the
Corporation which may be served upon his is 370 Lexington Avenue (11th
Floor), New York, New York 10017.
1
FIFTH: The foregoing change was approved by the Board of Directors.
IN WITNESS WHEREOF, we have subscribed this document on the date set
forth below and do hereby affirm, under penalties of perjury, that the
statements contained therein have been examined by us and are true and
correct.
DATE: December 17, 1981
___________________________
William Black, Chairman of
the Board and President
___________________________
Howard Leitner, Secretary
2
CERTIFICATE OF CHANGE
OF
CHOCK FULL O' NUTS CORPORATION
Under Section 805-A of the Business Corporation Law
Dreyer & Traub
Att: Cyrus Gilbert Abbe, Esq.
90 Park Avenue
New York, New York 10016
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CHOCK FULL O' NUTS CORPORATION
Under Section 805 of the Business Corporation Law
Pursuant to the provisions of Section 805 of the Business Corporation
Law, the undersigned, being the President and the Secretary, respectively, of
Chock Full o'Nuts Corporation, New York Corporation, hereby certify that:
FIRST: The name of the corporation is Chock Full o'Nuts Corporation.
The name under which the corporation was originally incorporated was Federal
Nut Co. Inc.
SECOND: The Certificate of Incorporation of the Corporation was filed
by the Department of State of the State of New York on November 7, 1932.
THIRD: The amendment to the Certificate of Incorporation effected by
this Certificate, which is the increase from 6,000,000 to 12,000,000 in the
number of shares of Common Stock, par value $.25 per share, which the
Corporation has authority to issue, is as follows:
The first paragraph of Article THIRD of the Certificate of
incorporation is hereby amended to read as follows:
THIRD: The aggregate number of shares which the
Corporation shall have authority to issue is 12,000,000
shares of Common Stock, par value $.25 per share.
1
FOURTH: The amendment of the Certificate of Incorporation was
authorized by a vote of the holders of a majority of all outstanding shares
entitled to vote on an amendment to the Certificate of Incorporation at a
meeting of the Shareholders.
IN WITNESS WHEREOF, the undersigned have subscribed this Certificate
this______ day of March 1984 and do hereby affirm that the statements
contained herein are true under the penalty of perjury.
__________________________
Leon Pordy, MD, President
__________________________
Howard Leitner, Secretary
2
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CHOCK FULL O'NUTS CORPORATION
Under Section 805 of the Business Corporation Law
Dreyer & Traub
101 Park Avenue
New York, New York 10178
CERTIFICATE OF MERGER
OF
CHOCK FULL O'NUTS BAKERY CORP.
INTO
CHOCK FULL O'NUTS CORPORATION
Under Section 905 of the Business Corporation Law
It is hereby certified, on behalf of each of the constituent
corporations named above, as follows:
FIRST: The name of the parent constituent corporation ("Parent
Corporation")which is to be the surviving corporation, is Chock Full o'Nuts
Corporation. The jurisdiction of its incorporation is New York, and its
certificate of incorporation was filed by the Department of State on November
7, 1932 under the name Federal Nut Co. Inc.
SECOND: The name of the subsidiary constituent corporation
("Subsidiary Corporation"), which is being merged into the parent
corporation, Chock Full o'Nuts Bakery Corp. The jurisdiction of its
incorporation is New Jersey and the date its certificate of incorporation
was filed in New Jersey was April 24, 1962. A Certificate of Authority for
the Subsidiary Corporation to transact business in the State of New York was
filed with the Department of State on April 30, 1962.
THIRD: The authorized capitalization of the Subsidiary Corporation
consists of 200 shares of Common Stock of one class, of which 9 shares are
now issued and outstanding and owned by the Parent Corporation. No shares of
common stock are subject to change prior to the effective date of the merger.
FOURTH: The Board of Directors of the Parent Corporation has duly
adopted a Plan of Merger setting forth the terms and conditions of the merger.
FIFTH: the effective date of the merger shall be upon the date of
the filing of this Certificate with the Department of State.
IN WITNESS WHEREOF, we have subscribed this Certificate on the date
set forth below and do hereby affirm, under the penalties of perjury, that
the statements contained in this Certificate have been examined by us and
are true and correct.
DATE: July 31, 1985
Arthur R. Berman, President of Chock Full o'Nuts Corp.
Howard Leitner, Secretary of Chock Full o'Nuts Corp.
Leon Pordy,President of Chock Full o'Nuts Bakery Corp.
Howard M. Leitner,Secretary Chock Full o'Nuts Bakery Corp.
1
CERTIFICATE OF MERGER
OF
CHOCK FULL O'NUTS BAKERY CORP.
INTO
CHOCK FULL O' NUTS CORPORATION
(Under Section 905 of the Business Corporation Law)
Dreyer & Traub
101 Park Avenue
New York, New York 10178-0071
2
CERTIFICATE OF MERGER
OF
RHEINGOLD BREWERIES, INC.
INTO
CHOCK FULL O'NUTS CORPORATION
It is hereby certifies, on behalf of each of the constituent
corporations named above, as follows:
FIRST: The name of the parent constituent corporation ("Parent
Corporation"), which is to be the surviving corporation, is Chock Full o'Nuts
Corporation. The jurisdiction of its incorporation is New York, November
7, 1932 under the name Federal Nut Co., Inc.
SECOND: The name of the Subsidiary constituent corporation
("Subsidiary Corporation"), which is being merged into the parent
corporation, is Rheingold Breweries, Inc. The jurisdiction of its
incorporation was filed in Delaware was March 1, 1974, under the name Rybeer
Acquisition Corporation. A Certificate of Authority for the Subsidiary
Corporation to transact business in the State of New York was filed with the
Department of State on March 8, 1974.
THIRD: The authorized capitalization of the Subsidiary Corporation
consists of 1,000 shares of Common Stock of one class, of which 100 shares
are now issued and outstanding and owned by the Parent Corporation. No
shares of common stock are subject to change prior to the effective date of
the merger.
FOURTH: The Board of Directors of the Parent Corporation has duly
adopted a Plan of Merger setting forth the terms and conditions of the merger.
FIFTH: The effective date of the merger will be the date of the
filing of this Certificate with the Department of State.
IN WITNESS WHEREOF, we have subscribed this Certificate on the date
set forth below and do hereby affirm, under the penalties of perjury, that
the statements contained in this Certificate have been examined by us and
are true and correct.
Date: July 15, 1986
Arthur Berman
President of Chock Full o'Nuts Corp.
Howard Leitner
Secretary of Chock Full o'Nuts Corp.
Leon Pordy, MD
President of Rheingold Breweries, Inc.
Howard Leitner
Secretary of Rheingold Breweries, Inc.
1
CERTIFICATE OF MERGER
OF
RHEINGOLD BREWERIES. INC
INTO
CHOCK FULL O'NUTS CORPORATION
(Under Section 905 of the Business Corporation Law)
Dreyer & Traub
101 Park Avenue
New York, New York 10178
2
CERTIFICATE OF MERGER
OF
SOLINCO, INC.
INTO
CHOCK FULL O'NUTS CORPORATION
(Under Section 905 of the Business Corporation Law)
It is hereby certified, on behalf of each of the constituent
corporations named above, as follows:
FIRST: The name of the parent constituent corporation ("Parent
Corporation"), which is to be the surviving corporation, is Chock Full
o'Nuts Corporation. the jurisdiction of its incorporation is New York, and
its certificate of incorporation was filed by the Department of State on
November 7, 1932 under the name Federal Nut Co., Inc.
SECOND: The name of the subsidiary constituent corporation
("Subsidiary Corporation"), which is being merged into the Parent
Corporation, is Solinco, Inc. The jurisdiction of its incorporation is New
York and the date its certificate of incorporation was filed by the
Department of State was May 10, 1984, under the name Chock Inc. Acquisition,
Inc.
THIRD: The authorized capitalization of the Subsidiary Corporation
consists of 1,000 shares of Common Stock of one class, of which 100 shares
are now issued and outstanding owned by the Parent Corporation. No shares of
common Stock are subject to change prior to the effective date of the merger.
FOURTH: The Board of Directors of the Parent corporation has duly
adopted a Plan of Merger setting forth the terms and conditions of the merger.
FIFTH: The effective date of the merger shall be upon the date of
the filing of this Certificate with the Department of State.
IN WITNESS WHEREOF, we have subscribed this Certification on the
date forth below and do hereby affirm, under the penalties of perjury, that
the statements contained in this Certificate have been examined by us and
are true and correct.
Date: July 15, 1986 Arthur Berman
President of Chock Full o'Nuts Corporation
Howard Leitner
Secretary of Chock Full o'Nuts Corporation
Leon Pordy, MD
President of Solinco, Inc.
Howard Leitner
Secretary of Solinco, Inc.
1
CERTIFICATE OF MERGER
OF
SOLINCO, INC.
INTO
CHOCK FULL O'NUTS CORPORATION
(Under Section 905 of the Business Corporation Law)
Dreyer & Traub
101 Park Avenue
New York, New York 10178
2
CERTIFICATE OF MERGER
OF
CHOCK FULL O'NUTS COFFEE CORPORATION
INTO
CHOCK FULL O'NUTS CORPORATION
Under Section 905 of the Business Corporation
It is hereby certified, on behalf of each of the constituent
domestic corporation named above, as follows:
FIRST: The name of the parent constituent corporation ("Parent
Corporation"), which is to be the surviving corporation, is Chock Full o'Nuts
Corporation. the jurisdiction of its incorporation is New York, and its
certificate of incorporation was filed by the Department of State on November
7, 1932 under the name Federal Nut Co., Inc.
SECOND: The name of the Subsidiary constituent corporation
("Subsidiary Corporation"), which is being merged into the Parent Corporation
is Chock Full o'Nuts Coffee Corporation. The jurisdiction of its
incorporation is New York and its certificate of incorporation was filed by
the Department of State on November 9, 1949 under the name Sol Cafe Products,
Inc.
THIRD: The authorized capitalization of the Subsidiary Corporation
consist of 55,000 shares of Class A Common Stock, of which 42,000 shares are
now issued and outstanding and owned by the Parent Corporation, and 20,000
Class B Common Stock, none of which is now issued and outstanding. No shares
of Common Stock of either class are subject to change prior to the effective
date of the merger.
FOURTH: The Board of Directors of the Parent Corporation had duly
adopted a plan of merger setting forth the terms and conditions of the merger.
FIFTH: The effective date of the merger shall be the date of the
filing of this Certificate with the Department of State.
IN WITNESS WHEREOF, we have subscribed this Certificate on the date
set forth below and do hereby affirm, under the penalties of perjury, that
the statements contained in this Certificate have been examined by us and
are true and correct.
July 15, 1986
Arthur Berman, President of Chock Full o'Nuts Corporation
Howard Leitner, Secretary of Chock Full o'Nuts Corporation
Leon Pordy, MD, President of Chock Full o'Nuts Coffee Corp.
Howard Leitner, Secretary of Chock Full o'Nuts Coffee Corp.
1
CERTIFICATE OF MERGER
OF
CHOCK FULL O'NUTS COFFEE CORPORATION
INTO
CHOCK FULL O' NUTS CORPORATION
(Under Section 905 of the Business Corporation Law)
Dreyer & Traub
101 Park Avenue
New York, New York 10178
2
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CHOCK FULL O'NUTS CORPORATION
(Under Section 805 of the Business Corporation)
We are undersigned, being the President and Secretary of Chock Full
o'Nuts Corporation (hereinafter the "Corporation") pursuant to Section 805 of
the Business Corporation Law of the State of New York, do hereby certify:
FIRST: The name of the Corporation is Chock Full o'Nuts Corporation.
The name under which the Corporation was formed was Federal Nut Co., Inc.
SECOND: The Certificate of Incorporation of the Corporation was filed
by the Department of State on November 7, 1932.
THIRD: The changes in the certificate of Incorporation effected
by this Certificate of Amendment are:
(a) to increase from 12,000,000 to 50,000,000 the number of
shares of Common Stock, par value $.25 per share, which the
Corporation has authority to issue.
(b) provide for a classified Board of Direction of the
Corporation divided into three classes; and
(c) to provide for indemnification of directors and officers
of the Corporation to the fullest extend allowed under New York
law.
FOURTH: To accomplish the foregoing changes, thE certificate of
Incorporation of the Corporation, as now full force and effect, is hereby
amended, as authorized by Section 801 of the Business Corporation Law, as
follows:
(a) The first paragraph of Article THIRD of the certificate of
Incorporation, relating to the Corporation authorized capitalization, is
hereby amended to read as follows:
1
THIRD: The aggregate number of shares which the Corporation shall
have authority to issued is 50,000,000 shares of Common Stock, par value
$.25 per share.
(b) Article SIXTH of the Certificate of Incorporation relating to the
composition of the Corporations Board of Directors, is hereby stricken out
in its entirety, and the following new Article SIXTH is substituted in lieu
thereof.
SIXTH: (1) The business and affairs of the Corporation shall be
managed by or under the direction of a Board of Directors consisting of not
fewer than nine or more than twenty-seven directors, the exact number of
directors to be determined form time to time by resolution adopted by
affirmative vote of a majority of the entire Board of Directors. The
directors shall be divided into three classes, designated Class I, Class II
and Class III. Each class shall consist, as nearly as may be possible, of
one-third of the total number of directors constituting the entire Board of
Directors. At the 1986 annual meeting of stockholders, Class I directors
shall be elected for a one-year term, Class II directors for a two-year term
and Class III directors for a three-year term. At each succeeding annual
meeting of stockholders beginning at the 1987 annual meeting, successors to
the class of directors whose term expires at the annual meeting shall be
elected for a three-year term. A director shall hold office until the annual
meeting for the year in which his term expires and until his successor shall
be elected and shall qualify, subject however, to prior death, resignation,
retirement, disqualification or removal from office. If the number of
directors is changed, any increases or decreases shall be apportioned among
the classes so as to maintain the number of directors in each class as nearly
equal possible.
(2) Newly created directorship resulting from any increase in the
authorized number of directors or vacancies on the Board of Directors
resulting from death, resignation, retirement, disqualification, removal
from office or any other cause shall be filled only by a majority of the
remaining directors then in office, even if less than a quorum or by the
sole remaining director. Directors elected to full vacancies shall hold
office for the remainder of the full term of the class of directors in which
the vacancy occurred and until such director's successor shall be elected and
shall qualify. The directors of any class of directors of the Corporation
may be removed by the Stockholders only for cause by the affirmative vote of
the holders of at least a majority of the voting power of all outstanding
voting stock.
(3) Notwithstanding the foregoing, whenever the holders of any one
or more classes or series of preferred stock issued by the Corporation shall
have the right to vote separately by class or series to elect directors at an
annual or special meeting of stockholders, the election, term of office,
filling of vacancies and other features of such directorships shall be
governed by the terms of this Certificate of Incorporation
2
applicable thereto, and such directors so elected shall not be divided into
classes pursuant to this Article SIXTH unless expressly provided by such
terms.
(4) Wherever the term "Board of Directors" is used in this
Certificate of Incorporation, such term shall mean the Board
of Directors of the Corporation; provided, however, that to the extant any
committee of directors of the Corporation is lawfully entitled to exercise
the powers of the Board of Directors, such committee may exercise any right
or authority of the Board of Directors under this Certificate of
Incorporation.
(5) Notwithstanding any other provision of this Certificate of
Incorporation or the by-laws of this Corporation (and notwithstanding the
fact that a lesser percentage or separate class vote may be specified by Law,
this Certificate, the by-laws of the Corporation or otherwise), the
affirmative vote of the holders of at least seventy-five (75%) of the voting
power of all outstanding voting stock shall be required to adopt any
provision inconsistent with, or to amend or repeal, Paragraphs 1, 2, or 5 of
this Article SIXTH.
(c) Section 9 of Article ELEVENTH of the Certificate of Incorporation,
relating to indemnification of officers and directors of the Corporation,
is hereby amended to read as follows:
(9) The Corporation shall, to the fullest extant permitted by
Article 7 of the Business Corporation Law of the State of New York, as the
same may be amended and supplemented, indemnify any person who is or was made
or threatened to be made a party to or is involved in any threatened, pending
or completed action, suit or proceeding, whether civil criminal,
administrative or investigative, including an action by or in the right of
the Corporation, by or in the right of any other corporation of any type or
kind, domestic or foreign, or any partnership, joint venture, trust,
employee benefit plan or other enterprise, which any director or officer of
the Corporation is serving, has served or has agreed to serve in any capacity
at the request of the Corporation, by reason of the fact that he, his
testator or interstate, is or was or has agreed to become a director of
officer of the Corporation, or is or was serving or has agreed to serve such
other corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise in any capacity, against judgments, fines, amounts paid
or to be paid in settlement, excise taxes or penalties, and costs, charges
and expenses, including attorneys' feeds, incurred in connection with such
action or proceeding or any appeal therein. The Corporation may indemnify
any person to whom the Corporation is permitted to provide indemnification
or the advancement of expenses by applicable law, whether pursuant to rights
granted pursuant to, or provided by, the New York Business Corporation Law
or other rights created by (I)a
3
resolution of stockholders, (II) a resolution of the Board of Directors or
(III) an agreement providing for such indemnification; it being expressly
intended that this Certificate of Incorporation authorize the creation of
other rights in any such manner. The right to be indemnified and to the
reimbursement or advancement of expenses incurred in defending a proceeding
in advance of its final disposition conferred thereunder shall not be
exclusive of any other rights which any person may have or hereafter acquire."
FIFTH: The foregoing amendments to the Certificate of Incorporation
was authorized by vote of the board of directors followed by the vote of the
holder of a majority of all outstanding shares of
Corporation at a duly constituted meeting of shareholders.
IN WITNESS WHEREOF, we have subscribed this Certificate
this 23rd day of February ,1987.
Howard Leitner, President
Martin Cullen, Secretary
4
STATE OF NEW YORK )
COUNTY OF NEW YORK )
Howard M. Leitner, being duly sworn deposes and says that he
is the President of Chock Full o'Nuts Corporation, the Corporation described
in the foregoing Certificate that he has read and signed said Certificate
and that the statements contained therein are true.
Howard M. Leitner
Sworn to before me this
23rd day of February, 1987.
Notary Public
5
STATE OF NEW YORK )
COUNTRY OF NEW YORK )
Martin Cullen, being duly sworn deposes and says that he is the
Secretary of Chock Full o'Nuts Corporation, the Corporation described in the
foregoing Certificate, that he has read and signed said Certificate and that
the statements therein are true.
Martin Cullen
Notary Public
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CHOCK FULL O'NUTS CORPORATION
(Under Section 805 of the Business Corporation Law)
Dreyer & Traub
101 Park Avenue
New York, New York 10178
CERTIFICATE OF MERGER
OF PACIFIC NUT PRODUCTS, INC.
INTO
CHOCK FULL O'NUTS CORPORATION
(Under Section 905 of the Business Corporation Law)
It is hereby certified, on behalf of each of the constituent domestic
corporation named above, as follows:
FIRST: The name of the parent constituent corporation ("Parent
Corporation"), which is to be the surviving corporation, is Chock Full o'Nuts
Corporation. The jurisdiction of its incorporation is New York, and its
certificate of incorporation was filed by the Department of State on November
7, 1932 under the name Federal Nut Co., Inc.
SECOND: The name of the subsidiary constituent corporation
("Subsidiary Corporation"), which is being merged into the Parent
Corporation, is Pacific Nut Products, Inc. The Jurisdiction of its
incorporation is New York and the date its certificate of incorporation was
filed by the Department of State was September 29, 1934.
THIRD: The authorized capitalization of the Subsidiary Corporation
consists of 200 shares of Common Stock of one class, of which 50 shares are
now issued and outstanding and owned by the Parent Corporation. No shares of
common stock are subject to change prior to the effective date of the merger.
FOURTH: The Board of Directors of the Parent Corporation has duly
adopted a Plan of Merger setting.
FIFTH: The effective date of the merger shall be upon the date of
filing of this Certificate with the Department of State.
IN WITNESS WHEREOF, we have subscribed this Certificate on the date
set forth below and do hereby affirm, under the penalties of perjury, that
the statements contained in this Certificate have been examined by us and are
true and correct.
Date July 22, 1997
Leon Pordy, M.D.,Chairman of the Board
of Chock Full O'Nuts Corporation
Martin Cullen
President of Pacific Nut Products, Inc.
Leon Pordy, M.D.
President of Pacific Nuts Products, Inc.
Howard M. Leitner
Secretary of Pacific Nut Products, Inc.
1
VERIFICATION
STATE OF NEW YORK )
COUNTY OF NEW YORK )
Martin Cullen, being duly sworn, deposes and says that he is one of
the persons who signed the foregoing certificate of merger on behalf of the
corporation named therein as the surviving corporation; that he signed said
certificate in the capacity set opposite or beneath his signature thereon;
that he has read the foregoing certificate and knows the contents thereof;
and that the statements contained therein are true to his own knowledge.
Martin Cullen, Secretary
Subscribed and sworn to
before me on July 22, 1987
Audrey Jane Ruppel
Notary Public
2
CERTIFICATE OF MERGER
OF
PACIFIC NUT PRODUCTS, INC.
INTO:
CHOCK FULL O'NUTS CORPORATION
Under Section 905 of the Business Corporation Law
Dreyer & Traub
101 Park Avenue
New York, New York 10178
CERTIFICATE OF MERGER
OF
COMANCHE PROPERTIES, INC.
INTO
CHOCK FULL O'NUTS CORPORATION
Under Section 905 of the Business Corporation Law
It is hereby certified, on behalf of each of the constituent domestic
corporation named above, as follows:
FIRST: The name of the parent constituent corporation ("Parent
Corporation"), which is to be the surviving corporation, is Chock Full O'Nuts
Corporation. The jurisdiction of its incorporation is New York, and its
certificate of incorporation was filed by the Department of State on November
7, 1932 under the name Federal Nut Co., Inc.
SECOND: The name of the subsidiary constituent corporation
("Subsidiary Corporation"), which is being merged into the Parent
Corporation, is Comanche Properties, Inc. The Jurisdiction of its
incorporation is New York and the date its certificate of incorporation was
filed by the department of State was July 24, 1964.
THIRD: The authorized capitalization of the Subsidiary Corporation
consist of 200 shares of Common Stock of one class, of which 200 shares are
now issued and outstanding and owned by the Parent Corporation. No shares of
common stock are subject to change prior to the effective date of the merger.
FOURTH: The Board of Directors of the Parent Corporation has duly
adopted a Plan of Merger setting forth the terms and conditions of the merger.
FIFTH: The effective date of the merger shall be upon the date of the
filing of this certificate with the Department of State.
IN WITNESS WHEREOF, we have subscribed this Certification on the
date set forth below and do hereby affirm, under the penalties of perjury,
that the statements contained in this Certificate have been examined by us
and are true and correct.
DATE: July 22, 1987 Leon Pordy, M.D., Chairman of the Board
of Chock Full o'Nuts Corporation
Martin Cullen
Secretary of Chock Full o'Nuts Corporation
Leon Pordy, M.D.,
President of Comanche Properties, Inc.
Howard Leitner
Secretary of Comanche Properties, Inc.
1
VERIFICATION
STATE OF NEW YORK )
COUNTY OF NEW YORK )
Martin Cullen, being duly sworn, deposes and says that he is one of
the persons who signed the foregoing certificate of merger on behalf of the
corporation named therein as the surviving corporation; that he signed said
certificate in the capacity set opposite or beneath his signature thereon;
that he has read the foregoing certificate and knows the contents thereof;
and that the statements contained therein are true to his own knowledge.
Martin Cullen, Secretary
Subscribed and sworn to
before me on July 22, 1987
Audrey Jane Ruppel
Notary Public
2
CERTIFICATE OF MERGER
OF
COMMANCHE PROPERTIES, INC.
INTO
CHOCK FULL O' NUTS CORPORATION
Under Section 905 of the Business Corporation Law
Dreyer & Traub
101 Park Avenue
New York, New York 10178
CERTIFICATE OF MERGER
OF
PEERLESS ADVERTISING INC.
INTO
CHOCK FULL O'NUTS CORPORATION
Under Section 905 of the Business Corporation Law
It is hereby certified, on behalf of each of the constituent domestic
corporation named above, as follows:
FIRST: The name of the parent constituent corporation ("Parent
Corporation"), which is to be the surviving corporation, is Chock Full O'Nuts
Corporation. The jurisdiction of its incorporation is New York, and its
certificate of incorporation was filed by the Department of State on
November 7, 1932 under the name Federal Nut Co., Inc.
SECOND: The name of the subsidiary constituent corporation
("Subsidiary Corporation"), which is being merged into the Parent
Corporation, is Peerless Advertising, Inc. The Jurisdiction of its
incorporation is New York and the date its certificate of incorporation was
filed by the department of State was April 20, 1961.
THIRD: The authorized capitalization of the Subsidiary Corporation
consist of 100 shares of Common Stock of one class, of which 5 shares are
now issued and outstanding and owned by the Parent Corporation. No shares of
common stock are subject to change prior to the effective date of the merger.
FOURTH: The Board of Directors of the Parent Corporation has duly
adopted a Plan of Merger setting forth the terms and conditions of the merger.
FIFTH: The effective date of the merger shall be upon the date of
the filing of this certificate with the Department of State.
IN WITNESS WHEREOF, we have subscribed this Certification on the
date set forth below and do hereby affirm, under the penalties of perjury,
that the statements contained in this Certificate have been examined by us
and are true and correct.
DATE: July 22, 1987
Leon Pordy, M.D., Chairman of the Board
of Chock Full o'Nuts Corporation
Martin Cullen
Secretary of Chock Full o'Nuts Corporation
Leon Pordy, M.D.,
President of Peerless Advertising, Inc.
Howard Leitner
Secretary of Peerless Advertising, Inc.
1
VERIFICATION
STATE OF NEW YORK )
COUNTY OF NEW YORK )
Martin Cullen, being duly sworn, deposes and says that he is one of
the persons who signed the foregoing certificate of merger on behalf of the
corporation named therein as the surviving corporation; that he signed said
certificate in the capacity set opposite or beneath his signature thereon;
that he has read the foregoing certificate and knows the contents thereof;
and that the statements contained therein are true to his own knowledge.
Martin Cullen, Secretary
Subscribed and sworn to
before me on July 22, 1987
Audrey Jane Ruppel
Notary Public
2
CERTIFICATE OF MERGER
OF
PEERLESS ADVERTISING, INC.
INTO
CHOCK FULL O' NUTS CORPORATION
Under Section 905 of the Business Corporation Law
Dreyer & Traub
101 Park Avenue
New York, New York 10178
CERTIFICATE OF MERGER
OF
PARK NUT PRODUCTS CORP.
INTO
CHOCK FULL O'NUTS CORPORATION
Under Section 905 of the Business Corporation Law
It is hereby certified, on behalf of each of the constituent domestic
corporation named above, as follows:
FIRST: The name of the parent constituent corporation ("Parent
Corporation"), which is to be the surviving corporation, is Chock Full O'Nuts
Corporation. The jurisdiction of its incorporation is New York, and its
certificate of incorporation was filed by the Department of State on
November 7, 1932 under the name Federal Nut Co., Inc.
SECOND: The name of the subsidiary constituent corporation
("Subsidiary Corporation"), which is being merged into the Parent
Corporation, is Park Nut Product Corp. The Jurisdiction of its incorporation
is New York and the date its certificate of incorporation was filed by the
department of State was November 24, 1972.
THIRD: The authorized capitalization of the Subsidiary Corporation
consist of 100 shares of Common Stock of one class, of which 1 shares are
now issued and outstanding and owned by the Parent Corporation. No shares of
common stock are subject to change prior to the effective date of the merger.
FOURTH: The Board of Directors of the Parent Corporation has duly
adopted a Plan of Merger setting forth the terms and conditions of the merger.
FIFTH: The effective date of the merger shall be upon the date of
the filing of this certificate with the Department of State.
IN WITNESS WHEREOF, we have subscribed this Certification on the
date set forth below and do hereby affirm, under the penalties of perjury,
that the statements contained in this Certificate have been examined by us
and are true and correct.
DATE: July 22, 1987 Leon Pordy, M.D., Chairman of the Board
of Chock Full o'Nuts Corporation
Martin Cullen
Secretary of Chock Full o'Nuts Corporation
Leon Pordy, M.D.,
President of Park Nut Products Corp.
Howard Leitner
Secretary of Park Nut Products Corp.
1
VERIFICATION
STATE OF NEW YORK )
COUNTY OF NEW YORK )
Martin Cullen, being duly sworn, deposes and says that he is one of
the persons who signed the foregoing certificate of merger on behalf of the
corporation named therein as the surviving corporation; that he signed said
certificate in the capacity set opposite or beneath his signature thereon;
that he has read the foregoing certificate and knows the contents thereof;
and that the statements contained therein are true to his own knowledge.
Martin Cullen, Secretary
Subscribed and sworn to
before me on July 22, 1987
Audrey Jane Ruppel
Notary Public
2
CERTIFICATE OF MERGER
OF
PARK NUT PRODUCTS, INC.
INTO
CHOCK FULL O' NUTS CORPORATION
Under Section 905 of the Business Corporation Law
Dreyer & Traub
101 Park Avenue
New York, New York 10178
CERTIFICATE OF MERGER
OF
HARRISON FOODS, INC.
INTO
CHOCK FULL O'NUTS CORPORATION
Under Section 905 of the Business Corporation Law
It is hereby certified, on behalf of each of the constituent domestic
corporation named above, as follows:
FIRST: The name of the parent constituent corporation ("Parent
Corporation"), which is to be the surviving corporation, is Chock Full O'Nuts
Corporation. The jurisdiction of its incorporation is New York, and its
certificate of incorporation was filed by the Department of State on
November 7, 1932 under the name Federal Nut Co., Inc.
SECOND: The name of the subsidiary constituent corporation
("Subsidiary Corporation"), which is being merged into the Parent
Corporation, is Harrison Foods, Inc. The Jurisdiction of its incorporation is
New Jersey and the date its certificate of incorporation was in New Jersey
was April 17, 1947.
THIRD: The authorized capitalization of the Subsidiary Corporation
consist of 200 shares of Common Stock of one class, of which five shares are
now issued and outstanding and owned by the Parent Corporation. No shares of
common stock are subject to change prior to the effective date of the merger.
FOURTH: The Board of Directors of the Parent Corporation has duly
adopted a Plan of Merger setting forth the terms and conditions of the merger.
FIFTH: The effective date of the merger shall be upon the date of
the filing of this certificate with the Department of State.
IN WITNESS WHEREOF, we have subscribed this Certification on the
date set forth below and do hereby affirm, under the penalties of perjury,
that the statements contained in this Certificate have been examined by us
and are true and correct.
DATE: July 22, 1987 Leon Pordy, M.D., Chairman of the Board
of Chock Full o'Nuts Corporation
Martin Cullen
Secretary of Chock Full o'Nuts Corporation
Leon Pordy, M.D.,
President of Harrison Foods, Inc.
Howard Leitner
Secretary of Harrison Foods, Inc.
1
CERTIFICATE OF MERGER
OF
HARRISON FOODS, INC.
INTO
CHOCK FULL O' NUTS CORPORATION
Under Section 905 of the Business Corporation Law
Dreyer & Traub
101 Park Avenue
New York, New York 10178
2
CERTIFICATE OF MERGER
OF
BROAD ESSEX, INC.
INTO
CHOCK FULL O'NUTS CORPORATION
Under Section 905 of the Business Corporation Law
It is hereby certified, on behalf of each of the constituent domestic
corporation named above, as follows:
FIRST: The name of the parent constituent corporation ("Parent
Corporation"), which is to be the surviving corporation, is Chock Full O'Nuts
Corporation. The jurisdiction of its incorporation is New York, and its
certificate of incorporation was filed by the Department of State on
November 7, 1932 under the name Federal Nut Co., Inc.
SECOND: The name of the subsidiary constituent corporation
("Subsidiary Corporation"), which is being merged into the Parent
Corporation, is Broad Essex, Inc. The Jurisdiction of its incorporation is
New Jersey and the date its certificate of incorporation was in New Jersey
was April 17, 1963.
THIRD: The authorized capitalization of the Subsidiary Corporation
consist of 200 shares of Common Stock of one class, of which ten shares are
now issued and outstanding and owned by the Parent Corporation. No shares of
common stock are subject to change prior to the effective date of the merger.
FOURTH: The Board of Directors of the Parent Corporation has duly
adopted a Plan of Merger setting forth the terms and conditions of the merger.
FIFTH: The effective date of the merger shall be upon the date of
the filing of this certificate with the Department of State.
IN WITNESS WHEREOF, we have subscribed this Certification on the
date set forth below and do hereby affirm, under the penalties of perjury,
that the statements contained in this Certificate have been examined by us
and are true and correct.
DATE: July 22, 1987
Leon Pordy, M.D., Chairman of the Board
of Chock Full o'Nuts Corporation
Martin Cullen
Secretary of Chock Full o'Nuts Corporation
Leon Pordy, M.D.,
President of Broad Essex, Inc.
Howard Leitner
Secretary of Broad Essex, Inc.
1
CERTIFICATE OF MERGER
OF
BROAD ESSEX, INC.
INTO
CHOCK FULL O' NUTS CORPORATION
Under Section 905 of the Business Corporation Law
Dreyer & Traub
101 Park Avenue
New York, New York 10178
2
CERTIFICATE OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION
OF
CHOCK FULL O'NUTS CORPORATION
Under Section 805 of the Business Corporation Law
It is hereby certified that:
FIRST: The name of the Corporation is Chock Full o'Nuts Corporation.
SECOND: The Certificate of incorporation of the corporation was filed
by the Department of State on November 7, 1932, under the original name of
Federal Nut Co., Inc.
THIRD: The amendment of the certificate of incorporation of the
corporation effected by this certificate of amendment is as follows:
To add to the certificate of incorporation a new Article TWELFTH
containing a provision limiting or eliminating in certain circumstances the
potential monetary liability of directors to the corporation or its
stockholders by reason of their conduct as directors.
FOURTH: To accomplish the foregoing amendment, a new Article TWELFTH
of the certificate of incorporation of the corporation is hereby added to
read as follows:
TWELFTH: A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for damages for any breach of duty in
such capacity, except for the liability of any director, if a judge or other
final adjudication adverse to him establishes that his acts or omissions were
in bad faith or involved intentional misconduct or a knowing violation of law
or that he personally gained in fact a financial profit or other advantage to
which he was not legally entitled or that his acts violated section 719 of
the New York Business Corporation Law.
FIFTH: The foregoing amendment was authorized by the Board of
Directors of the Corporation, followed by its adoption by a favorable vote of
a majority of the stockholders of record of the corporation at a duly called
and held meeting of stockholders.
IN WITNESS WHEREOF, we have subscribed this document as of
September 2, 1988, and do hereby affirm, under the penalties of perjury,
that the statements contained herein have been examined by us and are true
and correct.
Howard Leitner, President
Martin Cullen, Secretary
1
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
CHOCK FULL O' NUTS CORPORATION
Under Section 805 of the Business Corporation Law
Dreyer & Traub
101 Park Avenue
New York, New York 10178
2
CERTIFICATE OF MERGER
OF
ERNEST SINGHOFEN & CO., INC.
INTO
CHOCK FULL O'NUTS CORPORATION
Under Section 905 of the Business Corporation Law
It is hereby certified, on behalf of each of the constituent domestic
corporation named above, as follows:
FIRST: The name of the parent constituent corporation ("Parent
Corporation"), which is to be the surviving corporation, is Chock Full O'Nuts
Corporation. The jurisdiction of its incorporation is New York, and its
certificate of incorporation was filed by the Department of State on
November 7, 1932 under the name Federal Nut Co., Inc.
SECOND: The name of the subsidiary constituent corporation
("Subsidiary Corporation"), which is being merged into the Parent
Corporation, is Ernest Singhofen Co., Inc. The Jurisdiction of its
incorporation is New York and the date its certificate of incorporation
was filed by the Department of State was October 25, 1948 under the name of
Charles F. Slover & Co., Inc.
THIRD: The authorized capitalization of the Subsidiary Corporation
consist of 250 shares of Common Stock of one class, of which 112 shares are
now issued and outstanding and owned by the Parent Corporation. No shares of
common stock are subject to change prior to the effective date of the merger.
FOURTH: The Board of Directors of the Parent Corporation has duly
adopted a Plan of Merger setting forth the terms and conditions of the merger.
FIFTH: The effective date of the merger shall be July 29, 1989.
IN WITNESS WHEREOF, we have subscribed this Certification on the
date set forth below and do hereby affirm, under the penalties of perjury,
that the statements contained in this Certificate have been examined by us
and are true and correct.
DATE: July 7, 1989 Leon Pordy, M.D., Chairman of the Board
of Chock Full o'Nuts Corporation
Martin Cullen
Secretary of Chock Full o'Nuts Corporation
Leon Pordy, M.D.,
Chairman of the Board of Ernest & Singhofen &
Co., Inc.
Martin Cullen
Secretary of Ernest & Singhofen & Co., Inc.
1
CERTIFICATE OF MERGER
OF
ERNEST SINGHOFEN & CO., INC.
INTO
CHOCK FULL O' NUTS CORPORATION
Under Section 905
of the
Business Corporation Law
Dreyer & Traub
101 Park Avenue
New York, New York 10178
2
CERTIFICATE OF MERGER
OF
MULTI-DATA SERVICES, INC.
INTO
CHOCK FULL O'NUTS CORPORATION
Under Section 905 of the Business Corporation Law
It is hereby certified, on behalf of each of the constituent domestic
corporation named above, as follows:
FIRST: The name of the parent constituent corporation ("Parent
Corporation"), which is to be the surviving corporation, is Chock Full O'Nuts
Corporation. The jurisdiction of its incorporation is New York, and its
certificate of incorporation was filed by the Department of State on
November 7, 1932 under the name Federal Nut Co., Inc.
SECOND: The name of the subsidiary constituent corporation
("Subsidiary Corporation"), which is being merged into the Parent
Corporation, is Multi-Data Services, Inc. The Jurisdiction of its
incorporation is New Jersey and the date its certificate of incorporation
was in New Jersey was March 20, 1975. No application for authority to
transact business in the State of new York has been filed.
THIRD: The authorized capitalization of the Subsidiary Corporation
consist of 1000 shares of Common Stock of one class. of which one share are
now issued and outstanding and owned by the Parent Corporation. No shares of
common stock are subject to change prior to the effective date of the merger.
FOURTH: The Board of Directors of the Parent Corporation has duly
adopted a Plan of Merger setting forth the terms and conditions of the merger.
FIFTH: The effective date of the merger shall be July 11, 1989.
IN WITNESS WHEREOF, we have subscribed this Certification on the
date set forth below and do hereby affirm, under the penalties of perjury,
that the statements contained in this Certificate have been examined by us
and are true and correct.
DATE: July 28, 1989
Leon Pordy, M.D., Chairman of the Board
of Chock Full o'Nuts Corporation
Martin Cullen
Secretary of Chock Full o'Nuts Corporation
Leon Pordy, M.D.,
Chairman of the Board of Mult-Data Services Inc.
Martin Cullen
Secretary of Multi-Data Services, Inc.
1
CERTIFICATE OF MERGER
OF
MULTI-DATA SERVICES, INC.
INTO
CHOCK FULL O' NUTS CORPORATION
Under Section 905 of the Business Corporation Law
Dreyer & Traub
101 Park Avenue
New York, New York 10178
2
CERTIFICATE OF MERGER
OF
LA TOURAINE COFFEE COMPANY, INC.
INTO
CHOCK FULL O'NUTS CORPORATION
Under Section 905 of the Business Corporation Law
It is hereby certified, on behalf of each of the constituent domestic
corporation named above, as follows:
FIRST: The name of the parent constituent corporation ("Parent
Corporation"), which is to be the surviving corporation, is Chock Full O'Nuts
Corporation. The jurisdiction of its incorporation is New York, and its
certificate of incorporation was filed by the Department of State on
November 7, 1932 under the name Federal Nut Co., Inc.
SECOND: The name of the subsidiary constituent corporation
("Subsidiary Corporation"), which is being merged into the Parent
Corporation, is La Touriane Coffee Company, Inc. The Jurisdiction of its
incorporation is Massachusetts and the date its certificate of incorporation
was in Massachusetts was November 29, 1974. An application for authority to
transact business in the State of New York was filed on December 12, 1974.
THIRD: The authorized capitalization of the Subsidiary Corporation
consist of 12,500 shares of Common Stock of one class, of which 100 shares
are now issued and outstanding and owned by the Parent Corporation. No
shares of common stock are subject to change prior to the effective date of
the merger.
FOURTH: The Board of Directors of the Parent Corporation has duly
adopted a Plan of Merger setting forth the terms and conditions of the merger.
FIFTH: The effective date of the merger shall be July 31, 1989.
IN WITNESS WHEREOF, we have subscribed this Certification on the
date set forth below and do hereby affirm, under the penalties of perjury,
that the statements contained in this Certificate have been examined by us
and are true and correct.
DATE: July 28, 1989
Leon Pordy, M.D., Chairman of the Board
of Chock Full o'Nuts Corporation
Martin Cullen
Secretary of Chock Full o'Nuts Corporation
Leon Pordy, M.D.,
Chairman of the Board of La Touraine Coffee Company, Inc.
Martin Cullen
Secretary of La Touraine Coffee Company, Inc.
1
CERTIFICATE OF MERGER
OF
LA TOURAINE COFFEE COMPANY, INC.
INTO
CHOCK FULL O' NUTS CORPORATION
Under Section 905 of the Business Corporation Law
Dreyer & Traub
101 Park Avenue
New York, New York 10178
2
CERTIFICATE OF MERGER
OF
GREENWICH MILLS COMPANY
(a Florida Corporation)
INTO
CHOCK FULL O'NUTS CORPORATION
Under Section 905 of the Business Corporation Law
It is hereby certified, on behalf of each of the constituent domestic
corporation named above, as follows:
FIRST: The name of the parent constituent corporation ("Parent
Corporation"), which is to be the surviving corporation, is Chock Full O'Nuts
Corporation. The jurisdiction of its incorporation is New York, and its
certificate of incorporation was filed by the Department of Sate on
November 7, 1932 under the name Federal Nut Co., Inc.
SECOND: The name of the subsidiary constituent corporation
("Subsidiary Corporation"), which is being merged into the Parent
Corporation, is Greenwich Mills Company. The Jurisdiction of its
incorporation is Florida and the date its certificate of incorporation was
in Florida was April 21, 1969 under the name Hill Stephens Coffee company.
No application for authority to transact business in the State of New York
has been filed.
THIRD: The authorized capitalization of the Subsidiary Corporation
consist of 6,500 shares of Common Stock of one class, of which 500 shares are
now issued and outstanding and owned by the Parent Corporation. No shares of
common stock are subject to change prior to the effective date of the merger.
FOURTH: The Board of Directors of the Parent Corporation has duly
adopted a Plan of Merger setting forth the terms and conditions of the merger.
FIFTH: The effective date of the merger shall be July 31, 1989.
IN WITNESS WHEREOF, we have subscribed this Certification on the
date set forth below and do hereby affirm, under the penalties of perjury,
that the statements contained in this Certificate have been examined by us
and are true and correct.
DATE: July 28, 1989
Leon Pordy, M.D., Chairman of the Board
of Chock Full o'Nuts Corporation
Martin Cullen
Secretary of Chock Full o'Nuts Corporation
Leon Pordy, M.D.,
Chairman of the Board Greenwich Mills Company
Martin Cullen
Secretary of Greenwich Mills Company
1
CERTIFICATE OF MERGER
OF
GREENWICH MILLS COMPANY
(A FLORIDA CORPORATION)
INTO
CHOCK FULL O' NUTS CORPORATION
Under Section 905 of the Business Corporation Law
Dreyer & Traub
101 Park Avenue
New York, New York 10178
2
CERTIFICATE OF MERGER
OF
GREENWICH MILLS COMPANY
(a North Carolina Corporation)
INTO
CHOCK FULL O'NUTS CORPORATION
Under Section 905 of the Business Corporation Law
It is hereby certified, on behalf of each of the constituent domestic
corporation named above, as follows:
FIRST: The name of the parent constituent corporation ("Parent
Corporation"), which is to be the surviving corporation, is Chock Full O'Nuts
Corporation. The jurisdiction of its incorporation is New York, and its
certificate of incorporation was filed by the Department of State on
November 7, 1932 under the name Federal Nut Co., Inc.
SECOND: The name of the subsidiary constituent corporation
("Subsidiary Corporation"), which is being merged into the Parent
Corporation, is Greenwich Mills Company. The Jurisdiction of its
incorporation is North Carolina the date its certificate of incorporation
was in North Carolina was October 25, 1984. No application for authority to
transact business in the State of New York has been filed.
THIRD: The authorized capitalization of the Subsidiary Corporation
consist of 100,000 shares of Common Stock of one class, of which 100 shares
are now issued and outstanding and owned by the Parent Corporation. No
shares of common stock are subject to change prior to the effective date of
the merger.
FOURTH: The Board of Directors of the Parent Corporation has duly
adopted a Plan of Merger setting forth the terms and conditions of the merger.
FIFTH: The effective date of the merger shall be July 31, 1989.
IN WITNESS WHEREOF, we have subscribed this Certification on the
date set forth below and do hereby affirm, under the penalties of perjury,
that the statements contained in this Certificate have been examined by us
and are true and correct.
DATE: July 28, 1989
Leon Pordy, M.D., Chairman of the Board
of Chock Full o'Nuts Corporation
Martin Cullen
Secretary of Chock Full o'Nuts Corporation
Leon Pordy, M.D.,
Chairman of the Board Greenwich Mills Company
Martin Cullen
Secretary of Greenwich Mills Company
1
CERTIFICATE OF MERGER
OF
GREENWICH MILLS COMPANY
(A NORTH CAROLINA CORPORATION)
INTO
CHOCK FULL O' NUTS CORPORATION
Under Section 905 of the Business Corporation Law
Dreyer & Traub
101 Park Avenue
New York, New York 10178
2
CERTIFICATE OF MERGER
OF
GREENWICH MILLS COMPANY
INTO
CHOCK FULL O'NUTS CORPORATION
Under Section 905 of the Business Corporation Law
It is hereby certified, on behalf of each of the constituent domestic
corporation named above, as follows:
FIRST: The name of the parent constituent corporation ("Parent
Corporation"), which is to be the surviving corporation, is Chock Full O'Nuts
Corporation. The jurisdiction of its incorporation is New York, and its
certificate of incorporation was filed by the Department of Sate on
November 7, 1932 under the name Federal Nut Co., Inc.
SECOND: The name of the subsidiary constituent corporation
("Subsidiary Corporation"), which is being merged into the Parent
Corporation, is Greenwich Mills Company. The Jurisdiction of its
incorporation is New York and the date its certificate of incorporation
was filed by the Department of State was February 24, 1912.
THIRD: The authorized capitalization of the Subsidiary Corporation
consist of 10,000 shares of Common Stock of one class, of which 5,911 shares
are now issued and outstanding and owned by the Parent Corporation. No
shares of common stock are subject to change prior to the effective date of
the merger.
FOURTH: The Board of Directors of the Parent Corporation has duly
adopted a Plan of Merger setting forth the terms and conditions of the merger.
FIFTH: The effective date of the merger shall be July 30, 1989.
IN WITNESS WHEREOF, we have subscribed this Certification on the
date set forth below and do hereby affirm, under the penalties of perjury,
that the statements contained in this Certificate have been examined by us
and are true and correct.
DATE: July 26, 1989
Leon Pordy, M.D., Chairman of the Board
of Chock Full o'Nuts Corporation
Martin Cullen
Secretary of Chock Full o'Nuts Corporation
Leon Pordy, M.D.,
Chairman of the Board Greenwich Mills Company
Martin Cullen
Secretary of Greenwich Mills Company
1
CERTIFICATE OF MERGER
OF
GREENWICH MILLS COMPANY
INTO
CHOCK FULL O' NUTS CORPORATION
Under Section 905 of the Business Corporation Law
Dreyer & Traub
101 Park Avenue
New York, New York 10178
2
CERTIFICATE OF MERGER
OF
NATHOR COFFEE CO., INC.
AND
A.L. RANSOHOFF CORP., INC.
INTO
CHOCK FULL O'NUTS CORPORATION
Under Section 905 of the Business Corporation Law
It is hereby certified, on behalf of each of the constituent domestic
corporation named above, as follows:
FIRST: The name of the parent constituent corporation ("Parent
Corporation"), which is to be the surviving corporation, is Chock Full O'Nuts
Corporation. The jurisdiction of its incorporation is New York, and its
certificate of incorporation was filed by the Department of State on
November 7, 1932 under the name Federal Nut Co., Inc.
SECOND: The name of the subsidiary constituent corporation ("First
Subsidiary Corporation"), which is being merged into the Parent Corporation,
is Nathor Coffee Roasting Corp. The Jurisdiction of its incorporation is
New York and the date its certificate of incorporation was filed by the
Department of State was March 26, 1936.
THIRD: The authorized capitalization of the first Subsidiary
Corporation consist of 150 shares of Class A Common Stock, 100 shares of
Class B Common Stock and 100 shares of Preferred Stock, of which 150, 60 and
100 shares, respectively, are now issued and outstanding and owned by the
Parent Corporation. No shares are subject to change prior to the effective
date of merger.
FOURTH: The name of the second subsidiary constituent corporation
("Second Subsidiary Corporation"), which is being merged into the Parent
corporation, is A.L. Ransohoff Co., Inc. The jurisdiction of its
incorporation is New York and the date its certificate of incorporation was
filed by the Department of State was November 20, 1939.
FIFTH: The authorized capitalization of the Second Subsidiary
corporation consists of 2,000 shares of Common Stock and 100 shares of
Preferred Stock, of which 2,000 and 100 shares, respectively, are now issued
and outstanding and owned by the Parent corporation. No shares of capital
stock are subject to change prior to the effective date of the merger.
SIXTH: The Board of Directors of the Parent Corporation has duly
adopted a Plan of Merger setting forth the terms and conditions of merger.
1
SEVENTH: The effective date of the merger shall be July 31, 1989.
IN WITNESS WHEREOF, we have subscribed this Certification on the
date set forth below and do hereby affirm, under the penalties of perjury,
that the statements contained in this Certificate have been examined by us
and are true and correct.
DATE: July 28, 1989
Leon Pordy, M.D., Chairman of the Board
of Chock Full o'Nuts Corporation
Martin Cullen
Secretary of Chock Full o'Nuts Corporation
Leon Pordy, M.D.,
Chairman of the Board of Nathor Coffee Roasting Corp.
Martin Cullen
Secretary of Nathor Coffee Roasting Corp.
Leon Pordy, M.D.,
Chairman of the Board of A.L. Ransohoff Co, Inc.
Martin Cullen
Secretary of A.L. Ransohoff Co., Inc.
2
CERTIFICATE OF MERGER
OF
NATHOR COFFEE ROASTING CORP.
AND
A.L. RANSOHOFF CO., INC.
INTO
CHOCK FULL O' NUTS CORPORATION
Under Section 905 of the Business Corporation Law
Dreyer & Traub
101 Park Avenue
New York, New York 10178
CERTIFICATE OF MERGER
OF
IROQUOIS PROPERTIES, INC.
INTO
CHOCK FULL O'NUTS CORPORATION
Under Section 905 of the Business Corporation Law
It is hereby certified by the corporation named herein as the
surviving corporation as follows:
FIRST: The Board of Directors of the corporation named herein as
the surviving corporation has adopted a plan of merger setting forth the
terms and conditions of merging the corporation named herein as the
subsidiary corporation into said surviving corporation.
SECOND: The Laws of the jurisdiction of incorporation of the
corporation named herein as the subsidiary corporation permit a merger of
the kind certified herein.
THIRD: The name of the subsidiary corporation to be merged, which
was organized under the laws of the State of Delaware on February 26, 1964,
is Iroquois Properties, Inc.
The Application for Authority in the State of New York of said
corporation to transact business as a foreign corporation therein was filed
by the Department of State of the State of New York on March 9, 1964.
FOURTH: The name of the surviving corporation, the certificate of
incorporation which was filed by the Department of State on November 7, 1932
is Chock Full O'Nuts Corporation. The name under which said corporation was
formed is Federal Nut Co., Inc.
FIFTH: The designation and number of outstanding shares of each
class of the subsidiary corporation, all of which are owned by the surviving
corporation, as set forth in the plan of merger, are as follows:
DESIGNATION NUMBER
Common 1,000
SIXTH: The merger of the subsidiary corporation into the surviving
corporation has been authorized under the laws of the jurisdiction of
incorporation of the subsidiary corporation.
IN WITNESS WHEREOF, we have subscribed this Certification on the
date set forth below and do hereby affirm, under the penalties of perjury,
that the statements contained in this Certificate have been examined by us
and are true and correct.
DATE: May 3, 1990
CHOCK FULL O'NUTS CORPORATION
Leon Pordy, M.D.
Chairman of the Board and Chief Executive Officer
1
CERTIFICATE OF MERGER
OF
IROQUOIS PROPERTIES, INC.
INTO
CHOCK FULL O' NUTS CORPORATION
Dreyer & Traub
101 Park Avenue
New York, New York 10178
2
EXHIBIT (4C)
Exhibit 4 (c)
INSTRUMENT OF RESIGNATION, APPOINTMENT AND ACCEPTANCE,
dated as of August 9, 1993, among Chock full O'Nuts Corporation, a
corporation duly organized and existing under the laws of the State of
New York, having its principal office at 370 Lexington Avenue, New York,
New York, 10017 (the "Company"), Chemical Bank, successor by merger to
Manufacturers Hanover Trust Company, a banking corporation duly organized
and existing under the laws of the State of New York, having its principal
corporate trust office at 450 West 33rd Street, New York, New York 10001
(the "Resigning Trustee"), and Liberty Bank and Trust Company of Oklahoma
City, National Association, a national banking association duly organized
and existing under the laws of the United States of America having its
principal corporate trust office at 100 N. Broadway, Oklahoma City,
OK 73102 (the "Successor Trustee");
RECITALS
There are presently issued and outstanding
$43,268,000.00 in aggregate principal amount of the Company's 8%
Convertible Subordinated Debentures due September 15, 2006 (the
"Securities") under an Indenture, dated as of September 15, 1986
(the "Indenture"), between the Company and the Resigning Trustee.
The Resigning Trustee wishes to resign as Trustee, Registrar,
Paying Agent, Conversion Agent and agent for service of notices and demands
under the Indenture; the Company wishes to appoint the Successor Trustee to
succeed the Resigning Trustee as Trustee, Registrar, Paying Agent,
Conversion Agent and agent for service of notices and demands under the
Indenture; and the Successor Trustee wishes to accept such appointment as
Trustee, Registrar, Paying Agent, Conversion Agent and agent for service of
notices and demands under the Indenture.
NOW THEREFORE, the Company, the Resigning Trustee and
the Successor Trustee agree as follows:
ARTICLE ONE
THE RESIGNING TRUSTEE
Section 101. Pursuant to Section 7.08 of the Indenture,
the Resigning Trustee hereby confirms previous notification to the Company
that the Resigning Trustee is hereby resigning as Trustee under the
Indenture.
- - -2-
Section 102. The Resigning Trustee hereby represents and
warrants to the Successor Trustee that:
(a) To the best of the knowledge of the Responsible Officers of the
Resigning Trustee assigned to its Corporate Trust Department, no Event of
Default and no event which, after notice or lapse of time or both, would
become an Event of Default, has occurred and is continuing under the
Indenture.
(b) No covenant or condition contained in the Indenture has been waived
by the Resigning Trustee or by the Holders of the percentage in aggregate
principal amount of the Securities required by the Indenture to effect any
such waiver.
(c) There is no action, suit or proceeding pending or, to the best of
the knowledge of the Responsible Officers of the Resigning Trustee assigned
to its Corporate Trust Department, threatened against the Resigning Trustee
before any court or governmental authority arising out of any action or
omission by the Resigning Trustee as Trustee under the Indenture.
Section 103. The Resigning Trustee hereby assigns,
transfers, delivers and confirms to the Successor Trustee all right, title
and interest of the Resigning Trustee in and to the trust under the Indenture
and all the rights, powers and trusts of the Trustee under the Indenture.
The Resigning Trustee shall execute and deliver such further instruments and
shall do such other things as the Successor Trustee may reasonably require
so as to more fully and certainly vest and confirm in the Successor Trustee
all the rights, trusts and powers hereby assigned, transferred, delivered
and confirmed to the Successor Trustee.
Section 104. The Resigning Trustee hereby resigns as Paying
Agent, Registrar, Conversion Agent, agent for service of notices and demands
and as the Office or agency maintained by the Company pursuant to the terms
of the Indenture.
- - -3-
ARTICLE TWO
THE COMPANY
Section 201. The Secretary or Assistant Secretary or the
Company attesting to the execution of this Instrument by the Company hereby
certifies that annexed hereto marked Exhibit A is a copy of Board Resolutions
duly adopted by the Board of Directors of the Company, and in full force and
effect on the date hereof authorizing certain officers of the Company
to: (a) accept the Resigning Trustee's resignation as Trustee, Registrar,
Paying Agent, Conversion Agent, agent for service of notices and demands and
as the Company's office or agency; (b) appoint the Successor Trustee as
Trustee, Registrar, Paying Agent, Conversion Agent, agent for service of
notices and demands and as the Company's office or agency; and (c) execute
and deliver such agreements and other instruments as may be necessary or
desirable to effectuate the succession of the Successor Trustee under the
Indenture.
Section 202. The Company hereby appoints the Successor
Trustee as Trustee under the Indenture and confirms to the Successor Trustee
all the rights, powers and trusts of the Trustee under the indenture. The
Company shall execute and deliver such further instruments and shall do such
other things as the Successor Trustee may reasonably require so as to more
fully and certainly vest and confirm in the Successor Trustee all the rights,
trusts and powers hereby assigned, transferred, delivered and confirmed to
the Successor Trustee.
Section 203. The Company hereby appoints the Successor
Trustee as Registrar, Paying Agent, Conversion Agent, agent for service of
notices and demands and as the Company's office or agency maintained pursuant
to the terms of the Indenture.
- - -4-
ARTICLE THREE
THE SUCCESSOR TRUSTEE
Section 301. The Successor Trustee hereby represents and
warrants to the Resigning Trustee and to the Company that the Successor
Trustee is qualified and eligible under the provisions of Section 7.10 of
the Indenture to act as Trustee under the Indenture.
Section 302. The Successor Trustee hereby accepts its
appointment as Trustee under the Indenture and shall hereby be vested with
all the rights, powers, trusts and duties of the Trustee under the Indenture.
Section 303. The Successor Trustee hereby accepts its
appointment as Registrar, Paying Agent, Conversion Agent, agent for service
of notices and demands and as Company's office or agency maintained pursuant
to the terms of the Indenture.
ARTICLE FOUR
MISCELLANEOUS
Section 401. Except as otherwise expressly provided or
unless the context otherwise requires, all terms used herein which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture.
Section 402. This instrument and the resignation,
appointment and acceptance effected hereby shall be effective as of the
opening of business on the date first above written upon the execution and
delivery hereof by each of the parties hereto.
Section 403. Notwithstanding the resignation of the
Resigning Trustee effected hereby, the Company shall remain obligated under
Section 7.07 of the Indenture to compensate, reimburse and indemnify the
Resigning Trustee in connection with its trusteeship under the Indenture.
Section 404. This Instrument shall be governed by and
construed in accordance with the laws of the jurisdiction which govern the
Indenture and its construction.
Section 405. This Instrument may be executed in any number
of counterparts each of which shall be an original, but such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereby have caused this
Instrument of Resignation, Appointment and Acceptance to be duly executed
and their respective seals to be affixed hereunto and duly attested all as
of the day and year first above written.
- - -5-
[Corporate Seal]
CHOCK FULL O'NUTS CORPORATION
By__________________________
Name: Howard Leitner
Title: President
Attest:
___________________________
Secretary
CHEMICAL BANK
[Corporate Seal]
By_________________________
Name: G.K. Burke
Title: Vice President
Attest:
______________________________
Assistant Trust Officer
LIBERTY BANK AND TRUST COMPANY
OF OKLAHOMA CITY, NATIONAL
ASSOCIATION
[Corporate Seal]
By___________________________
Name: Jake Riley
Title: Senior Vice President
Attest:
_______________________
Assistant Secretary
- - -6-
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
On the 11th day of June, 1993, before me personally came
Howard Leitner, to me known, who, being by me duly sworn, did depose and say
that he resides at Chappaqua, NY; that he is a president of Chock Full O'Nuts
Corporation, corporation described in and which executed the above
instrument; that he knows the seal of said corporation; that the seal affixed
to said instrument is such corporate seal; that it was so affixed pursuant to
the authority of the Board of Directors of said corporation; and that he
signed his name thereto pursuant to like authority.
-------------------------------
Notary Public
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
On the 13th day of April, 1993, before me personally came G.K.
Burke, to me known who, being by me duly sworn, did depose and say that he
resides at 489 Hoyt Street, Darien, CT 06820; that he is a Vice President
of Chemical Bank, a corporation described in and which executed the above
instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed
pursuant to the authority of the Board of Directors of said corporation;
and that he signed his name thereto pursuant to like authority.
---------------------------
Norary Public
- - -7-
STATE OF OKLAHOMA )
) SS:
COUNTY OF OKLAHOMA )
On the 16th day of July, 1993, before me personally came Jake L.
Riley, to me known, who, being by me duly sworn, did depose and say that he
is a Senior Vice President of Liberty Bank and Trust Company of Oklahoma
City, National Association, a national banking association described in and
which executed the above instrument; that he knows the seal of said
association; that the seal affixed to said instrument is such seal; that it
was so affixed pursuant to the authority of the Board of Directors of said
association; and that he signed his name thereto pursuant to like authority.
--------------------------------
Notary Public
- - -8-
EXHIBIT A
BOARD RESOLUTIONS
The following is a true copy of resolutions duly adopted on April 29, 1993,
by the Board of Directors of Chock Full O'Nuts Corporation.
"RESOLVED, that any officer of this Company is hereby authorized to
accept the resignation of Chemical Bank, successor by merger to Manufacturers
Hanover Trust Company, as Trustee, Registrar, Paying Agent, Conversion Agent,
agent for service of notices and demands and as Company's office or agency
under the Company's Indenture, dated as of September 15, 1986, and to appoint
Liberty Bank and Trust Company of Oklahoma City as Successor Trustee under
said Indenture and as this Company's agent for the service of notices and
demands in connection with the securities issued under said Indenture; and
FURTHER RESOLVED, that any officer of this Company is hereby
authorized to enter into such agreements and other instruments as may be
necessary or desirable to effectuate the appointment of said Successor
Trustee under said Indenture."
Exhibit 4 (d,e)
3/31/87 (GL)
22B
CHOCK FULL O' NUTS CORPORATION
$60,000,000 *
7% Convertible Senior Subordinated Debentures due
April 1, 2012
INDENTURE
Dated as of April 1, 1987
IBJ SCHRODER BANK & TRUST COMPANY
* Subject to a 30-day option to purchase up to an additional $9,000,000
principal amount of Convertible Senior Subordinated Debentures granted to
the underwriters by the Company.
CROSS-REFERENCE TABLE
CHOCK FULL O' NUTS CORPORATION
Trust Indenture
Act Section Indenture Section
310 (a) (1) 7.10
(a) (2) 7.10
(a) (3) Not Applicable
(a) (4) Not Applicable
(b) 7.08; 7.10; 12.02
(c) Not Applicable
311 (a) 7.11
(b) 7.11
(c) Not Applicable
312 (a) 2.05
(b) 12.03
(c) 12.03
313 (a) 7.06
(b)(1) Not Applicable
(b)(2) 7.06
(c) 7.06; 12.02
(d) 7.06
314 (a) 4.02; 12.02
(b) Not Applicable
(c)(1) 12.04
(c)(2) 12.04
(c)(3) Not Applicable
(d) Not Applicable
(e) 12.05
(f) Not Applicable
315 (a) 7.01 (b)
(b) 7.05; 12.02
(c) 7.01 (a)
(d) 7.01 (c)
(e) 6.11
316 (a)(last sentence) 12.06
(a)(l,A) 6.05
(a)(1,B) 6.04
(a)(2) Not Applicable
(b) 6.07
317 (a)(1) 6.08
(a)(2) 6.09
(b) 2.04
318 (a) 12.01
_____________________________
Note: This Cross-Reference Table shall not, for any purpose, be deemed to
be a part of the Indenture.
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions 1
SECTION 1.02. Other Definitions 4
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act 4
SECTION 1.04. Rules of Construction 4
ARTICLE 2
THE SECURITIES
SECTION 2.01. Dating; Incorporation of Form
in Indenture 5
SECTION 2.02. Execution of Authentication 5
SECTION 2.03. Registrar and Agents 5
SECTION 2.04. Paying Agent to Hold Money in Trust 6
SECTION 2.05. Securityholder Lists 6
SECTION 2.06. Transfer and Exchange 6
SECTION 2.07. Replacement Securities 7
SECTION 2.08. Outstanding Securities 7
SECTION 2.09. Temporary Securities 7
SECTION 2.10. Cancellation 7
SECTION 2.11. Defaulted Interest 7
SECTION 2.12. Persons Deemed Owners 3
ARTICLE 3
REDEMPTION
SECTION 3.01. Notices to Trustee 8
SECTION 3.02. Selection of Securities to be Redeemed 8
SECTION 3.03. Notice of Redemption 8
SECTION 3.04. Effect of Notice of Redemption 8
SECTION 3.05. Deposit of Redemption Price 9
SECTION 3.06. Securities Redeemed in Part 9
SECTION 3.07. Mandatory Redemption Provisions 9
- - -i-
ARTICLE 4
Page
COVENANTS
SECTION 4.01. Payment of Securities 10
SECTION 4.02. SEC Reports 10
SECTION 4.03. Waiver of Stay, Extension or Usury Laws 10
SECTION 4.04. Limitation on Dividends and Other
Distributions 10
SECTION 4.05. Liquidation 12
SECTION 4.06. Notice of Defaults 13
SECTION 4.07. Compliance Certificates 13
SECTION 4.08. Maintenance of Consolidated Net Worth 13
SECTION 4.09. Limitation of Certain Indebtedness 14
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, etc. 15
SECTION 5.02. Successor Corporation Substituted 15
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default 15
SECTION 6.02. Acceleration 16
SECTION 6.03. Other Remedies 17
SECTION 6.04. Waiver of Defaults and Events of Default 17
SECTION 6.05. Control by Majority 17
SECTION 6.06. Limitation on Suits 17
SECTION 6.07. Rights of Holders to Receive Payment 18
SECTION 6.08. Collection Suit by Trustee 18
SECTION 6.09. Trustee May File Proofs of Claim 18
SECTION 6.10. Priorities 19
SECTION 6.11. Undertaking for Costs 19
ARTICLE 7
TRUSTEE
SECTION 7.01. Duties of Trustee 19
SECTION 7.02. Rights of Trustee 20
SECTION 7.03. Individual Rights of Trustee 21
SECTION 7.04. Trustee's Disclaimer 21
SECTION 7.05. Notice of Defaults 21
SECTION 7.06. Reports by Trustee to Holders 21
SECTION 7.07. Compensation and Indemnity 21
SECTION 7.08. Replacement of Trustee 22
SECTION 7.09. Successor Trustee by Merger, etc. 22
SECTION 7.10. Eligibility; Disqualification 22
SECTION 7.11. Preferential Collection of Claims
Against Company 23
- - -ii-
ARTICLE 8
Page
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01. Satisfaction , Discharge and
Defeasance of the Securities 23
SECTION 8.02. Satisfaction and Discharge of Indenture 23
SECTION 8.03. Survival of Certain Obligations 24
SECTION 8.04. Application of Trust Money 24
SECTION 8.05. Paying Agent to Repay Monies Held 24
SECTION 8.06. Return of Unclaimed Monies 25
SECTION 8.07. Reinstatement 25
ARTICLE 9
AMENDMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders 25
SECTION 9.02. With Consent of Holders 26
SECTION 9.03. Compliance with Trust Indenture Act 26
SECTION 9.04. Revocation and Effect of Consents 26
SECTION 9.05. Notation on Exchange of Securities 27
SECTION 9.06. Trustee to Sign Amendments, etc. 27
ARTICLE 10
SUBORDINATION; SENIORITY
SECTION 10.01. Securities Subordinated to Senior
Indebtedness 27
SECTION 10.02. Company Not to Make Payments with
Respect to Securities in Certain
Circumstances 27
SECTION 10.03. Securities Subordinated to prior
Payment of All Senior Indebtedness
on Dissolution, Liquidation or
Reorganization of Company 28
SECTION 10.04. Securityholders to be Subrogated to
Rights of Holders of Senior
Indebtedness 30
SECTION 10.05. Obligation of the Company Unconditional 30
SECTION 10.06. Trustee Entitled to Assume Payments Not
Prohibited in Absence of Notice 31
SECTION 10.07. Application by Trustee of Monies
Deposited with It 31
SECTION 10.08. Continuing Offer of Subordination 31
SECTION 10.09. Subordination Rights Not Impaired by
Acts or Omissions of Company or
Holders of Senior Indebtedness 32
SECTION 10.10. Securityholders Authorize Trustee to
Effectuate Subordination of Securities 32
SECTION 10.11. Right of Trustee to Hold Senior
Indebtedness; Trustee Owes No Fiduciary
Duty to Holders of Senior Indebtedness 33
SECTION 10.12. Article 10 Not to Prevent Events of
Default 33
SECTION 10.13. Officers' Certificate 33
SECTION 10.14. Paying Agents Other than the Trustee 33
SECTION 10.15. Securities Senior to Subordinated
Indebtedness 33
- - -iii-
ARTICLE 11
Page
CONVERSION OF DEBENTURES
SECTION 11.01. Right of Conversion; Conversion Price 33
SECTION 11.02. Issuance of Common Stock on Conversion 34
SECTION 11.03. No Adjustment for Interest or Dividends 34
SECTION 11.04. Adjustment of Conversion Price 35
SECTION 11.05. No Fractional Shares 39
SECTION 11.06. Effect of Reclassification,
Consolidation, Merger, Sale, Lease
or Conveyance 39
SECTION 11.07. Covenant to Reserve Shares 40
SECTION 11.08. Compliance with Legal and Governmental
Requirements 40
SECTION 11.09. Payment of Taxes 41
SECTION 11.10. Notice of Certain Events 41
SECTION 11.11. Responsibility of Trustee and Conversion
Agent 41
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. Trust Indenture Act Controls 42
SECTION 12.02. Notices 42
SECTION 12.03. Communications by Holders with other
Holders 43
SECTION 12.04. Certificate and Opinion as to Conditions
Precedent 43
SECTION 12.05. Statements Required in Certificate and
Opinion 43
SECTION 12.06. When Treasury Securities Disregarded 43
SECTION 12.07. Rules by Trustee and Agents 44
SECTION 12.08. Legal Holidays 44
SECTION 12.09. Governing Law 44
SECTION 12.10. No Adverse Interpretation of Other
Agreements 44
SECTION 12.11. No Recourse Against Others 44
SECTION 12.12. Successors 44
SECTION 12.13. Multiple Counterparts 44
SECTION 12.14. Table of Contents, Headings, etc. 44
SECTION 12.15. Severability 44
Signatures 45
Exhibit A - Form of Security
- - -iv-
INDENTURE dated as of April 1, 1987 between CHOCK FULL O' NUTS
CORPORATION, a New York corporation ("Company") and IBJ SCHRODER BANK &
TRUST COMPANY, a New York corporation ("Trustee").
Each party agrees as follows for the benefit of the other party
and for the equal and ratable benefit of the Holders of the Company's
7% Convertible Senior Subordinated Debentures due April 1, 2012
("Securities"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
SECTION 1.01 Definitions
"Affiliate" means any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company.
"Agent" means any Registrar, Paying Agent, Conversion Agent,
co-registrar or agent for service of notices and demands. See Section 2.03.
"Board of Directors" means the Board of Directors of the Company or
any committee of the Board.
"Business Day" means a day that is not a Legal Holiday.
"Capital Stock" means any and all shares or other equivalents
(however designated) of corporate stock except Redeemable Preferred Stock.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to the Indenture and thereafter means the
successor.
"Consolidated Net Income" means, for any period, the aggregate of
the Net Income of the Company and its Subsidiaries for such period determined
in accordance with generally accepted accounting principles consistently
applied, provided that (i) the Net income of any person which is not a
Subsidiary and which is consolidated with the Company or is accounted for by
the Company by the equity method of accounting shall be included only to the
extent of the amount of cash dividends or cash distributions paid to the
Company or a Subsidiary, (ii) the Net Income of any person acquired by the
Company or a Subsidiary in a pooling of interests transaction for any period
prior to the date of such acquisition shall be excluded and (iii) the Net
Income of any Subsidiary that is subject to restrictions, direct or indirect,
on the payment of dividends or the making of distributions to the Company
shall be excluded to the extent of such restrictions.
"Consolidated Net Worth", as applied to any Person, means the
consolidated Stockholders' Equity (exclusive of any Redeemable Preferred
Stock) of such Person and its consolidated subsidiaries.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is
located at One State Street, New York, New York 10004.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
1
"Holder" or "Securityholder" means the person in whose name a
Security is registered on the Registrar's books.
"Indenture" means this Indenture as amended or supplemented from
time to time.
"Net Income" of any person means the net income (loss) of such
person, determined in accordance with generally accepted accounting
principles consistently applied: excluding, however, from the determination
of Net Income any gain (but not loss) realized upon the sale or other
disposition (including, without Limitation, dispositions pursuant to Sale
and Leaseback transactions) of any real property or equipment of such person,
which is not sold or otherwise disposed of in the ordinary course of
business, or of any Capital Stock of the Company or a Subsidiary owned by
such person except to the extent that any such gain over the net book value
of any such assets is represented by cash or fair value of other
consideration as such value is determined in good faith by the Board of
Directors of the Company.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, the Secretary or the Controller of the Company.
"Officers' Certificate" means a certificate signed by two Officers or
by an Officer and an Assistant Treasurer, Assistant Secretary or Assistant
Controller of the Company. See Sections 12.04 and 12.05.
"Opinion of Counsel" means a written opinion from legal counsel who
is acceptable to the Trustee. The counsel may be an employee of or counsel
to the Company or the Trustee. See Sections 12.04 and 12.05.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
"Principal" of a Security means the principal of the Security plus,
when appropriate, the premium, if any, on the Security.
"Redeemable Preferred Stock" means (i) preferred stock of the
Company which is subject to mandatory redemption or which is redeemable at
the option of the holder thereof or (ii) corporate stock which may be
exchanged or converted, directly or indirectly, into any security other than
(A) Common Stock or (B) non-Redeemable Preferred Stock until extinguishment
of the exchange rights, either by the terms of such Stock or pursuant to an
irrevocable election of the Company.
"Redemption Date" when used with respect to any Security to be
redeemed means the rate fixed for such redemption pursuant to this Indenture.
"Redemption Price", when used with respect to any Securities to be
redeemed, means the price fixed for such redemption pursuant to this
Indenture as set forth in the form of Security annexed hereto as Exhibit A.
"Sale and Lease-Back Transaction" means any arrangement with any
person (other than the Company or a Subsidiary), or to which any such person
is a party, providing for the leasing to the Company or a Subsidiary of any
property owned by the Company or Subsidiary and sold or transferred by the
Company or such Subsidiary to such person or to any other person (other than
the Company or a Subsidiary).
"SEC" means the Securities and Exchange Commission.
"Securities" means the securities that are issued under this
Indenture as amended or supplemented from time to time, pursuant to this
Indenture.
2
"Senior Indebtedness" means the principal, premium, if any, and
interest on Indebtedness of the Company (including, without limitation,
that certain Guaranty Agreement between the Company and the First Missouri
Bank and Trust Company dated as of December 1, 1984, that certain Loan
Agreement between the Company as successor to Chock Full O' Nuts Coffee
Corporation ("Coffee") and the Industrial Development Authority of the city
of St. Louis, Missouri ("Authority") dated as of December 1, 1984, and that
certain Promissory Note in the original principal amount of $2,000,000 made
on December 28, 1984 payable to the Authority to which the Company is the
obligor as the successor to Coffee) outstanding at any time, other than the
Securities, Indebtedness of the Company with respect to the principal,
premium, if any, and interest on the Company's $50,000,000 principal amount
of 8% Convertible Subordinated Debentures due September 15, 2006,
Indebtedness of the Company to a Subsidiary for money borrowed or advanced
from any Subsidiary and any other Indebtedness which by its terms expressly
provides that it is not superior in right of payment to the Securities.
"Indebtedness" with respect to any Person means:
(1) any debt (i) for borrowed money, or (ii) evidenced by a bond, note,
debenture, or similar instrument (including purchase money obligations)
given in connection with or assumed as all or a part of the consideration
for the acquisition of property or assets, whether by purchase, merger,
consolidation or otherwise, but shall not include any trade accounts payable,
or (iii) which is a direct or indirect obligation which arises as a result of
banker's acceptances or drawings under bank letters of credit issued to
secure obligations of such person, whether contingent or otherwise;
(2) any debt of others described in the preceding clause (1) which such
Person has guaranteed or for which it is otherwise liable;
(3) any obligation secured by a lien to which the property or assets of
such Person are subject, whether or not the obligations secured thereby shall
have been assumed by or shall otherwise be such Person's legal liability;
(4) the obligation of such Person as lessee under any lease of property
which is reflected on such Person's balance sheet as a capitalized lease; and
(5) any deferral, amendment, renewal, extension, supplement or refunding
of any liability of the kind described in any of the preceding clauses (1),
(2), (3) and (4).
"Stockholders' Equity" as applied to any Person means such Person's
stockholders' equity as determined according to generally accepted accounting
principles, but shall not include any amounts attributable to securities
which do not constitute Capital Stock.
"Subordinated Indebtedness" means the principal, premium, if any, and
interest on any Indebtedness of the Company which by its terms is
subordinated in right of payment to the Securities.
"Subsidiary" means a corporation the majority of whose voting stock
is owned by the Company or a Subsidiary. Voting stock is Capital Stock
having voting power under ordinary circumstances to elect directors.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.
Code 77aaa-77bbbb) as in effect on the date of this Indenture.
"Trustee" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means the
successor.
3
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.
"United States" means the United States of America.
SECTION 1.02 Other Definitions.
Term Defined in Section
"Bankruptcy Law" 6.01
"Conversion Agent" 2.03
"Current Market Price" 11.04 (g)
"Custodian" 6.01
"Event of Default" 6.01
"Legal Holiday" 12.08
"Paying Agent" 2.03
"Registrar" 2.03
"U.S. Government Obligations" 8.01
SECTION 1.03 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other
obligor on the indenture securities.
All other terms used in this Indenture that that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC
rule have the meanings assigned to them.
SECTION 1.04 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles in effect on the date hereof;
(3) "or" is not exclusive; and
(4) words in the singular include the plural, and in the plural
include the singular.
4
ARTICLE 2
THE SECURITIES
SECTION 2.01 Dating; Incorporation of Form in Indenture.
The Securities and the Trustee's certificate of authentication shall
be substantially in the form of Exhibit A which is incorporated in and made
part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule, agreements to which the
Company is subject, or usage. the Company shall approve the form of the
Securities and any notation, legend or endorsement on them. Each Security
shall be dated the date of its authentication.
SECTION 2.02 Execution and Authentication.
Two Officers shall sign the Securities for the Company by manual or
facsimile signature. The Company's seal shall be impressed, affixed,
imprinted or reproduced on the Securities and may be in facsimile form.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall
be nevertheless valid.
A Security shall not be valid until the Trustee manually signs the
certificate of authentication on the Security. Such signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee shall authenticate Securities for original issue in the
aggregate principal amount of up to $69,000,000 upon the execution of the
Indenture an a written order or orders of the Company signed by two Officers
or by an Officer and an Assistant Treasurer of the Company. The aggregate
principal amount of Securities outstanding at any time may not exceed that
amount except as provided in Section 2.07.
The Trustee may appoint an authenticating agent to authenticate
Securities. An authenticating agent may authenticate Securities whenever
the Trustee may do so. Each reference in this Indenture to authentication
by the Trustee includes authentication by such agent. An authenticating
agent has the same rights as an Agent to deal with the Company or an
Affiliate.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 and any integral multiple
thereof.
SECTION 2.03 Registrar and Agents.
The Company shall maintain an office or agency where Securities may
be presented for registration of transfer or for exchange ("Registrar"), an
office or agency where Securities may be presented for payment
("Paying Agent"), an office or agency where Securities may be presented for
conversion ("Conversion Agent") and an office or agency where notices and
demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Registrar shall keep a register of the
Securities and of their transfer and exchange. The Company may have one or
more co-registrars, one or more additional paying agents and one or more
additional conversion agents. The "Paying Agent" includes any additional
paying agent and the term "Conversion Agent" includes any additional
conversion agent.
5
The Company shall enter into an appropriate agency agreement with
any Registrar, Paying Agent, Conversion Agent or co-registrar not a party
to this Indenture. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Company shall notify the Trustee
of the name and address of any such Agent. If the Company fails to maintain
a Registrar, paying Agent, Conversion Agent or agent for service of notices
and demands, or fails to give the foregoing notice, the Trustee shall act as
such.
The Company initially appoints the Trustee as Registrar, Paying
Agent, Conversion Agent and agent for service of notices and demands.
SECTION 2.04 Paying Agent to Hold Money in Trust.
On or prior to each due date of the principal of an interest on any
Securities, the Company shall deposit with each paying Agent a sum sufficient
to pay such principal, premium, if any, and interest so becoming due. the
Company shall require each Paying Agent to agree in writing that it will hold
in trust for the benefit of Securityholders or the Trustee all money held by
the Paying Agent for the payment of principal of, premium if any, or interest
on the Securities and to notify the Trustee of any default by the Company (or
any other obligor on the Securities) in making any such payment. If the
Company or a Subsidiary acts as Paying Agent, it shall on or before each due
date of the principal of, premium, if any, or interest on any Securities
segregate the money and hold it as a separate trust fund. The Company at any
time may require a paying Agent to pay all money held by it to the Trustee
and the Trustee may at any time during the continuance of any payment
default, upon written request to a Paying Agent, require such Paying Agent
to forthwith pay to the Trustee all sums so held in trust by such Paying
Agent. Upon doing so, the Paying Agent (other than the Company) shall have
no further liability for the money.
SECTION 2.05 Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses
of Securityholders. If the Trustee is not the Registrar, the Company shall
furnish to the Trustee on or before each semiannual interest payment date and
at such other times as the Trustee may request in writing a list in such form
and as of such date as the Trustee may reasonable require of the names and
addresses of Securityholders.
SECTION 2.06 Transfer and Exchange.
When a Security is presented to the Registrar or a co-registrar with
a request to register the transfer, the Registrar or co-registrar shall
register the transfer as requested and when Securities are presented to the
Registrar or a co-registrar with a request to exchange them for an equal
principal amount of Securities of other authorized denominations, the
Registrar shall make the exchange as requested provided that every Security
presented or surrendered for registration of transfer or exchange shall be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Registrar duly executed by the Holder
thereof or his attorney duly authorized in writing. To permit transfers and
exchanges, the Company shall execute and the Trustee shall authenticate
Securities at the Registrar's or co-registrar's request. The Company may
charge a reasonable fee for any transfer or exchange and may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto, but this provision shall not apply to any
exchange pursuant to Section 2.09, 3.06, 9.05 or 11.02.
6
SECTION 2.07 Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if the
Holder of a Security presents evidence to the satisfaction of the Company
and the Trustee that the Security has been lost, destroyed or wrongfully
taken, the Company shall issue and the Trustee shall authenticate a
replacement Security if the requirements of the Trustee and the Company are
met. An indemnity bond may be required that is sufficient in the judgment of
the Company and the Trustee to protect the Company, the Trustee or any Agent
from any loss which any of them may suffer if a Security is replaced. The
Company may charge for its expense in replacing a Security.
SECTION 2.08 Outstanding Securities.
Securities outstanding at any time are all Securities authenticated
by the Trustee except for those canceled by it and those described in this
Section 2.08 as not outstanding.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding until the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent (other than the Company or a Subsidiary) holds
on a Redemption Date or maturity date money deposited with it by or on behalf
of the Company sufficient to pay the principal of and accrued interest on
Securities payable on that date, then on and after that date such Securities
cease to be outstanding and interest on them ceases to accrue.
Subject to Section 12.06, a Security does not cease to be outstanding
because the Company or an Affiliate holds the Security.
SECTION 2.09 Temporary Securities.
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities but
may have variations that the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Securities in exchange for temporary
Securities.
SECTION 2.10 Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. the Registrar, the Paying Agent and the Conversion Agent shall
forward to the Trustee any Securities surrendered to the for transfer,
exchange or payment. The Trustee shall cancel all Securities surrendered for
transfer, exchange, payment or cancellation and destroy canceled Securities
and deliver a certificate of such destruction to the Company unless the
Company directs the Trustee to deliver canceled Securities to the Company,
Subject to Section 2.07, the Company may not issue Securities to replace
Securities that it has previously paid or delivered to the Trustee for
cancellation.
SECTION 2.11 Defaulted Interest.
If the Company defaults in a payment of interest on the Securities,
it shall pay the defaulted interest to the Persons who are Securityholders on
a subsequent special record date. The Company shall
7
fix the special record date and payment date in a manner satisfactory to the
Trustee. At least 15 days before the special record date, the Company shall
mail to each Securityholder a notice that states the special record date, the
payment date, and the amount of defaulted interest to be paid. The Company
may pay defaulted interest in any other lawful manner.
SECTION 2.12 Persons Deemed Owners.
Prior to presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security and neither the Company, the Trustee nor any agent of the company
or the Trustee shall be affected by notice to the contrary.
ARTICLE 3
REDEMPTION
SECTION 3.01 Notices to Trustee.
If the Company wants to redeem the Securities pursuant to Paragraph 5
of the Securities, it shall notify the Trustee of the Redemption Date and the
principal amount of Securities to be redeemed.
If the Company wants to reduce the principal amount of Securities to
be acquired pursuant to Paragraph 6 of the Securities, it shall notify the
Trustee of the amount of the reduction and the basis for it. If the Company
wants to credit against any such redemption Securities it has not previously
delivered to the Trustee for cancellation, it shall deliver the Securities
with such notice.
The Company shall give each notice provided for in this Section 3.01
at least 60 days before the Redemption Date or such other period as the
Company and the Trustee may agree.
SECTION 3.02 Selection of Securities to be Redeemed.
If less than all the Securities are to be redeemed, the Trustee shall
select the Securities to be redeemed by a method the Trustee considers fair
and appropriate. The Trustee shall make the selection from Securities
outstanding and not previously called for redemption. The Trustee may select
for redemption portions of the principal of Securities that have
denominations larger than $1,000. Securities and portions of them it selects
shall be in amounts of $1,000 or multiples of $1,000. Provisions of this
Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption.
SECTION 3.03 Notice of Redemption.
At least 15 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first-class mail to each
Holder of Securities to be redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
8
(1) The Redemption Date;
(2) the Redemption Price;
(3) the then current conversion price;
(4) the name and address of the Paying Agent and the
Conversion Agent;
(5) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(6) that interest on Securities called for redemption ceases
to accrue on and after the Redemption Date;
(7) Whether the redemption is pursuant to the optional or
mandatory redemption provisions of the Securities;
(8) that the right to convert the Securities as provided in
Article 11 expires at the close of business on the Business Day
prior to the Redemption Date; and
(9) if any Security is being redeemed in part, the portion of
the principal amount of such Security to be redeemed and that,
after the Redemption Date, upon surrender of such Security, a new
Security or Securities in principal amount equal to the unredeemed
portion thereof will be issued.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense.
SECTION 3.04 Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for redemption
become due and payable on the Redemption Date and at the Redemption Price.
Upon surrender to the Paying Agent, such Securities shall be paid at the
Redemption Price, plus accrued interest to the Redemption Date.
SECTION 3.05 Deposit of Redemption Price.
On or prior to the Redemption date, the Company shall deposit with
the Paying Agent, or if the Company or a Subsidiary is the Paying Agent,
shall segregate and hold in trust or cause such Subsidiary to segregate and
hold in trust) money sufficient to pay the Redemption Price of and accrued
interest on all Securities to be redeemed on that date.
SECTION 3.06 Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Trustee
shall authenticate for the Holder a new Security equal in principal amount
to the unredeemed portion of the Security surrendered.
SECTION 3.07 Mandatory Redemption Provisions.
The Company shall redeem 5% of the principal amount of the Securities
originally issued, on the dates, upon the terms and subject to the conditions
set forth in Paragraph 6 of the Securities. Any such redemption shall be
made pursuant to the provisions of this Article.
9
ARTICLE 4
COVENANTS
SECTION 4.01 Payment of the Securities.
The Company shall pay the principal of, premium, if any, and interest
on the Securities on the dates and in the manner provided in the Securities
and this Indenture. An installment of principal, premium, if any, or
interest shall be considered paid on the date it is due if the Trustee or
Paying Agent (other than the Company or a Subsidiary) holds on that date
money designated for and sufficient to pay the installment. The Company
shall pay interest on overdue principal at the rate borne by the Securities;
it shall pay interest, including post-petition interest in the event of a
proceeding under the Bankruptcy Laws, on overdue installments of interest at
the same rate to the extent lawful.
SECTION 4.02 SEC Reports.
The Company shall file with the Trustee, within 15 days after it
files them with the SEC, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the
foregoing as the SEC may by rules and regulations prescribe) which the
Company is required to file with the SEC pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended. The Company shall also
comply with the other provisions of TIA 314(a).
So long as the Securities remain outstanding, the Company shall cause
its annual reports to shareholders (containing audited financial statements)
and any other financial reports furnished by it to shareholders to be mailed
to the Holders at their addresses appearing in the register of Securities
maintained by the Registrar.
SECTION 4.03 Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law or any usury
law or other law that would prohibit or forgive the Company from paying all
or any portion of the principal of or interest on the Securities as
contemplated herein, wherever enacted, now or at any time hereafter in force,
or that may affect the covenants or the performance of this Indenture; and
(to the extent that it may lawfully do so) the Company hereby expressly
waives all benefit or advantage of any such law, and covenants that it will
not hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
SECTION 4.04 Limitation on Dividends and Other Distributions.
The Company will not declare or pay any dividend or make any
distribution on its Redeemable Preferred Stock held by Subsidiaries or on
its Capital Stock or to holders of its Capital Stock (other than dividends or
distributions payable in Capital Stock of the Company, or purchase, redeem or
otherwise acquire or retire for value any of its Capital Stock or Redeemable
Preferred Stock held by Subsidiaries or any warrants, rights or options to
purchase or acquire any shares of its Capital Stock or Redeemable Preferred
Stock held by Subsidiaries or permit any Subsidiary to purchase, redeem or
otherwise acquire or retire for value any such Capital Stock or Redeemable
Preferred Stock so held or any warrants, rights or options to purchase or
acquire any shares of its Capital Stock of Redeemable Preferred Stock so
held:
10
(1) if at the time of such action an Event of Default has occurred and is
continuing or would exist immediately after giving effect to such action; or
(2) if, upon giving effect to such dividend, distribution, purchase,
redemption, other acquisition or retirement, the aggregate amount expended
for all such purposes (the amount expended for such distribution, if other
than in cash, to be determined by the Board of Directors, whose determination
shall be conclusive and evidenced by a resolution of the Board of Directors
filed with the Trustee) subsequent to January 31, 1987, exceeds the sum of:
(A) 50% of aggregate Consolidated Net Income accrued on the
cumulative basis subsequent to January 31, 1987 (or, in case such
aggregate Consolidated Net Income shall be a deficit, minus 100% of
such deficit);
(B) The aggregate of the net proceeds received by the Company
from the issue or sale of its Capital Stock subsequent to
January 31, 1987 (other than to a Subsidiary) including, without
limitation, any such issue or sale in connection with the conversion
of any Indebtedness (including the Securities) or of any Redeemable
Preferred Stock of the Company, said net proceeds being deemed for
the purpose of this Section 4.04 to equal the aggregate of (a) the
cash, if any, received by the Company from such issue or sale, plus
(b) the fair value of the consideration other than cash (as
determined by the Board of Directors, whose determination shall be
conclusive and evidenced by a resolution of the Board of Directors
filed with the Trustee) received by the Company from such issue or
sale, and
(C) $2,909,808
provided, however, that the provisions of this Section 4.04 shall not prevent
(i) the payment of any dividend within 60 days after the date of declaration
thereof, if at said date of declaration such payment complied with the
provisions hereof; or (ii) the retirement of any shares of the Company's
Capital Stock by exchange for, or upon conversion of, or out of the proceeds
of the substantially concurrent sale (other than to a Subsidiary) of shares
of its Capital Stock, and neither such retirement nor the proceeds of any
such sale or exchange shall be included in any computation made under this
Section 4.04.
For purposes of this Section 4.04, a distribution to holders of the
company's Capital Stock or Redeemable Preferred Stock held by Subsidiaries
of (i) shares of Capital Stock of any Subsidiary or Redeemable Preferred
Stock of any Subsidiary or similar securities of any Subsidiary of the
Company, or (ii) other assets of the Company, without, in either case, the
receipt of equivalent consideration therefor shall be regarded as the
equivalent of a cash dividend equal to the excess of the fair market value of
the shares or other assets being so distributed at the time of such
distribution over the consideration, if any, received therefor. The fair
market value of such shares or other assets and the value of any
consideration therefor other than cash shall be determined by the Board of
Directors, whose determination shall be conclusive and evidenced by a
resolution of the Board of Directors filed with the Trustee.
For purposes of this Section 4.04, the net proceeds from the issuance
of shares of Capital Stock of the Company issued (a) upon conversion of debt
securities shall be deemed to be the net book value of such debt securities
at the date of conversion (plus the additional amount required to be paid
upon such conversion, if any) less any cash payment on account of fractional
shares or (b) upon exercise of warrants,
11
rights and options shall be deemed to be the exercise price thereof less any
cash payment on account of fractional shares. For purposes of this
paragraph, the "net book value" of a security shall be the amount received by
the Company on the issuance of such security, as adjusted on the books of the
Company to the date of conversion. The foregoing shall not be interpreted to
limit the authority of the Board of Directors, as set forth above, to
determine the value of other securities of the Company or other property
received as net proceeds; provided, however, that the value of the other
property as so determined shall not exceed the net book value of such
property.
Before the Company pays any dividend or makes any distribution on
its Capital Stock or Redeemable Preferred Stock held by Subsidiaries (other
than dividends or distributions payable in Capital Stock of the Company), o
r purchases, redeems or otherwise acquires or retires for value any Capital
Stock or Redeemable Preferred Stock so held or permits any Subsidiary to
purchase, redeem or otherwise acquire or retire for value any such Capital
Stock or Redeemable Preferred Stock, the Company shall file with the Trustee
an Officers' Certificate (upon which the Trustee may conclusively rely) which
shall conform to the provisions of Section 12.04 and 12.05 hereof and which
shall set forth the applicable computation required by subdivision (2) of
this Section 4.04.
SECTION 4.05 Liquidation.
The Board of Directors or the stockholders of the Company may not
adopt a plan of liquidation which plan provides for, contemplates or the
effectuation of which is preceded by (A) the sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company
otherwise than substantially as an entirety (Section 5.01 of this Indenture
being the Section which governs any such sale, lease, conveyance or other
disposition substantially as an entirety), and (B) the distribution of all or
substantially all of the proceeds of such sale, lease, conveyance or other
disposition and of the remaining assets of the Company to the holders of
Capital Stock of the Company, unless the Company shall in connection with the
adoption of such plan make provision for, or agree that prior to making any
liquidating distributions it will make provision for, the satisfaction of the
Company's obligations hereunder and under the Securities as to the payment of
principal and interest. The Company shall be deemed to make provision for
such payments only if (i) the Company delivers in trust to the Trustee U.S.
Government Obligations in an aggregate principal amount equal to the unpaid
principal amount of the Securities and having maturities and interest payment
dates on or before the dates on when the principal of and interest on the
Securities are due, or (ii) there is an express assumption of the due and
punctual payment of the Company's obligations hereunder and under the
Securities and performance and observance of all covenants and conditions to
be performed by the Company hereunder, by the execution and delivery of a
supplemental Indenture in form satisfactory to the Trustee by a person which
acquires, or will acquire otherwise than pursuant to a lease) a portion of
the assets of the Company, provided that at the time of such assumption no
default or Event of Default shall have occurred and be continuing and such
person will have a Consolidated Net Worth (immediately after the date of such
express assumption) and pro-forma aggregate earnings adjusted to reflect the
acquisition for such person's four full fiscal quarters (immediately
preceding the date of such express assumption) equal to not less than the
Consolidated Net Worth of the Company (immediately preceding the date of such
express assumption) and the aggregate Net Income of the Company and its
consolidated subsidiaries (for its four full fiscal quarters immediately
preceding the date of such express assumption) and the aggregate Net Income
of the Company and its consolidated subsidiaries (for its four full fiscal
quarters immediately preceding the date of such express assumption),
respectively, and which is organized under the laws of the United States, any
State thereof or the District of Columbia; provided, further, that the
Company shall not make any liquidating distribution until after the Company
shall have certified to the Trustee with an Officers Certificate at least
five days prior to the making of any liquidating distribution that it has
complied with
12
the provisions of this Section 4.05. In the event that the Company shall
liquidate in compliance with clauses (A) or (B) above, it shall be relieved
of all obligations hereunder except as set forth below.
However, in the case of a liquidation pursuant to clause (A), the
Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08,
8.06 and 8.07 shall survive until the Securities are no longer outstanding.
Thereafter the Company's obligations in Section 7.07 shall survive.
SECTION 4.06 Notice of Defaults.
In the event that any Event of Default under Section 6.01(4) hereof
occurs, the Company shall promptly give written notice to the Trustee of such
Default. The Company will deliver to the Trustee, within 5 days after the
occurrence thereof, written notice of any event which with the giving of
notice and/or the lapse of time would become an Event of Default under
Section 6.01(4) hereof.
SECTION 4.07 Compliance Certificates.
The Company shall deliver to the Trustee within 45 days after the end
of each fiscal quarter of the Company and 120 days after the end of each
fiscal year of the Company, which as of the date of this Indenture is
July 31, an Officers' Certificate stating whether or not the signers know of
any Default or Events of Default. If they do know of such a Default or Event
of Default, the certificate shall describe the Default or Event of Default
and the efforts to remedy the same. The certificate need not comply with
Section 12.05.
SECTION 4.08 Maintenance of Consolidated Net Worth.
If the Company's Consolidated Net Worth at the end of each of any
two consecutive fiscal quarters is less than $15,283,033, then the Company
shall make an offer to acquire (an "Offer") on the last day of the next
following fiscal quarter (the "Accelerated Payment Date") 7.5% of the
principal amount of Securities originally issued (or such lesser amount as
may be outstanding at the time) at a purchase price of 100% of principal
amount plus accrued interest to the Accelerated Payment Date. The Company
may credit against its obligation to offer to repurchase Securities hereunder
the principal amount of Securities acquired by the Company and surrendered
for cancellation through purchase, redemption (otherwise than pursuant to
Paragraph 6 or the Securities) or exchange, or upon conversion, and which
were not previously used as a credit against (i) the redemption obligation
set forth in Paragraph 6 of the Securities or (ii) any obligation to offer to
repurchase Securities pursuant to this Section. In no event shall the
failure to meet the minimum Consolidated Net Worth stated above at the end of
any fiscal quarter be counted toward the making of more than one Offer
hereunder.
The Company shall provide the Trustee with written notice of the
Offer at least 30 days before any such Accelerated Payment Date (unless
shorter notice shall be acceptable to the Trustee) but in no case less than
15 days before the notice of any Offer is mailed to Holders. The Company
shall notify the Trustee promptly after the occurrence of any of the events
specified in this Section 4.08.
Notice of an Offer shall be mailed by the Trustee to all Holders not
less than 15 days nor more than 60 days before the Accelerated Payment Date
to the Holders of the Securities at their last registered addresses. The
offer shall remain open from the time of mailing until five days before the
Accelerated Payment Date. The notice shall be accompanied by a copy of the
information regarding the Company required to be contained in a Quarterly
Report on Form 10-Q for the second fiscal quarter referred to
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above if such second fiscal quarter is one of the Company's first three
fiscal quarters. If such second fiscal quarter is the Company's last fiscal
quarter, a copy of the information required to be contained in an Annual
Report to Shareholders pursuant to Rule 14a-3 under the Securities Exchange
Act of 1934 for the fiscal year ending with such second fiscal quarter shall
either accompany the notice or be delivered to Holders not less than 15 days
before the Accelerated Payment Date. The notice shall contain all
instructions and materials necessary to enable such Holders to tender
Securities pursuant to the Offer. The notice, which shall govern the terms
of the offer, shall state:
(1) that the offer is being made pursuant to this Section 4.08;
(2) the purchase price and the Accelerated Payment Date;
(3) that any Security not tendered or accepted for payment will
continue to accrue interest;
(4) that any Security accepted for payment pursuant to the Offer
shall cease to accrue interest after the Accelerated Payment Date;
(5) that Holders electing to have a Security purchased pursuant
to an Offer will be required to surrender the Security, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the
Security completed, to the Paying Agent at the address specified in
the notice at least five days before the Accelerated Payment Date;
(6) that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than three Business Days prior
to the Accelerated Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the
principal amount of the Security the Holder delivered for purchase
and a statement that such Holder is withdrawing his election to have
the Security purchased; and
(7) that Holders whose Securities were purchased only in part
will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered.
Before an Accelerated Payment Date, the Company shall (i) accept for
payment on a pro rata basis (rounded to the nearest $1,000) Securities or
portions thereof tendered pursuant to the Offer; provided, however, that all
Securities or portions thereof accepted for payment shall be in amounts of
$1,000 or multiples of $1,000, (ii) deposit with the Trustee or the Paying
Agent money sufficient to pay the purchase price of all Securities or
portions thereof so accepted and (iii) deliver to the Trustee Securities so
accepted together with an Officer's Certificate stating the Securities or
portions thereof accepted for payment by the Company. The Trustee or the
Paying Agent shall, on or before the tenth Business Day following the date
of the delivery of the Securities, mail or deliver to Holders of Securities
so accepted payment in an amount equal to the purchase price, and the Trustee
shall promptly authenticate and mail or deliver to such Holders a new
Security equal in principal amount to any unpurchased portion of the Security
surrendered. Any Securities not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof. The Company will publicly
announce by a press release the results of the Offer on the Accelerated
Payment Date. For purposes of this Section 4.08, the Trustee shall act as
the Paying Agent.
SECTION 4.09 Limitation on Certain Indebtedness.
The Company will not incur, directly or indirectly, any Indebtedness
which by its terms is both (i) subordinated in right of payment to any Senior
Indebtedness and (ii) senior in right of payment to the Securities.
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ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01 When Company May Merge, etc.
The Company shall not consolidate with or merge into, or transfer all
or substantially all of its assets to, another Person unless (i) the
resulting, surviving or transferee Person is a corporation which assumes by
supplemental indenture all the obligations of the Company under the
Securities and this Indenture; (ii) such corporation is organized and
existing under the laws of the United States, a State thereof or the District
of Columbia; (iii) such corporation and its consolidated subsidiaries shall
have consolidated Stockholders' Equity immediately after such transaction at
least equal to the consolidated Stockholders' Equity of the Company and its
consolidated subsidiaries immediately prior to such transaction; (iv)
immediately after giving effect to such transaction no Default or Event of
Default shall have happened and be continuing, and (v) the Company shall have
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger or transfer and such
supplemental indenture comply with this Indenture, and thereafter all
obligations of the Company shall terminate.
SECTION 5.02 Successor Corporation Substituted.
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company in accordance with Section
5.01, the successor corporation formed by such consolidation or into which
the Company is merged or to which such transfer is made shall succeed to,
and be substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such successor
corporation had been named as the Company herein.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest on any
Security when the same becomes due and payable and the default
continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of (and
premium, if any on) any Security when the same becomes due and
payable at maturity, upon redemption or otherwise (including payment
pursuant to Paragraph 5 or Paragraph 6 of the Securities or
Section 4.08 hereof);
(3) the Company fails to comply with any of its other agreements
in the Securities or this Indenture and the default continues for the
period and after the notice specified in the last paragraph of this
Section 6.01;
(4) there shall be a default under any bond, debenture, note or
other evidence of Indebtedness or under any mortgage, indenture or
other instrument under which there may be issued or by which there
may be secured or evidence any Indebtedness of the Company or any
15
Subsidiary, whether any such Indebtedness now exists or shall hereafter be
created, which (a) is a default in the payment of the principal, premium, if
any, or interest on such Indebtedness unless such default is cured within 30
days after the date such payment is due or (b) if any other default, such
default shall have resulted in such Indebtedness becoming or being declared
due and payable prior to the date on which it would otherwise have become due
and payable or on maturity, without such acceleration having been rescinded
or annulled within 10 days after notice to the Company of such acceleration ,
or such Indebtedness having been discharged; provided, however, that no
default under this paragraph (4) shall exist if the aggregate amount of such
Indebtedness with respect to which a payment default under clause (a) or an
acceleration under clause (b) had occurred shall be less than $2,000,000;
(5) the Company pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case or proceeding,
(B) consents to the entry of an order for relief against it in
an involuntary case or proceeding,
(C) consents to the appointment of a Custodian of it or for
all or substantially all of its property, or
(6) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company in an involuntary case or
proceeding,
(B) appoints a Custodian of the Company or for all or
substantially all of its property, or
(C) orders the liquidation of the Company,
and the order or decree remains unstayed and in effect for 90 days.
The term "Bankruptcy Law" means Title 11 U.S. Code or any similar
Federal or State law for the relief of debtors. The term "Custodian" means
any receiver, trustee, assignee, liquidator, sequestrator or similar official
under any Bankruptcy Law.
A default under clause (3) (other than defaults under Sections 4.04,
4.05 and 4.08, which defaults shall be Events of Defaults without the notice
or passage of time specified in this paragraph) is not an Event of Default
until the Trustee notifies the Company, or the Holders of at least 25% in
principal amount of the Securities then outstanding notify the Company and
the Trustee, of the default and the Company does not cure the default within
30 days after receipt of such notice. the notice must specify the default,
demand that it be remedied and state that the notice is a
"Notice of Default".
SECTION 6.02 Acceleration.
If an Event of Default occurs and is continuing, the Trustee by
notice to the Company, or the Holders of at least 25% in principal amount of
the Securities then outstanding by notice to the Company
16
and the Trustee, may declare to be due and payable immediately the principal
amount of the Securities plus accrued interest to the date of acceleration.
Upon any such declaration, such amount shall be due and payable immediately,
and upon payment of such amount all of the Company's obligations under the
Securities and this Indenture, other than obligations under Section 7.07,
shall terminate. The Holders of a majority in principal amount of the
outstanding Securities by notice to the Trustee may rescind an acceleration
and its consequences if (x) all existing Events of Default, other than the
non-payment of the principal of the Securities, which have become due solely
by such declaration of acceleration, have been cured or waived, (y) to the
extent the payment of such interest is lawful, interest on overdue
installments of interest and overdue principal which has become due
otherwise than by such declaration of acceleration, has been paid, and (z)
the rescission would not conflict with any judgment or decree of a court of
competent jurisdiction. Notwithstanding anything contained in this Indenture
or in the Securities to the contrary, in the case of any Event of Default
specified in Section 6.01 occurring by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company, then upon the
acceleration resulting therefrom, the unpaid principal amount of the
Securities, to the extent lawful, shall be deemed to be equal to the product
of (i) the unpaid principal amount thereof and (ii) the then applicable
percentage specified in Paragraph 5 of the Securities.
SECTION 6.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal (and premium, if any) or interest on the Securities or
to enforce the performance of any provision of the Securities or this
Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any
right or remedy accruing upon an Event of Default shall not impair the right
or remedy or constitute a waiver of or acquiescence in the Event of Default.
No remedy is exclusive of any other remedy. All available remedies are
cumulative.
SECTION 6.04 Waiver of Defaults and Events of Default.
Subject to Section 9.02, the Holders of a majority in principal
amount of the Securities then outstanding, on behalf of the Holders of all of
the Securities, by notice to the Trustee may waive a Default or Event of
Default and its consequences. When a Default or Event of Default is waived,
it is cured and ceases.
SECTION 6.05 Control by Majority.
The Holders of a majority in principal amount of the Securities then
outstanding may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on it. The Trustee, however, may refuse to follow any
direction that conflicts with law or this Indenture, that the Trustee
determines may be unduly prejudicial to the rights of other Securityholders
or that may involve the Trustee in personal liability; provided that the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
section 6.06 Limitation on Suits.
A Securityholder may not pursue any remedy with respect to this
Indenture or the Securities unless:
17
(1) the Holder gives to the Trustee written notice of a continuing Event
of Default;
(2) the Holders of at least 25% in principal amount of the Securities
then outstanding make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity satisfactory
to the Trustee against any loss, liability or expenses;
(4) the Trustee does not comply with the request within 60 days after
receipt of the notice, request and offer of indemnity; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60 day period by the Holders of a majority in
principal amount of the Securities then outstanding.
A Securityholder may not use this Indenture to prejudice the rights
of another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.07 Rights of Holders to Receive Payment.
Subject to Article 10, notwithstanding any other provision of this
Indenture, the right of any Holder of a Security to receive payment of
principal of, premium, if any, and interest on the Security, on or after the
respective due dates expressed in the Security, or to bring suit for the
enforcement of any such payment on or after such respective dates, is
absolute and unconditional and shall not be impaired or affected without the
consent of the Holder.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Security to convert the Security or to bring suit for the
enforcement of such right shall not be impaired or affected without the
consent of the Holder.
SECTION 6.08 Collection Suit by Trustee.
If an Event of Default in payment of interest or principal (and
premium, if any)specified in Section 6.01(1) or (2) occurs and is continuing,
the Trustee may recover judgment in its own name and as trustee of an express
trust against the Company or any other obligor on the Securities for the
whole amount of unpaid principal (and premium, if any) and accrued interest
remaining unpaid, together with interest on overdue principal and premium,
if any) and to the extent that payment of such interest, in each case at the
rate borne by the Securities and such further amount as shall be sufficient
to cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursement and advances of the Trustee, its agents
and counsel.
SECTION 6.09 Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of
the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Securityholders allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Securities), its creditors or its property
and shall be entitled and empowered to collect and receive any monies or
other property payable or deliverable on any such claims and to distribute
the same. Any Custodian in any such
18
judicial proceeding is hereby authorized by each Securityholder to make such
payments to the Trustee, and in the event that the Trustee shall consent to
the making of such payments directly to the Securityholders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee its agents and counsel, and any
other amounts due the Trustee under Section 7.07.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Securityholder
any plan of reorganization, arrangement, adjustment or composition affecting
the Securities or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Securityholder in any such
proceedings.
SECTION 6.10 Priorities.
If the Trustee collects any money pursuant to this Article 6, it
shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of Senior Indebtedness to the extent
required by Article 10;
THIRD: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratable, without
preference or priority of any kind, according to the amounts
due and payable on the Securities for principal and interest,
respectively, and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section 6.10.
SECTION 6.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted
by it as Trustee, a court in its discretion may require the filing by any
party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorney's fees, against any party litigant in the suit, having
due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.08, or a suit by Holders
of more than 10% in principal amount of the Securities then outstanding.
ARTICLE 7
TRUSTEE
SECTION 7.01 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise its rights and powers and use the same degree of care
and skill in their exercise as a prudent person would exercise or use under
the circumstances in the conduct of his own affairs.
19
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are
specifically set forth in this Indenture and no others.
(2) In the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnishe
to the Trustee and conforming to the requirements of this Indenture. The
Trustee, however, shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of
paragraph (b) of this Section 7.01.
(2) The Trustee shall not be liable for any error in
judgment made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.
(e) The Trustee may refuse to perform any duty or exercise any
right or power unless it receives indemnity satisfactory to it against any
loss, liability, expense or fee.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree with the Company. Money held
in trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02 Rights of Trustee.
Subject to Section 7.01:
(1) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person.
The Trustee need not investigate any fact or matter stated in the
document.
(2) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, which
shall conform to Section 12.05. The Trustee shall not be
liable for any action it takes or omits to take in good faith in
reliance on such Certificate or Opinion.
(3) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed
with due care.
(4) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or
within its rights or powers.
20
SECTION 7.03 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledge of Securities and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. The Trustee, however, is subject to
Sections 7.10 and 7.11.
SECTION 7.04 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the
Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement in the Securities other than its certificate
of authentication or in any document used in the sale of the Securities other
than any statement in writing provided by the Trustee for use in such
document.
SECTION 7.05 Notice of Defaults.
If a Default occurs and is continuing and if it is known to the
Trustee, the Trustee shall mail to each Securityholder notice of the Default
within 90 days after it occurs. Except in the case of a default in payment of
principal of , premium, if any, or interest on any Security, the Trustee may
withhold the notice if and so long as a committee of its Trust Officers in
good faith determines that withholding the notice is in the interests of
Securityholders.
SECTION 7.06 Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, the Trustee shall mail to each Securityholder a
brief report dated as of such May 15 that complies with TIA 313(a). The
Trustee also shall comply with TIA 313(b) and 313(c).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange on which the Securities
are listed. The Company agrees to notify the Trustee whenever the Securities
become listed on any stock exchange.
SECTION 7.07 Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services (which compensation shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust). The Company shall reimburse the Trustee upon request for all
reasonable disbursements, expenses and advances incurred or make by it.
Such expenses may include the reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee for, and hold it harmless
against, any loss or liability incurred by it in connection with its duties
under this Indenture. The Trustee shall notify the Company promptly of any
claim asserted against the Trustee for which it may seek indemnity.
The Company need not reimburse the Trustee for any expense or
indemnify it against any loss or liability incurred by it through its
negligence or bad faith.
21
To secure the Company's payment obligations in this Section 7.07,
the Trustee shall have a lien prior to the Securities on all money or
property held or collected by the Trustee, except such money or property
held in trust to pay principal and interest on particular Securities and
such lien shall not be subordinate to any Senior Indebtedness.
SECTION 7.08 Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
The Trustee may resign by so notifying the Company. The Holders of
a majority in principal amount of the Securities then outstanding may remove
the Trustee by so notifying the Trustee and may appoint a successor Trustee
with the Company's written consent. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee.
If a successor Trustee does not take office within 45 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holders of a majority in principal amount of the Securities then
outstanding may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after
that, the retiring Trustee shall, upon payment of its charges, transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07, the resignation or removal of the retiring
Trustee shall become effective, and the successor Trustee shall have all the
rights, powers and duties of the Trustee under this Indenture. A successor
Trustee shall mail notice of its succession to each Security holder.
SECTION 7.09 Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10 Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA 310(a)(1). The Trustee shall have a combined capital
and surplus of at least $50,000,000 as set forth in its most recent
published annual report of condition. the Trustee shall comply with
TIA 310(b), including the
22
optional provision permitted by the second sentence of TIA 310(b)(9).
SECTION 7.11 Preferential Collection of Claims Against Company.
The Trustee is subject to TIA 311(a), excluding any creditor
relationship listed in TIA 311(b). A Trustee who has resigned or been
removed shall be subject to TIA 311(a) to the extent indicated therein.
SECTION 7.12 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except
as otherwise agreed with the Company.
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01 Satisfaction, Discharge and Defeasance of the Securities.
The Company shall be deemed to have paid and discharged the entire
indebtedness on the Securities from and after the ninety-first day after the
date of the deposit referred to in paragraph (a) below, the provisions of
this Indenture shall no longer be in effect in respect of the Securities,
and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of such indebtedness;
provided that the following conditions shall have been satisfied:
(a) the Company has deposited or caused to be deposited with the
Trustee irrevocably as trust funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of
the Securities, with reference to this Section 8.01, (i) money
or (ii) US Government Obligations or (iii) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge the entire
indebtedness on all the Securities for principal, premium, if any,
and interest, if any, to April 1, 2012 as such principal, premium or
interest, if any, becomes due and payable in accordance with the
terms of this Indenture and the Securities;
(b) the Company has paid or caused to be paid all other sums
payable hereunder by the Company in connection with the Securities,
including all fees and expenses of the Trustee; and
(c) the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the
satisfaction and discharge of the entire indebtedness on the
Securities have been complied with.
"U.S. Government Obligation" means direct, non-callable obligations
of, or non-callable obligations guaranteed by, the United States of America
for the timely payment of which obligation or guarantee the full faith and
credit of the Unites States of America is pledged.
SECTION 8.02 Satisfaction and Discharge of Indenture.
In addition to its rights under Section 8.01, the Company may
terminate all of its obligations under this Indenture when:
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(a) All of the Securities theretofore authenticated and delivered
(other than (A) Securities which have been destroyed, lost or stolen
and which has been replaced or paid as provided in Section 2.07
hereof and (B) Securities for whose payment money has theretofore
been deposited with the Trustee or the Paying Agent in trust or
segregated and held in trust by the Company and thereafter repaid to
the Company or discharged from such trust, as provided in Section
2.04 and Section 8.06 hereof) have been delivered to the Trustee for
cancellation;
(b) the Company has paid or caused to be paid all other sums
payable hereunder by the Company in connection with the outstanding
Securities, including all fees and expenses of Trustee; and
(c) the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the
satisfaction and discharge of this indenture have been complied with.
SECTION 8.03 Survival of Certain Obligations.
Notwithstanding the satisfaction and discharge of this Indenture
pursuant to Sections 8.01 and 8.02, the respective obligations of the Company
in Paragraph 12 or the Securities and in Sections 2.03, 2.04.2.05, 2.06,
2.07, 4.01,7.07,7.08, 8.06, 8.07 and in Article 11 shall survive until the
Securities are no longer outstanding, and thereafter the obligations of the
Company in such Paragraph 12 and in Sections 7.07 and 8.06 shall survive.
Nothing contained in this Article Eight shall abrogate any of the obligations
or duties of the Trustee under the Indenture.
SECTION 8.04 Application of Trust Money.
(a) Subject to the provisions of Section 8.06, all money and
U.S. Government Obligations deposited with the Trustee for the
Securities pursuant to Section 8.01 or Section 8.02, and all money
received by the Trust in respect of U.S. Government Obligations
deposited with the Trustee for the Securities pursuant to Section
8.01 or Section 8.02 shall be held in trust and applied by it, in
accordance with the provisions of the Securities and this Indenture,
to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the
principal, premium, if any, and interest, if any, on the
Securities: but such money need not be segregated from other funds
except to the extent required by law. Money and U.S. Government
Obligations so held in trust are not subject to the subordination
provisions of Article 10.
(b) The Trustee shall deliver or pay to the Company from time to
time upon Company request any U.S. Government Obligations, or money
held by it as provided in Section 8.01 or Section 8.02 which, in the
opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered
to the Trustee, are then in excess of the amount thereof which then
would have been required to be deposited for the purpose for which
such U.S. Government Obligations, or money were deposited or
received.
SECTION 8.05 Paying Agent to Repay Monies Held.
Upon the satisfaction and discharge of this Indenture, all monies
then held by any Paying Agent under the provisions of this Indenture shall,
upon demand of the Company, be repaid to it or paid to the
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appropriate Trustee, and thereupon such Paying Agent shall be released from
all further liability with respect to such monies.
SECTION 8.06 Return of Unclaimed Monies.
Any monies deposited with or paid to the Trustee or any Paying Agent
for the Securities, or then held by the Company, in trust for the payment of
the principal, premium, if any, and interest, if any, on the Securities and
not applied but remaining unclaimed by the Holders of the Securities for two
years after the date upon which the principal of and interest , if any, on
the Securities, as the case may be, shall have become due and payable, shall,
unless otherwise required by mandatory provisions of applicable escheat or
abandoned or unclaimed property law, be repaid to the Company by such Trustee
or any Paying Agent or demand or (if then held by the Company) shall be
discharged from such trust; and the Holders of the Securities entitled to
receive such payment shall thereafter look only to the Company for the
payment thereof; provided, however, that, before being required to make any
such repayment, such Trustees may (at the expense of the Company) cause to
be published once in an authorized newspaper in the expense of the Company)
cause to be published once in an authorized newspaper in the same city in
which the place of payment with respect to the Securities shall be located
and in an authorized newspaper in the City of New York, or mail to each such
Holder, a notice (in such form as may be deemed appropriate by such Trustee)
that said monies remain unclaimed and that, after a date named therein, any
unclaimed balance of said monies then remaining will be returned to the
Company.
SECTION 8.07 Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 8.01 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application,
the Company's obligations under this Indenture and the Securities shall be
revived and reinstated as though no deposit had occurred pursuant to
Section 8.01 until such time as the Trustee or Paying Agent is permitted to
apply all such money or U.S. Government Obligations in accordance with
Section 8.01; provided, however, that if the Company has made any payment
of interest on or principal of any Securities because of the reinstatement
of its obligations, the Company shall be subrogated to the rights of the
Holders of such Securities to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS AND WAIVERS
SECTION 9.01 Without Consent of Holders.
The Company and the Trustee may amend or supplement this Indenture (any
Indenture supplemental hereto to be in a form satisfactory to the Trustee)
or the Securities without notice to or consent of any Securityholder:
(1) to comply with Section 5.01;
(2) to provide for uncertificated Securities in addition to
or in place of certificated Securities, or
(3) to cure any ambiguity, defect or inconsistency, or to make
any other change that does not adversely affect the rights of any
Securityholder.
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SECTION 9.02 With Consent of Holders.
The Company and the Trustee may amend this Indenture or the
Securities without notice to any Securityholder but with the written
consent of the Holders of at least a majority in principal amount of the
Securities then outstanding. The Holders of a majority in principal amount
of the Securities then outstanding may waive compliance in a particular
instance by the Company with any provision of this Indenture or the
Securities without notice to any Securityholder. Subject to Section 9.04,
without the consent of each Securityholder affected, however, an amendment,
supplement or waiver, including a waiver pursuant to Section 6.04, may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment or waiver;
(2) reduce the rate of or extend the time for payment of
interest on any Security;
(3) reduce the principal of or extend the fixed maturity of any
Security;
(4) waive (except, unless theretofore cured) a default in the
payment of the principal of (and premium, if any on), interest on
or redemption amounts with respect to any Security;
(5) make Security payable in money other than that stated in
the Security;
(6) make any change in Sections 6.04, 6.07 or 9.02 (third
sentence);
(7) make any change that adversely affects the right to convert
any Security; or
(8) make any change in Article 10 that adversely affects the
rights of any Securityholder.
After an amendment under this Section becomes effective the Company
shall mail to Securityholders a notice briefly describing such amendment.
SECTION 9.03 Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Securities
shall comply with the TIA as then in effect.
SECTION 9.04 Revocation and Effect of Consents.
Subject to this Indenture, each amendment, waiver or instrument
evidencing other action shall become effective in accordance with its terms.
Until an amendment, waiver or other action becomes effective, a consent to
it by a Holder of a Security is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the
same debt as the consenting Holder's Security, even if notation of the
consent is not made on any Security. Any such Holder or subsequent Holder,
however, may revoke the consent as to his Security or portion of a Security,
if the Trustee receives the notice of revocation before the date the
amendment, waiver or other action becomes effective.
After an amendment, waiver or other action becomes effective, it
shall bind every Securityholder, unless it makes a change described in any of
clauses (1) through (8) or Section 9.02. In that case the amendment, waiver
or other action shall bind each Holder of a Security or portion of a Security
that
26
evidences the same debt as the consenting Holder's Security.
SECTION 9.05 Notation on or Exchange of Securities.
If an amendment or waiver changes the terms of a Security, the
Trustee may request the Holder of the Security to deliver it to the Trustee.
The Trustee may place an appropriate notation on the Security about the
changed terms and return it to the Holder. Alternatively, if the Company or
the Trustee so determine, the Company in exchange for the Security shall
issue and the Trustee shall authenticate a new Security that reflects the
changed terms.
SECTION 9.06 Trustee to Sign Amendments, etc.
The Trustee need not sign any amendment that adversely affects its
rights. In signing or refusing to sign any amendment the Trustee shall be
entitled to receive and, subject to Section 7.01, shall be fully protected
in relying upon, an Opinion of Counsel stating that such amendment is
authorized or permitted by this Indenture. The Company may not sign an
amendment until its Board of Directors approves it.
ARTICLE 10
SUBORDINATION; SENIORITY
SECTION 10.01 Securities Subordinated to Senior Indebtedness.
The Company agrees, and each Holder of the Securities by his
acceptance thereof likewise agrees, that the payment of the principal of,
premium, if any, and interest on the Securities is subordinated and junior
in right of payment, to the extent and in the manner provided in this Article
10, except as provided in Section 8.04, to the prior payment in full of all
Senior Indebtedness whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed.
The Senior Indebtedness of the Company shall continue to be Senior
Indebtedness and entitled to the benefits of these subordination provisions
irrespective of any amendment, modification or waiver of any term of any
instrument relating to the Senior Indebtedness or the extension or renewal
of the Senior Indebtedness.
All the provisions of this Indenture and the Securities shall be
subject to the provisions of this Article 10 so far as they may be applicable
thereto, except that nothing in this Article 10 shall apply to claims for, or
payments to, the Trustee under or pursuant to Section 7.07.
SECTION 10.02 Company Not to Make Payments with Respect to Securities in
Certain Circumstances.
(a) In the event the Company shall default in the payment of
any principal of, premium, if any, or interest on any Senior Indebtedness
when the same becomes due and payable, whether at maturity or at a date fixed
for prepayment or by declaration or otherwise, then, unless and until such
default shall have been cured or waived or shall have ceased to exist, no
direct or indirect payment (in cash, property, securities, by set-off or
otherwise) shall be made or agreed to be made on account of the principal of,
premium, if any, or interest on the Securities, or on account of the
mandatory redemption provisions in the Securities (except mandatory
redemption payments made in respect of Securities acquired by the Company
before the coming due of such Senior Indebtedness), or in respect of any
retirement, purchase or other acquisition of any of the Securities.
27
(b) Upon the happening of an event of default with respect to any
Senior Indebtedness, as defined therein or in the instrument under which the
same is outstanding, permitting the holders thereof to accelerate the
maturity thereof (other than under circumstances when the terms of the
preceding paragraph are applicable), upon written notice thereof given to
the Company and the Trustee by any holder or holders of such Senior
Indebtedness or their representative or representatives ("Payment Notice"),
then, unless and until such event of default shall have been cured or waived
or shall have ceased to exist, no direct or indirect payment (in cash,
property, securities, by set-off or otherwise) shall be made or agreed to be
made on account of the principal of, premium if any or interest on the
Securities or on account of the mandatory redemption provisions of the
Securities (except mandatory redemption payments made in Securities acquired
by the Company before such payment notice), or in respect of any retirement,
purchase or other acquisition of any of the Securities; provided, however,
that this paragraph (b) shall prevent any such payment (which is not
otherwise prohibited by the immediately preceding paragraph) only for a
period which is the longer of (i) 90 days after Payment Notice shall have
been given or (ii) any period during which the Senior Indebtedness in
respect of which such event of default exists has become due and payable in
its entirety and (A) such acceleration has not been rescinded or annulled or
(B) such acceleration is being contested in good faith by the Company in an
appropriate judicial proceeding. Notwithstanding the foregoing, no event of
default which existed or was continuing on the date of any Payment Notice
shall be made the basis for the giving of a second Payment Notice unless all
events of default existing or continuing on the date of such first Payment
Notice shall have been cured or waived after such date.
(c) If any payment or distribution of any character, whether in
cash, property or securities (including any collateral at any time securing
the Securities, but not including shares of stock of the Company as
reorganized or readjusted or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated, at least to the same extent as the
Securities, to the payment of all Senior Indebtedness which may at the time
be outstanding, provided that the rights of the holders of the Senior
Indebtedness are not altered by such reorganization or readjustment),
including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness of the
Company being subordinated to the payment of the Securities, shall be
received by the Trustee or any holder of the Securities, in contravention
of any of the terms hereof and before all the Senior indebtedness shall have
been paid in full, such payment or distribution shall be paid over or
delivered and transferred to the holders of the Senior Indebtedness (pro rata
to each such holder on the basis of the respective amounts of Senior
Indebtedness held by such holder) or their representatives, to the extent
necessary to pay all Senior Indebtedness in full, after giving effect to any
concurrent payment or distribution to or for the holders of Senior
Indebtedness; provided, however, that such payment or distribution need not
be so paid over or delivered and transferred at any time when the provisions
of subsections (a) and (b) or this Section 10.02 would no longer prevent
payments by the Company to the Holders of the Securities.
SECTION 10.03 Securities Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization of Company.
(a) Upon any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities (including any
collateral at any time securing the Securities), to creditors upon any
dissolution or winding up or total or partial liquidation or reorganization
or readjustment of the Company, whether voluntary or involuntary, in
bankruptcy, insolvency, receivership or other cases or proceedings, all
principal of and interest due or to become due upon all Senior Indebtedness
shall first be paid in full before the Holders of the Securities shall be
entitled to receive any assets (including any collateral at any time securing
the Securities, but not including shares of stock of the
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Company as reorganized or readjusted or securities of the Company or any
other corporation provided for by a plan of reorganization or readjustment,
the payment of which is subordinated, at least to the same extent as the
Securities, to the payment of all Senior Indebtedness which may at the time
be outstanding, provided that the rights of the holders of the Senior
Indebtedness are not altered by such reorganization or readjustment) so paid
or distributed in respect of the Securities (for principal, premium, if any,
or interest); and upon any such dissolution or winding up or liquidating or
reorganization or readjustment, any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or securities
(including any collateral at any time securing the Securities, but not
including shares of stock of the Company as reorganized or readjusted or
securities of the Company or any other corporation provided for by a plan or
reorganization or readjustment, the payment of which is subordinated, at
least to the same extent as the Securities, to the payment of all Senior
Indebtedness which may at the time be outstanding, provided that the rights
of the holders of the Senior Indebtedness are not altered by such
reorganization or readjustment), to which the Holders of the Securities
would be entitled except for the provisions of this Section 10.03, including
any such payment or distribution which may be payable or deliverable by
reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Securities, shall be paid or distributed
by the Company or by any receiver, trustee in bankruptcy, liquidating
trustee, agent or other Person making such payment or distribution directly
to the holders of Senior Indebtedness (pro rata to each such holder on the
basis of the respective amounts of Senior Indebtedness held by such holder)
or their representatives, to the extent necessary to pay all Senior
Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness, before any payment
or distribution in respect of the Securities (for principal, premium, if any,
or interest) is made to the Holders of the Securities.
(b) Upon any payment or distribution in connection with any cases
or proceedings referred to in subsection (a) of this Section 10.03, the
Trustee and the Holders of the Securities shall be entitled to rely upon any
order or decree of a court of competent jurisdiction in which such cases or
proceedings are pending, and the Trustee and the Holders of the Securities
shall be entitled to rely upon a certificate of the liquidating trustee or
agent or other Person making such payment or distribution to the Trustee or
to the Holders of the Securities for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of the
Senior Indebtedness and other indebtedness of the Company, the amount thereof
or payable thereon, the amount or amounts paid or distributed thereon and
all other facts pertinent thereto or to this Section 10.03.
(c) If any payment or distribution of any character, whether in
cash, property or securities (including any collateral at any time securing
the Securities, but not including shares of stock of the Company as
reorganized or readjusted or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated, at least to the same extent as the
Securities, to the payment of all Senior Indebtedness which may at the time
be outstanding, provided that the rights of the holders of the Senior
Indebtedness are not altered by such reorganization or readjustment),
including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness of the
Company being subordinated to the payment of the Securities, shall be
received by the Trustee or any Holder of the Securities in contravention of
any of the terms of this Article 10 and before all the Senior Indebtedness
shall have been paid in full, such payment or distribution shall be paid over
or delivered and transferred to the holders of the Senior Indebtedness (pro
rata to each such holder on the basis of the respective amounts of Senior
Indebtedness held by such holder) or their representatives, to the extent
necessary to pay all Senior Indebtedness in full, after giving
29
effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness; provided, however, that such payment or distribution
need not be so paid over or delivered and transferred at any time when the
provisions of subsection (a) of this Section 10.03 would no longer prevent
payments by the Company to the Holders of the Securities.
(d) The Company shall give prompt written notice to the Trustee
of any insolvency or bankruptcy case or proceeding in respect of the Company
and of any cases or proceedings for voluntary liquidation, dissolution or
other winding up of the Company (whether or not involving insolvency or
bankruptcy), within the meaning of this Section 10.03 or any other proceeding
or event contemplated by this Section 10.03, of the declaration of any
Senior Indebtedness as due and payable before its expressed maturity, and of
any event which pursuant to this Article 10 would prevent payment by the
Company of the principal of, premium, if any, or interest on the Securities.
SECTION 10.04 Securityholders to be Subrogated to Rights of Holders of
Senior Indebtedness.
Senior Indebtedness shall not be deemed to have been paid in full
unless the holders thereof shall have received cash, or other property
satisfactory to the holders of Senior Indebtedness, equal to the amount of
such Senior Indebtedness then outstanding. Upon the payment in full of all
Senior Indebtedness and not before, the Holders of the Securities shall be
subrogated (equally and ratably with the holders of all indebtedness of the
Company which, by its express terms, ranks on a parity with the Securities
and is entitled to like rights of subrogation) to the rights of the holders
of Senior Indebtedness to receive payments or distributions of assets of the
Company applicable to the Senior Indebtedness until the Securities shall be
paid in full. For purposes of such subrogation, no payments or distributions
on the Senior Indebtedness, pursuant to Sections 10.02 an 10.03 hereof shall,
as between the Company, its creditors other than the holders of Senior
Indebtedness, and the Holders of the Securities, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness, and
no payments or distribution to the Trustee or the Holders of the Securities
of assets by virtue of the subrogation herein provided for shall, as between
the Company, its creditors other than the holders of Senior Indebtedness,
and the Holders of the Securities, be deemed to be a payment to or on account
of the Securities. The provisions of this Article 10 are solely for the
purpose of defining the relative rights of the Holders of the Securities, on
the one hand, and the holders of Senior Indebtedness on the other hand.
SECTION 10.05 Obligation of the Company Unconditional.
Nothing contained in this Article 10 or elsewhere in this Indenture
or in the Securities is intended to or shall impair the obligation of the
Company, which is unconditional and absolute, to pay the principal of,
premium, if any, and interest on the Securities as and when the same shall
become due and payable in accordance with their terms, or to affect the
relative rights of the Holders of the Securities and creditors of the
Company other than the holders of Senior Indebtedness, nor shall anything
herein or therein prevent the Trustee or the Holder of any Securities from
exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article 10,
of the holders of Senior Indebtedness in respect of cash, property or
securities of the Company otherwise payable or delivered to the Trustee or
such Holder upon the exercise of any such remedy.
30
SECTION 10.06 Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or
by the Trustee, and the Trustee shall not be required to withhold payment to
the Holders of Securities as provided in Section 10.02(c) or 10.03(c), unless
the Trustee shall have received written notice thereof, two Business Days
prior to the day such payment is due, at its Corporate Trust Office from the
Company or from the one or more holders of Senior Indebtedness or from any
representative thereof or trustee therefor identifying the specific sections
of this Indenture involved and describing in detail the facts that would
obligate the Trustee to withhold payments to Holders of Securities, as well
as any other facts required by the next succeeding paragraph of this Section
10.06; and, prior to the receipt of any such written notice, the Trustee,
subject to the provisions of Section 7.01 and 7.02, shall be entitled to
assume conclusively that no such facts exist.
The Trustee shall be entitled to rely on the delivery to it of a
written notice by a Person representing himself to be a holder of Senior
Indebtedness (or a trustee on behalf of such holder) to establish that such
notice has been given by a holder of Senior Indebtedness or a trustee on
behalf of any such holder. In the event that the Trustee determines in
good faith that further evidence is required with respect to the right of
any Person as a holder of Senior Indebtedness to participate in any payment
or distribution pursuant to this Article 10, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Indebtedness held by such Person, the extent to
which such Person is entitled to participate in such payment or distribution
and any other facts pertinent to the rights of such Person under this Article
10, and if such evidence is not furnished, the Trustee may defer any payment
to such Person pending judicial determination as to the right of such Person
to receive such payment; provided, however, that if this Indenture has been
discharged in accordance with Article Eight, any monies deposited with the
Trustee shall be applied in accordance with the provisions of Article Eight
and not otherwise.
SECTION 10.07 Application by Trustee of Monies Deposited with It.
Nothing contained in this Article 10 or elsewhere in this Indenture,
or in any of the Securities, shall (i) affect the obligations of the Company
to make, or prevent the Company from making, at any time except during the
pendency of a proceeding referred to in subsection (a) of Section 10.03 and
except during the continuance of any default specified in subsection (a) or
(b) of Section 10.02 to the extent provided therein, payments at any time of
principal of, premium, if any, or interest on the Securities, (ii) prevent
the Paying Agent, in trust for the benefit of the Holders of Securities as
to which notice of redemption shall have been mailed or published, to the
payment of or on account of principal of, premium, if any, or interest on
the Securities if, at the time of such mailing or publishing, such payment
would not have been prohibited by the provisions of this Article 10, or
(iii) prevent the application by the Trustee or any Paying Agency of any
monies deposited with it hereunder to (or, if the Company is acting as its
own Paying Agent, segregated and held in trust as provided in Section 2.04
for) the payment of or on account of the principal of, premium, if any, or
interest on Securities if, at the time of such deposit (or at the time such
monies were so segregated and held in trust), such payment would not have
been prohibited by the provisions of this Article 10.
SECTION 10.08 Continuing Offer of Subordination.
The provisions of this Article 10 are made for the benefit of all
Persons who become holders of or continue to hold Senior Indebtedness, and
such holders are hereby made obligees under this Article 10 to
31
the same extent as if their names were written herein as such, and they
and/or each of them may proceed to enforce such provisions.
In furtherance of the foregoing, each holder of Senior Indebtedness
is hereby irrevocably authorized and empowered but shall not be obligated to
demand, sue for, collect, receive and execute a receipt for such holder's
ratable share of all payments and distributions in respect of the Securities
which are required to be paid or delivered to holders of Senior Indebtedness
as provided in this Article 10, and to file and prove all such claims and
take all such other action (including the right to vote such holder's ratable
share of the Securities) in the name of the Holders of Securities or
otherwise, as such holder of Senior Indebtedness may reasonably determine to
be necessary for the enforcement of the rights provided in this Article 10,
and at the Company's expense (which expense must be paid by the Company in
advance to each Securityholder from whom the Company requests such
instruments and such other action) the Company may require the delivery to
a holder of Senior Indebtedness by each Holder of Securities of such
instruments reasonable necessary to confirm such authorization, such as
powers of attorney, proofs of claim, assignments of claim and other
instruments in form and substance reasonably satisfactory to the
Securityholders, and the taking of all such other reasonable action, as the
Company may reasonably request in order to enable such holder of Senior
Indebtedness to enforce such holder's ratable share of all Securities and all
such payments and distributions in respect thereof.
The Trustee shall have no obligations whatsoever with respect to
compliance with any of the provisions of this Section 10.08 by any Holder.
SECTION 10.09 Subordination Rights Not Impaired by Acts or Omissions of
Company or Holders of Senior Indebtedness.
The Holders of Senior Indebtedness may at any time or from time to
time, and in their absolute discretion, change the manner, place or terms of
payment of, change or extend the time of payment of, or renew or alter, any
Senior Indebtedness, or amend or supplement any instrument pursuant to which
any Senior Indebtedness is issued, or exercise or refrain from exercising
any other of their rights under the Senior Indebtedness including, without
limitation, the waiver of defaults thereunder, all without notice to or
assent from the Holders of the Securities of the Trustee. No right of any
present or future holders of any Senior Indebtedness to enforce
subordination as provided herein shall at any time in any way be prejudiced
or impaired by any act by any such holder or by any noncompliance by the
Company with the terms of this Indenture, regardless of any knowledge thereof
which any such holder may have or be otherwise charged with.
SECTION 10.10 Securityholders Authorize Trustee to Effectuate
Subordination of Securities.
Each holder of the Securities by his acceptance thereof authorizes
and expressly directs the Trustee on his behalf to take such action as may
be necessary or appropriate to effectuate the subordination provided in this
Article 10 and irrevocably appoints the Trustee his attorney-in-fact for
such purpose, including, in the event of any dissolution, winding up,
liquidation or reorganization of the Company (whether in bankruptcy,
insolvency or receivership proceedings or otherwise) tending towards
liquidation of the business and assets of the Company, the timely filing of
a claim for the unpaid balance of its or his Securities in the form required
in said proceedings and causing said claim to be approved. If the Trustee
does not file a proper claim or proof of debt in the form required in such
proceeding prior to 30 days before the expiration of the time to file such
claim or claims, then the holders of Senior Indebtedness have the right to
file and are hereby authorized to file an appropriate claim for and on
behalf of the Holders of said Securities.
32
SECTION 10.11 Right of Trustee to Hold Senior Indebtedness; Trustee Owes
No Fiduciary Duty to Holder of Senior Indebtedness.
The Trustee, in its individual capacity, shall be entitled to all of
the rights set forth in this Article 10 in respect of any Senior Indebtedness
at any time held by it to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall be construed to deprive the
Trustee of any of its rights as such holder.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article 10, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall
not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness
and the Trustee shall not be liable to any holder of Senior Indebtedness if
it shall mistakenly pay over or deliver to Holders of Securities, the Company
or any other person monies or assets to which any holder of Senior
Indebtedness shall be entitled by virtue of this Article 10 or otherwise.
SECTION 10.12 Article 10 Not To Prevent Events of Default.
The failure to make a payment on account of principal of or interest
on the Securities by reason of any provision in this Article 10 shall not be
construed as preventing the occurrence of an Event of Default under
Section 6.01.
SECTION 10.13 Officers' Certificate.
If there occurs an event referred to in section 10.02(a) or (b) or
the first sentence of Section 10.03(a), the Company shall promptly give to
the Trustee an Officers' Certificate (on which the Trustee may conclusively
rely) identifying all holders of Senior Indebtedness and the principal
amount of Senior Indebtedness then outstanding held by each such holder and
stating the reasons why such Officers' Certificate is being delivered to the
Trustee.
SECTION 10.14 Paying Agents other than the Trustee.
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article 10 shall in such case (unless the context
shall otherwise require) be construed as extending to and including such
Paying Agent within its meaning as fully for all intents and purposes as if
such Paying Agent were named in this Article 10 in addition to or in place
of the Trustee, provided, however, that Sections 10.06 and 10.11 hereof
shall not apply to the Company if it acts as Paying Agent.
SECTION 10.15 Securities Senior Subordinated Indebtedness.
The indebtedness represented by the Securities will be senior and
prior in right of payment to the principal, premium, if any, and interest on
all Subordinated Indebtedness, to the extent and in the manner provided in
such Subordinated Indebtedness.
ARTICLE 11
CONVERSION OF SECURITIES
SECTION 11.02 Right of Conversion; Conversion Price.
The Holder of any Security or Securities shall have the right, at
his option, at any time before the close of business on April 1, 2012,
(except that, with respect to any Security or portion of a Security which
33
shall be called for redemption, such right shall terminate, at the close of
business on the Business Day prior to the date fixed for redemption of such
Security or portion of a Security unless the Company shall default in payment
due upon redemption thereof), to convert, subject to the terms and provisions
of this Article 11, the principal of any such Security or Securities or any
portion thereof which is $1,000 or an integral multiple thereof into shares
of Common Stock of the Company, initially at the conversion price per share
of $10.75; or, in case an adjustment of such price has taken place pursuant
to the provisions of Section 11.04, then at the price at last adjusted (such
price or adjusted price being referred to herein as the "conversion price"),
upon surrender of the Security or Securities, the principal of which is so to
be converted, accompanied by written notice of conversion duly executed, to
the Company, at any time during usual business hours at the office or agency
maintained by it for such purpose, and, if so required by the Conversion
Agent or Registrar, accompanied by a written instrument or instruments of
transfer in form satisfactory to the Conversion Agent or Registrar duly
executed by the Holder or his attorney duly authorized in writing. For
convenience, the conversion of any portion of the principal of any Security
or Securities into the Common Stock of the Company is hereinafter sometimes
referred to as the conversion of such Security or Securities.
SECTION 11.02 Issuance of Common Stock on Conversion.
As promptly as practical after the surrender, as herein provided, of
any Security or Securities for conversion, the Company shall deliver or cause
to be delivered at its said office or agency, to or upon the written order of
the holder of the Security or Securities so surrendered, certificates
representing the number of fully paid and non-assessable shares of Common
Stock of the Company into which such Security or Securities may be converted
in accordance with the provisions of this Article 11. Such conversion shall
be deemed to have been made at the close of business on the date that such
Security or Securities shall have been surrendered for conversion with a
written notice of conversion duly executed, so that the rights of the holder
of such Security or Securities as a Securityholder shall cease at such time
and, subject to the following provisions of this paragraph, the person or
persons entitled to receive the shares of Common Stock upon conversion of
such Security or Securities shall be treated for all purposes as having
become the record holder or holders of such shares of Common Stock at such
time and such conversion shall be at the conversion price in effect at such
time; provided, however, that no such surrender on any date when the stock
transfer books of the Company shall be closed shall be effective to
constitute the person or persons entitled to receive the shares of Common
Stock upon such conversion as the record holder or holders of such shares of
Common Stock on such date, but such surrender shall be effective to
constitute the person or persons entitled to receive such shares of Common
Stock as the record holder or holders thereof for all purposes at the close
of business on the next succeeding day on which such stock transfer books are
open; such conversion shall be at the conversion price in effect on the date
that such Security or Securities shall have been surrendered for conversion,
as if the stock transfer books of the Company had not been closed.
Upon conversion of any Security which is converted in part only, the
Company shall execute and the Trustee shall authenticate and deliver to or
on the order of the Holder thereof, at the expense of the Company, a new
Security or Securities of authorized denominations in principal amount equal
to the unconverted portion of such Security.
section 11.03 No Adjustment for Interest or Dividends.
No payment or adjustment in respect of interest on the Securities or
dividends on the Common Stock shall be made upon the conversion of any
Security or Securities;
34
provided, however, that if a Security or any portion thereof shall be
converted subsequent to any regular record date and on or prior to the next
succeeding interest payment date, the interest falling due on such interest
payment date shall be payable on such interest payment date notwithstanding
such conversion, and such interest (whether or not punctually paid or duly
provided for) shall be paid to the person in whose name such Security is
registered at the close of business on such regular record date (unless such
Security shall have been called for redemption and the redemption date is
prior to such interest payment date).
SECTION 11.04 Adjustment of Conversion Price.
The conversion price shall be subject to adjustment from time to
time as follows:
(a) In case the Company shall (i) declare a dividend or make a
distribution on the outstanding shares of its Common Stock in shares of its
Common Stock, (ii) subdivide or reclassify the outstanding shares of its
Common Stock into a greater number of shares, or (iii) combine or reclassify
the outstanding shares of its Common Stock into smaller number of shares,
the conversion price in effect at the time of the record date for such
dividend or distribution or the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted so that
the Holder of any Security surrendered for conversion after such time shall
be entitled to receive the number of shares of Common Stock of the Company
which he would have owned or been entitled to receive had such Security been
converted immediately prior to such time. The adjustment shall become
effective immediately after the record date in the case of a dividend or
distribution and immediately after the effective date in the case of a
subdivision, combination or reclassification. Any shares of Common Stock of
the Company issuable in payment of a dividend shall be deemed to have been
issued immediately prior to the time of the record date for such dividend
for purposes of calculating the number of outstanding shares of Common Stock
of the Company under subsections (b) and (c) below. In the event that any of
the events for which a record date is set do not occur, the conversion price
then in effect shall be readjusted, effective as of the date when the Board
of Directors determines not to effect such event, to the conversion price
which would be then in effect if such record date had not been fixed. Such
adjustment shall be made successively whenever any event specified above
shall occur.
(b) In case the Company shall fix a record date for the issuance of
rights or warrants to all holders of its Common Stock entitling them (for a
period expiring within 45 days after the record date mentioned below) to
subscribe for or purchase shares of its Common Stock (or securities
convertible into shares of its Common Stock) at a price per share (or having
an initial conversion price per share) less than the Current Market Price
(as defined in subsection (g) below) of a share of Common Stock of the
Company on such record date, the conversion price shall be adjusted
immediately thereafter so that it shall equal the price determined by
multiplying the conversion price in effect immediately prior thereto by a
fraction, of which the numerator shall be the number of shares of Common
Stock of the Company outstanding on such record date plus the number of
shares of Common Stock of the Company which the aggregate offering price of
the number of shares of such Common Stock so offered (or the aggregate
initial conversion price of the convertible securities so offered) would
purchase at the Current Market Price per share, and of which the denominator
shall be the number of shares of Common Stock of the Company outstanding on
such record date plus the number of additional shares of Common Stock of the
Company offered for subscription or purchase (or into which the convertible
securities so offered are initially convertible). Shares of Common Stock of
the Company owned by or held for the account of the
35
Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
record date is fixed and shall become effective immediately after such record
date. In the event that such rights or warrants are not so issued, the
conversion price then in effect shall be readjusted, effective as of the date
when the Board of Directors determines not to issue such rights or warrants,
to the conversion price which would then be in effect if such record date had
not been fixed.
(c) In case the Company fixes a record date for the making of a
distribution to all holders of shares of its Common Stock (i) of shares of
any class other than its Common Stock (ii) of evidences of indebtedness of
the Company or any Subsidiary or (iii) of assets (excluding cash dividends
or distributions, and dividends or distributions referred to in subsection
(a) above) or (iv) of rights or warrants (excluding those referred to in
subsection (b) above), in each such case the conversion price shall be
adjusted immediately thereafter so that it shall equal the price determined
by multiplying the conversion price in effect immediately prior thereto by a
fraction, of which the numerator shall be the number of shares of Common
Stock of the Company outstanding on such record date multiplied by the
Current Market Price per share on such record date, less the fair market
value (as determined by the Board of Directors, whose determination shall
be conclusive, and described in a resolution of the Board of Directors
certified by the Secretary or an Assistant Secretary of the Company and filed
with the Trustee) of said shares or evidences or indebtedness or assets or
rights or warrants so distributed, and of which the denominator shall be the
number of shares of Common Stock of the Company outstanding on such record
date multiplied by such Current Market Price per share. Such adjustment
shall be made successively whenever such a record date is fixed and shall
become effective immediately after such record date. In the event that such
distribution is not so made, the conversion price then in effect shall be
readjusted, effective as of the date when the Board of Directors determines
not to distribute such shares, evidences of Indebtedness, assets, rights or
warrants, as the case may be, to the conversion price which would then be in
effect if such record date had not been fixed.
(d) In case the Company shall issue shares of Common Stock, (excluding
shares issued (i) in any of the transactions described in subsection (a)
above, (ii) upon conversion or exchange of securities convertible into or
exchangeable for Common Stock of the Company, (iii) to the employees under
the Company's 1984 Incentive Compensation Plan, as may be amended from time
to time, if such shares would otherwise be included in this Section 11.04,
(iv) to the Company's employees under bona fide employee benefit plans
adopted by the Company's Board of Directors and approved by its stockholders,
if such shares would otherwise be included in this Section 11.04(d)(but only
to the extent that the aggregate number of shares excluded by this
subdivision (iv), and issued after the date of this Indenture shall not
exceed 50% of the Company's Common Stock outstanding at the time of any such
issuance), or (v) upon exercise of rights or warrants issued to the holders
of Common Stock of the Company, or issued to acquire, or in connection with
the acquisition of, all or any portion of a business as a going concern,
whether such acquisition shall be effected by purchase of assets, exchange of
securities, merger, consolidation or otherwise, or (vi) upon exercise of
rights or warrants issued in a bona fide public offering pursuant to a firm
commitment underwriting, but only if no adjustment is required pursuant to
this Section 11.04 (without regard to subsection (i) of this Section 11.04)
with respect to the transaction giving rise to such rights) for a
consideration per share less than the Current Market Price per share on the
date of the Company fixes the offering price of such additional shares, the
conversion price shall be adjusted immediately thereafter so that it shall
equal the price determined by multiplying the conversion price in effect
immediately prior thereto by a
36
fraction, of which the numerator shall be the total number of shares of
Common Stock of the Company outstanding immediately prior to the issuance of
such additional shares plus the number of shares of Common Stock of the
Company which the aggregate consideration received (determined as provided in
subsection (f) below) for the issuance of such additional shares would
purchase at the Current Market Price per share, and of which the denominator
shall be the number of shares of Common Stock of the Company outstanding
immediately after the issuance of such additional shares. Such adjustment
shall be made successively whenever such an issuance is made and shall become
effective immediately after such issuance.
(e) In case the Company shall issue any securities convertible into or
exchangeable for its Common Stock (excluding securities issued in
transactions described in subsections (b) and (c) above, or the Securities)
for a consideration per share of Common Stock of the Company initially
deliverable upon conversion or exchange of such securities (determined as
provided in subsection (f) below) less than the Current Market Price per
share in effect immediately prior to the issuance of such securities, the
conversion price shall be adjusted immediately thereafter so that it shall
equal the price determined by multiplying the conversion price in effect
immediately prior thereto by a fraction, of which the numerator shall be the
number of shares of Common Stock of the Company outstanding immediately
prior to the issuance of such securities plus the number of shares of Common
Stock which the aggregate consideration received (determined as provided in
subsection (f) below) for such securities would purchase at the Current
Market Price per share, and of which the denominator shall be the number of
shares of Common Stock outstanding immediately prior to such issuance plus
the maximum number of shares of Common Stock of the Company deliverable upon
conversion or exchange price or rate. Such adjustment shall be made
successively whenever such an issuance is made and shall become effective
immediately after such issuance.
Upon the termination of the right to convert or exchange such securities, the
conversion price shall forthwith be readjusted to such conversion price as
would have obtained had the adjustments made upon the issuance of such
convertible or exchangeable securities been made upon the basis of the
delivery of only the number of shares of Common Stock actually delivered upon
conversion or exchange of such securities and upon the basis of the
consideration actually received by the Company (determined as provided in
subsection (f) below) for such securities.
(f) For purposes of any computation respecting consideration received
pursuant to subsections (d) and (e) above, the following shall apply:
(i) in the case of the issuance of shares of Common Stock of the
Company for cash, the consideration shall be the amount of such cash,
provided that in no case shall any deductions be made for any
commissions, discounts or other expenses incurred by the Company for
any underwriting of the issue or otherwise in connection therewith;
(ii) in the case of the issuance of shares of Common Stock of the
Company for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair market
value thereof as determined by the Board of Directors (irrespective
of the accounting treatment thereof), whose determination shall be
conclusive, and described in a Certified Resolution which shall be
filed with the Trustee and each Conversion Agent; and
37
(iii) in the case of the issuance of securities convertible into or
exchangeable for shares of Common Stock of the Company, the aggregate
consideration received therefor shall be deemed to be the
consideration received by the company for the issuance for such
securities plus the additional minimum consideration, if any to be
received by the Company upon the conversion or exchange thereof (the
consideration in each case to be determined in the same manner as
provided in subparagraphs (i) and (ii) of this subsection (f).
(g) For the purpose of any computation under subsections (b), (c), (d)
and (e) above the "Current Market Price" per share at any date shall be
deemed to be the average of the daily closing prices for 30 consecutive
trading days commencing 45 trading days before such date. The closing price
for each day shall be the last reported sale price regular way or, in case
no such reported sale takes place on such day, the average of the last
reported bid and asked prices regular way, in either case on the principal
national securities exchange registered under the Securities Exchange Act of
1934 on which the Common Stock of the Company is admitted to trading or
listed, or if not listed or admitted to trading on any national securities
exchange, the avenge of the highest reported bid and lowest reported asked
prices as furnished by the National Quotation Bureau Incorporated or such
other nationally recognized quotation service selected by the Company for
the purpose, if said Bureau is not at the time furnishing quotations.
(h) In any case in which this Article 11 shall require that an adjustment
shall become effective immediately after a record date for an event, the
Company may defer until the occurrence of such event (i) issuing to the
Holder of any Security converted after such record date and before the
occurrence of such event the additional shares of Common Stock of the
Company issuable upon such conversion by reason of the adjustment required
by such event over and above the shares of Common Stock of the Company
issuable upon such conversion before giving effect to such adjustment
and (ii) paying to such Holder any amount in cash in lieu of a fractional
share of Common Stock of the Company pursuant to Section 11.05; provided,
however, that the Company shall deliver to such Holder a due bill or other
appropriate instrument evidencing such Holder's right to receive such
additional shares of Common Stock of the Company, and such cash, upon the
occurrence of the event requiring such adjustment.
(i) No adjustment in the conversion price need be made unless such
adjustment would require an increase or decrease of at least 25 cents in
such price; provided, however, that any such adjustment which is not required
to be made shall be carried forward and taken into account in any subsequent
adjustment.
(j) Whenever the conversion price is adjusted as provided in this Section
11.04, the Company shall promptly file with the Trustee and each Conversion
Agent (i) an Officers' Certificate in the case of an adjustment pursuant to
subsection (a) of this Section 11.04, or (ii) both an Officers' Certificate
and a certificate of a firm of independent public accountants, which shall
conform to the provisions of Section 12.05, in the case of any other
adjustment, in each case setting forth the conversion price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment and the computation thereof, which Officers' Certificate or
certificate of a firm of independent public accountants, as the case may be,
shall be conclusive evidence of the correctness of any such adjustment, and
promptly after such filing the Company shall mail or cause to be mailed a
notice of such adjustment to each Securityholder at his last address as the
same appears on the Security register. Neither the Trustee nor any
Conversion
38
Agent shall be under any duty or responsibility with respect to any such
certificate except to exhibit the same to any holder of Securities desiring
inspection thereof.
(k) All calculations under this Article 11 shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may be.
SECTION 11.05 No Fractional Shares.
No fractional shares or scrip representing fractional shares shall
be issued upon the conversion of any Security of Securities. If the
conversion of any Security or Securities results in a fraction, an amount
equal to such fraction multiplied by the last reported sale price on the
principal national securities exchange on which the Common Stock of the
Company is admitted to trading or listed (or if not listed or admitted to
trading on any national securities exchange, the last quoted bid price as
furnished by the National Quotation Bureau Incorporated or such other
nationally recognized quotation service selected by the Company for the
purpose, if said Bureau is not at the time furnishing quotations) of the
Common Stock of the Company on the day prior to the day of conversion (or if
such day is not a trading day on such exchange, on the next preceding day on
which such exchange was open for business) shall be paid to such holder in
cash by the Company. If more than one certificate evidencing Securities
shall be surrendered for conversion at any one time by the same Holder, then
the number of shares of Common Stock of the Company shall be computed on the
basis of the aggregate principal amount of the Securities so surrendered.
SECTION 11.06 Effect of Reclassification, Consolidation, Merger,
Sale, Lease or Conveyance.
(a) In case of any consolidation with or merger of the Company
into another corporation (other than a merger of consolidation in which the
Company is the continuing corporation), or in case of any sale, lease or
conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety, such successor, leasing or
purchasing corporation, as the case may be, shall execute with the Trustee a
supplemental indenture providing that the Holder of each Security then
outstanding shall have the right thereafter to convert such Security solely
into the kind and amount of shares of stock and other securities, property,
cash or any combination thereof receivable upon such consolidation, merger,
sale, lease or conveyance by a holder of the number of shares of Common
Stock of the Company into which such Security might have been converted
immediately prior to such consolidation, merger, sale, lease or conveyance.
(b) In case of any reclassification or change of the shares of
Common Stock of the Company issuable upon conversion of the Securities (other
than a change in par value, or from par value to no par value, or as a result
of a subdivision or combination, but including any change in the shares of
Common Stock of the Company into two or more classes or series of shares) or
in case of any consolidation or merger of another corporation into the
Company in which the Company is the continuing corporation and in which there
is a reclassification or change (including a change to the right to receive
cash or other property) of the shares of Common Stock of the Company(other
than a change in par value, or from par value to no par value, or as a result
of a subdivision or combination,, but including any change in the shares of
Common Stock of the Company into two or more classes or series of shares),
the Company shall execute with the Trustee a supplemental indenture providing
that the Holder of each Security then outstanding shall have the right
thereafter to convert such Security solely into the kind and amount of shares
of stock, and other securities, property, cash or any combination thereof
receivable upon such
39
reclassification, change, consolidation or merger by a holder of the number
of shares of Common Stock of the Company, into which such Security might have
been converted immediately prior to such reclassification, change,
consolidation or merger.
(c) Any supplemental indenture entered into pursuant to this
Section 11.06 shall (i) where appropriate, state the conversion price in
terms of one full share of Common Stock of the Company or one full share of
the common stock of any successor, leasing or purchasing corporation
and (ii) provide for adjustments which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Article 11. The
Company shall cause notice of the execution of each such supplemental
indenture to be mailed to each Securityholder at his address as the same
appears in the Security register.
(d) Neither the Trustee nor any Conversion Agent shall be under
any responsibility to determine the correctness of any provisions contained
in any such supplemental indenture relating either to the kind or amount of
shares of stock or securities or property or cash receivable by
Securityholders upon the conversion of their Securities after any such
reclassification, change, consolidation, merger, sale or conveyance or t
o any adjustment to be made with respect thereto, but, subject to the
provisions of Section 7.01, may accept as conclusive evidence of the
correctness of any such provisions and shall be protected in relying upon an
Officers' Certificate or a certificate of a firm of independent public
accountants which shall conform to the provision of Section 12.05 with
respect thereto.
(e) The above provisions of this Section 11.06 shall similarly
apply to successive reclassifications and changes of shares of Common Stock
of the Company and to successive consolidations, mergers, sales or
conveyances. If this Section 11.06 applies, Section 11.04 does not apply.
SECTION 11.07 Covenant to Reserve Shares.
The Company covenants that it will at all times reserve and keep
available, free from pre-emptive rights, out of its authorized Common Stock,
solely for the purpose of issuance upon conversion of Securities as herein
provided, such number of shares of Common Stock as shall then be issuable
upon the conversion of all outstanding Securities. The Company covenants
that all shares of Common Stock which shall be so issuable shall be, when
issued, duly and validly issued an fully paid and non-assessable. For
purposes of this Section 11.07, the number of shares of Common Stock which
shall be deliverable upon the conversion of all outstanding Securities shall
be computed as if at the time of computation all outstanding Securities were
held by a single holder.
SECTION 11.08 Compliance with Legal and Governmental Requirements.
Before taking any action which would cause an adjustment reducing the
conversion price below the then stated or par value of the shares of Common
Stock issuable upon conversion of the Securities, the Company will take any
corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
non-assessable shares of such Common Stock at such adjusted conversion
price.
Notwithstanding anything to the contrary that may be contained in
this Indenture, in no event shall the conversion price be less than the then
stated or par value of the shares of Common Stock issuable upon conversion
of the Securities.
The Company covenants that if any shares of Common Stock, required
to be reserved for purposes of conversion of Securities hereunder, require
registration with or approval of any governmental authority under any Federal
or State law, or listing upon any national securities exchange, before such
shares may be issued upon conversion, the Company will in good faith and as
expeditiously as possible endeavor to cause such shares to be duly
registered, approved or listed, as the case may be.
40
SECTION 11.09 Payment of Taxes.
The issuance of certificates for shares of Common Stock upon the
conversion of Securities shall be made without charge to the converting
Securityholders for any tax in respect of the issuance of such certificates,
and such certificates shall be issued in the respective names of, or in such
names as may be directed by, the Holders of the Securities converted;
provided, however, that neither the Company nor any Conversion Agent shall
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate in a name
other than that of the Holder of the Security converted, and neither the
Company nor any Conversion Agent shall be required to issue or deliver such
certificates unless or until the person or person requesting the issuance
thereof shall have paid to the Company or the Conversion Agent the amount of
such tax or shall have established to the satisfaction of the Company that
such tax has been paid.
SECTION 11.10 Notice of Certain Events.
In case at any time the Company shall propose:
(a) to take any action that would require an adjustment in the
conversion price pursuant to Section 11.04; or
(b) to effect any reclassification or change of outstanding shares
of its Common Stock, or consolidation or merger, or sale, lease or
conveyance of property, requiring the execution of a supplemental indenture
pursuant to Section 11.06; or
(c) to effect any liquidation, dissolution or winding-up of the Company
then, and in any one or more of such cases, the Company shall cause notice
thereof to be filed with the Trustee and each Conversion Agent and to be
mailed to each Holder of a Security at such Holder's last address as the
same appears on the Security register at least 15 days prior to the date on
which (i) the books of the Company shall close, or a record date be taken,
for such dividend, distribution or issuance of rights or warrants or (ii)
such reclassification, change, consolidation, merger, sale, lease,
conveyance, liquidation, dissolution or winding-up shall be effective, as
the case may be.
SECTION 11.111 Responsibility of Trustee and Conversion Agent.
Neither the Trustee nor any Conversion Agent shall at any time be
under any duty or responsibility to any Securityholder to determine whether
any facts exist which may require any adjustment of the conversion price, or
with respect to the nature or extent of any such adjustment when made, or
with respect to the method employed, or herein or in any supplemental
indenture provided to be employed, in making the same. Neither the Trustee,
nor any Conversion Agent shall be accountable with respect to the validity
or value (or the kind or amount) of any shares of Common Stock or of any
securities of property or cash which may at any time be issued or delivered
upon the conversion of any Security; and neither the Trustee nor any
Conversion Agent makes any representation with respect thereto. Neither the
Trustee nor any Conversion Agent shall be responsible for any failure of the
Company to make any cash payment or to issue, transfer or deliver any shares
of Common Stock of stock certificates or other securities or property upon
the surrender of any Security for the purpose of conversion, or, subject to
Section 7.01, to comply with any of the covenants of the Company contained
in this Article Eleven.
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ARTICLE 12
MISCELLANEOUS
SECTION 12.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts
with another provision which is required to be included in this Indenture
by the TIA, the required provisions shall control.
SECTION 12.02 Notices.
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand deliver,
or first class mail, postage prepaid, (except that any notice by the Trustee
to the Company of a default or an Event of Default under this Indenture
shall be by registered or certified mail, postage prepaid, return receipt
requested), addressed as follows:
if to the Company:
Chock Full O'Nuts Corporation
370 Lexington Avenue
New York, New York 10017
Attention: Chairman of the Board
if to the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
Attention: Corporate Trust Department
The Company or the Trustee by notice to the other may designate
additional or different addresses as shall be furnished in writing by either
party. Any notice or communication to the company or the Trustee shall be
deemed to have been given or made as of the date so delivered if personally
delivered, and five (5) calendar days after mailing if sent by registered or
certified mail (except that a notice of change of address shall not be deemed
to have been given until actually received by the addressee.)
Any notice or communication mailed to a Securityholder shall be
mailed to the address of such Securityholder as it appears on the
registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manne
r provided above, it is duly given, whether or not the addressee receives it.
If case by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail any notice, as
required by this Indenture, then such method of notification as shall be
made with the approval of the Trustee shall constitute a sufficient mailing
of such notice.
If the Company mails any notice or communication to Securityholders,
it shall mail a copy to the Trustee and all Agents at the same time.
42
SECTION 12.03 Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA 312 (b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall
have the protection of TIA 312 (c).
SECTION 12.04 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate (which shall include the statements
set forth in Section 12.05) stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with;
and
(2) an Opinion of Counsel (which shall include the statements
set forth in Section 12.05) stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 12.05 Statements Required in Certificate and Opinion.
Each Officers' Certificate and Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture shall
include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition:
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained
in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of such
person, such covenant or condition has been complied with.
SECTION 12.06 When Treasury Securities Disregarded.
In determining whether the Holders of the required principal amount
of Securities have concurred in any direction, waiver or consent, Securities
owned by the Company or any other obligor on the Securities or by any Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company or such obligor shall be
disregarded, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be so disregarded.
Securities so owned which have been pledged in good faith shall not be
disregarded if the pledgee establishes to the satisfaction of the Trustee
the pledgee's right so to act with respect to the Securities and that the
pledgee is not the Company or any other obligor upon the Securities or any
Person directly or indirectly controlling or controlled by or under direct
or indirect common control with the Company of such obligor.
43
SECTION 12.07 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting
of Securityholders. The Registrar, Paying Agent or Conversion Agent may
make reasonable rules for its functions.
SECTION 12.08 Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banks or
trust companies in the city in which the Trustee is located are not required
to be open. If a payment date is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day that is not a
legal Holiday, and no interest shall accrue for the intervening period.
SECTION 12.09 Governing Law.
The laws of the State of New York shall govern this Indenture and
the Securities without regard to principles of conflicts of law.
SECTION 12.10 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan
or debt agreement of the Company or a Subsidiary. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
SECTION 12.11 No Recourse Against Others.
All liability described in Paragraph 19 of the Securities of any
director, officer, employee or stockholder, as such, of the Company is waived
and released.
SECTION 12.12 Successors.
All agreements of the Company in this Indenture and the Securities
shall bind its successor. All agreements of the Trustee in this Indenture
shall bind its successor.
SECTION 12.13 Multiple Counterparts.
The parties may sign multiple counterparts of this Indenture. Each
signed counterpart shall be deemed an original, but all of the together
represent the same agreement.
SECTION 12.14 Table of Contents, Headings, etc.
The table of contents, cross-reference sheet and headings of the
Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof, and shall in no
way modify or restrict any of the terms or provisions hereof.
SECTION 12.15 Severability.
In case any provision in this Indenture or in the Securities shall
be invalid, illegal or
44
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby, and a
Holder shall have no claim therefor against any party hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the date first written above.
CHOCK FULL O' NUTS CORPORATION
Attest: ___________________ By: _________________________
IBJ SCHRODER BANK & TRUST COMPANY
Attest: ____________________ By: _________________________
45
3/25/87
#22B
EXHIBIT A
[Face of Debenture]
No. $
CHOCK FULL O' NUTS CORPORATION
7% CONVERTIBLE SENIOR SUBORDINATED DEBENTURES
DUE APRIL 1, 2012
CHOCK FULL O' NUTS CORPORATION, a New York corporation, promises to
pay to or registered assigns the principal sum of
Dollars, on April 1, 2012.
Interest Payment Dates: April 1 and October 1
Record Dates: March 15 and September 15
Additional provisions of this Security are set forth on other side
of this Security.
Dated: CHOCK FULL O' NUTS CORPORATION
By _____________________________
By _____________________________
Certificate of Authentication :
IBJ SCHRODER BANK & TRUST COMPANY as
Trustee, certifies that this is one of the
Securities referred to in the within mentioned
Indenture.
By _________________________________
Authorized Officer
[Back of Debenture]
CHOCK FULL O' NUTS CORPORATION
7% CONVERTIBLE SENIOR SUBORDINATED DEBENTURES
DUE APRIL 1, 2012
1. INTEREST.
CHOCK FULL O' NUTS CORPORATION, a New York corporation
(the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. The Company will pay interest
semiannually on April 1 and October 1 of each year beginning October 1, 1987.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from April 2, 1987;
provided that, if there is no existing Default in the payment of interest,
and if this Security is authenticated between a record date referred to on
the face hereof and the next succeeding interest payment date, interest shall
accrue from such interest payment date. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT.
The Company will pay interest on the Securities (except
defaulted interest) to the persons who are the registered Holders of the
Securities at the close of business on the March 15 or September 15 next
preceding the interest payment date. Holders must surrender Securities to a
Paying Agent to collect principal payments. The Company will pay principal
and interest in money of the United States that at the time of payment is
legal tender for payment of public and private debts. The Company, however,
may pay principal and interest by its check payable in such money. It may
mail an interest check to a Holder's registered address.
3. REGISTRAR AND AGENTS.
Initially, IBJ Schroder Bank & Trust Company (the "Trustee")
will act as Registrar, Paying Agent, Conversion Agent and agent for service
of notices and demands. The Company may change any Registrar, co-registrar,
Paying Agent, Conversion Agent and agent for service of notices and demands
without notice. The Company or any of its Subsidiaries may act as Registrar,
co-registrar, Paying Agent or Conversion Agent.
4. INDENTURE; LIMITATIONS.
The Company issued the Securities under an Indenture dated as
of April 1, 1987 (the "Indenture"), between the Company and the Trustee.
Capitalized terms herein are used as defined in the Indenture unless
otherwise defined herein. The terms of the Securities include those stated
in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S. Code 77aaa-77bbbb) as in effect on
the date of the Indenture. The Securities are subject to all such terms, and
the Holders of the Securities are referred to the Indenture and said Act for
a statement of them.
A-2
The Securities are general unsecured obligations of the
Company limited to $69,000,000 principal amount. The Indenture does not
limit in any manner the incurrence by the Company of other debt, secured or
unsecured, except that the Company may not incur, directly or indirectly,
any Indebtedness which by its terms is both (i) subordinated in right of
payment to any Senior Indebtedness and (ii) senior in right of payment to
the Securities. The Indenture imposes certain limitations on the ability of
the Company to, among other things, make payments in respect of its Capital
Stock, merge or consolidate with any other Person and sell, lease, transfer
or otherwise dispose of its properties or assets.
5. OPTIONAL REDEMPTION.
The Company may, at its option, redeem the Securities, in
whole or from time to time in part (except that the Securities may not be so
redeemed prior to April 1, 1990 unless the closing price per share of Common
Stock of the Company on each of any 20 trading days within a period of 30
consecutive trading days ending not more than 5 days prior to the date upon
which notice of redemption is first mailed is at least 150% of the conversion
price in effect on such day) at the following redemption prices, expressed
as percentages of the principal amount, if redeemed during the 12 months
beginning April 1 of the years indicated below, plus accrued interest to the
Redemption Date.
Year Percentage Year Percentage
1987 107.0% 1992 103.5%
1988 106.3 1993 102.8
1989 105.6 1994 102.1
1990 104.9 1995 101.4
1991 104.2 1996 100.7
1997 and
thereafter.... 100.0
6. MANDATORY REDEMPTION.
The Company will redeem, on April 1, 1998 and on each
April 1 thereafter through and including April 1, 2011, 5% of the principal
amount of Securities originally issued, at a redemption price of 100% of the
principal amount, plus accrued interest to the Redemption Date. The Company
may reduce the principal amount of Securities to be redeemed pursuant to
this paragraph 6 by subtracting 100% of the principal amount of any
Securities that the Company has delivered to the Trustee for cancellation or
redeemed otherwise than pursuant to this paragraph 6. The Company may so
subtract the same Security only once.
7. NOTICE OF REDEMPTION.
Notice of redemption will be mailed at least 15 days but not
more than 60 days before the Redemption Date to each Holder of Securities to
be redeemed at his registered address. Securities in denominations larger
than $1000 may be redeemed in part, but only in whole multiples of $1000.
On and after the Redemption Date interest ceases to accrue on Securities or
portions of them called for redemption.
8. CONVERSION.
A Holder of a Security may convert such Security into Common
Stock of the Company at any time before the close of business on
April 1, 2012. If the Security is called for redemption, the Holder may
convert it at any time before the close of business on the Business Day
prior to the date fixed for such redemption. The initial conversion price
is $10.75 per share, subject to adjustment in certain
A-3
events. To determine the number of shares issuable upon conversion of a
Security, divide the principal amount to be converted by the conversion
price in effect on the conversion date. The Company will deliver a check
for any fractional share.
To convert a Security, a Holder must (1) complete and sign the
conversion notice on the back of the Security, (2) surrender the Security to
a Conversion Agent, (3) furnish appropriate endorsements and transfer
documents if required by the Registrar or Conversion Agent and (4) pay any
transfer or similar tax if required. No adjustment is to be made on
conversion for interest accrued hereon or for dividends on shares of Common
Stock issued on conversion, provided, however, that if a Security is
surrendered for conversion after the record date for a payment of interest
and on or before the interest payment date, then, notwithstanding such
conversion, the interest falling due on such interest payment date will be
paid to the Person in whose name of Security is registered at the close of
business on such record date. A Holder may convert a portion of a Security
if the portion is $1,000 or an integral multiple of $1,000.
If the Company is a party to a consolidation or merger or a transfer
or lease of all or substantially all of its assets, the right to convert a
Security into Common Stock may be changed into a right to convert it into
securities, cash or other assets of the Company or another Person.
9. SUBORDINATION.
This Security is subordinated to all Senior Indebtedness of
the Company. To the extent and in the manner provided in the Indenture,
Senior Indebtedness must be paid before any payment may be made to any
Holders of Securities. Any Securityholder by accepting this Security agrees
to the subordination and authorizes the Trustee to give it effect.
In addition to all other rights of Senior Indebtedness
described in the Indenture, the Senior Indebtedness shall continue to be
Senior Indebtedness and entitled to the benefits of the subordination
provisions irrespective of any amendment, modification or waiver of any term
of any instrument relating to the Senior Indebtedness or extension or renewal
of the Senior Indebtedness.
10. DENOMINATIONS, TRANSFER, EXCHANGE.
The Securities are in registered form without coupons in
denominations of $1000 and integral multiples of $1000. A Holder may
register the transfer of or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes
and fees required by law or permitted by the Indenture. The Registrar need
not register the transfer of or exchange any Securities selected for
redemption or register the transfer of or exchange any Securities for a
period of 15 days before a selection of Securities to be redeemed.
11. PERSONS DEEMED OWNERS.
The registered Holder of a Security may be treated as the
owner of it for all purposes.
12. UNCLAIMED MONEY.
If money for the payment of principal or interest on any
Securities remains unclaimed for two years, the Trustee and the Paying Agent
will pay the money back to the Company at its request. After that, Holders
must look to the Company for payment.
A-4
13. DISCHARGE PRIOR TO REDEMPTION OR MATURITY.
The Indenture will be discharged and canceled except for
certain sections thereof upon payment of all the Securities, or upon the
irrevocable deposit with the Trustee of funds or U.S. Government Obligations
maturing on or before such payment date or Redemption Date, sufficient to
pay principal, premium, if any, and interest on such payment or redemption.
14. AMENDMENT AND WAIVER.
Subject to certain exceptions, the Indenture or the
Securities may be amended with the consent of the Holders of at least a
majority in principal amount of the Securities then outstanding and any
existing default or compliance with any provision may be waived with the
consent of the Holders of a majority in principal amount of the Securities
then outstanding. Without the consent of or notice to any Securityholder,
the Company may amend the Indenture or the Securities to, among other things,
provide for uncertificated Securities, to cure any ambiguity, defect or
inconsistency or make any other change that does not adversely affect the
rights of any Securityholder.
15. SUCCESSORS.
When a successor assumes all the obligations of its
predecessor under the Securities and the Indenture, the predecessor will be
released from those obligations.
16. DEFAULTS AND REMEDIES.
If an Event of Default, as defined in the Indenture, occurs
and is continuing, the Trustee or the Holders of at least 25% in principal
amount of Securities may declare all the Securities to be due and payable
immediately in the manner and with the effect provided in the Indenture.
Holders of Securities may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may require indemnity satisfactory
to it before it enforces the Indenture or the Securities. Subject to certain
limitations, Holders of a majority in principal amount of the Securities then
outstanding may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of Securities notice of any continuing
default (except a default in payment of principal or interest) if it
determines that withholding notice is in their interests. The Company is
required to file periodic reports with the Trustee as to the absence or
Default.
17. OFFER TO PURCHASE.
If the Company's Consolidated Net Worth at the end of each
of any two consecutive fiscal quarters is less than $15,283,033, then the
Company will be required to make an offer to acquire on the last day of the
fiscal quarter next following such second fiscal quarter 7.5% of the
aggregate principal amount of Securities originally issued (or such lesser
amount as may be outstanding at that time), at a purchase price of 100% or
their principal amount plus accrued interest to the date of payment. The
failure to meet the minimum required Consolidated Net Worth at the end of
any fiscal quarter may only be counted once toward the Company's requirement
to make such an offer.
18. TRUSTEE DEALINGS WITH THE COMPANY.
IBJ Schroder Bank & Trust Company, the Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its affiliates, and
may otherwise deal with the Company or its affiliates, as if it were not
Trustee.
A-5
19. NO RECOURSE AGAINST OTHERS.
No stockholder, director, officer or incorporator, as such,
past, present or future, of the Company or any successor corporation shall
have any liability for any obligation of the Company under the Securities or
the Indenture or for any claim based on, in respect of or by reason or, such
obligations or their creation. Each Holder of a Security by accepting a
Security waives and releases all such liability. The waiver and release are
part of the consideration for the issue of the Securities.
20. AUTHENTICATION.
This Security shall not be valid until the Trustee signs the
certificate of authentication on the other side of this Security.
21. ABBREVIATIONS.
Customary abbreviation may be used in the name of a
Securityholder or an assignee, such as: TEN COM (= tenants in common),
TEN ENT (= tenant by the entireties), JT TEN (= joint tenants with rights of
survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A/ (= Uniform Gifts to Minors Act.).
The Company will furnish to any Securityholder upon written
request and without charge a copy of the Indenture. It also will furnish the
text of this Security in larger type. Requests may be made to:
CHOCK FULL O' NUTS CORPORATION,
370 Lexington Avenue,
New York , New York 10017,
Attention: Secretary.
A-6
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.08 of the Indenture, check the box: / /
If you want to elect to have only part of this Security purchased by
the Company pursuant to Sections 4.08 of the Indenture, state the amount
(which must be a minimum of $1,000 or any multiple of
$1,000): $________________________.
Date: __________________ Your Signature: ____________________________
(Sign exactly as your name
appears on the other
side of this Security)
Signature Guarantee: ____________________________________________
CONVERSION NOTICE
To convert this Security into Common Stock of the Company,
check the box: / /
To convert only part of this Security, state the amount (which must
be a minimum or $1,000 or any multiple of
$1,000): $ __________________________________________.
If you want the stock certificate made out in another person's
name, fill in the form below:
____________________________________________________________________
(Insert other person's social security or tax I.D. no.)
____________________________________________________________________
(Print or type other person's name, address and zip code)
____________________________________________________________________
____________________________________________________________________
Date: __________________ Your Signature: ____________________________
(Sign exactly as your name
appears on the other
side of this Security)
A-7
ASSIGNMENT FORM
If you the Holder want to assign this Security, fill in the form below and
have your signature guaranteed:
I or we assign and transfer this Security to
_______________________________________________________________________
_______________________________________________________________________
(Insert Assignee's social security or tax ID number)
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
(Print or type assignee's name, address an zip code)
and irrevocably appoint
_______________________________________________________________________
agent to transfer this Security on the books of the Company. The agent
may substitute another to act for him.
_______________________________________________________________________
Date: __________________ Your Signature: ____________________________
(Sign exactly as your name
appears on the other
side of this Security)
Signature Guarantee: ____________________________________________
A-8
Exhibit 10
Material Contracts (a)
________________________________________________________________
CHOCK FULL O'NUTS CORPORATION
AND
IBJ SCHRODER BANK & TRUST COMPANY
RIGHTS AGENT
______________________________________
Rights Agreement
Dated as of December 30, 1987
______________________________________________________________
Table of Contents
Section Page
1 Certain Definitions 3
2 Appointment of Rights Agent 7
3 Issue of Rights Certificates 8
4 Form of Rights Certificates 11
5 Countersignature and Registration 12
6 Transfer, Split Up, Combination and
Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen
Rights Certificates 14
7 Exercise of Rights; Purchase Price;
Expiration Date of Rights 15
8 Cancellation and Destruction of
Rights Certificates 20
9 Reservation and Availability of
Common Stock 20
10 Common Stock Record Date 23
11 Adjustment of Purchase Price,
Number and Kind of Shares or
Number of Rights 24
12 Certificate of Adjusted Purchase
Price or Number of Shares 39
13 Consolidation, Merger or Sale
or Transfer of Assets or
Earning Power 40
14 Additional Covenant 45
15 Fractional Rights and Fractional
Shares 46
16 Rights of Action 48
(i)
Section Page
17 Agreement of Rights Holders 49
18 Rights Certificate Holder Not
Deemed a Shareholder 50
19 Concerning the Rights Agent 50
20 Merger or Consolidation or Change of
Name of Rights Agent 51
21 Duties of Rights Agent 53
22 Change of Rights Agent 57
23 Issuance of New Rights Certificate 59
24 Redemption and Termination 60
25 Notice of Certain Events 62
26 Notices 64
27 Supplements and Amendments 65
28 Determination and Actions by the
Board of Directors, etc 66
29 Successors 67
30 Benefits of this Agreement 67
31 Serverability 68
32 Governing Law 68
33 Counterparts 68
34 Descriptive Headings 68
Exhibit A -- Form of Rights Certificate A-1
Exhibit B -- Form of Summary of Rights B-1
(ii)
RIGHTS AGREEMENT
This Agreement, dated as of December 30, 1987, between Chock
Full O'Nuts Corporation, a New York Corporation (the "Company"), and IBJ
Schroder Bank & Trust Company, a New York banking corporation (the "Rights
Agent").
W I T N E S S E T H:
WHEREAS, on December 30, 1987, the Board of Directors of the
Company authorized and declared a dividend distribution of one Right (as
hereinafter defined) for each share of Common Stock, $0.25 par value per
share, of the Company (the "Common Stock") outstanding on January 22, 1988
(the Record Date), and contemplate the issuance, prior to the Expiration
Date (as hereinafter defined), of one Right (subject to adjustment as
provided herein) (i) for each share of Common Stock of the Company issued
between the Record Date and the later of the Stock Acquisition Date and the
Distribution Date (as such terms are hereinafter defined) and (ii) for each
share of Common Stock reserved for issuance upon conversion of the Company's
8% Convertible Subordinated Debentures due 2006 and the Company's 7%
Convertible Senior Subordinated Debentures due 2012 (the "Convertible
Debentures") and issued upon conversion of the Convertible Debentures at any
time after the Record Date (whether before or after the later of the Stock
Acquisition
-2-
Date and the Distribution Date), each Right representing the right to
purchase one share of Common Stock of the Company upon the terms and subject
to the conditions hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto hereby agree as
follows:
Section 1. Certain Definitions For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term
is hereinafter defined) who or which, together with all Affiliates (as such
term is hereinafter defined) and Associates (as such term is hereinafter
defined) of such Person, without the prior approval of the Company, shall be
the Beneficial Owner (as such term is hereafter defined) of securities
representing 20% or more of the Voting Power (as such term is hereinafter
defined), or who was such a Beneficial Owner at any time after the date
hereof, whether or not such Person continues to be the Beneficial Owner of
securities representing 20% or more of the Voting Power, but shall not
include (i) the Company, (ii) any subsidiary of the Company (as such term is
hereinafter defined), (iii) any employee benefit plan of the Company or any
of its subsidiaries, (iv) any entity holding securities of the Company
organized, appointed or established by the Company or any of its subsidiaries
for or pursuant to the terms of any such plan, or (v) any Person who or
which, together with all
- - -3-
Affiliates and Associates of such Person, was the Beneficial Owner of
securities representing 20% or more of the Voting Power on the date hereof
until such time as such Person who or which, together with all Affiliates
and Associates of such Person, without the prior approval of the Company,
acquires Beneficial Ownership of securities representing an additional 2% of
the Voting Power at any time subsequent to the date hereof.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right or obligation to acquire
(whether such right or obligation is exercisable or effective
immediately or only after the passage of time) pursuant to any
agreement, arrangement of understanding (whether or not in writing) or
upon the exercise of conversion
- - -4-
rights, exchange rights, rights (other than these Rights), warrants or
options, or otherwise; provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own," securities
tendered pursuant to a tender or exchange offer made by such Person or any
of such Person's Affiliates or Associated until such tendered securities
are accepted for purchase or exchange; or (B) the right to vote pursuant to
any agreement, arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the "Beneficial Owner"
of, or to "beneficially own," any security under this clause (B) if the
agreement, arrangement or understanding to vote such security (1) arises
solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the Exchange Act and (2) is not also
then reportable by such person on Schedule 13D under the Exchange Act
(or any comparable or successor report); or
(iii) which are beneficial owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof)
with which such Person or any of such
- - -5-
Person's Affiliates or Associates has any agreement, arrangement
or understanding (whether or not in writing), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in
clause (B) of subparagraph (ii) of this paragraph (c) or disposing of
any securities of the company.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5:00 P.M.,
New York City time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., New York City time, on the
next succeeding Business day.
(f) "Common Stock" shall mean the Common Stock, $0.25 per value, of
the Company, except that "Common Stock" when used with reference to stock
issued by any Person other than the Company shall mean the capital stock
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person or,
if such Person is a subsidiary of another Person, of the Person which
ultimately controls such first-mentioned Person and which has
- - -6-
issued and outstanding such capital stock, equity securities or equity
interests.
(g) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(h) "Stock Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such.
(i) A "subsidiary" of any Person shall mean any corporation
or other entity of which a majority of the voting power of the voting equity
securities or voting interests is owned, directly or indirectly, by such
Person, or which is otherwise controlled by such Person.
(k) "Voting Power" shall mean the voting power of all
securities of the Company then outstanding generally entitled to vote for
the election of directors of the Company.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights
Agents as it may deem necessary or desirable. In the event the Company
appoints one or more Co-Rights Agents, the respective duties of the Rights
Agents and any Co-Rights Agents shall be as the Company shall determine.
- - -7-
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the Stock Acquisition
Date or (ii) the tenth day after the date of the commencement of, or first
public announcement of the intent of any Person (other than the Company, any
subsidiary of the Company, or any employee benefit plan of the Company or any
of its subsidiaries) to commence (which intention to commence remains in
effect for five business days after such announcement), a tender or exchange
offer which would result in such Person becoming an Acquiring Person, or such
later date as may be fixed by the Board of Directors of the Company by notice
to the Rights Agent and publicly announced by the Company (including any such
date which is on or after the date of this Agreement and prior to the
issuance of the Rights; the earlier of such dates being herein referred to as
the "Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of the Section 3) by the certificates for Common
Stock registered in the names of the holders of the Common Stock (which
certificates for Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and (y) the Rights (and the right
to receive certificates therefor) will be transferable only in connection
with the transfer of the underlying shares of Common Stock. As soon as
practicable after the Distribution Date, the Rights Agent will send by
first-class, insured, postage prepaid mail, to each record holder of the
Common Stock as of the close
- - -8-
of business on the Distribution Date, at the address of such holder shown on
the records of the Company, a certificate for Rights, in substantially the
form of Exhibit A hereto (the "Rights Certificates"), evidencing one Right
for each share of Common Stock so held. As of and after the Distribution
Date, the Rights will be evidenced solely by such Rights Certificates.
As soon as practicable following the Record Date, the Company
will send a copy of a Summary of Rights, in substantially the form attached
hereto as Exhibit B (the Summary of Rights"), by first-class, postage prepaid
mail, to each record holder of the Common Stock as of the close of business
on the Record Date, at the address of such holder shown on the records of the
Company. With respect to certificates for the Common Stock outstanding as of
the Record Date, until the Distribution Date (or earlier redemption,
expiration or termination of the Rights), the Rights will be evidenced by
such certificates for the Common Stock together with the Summary of Rights
and the registered holders of the Common Stock shall also be the registered
holders of the associated Rights. Until the Distribution Date (or earlier
redemption, expiration or termination of the Rights), the surrender for
transfer of any of the certificates for the Common Stock outstanding on the
Record Date, even without a copy of the Summary of Rights attached thereto,
shall also constitute the transfer of the Rights associated with the Common
Stock represented by such certificate.
- - -9-
(b) Prior to the Expiration Date (as such term is
hereinafter defined), certificates issued for Common Stock (including,
without limitation, certificates issued upon transfer or exchange of Common
Stock or certificates issued upon conversion of the Convertible Debentures
of the Company) after the Record Date, but prior to the later of the Stock
Acquisition Date and the Distribution Date, shall be deemed also to be
certificates for Rights, and shall have impressed, printed, stamped, written
or otherwise affixed onto them the following legend:
This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in a Rights Agreement between
Chock Full O'Nuts Corporation and IBJ Schroder Bank & Trust Company
(the "Rights Agent"), dated as of December 30, 1987 (the "Rights
Agreement"), the terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal offices of Chock Full O'Nuts
Corporation. Under certain circumstances, as set forth in the Rights
Agreement, such Rights may be redeemed, may expire or may be evidenced by
separate certificates and will no longer be evidenced by this certificate.
Chock Full O'Nuts Corporation will mail to the holder of this certificate a
copy of the Rights Agreement without charge within five days after receipt of
a written request therefor. Under certain circumstances, Rights issued to
Acquiring Persons (as defined in the Rights Agreement) or certain related
persons and any subsequent holder of such Rights may become null and void
with respect to certain rights set forth in Section II (a) (ii) and
Section 13 (a) of the Rights Agreement.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Stock represented by
such certificates shall be
-10-
evidenced by such certificates alone, and the surrender for transfer of any
of such certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
(c) Prior to the Expiration Date (as such term is
hereinafter defined), certificates issued for Common Stock, upon conversion
of the Convertible Debentures of the Company after the later of the Stock
Acquisition Date and the Distribution Date, shall, as soon as practicable
after the Distribution Date, be accompanied by one Rights Certificate
evidencing one Right for each share of Common Stock so issued.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of
election to purchase shares and of assignment to be printed on the reverse
thereof) shall each be substantially in the form set forth in Exhibit A
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or with
any rule or regulation of any stock exchange on which the Rights may from
time to time be listed, or to conform to usage. Subject to the provisions
of Section 11 and Section 23 hereof, the Rights Certificates, whenever
distributed, shall be dated as of the Record Date, and on their face shall
entitle
-11-
the holders thereof to purchase such number of shares of Common Stock as
shall be set forth therein at the price per share set forth therein (the
"Purchase Price"), but the number of such shares and the Purchase Price
shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to
Section 3 hereof that represents Rights beneficially owned by an Acquiring
Person or any Associate or Affiliate thereof or to any nominee of such
Acquiring Person, Associate or Affiliate, and any Rights Certificate issued
pursuant to Section 6 or Section 11 upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this sentence,
shall contain the following legend:
The Rights represented by this Rights Certificate
were issued to a Person who was an Acquiring person or
an Affiliate or an Associate of an Acquiring Person.
This Rights Certificate and the Rights represented
hereby may become void to the extent provided by,
and under certain circumstances as specified in,
Section 7 (e) of the Rights Agreement.
The provisions of Section 7 (e) of this Rights Agreement shall be operative
whether or not the foregoing legend is contained on any such Rights
Certificate.
Section 5. Countersignature and Registration. The Rights
Certificates shall be executed on behalf of the Company
-12-
by its Chairman of the Board, the Vice Chairman of the Board, any President
or any Vice President, either manually or by facsimile signature, and shall
have affixed thereto the Company's seal or a facsimile thereof which shall
be attested by the Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be manually countersigned by the
Rights Agent and shall not be valid for any purpose unless so countersigned.
In any case any officer of the Company who shall have signed any of the
Rights Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the
Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent, and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not
ceased to be such officer of the Company; and any Rights Certificates may be
signed on behalf of the Company by any person who, at the actual date of the
execution of such Rights Certificate, although at the date of the execution
of this Rights Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at one of its offices in New York, New York, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names
-13-
and addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights Certificates and
the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificate; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
Subject to the provisions of Section 15 hereof, at any time after the close
of business on the Distribution Date, and at or prior to the close of
business on the Expiration Date, any Rights Certificate or Certificates may
be transferred, split up, combined or exchanged for another Rights
Certificate or Rights Certificates, entitling the registered holder to
purchase a like number of shares of Common Stock as the Rights Certificate or
Rights Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any
Rights Certificate shall make such request in writing delivered to the Rights
Agent, and shall surrender the Rights Certificate or Rights Certificates to
be transferred, split up, combined or exchanged at the principal office of
the Rights Agent. Thereupon the Rights Agent shall countersign and deliver
to the Person entitled thereto a Rights Certificate or Rights Certificates,
as the case may be, as so requested. The Company may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection
-14-
with any transfer, split up, combination or exchange of Rights Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Rights Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of the
Rights Certificate if mutilated, the Company will execute and deliver a new
Rights Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights.
(a) The registered holder of any Rights Certificate
may exercise the Rights evidenced thereby (except as otherwise provided
herein and subject to the prior compliance by the Company with the
provisions of the last paragraph of Section 9 hereof) in whole or in part at
any time after the Distribution Date upon presentation of the Rights
Certificate, with the appropriate form of election to purchase on the reverse
side thereof duly executed, to the Rights Agent as the principal office of
the Rights Agent, together with payment of the Purchase Price for each share
of Common Stock (or other securities, cash or other assets, as the case may
be as to which the Rights are exercised,
- - -15-
at or prior to the earliest of (i) the close of business on December 30, 1997
(the "Final Expiration Date"), (ii)the consummation of a transaction
contemplated by Section 13(d) hereof, or (iii) the time at which the Rights
are redeemed as provided in Section 24 hereof (such earliest time being
herein referred to as the "Expiration Date"). Notwithstanding any other
provision of this Agreement, any Person who prior to the later of the Stock
Acquisition Date or the Distribution Date becomes a record holder of shares
of Common Stock (or any Person who after the Record Date (whether before or
after the later of the Stock Acquisition and the Distribution Date) becomes
a record holder of shares of Common Stock upon conversion of the Convertible
Debentures of the Company) may exercise all of the rights of an registered
holder of a Rights Certificate with respect to the Rights associated with
such shares of Common Stock in accordance with and subject to the provisions
of this Agreement, including the provisions of Section 7 (e) hereof, as of
the date such Person becomes a record holder of shares of Common Stock.
(b) The Purchase Price for each share of Common
Stock pursuant to the exercise of a Right shall initially be $30.00, shall
be subject to adjustment from time to time as provided in Sections 11 and 13
hereof and shall be payable in lawful money of the United States of America
in accordance with paragraph (c) below.
-16-
(c) Upon receipt of a Rights Certificate
representing exercisable Rights, with the appropriate form of election to
purchase duly executed, accompanied by payment of the Purchase Price for the
shares (or other securities or property) to be purchased and an amount equal
to any applicable transfer tax (as determined by the Rights Agent) in cash,
or by certified check or bank draft payable to the order of the Company, the
Rights Agent shall, subject to Section 21 (k), thereupon promptly (i) (A)
requisition from any transfer agent of the shares of Common Stock (or make
available, if the Rights Agent is the transfer agent) certificates for the
number of shares of Common Stock to be purchased, and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests,
or (B) if the Company, in its sole discretion, shall have elected to deposit
the shares of Common Stock issuable upon exercise of the Rights hereunder
into a depository, requisition from the depository agent depository receipts
representing such number of shares of Common Stock as are to be purchased
(in which case certificates for the shares of Common Stock represented by
such receipts shall be deposited by the transfer agent with the depository
agent) and the Company will direct the depository agent to comply with such
request, (ii) when appropriate, requisition from the Company the amount of
cash, if any, to be paid in lieu of issuance of fractional shares in
accordance with Section 15, (iii) promptly after receipt of such certificates
or depository receipts,
-17-
cause the same to be delivered to or upon the order of the registered holder
of such Rights Certificate, registered in such name or names as may be
designated by such holder and (iv) when appropriate, after receipt promptly
deliver such cash to or upon the order of the registered holder of such
Rights Certificate. In the event that the Company is obligated to issue
other securities of the Company, and/or distribute other property pursuant
to Section 11 (a), the Company will make all arrangements necessary so that
such other securities and/or property are available for distribution by the
Rights agent, if and when appropriate. In addition, in the case of an
exercise of the Rights by a holder pursuant to Section 11 (a) (ii), the
Rights Agent shall return such Rights Certificate to the registered holder
thereof after imprinting, stamping or otherwise indicating thereon that the
rights represented by such Rights Certificate no longer include the rights
provided by Section 11 (a)(ii) of the Rights Agreement and if less than all
the Rights represented by such Rights Certificate were so exercised, the
Right Agent shall indicate on the Rights Certificate the number of Rights
represented thereby which continue to include the rights provided by
Section 11 (a)(ii).
(d) In case the registered holder of any Rights
Certificate shall exercise less than all the Rights evidenced thereby, a new
Rights Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to the
registered holder of such
-18-
Rights Certificate or to his duly authorized assigns, subject to the
provisions of Section 15 hereof.
(e) Notwithstanding anything in this Agreement to
the contrary, if an Acquiring Person or an Associate or Affiliate of an
Acquiring Person engages in or there occurs one or more of the transactions
set forth in Section 11 (a)(ii) or Section 13 (a) on or after the time the
Acquiring Person became such, then any Rights that are or were on or after
the earlier of the Distribution Date or the Stock Acquisition Date
beneficially owned by an Acquiring Person or any Associate or Affiliate shall
become void with respect to the rights provided under Section 11 (a)(ii) and
Section 13 (a) and any holder of such Rights shall thereafter have no right
to exercise such Rights under the provisions of Section 11 (a)(ii) and
Section 13 (a).
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence
of any purported exercise as set forth in this Section 7 unless the
certificate contained in the appropriate form of election to purchase set
forth on the reverse side of the Rights Certificate surrendered for such
exercise shall have been properly completed and duly executed by the
registered holder thereof and the Company shall have been provided with such
additional evidence of the identity of
-19-
the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably requests.
Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the purpose of
exercise, transfer, split up, combination or exchange shall, if surrendered
to the Company or any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights Agent,
shall be canceled by it, and no Rights Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this Rights
Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other
Rights Certificate purchased or acquired by the Company otherwise than upon
the exercise thereof. The Rights Agent shall deliver all canceled Rights
Certificates to the Company, destroy such canceled Rights Certificates, and
in such case shall deliver a certificate of destruction thereof to the
Company.
Section 9. Reservation and Availability of Common Stock.
The Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued shares of Common Stock, or any
authorized and issued shares of Common Stock held in its treasury, the number
of shares of Common Stock that will be sufficient to permit the exercise in
full of all outstanding Rights and, subject to
-20-
Section 11 (a)(iii) hereof, after the occurrence of an event specified in
Section 11, shall so reserve and keep available a sufficient number of shares
of Common Stock (and/or other securities) which may be required to permit the
exercise in full of the Rights pursuant to this Agreement.
So long as the shares of Common Stock (or other securities)
issuable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from
and after such time as the Rights become exercisable, all shares (or other
securities)reserved for such issuance to be listed on such exchange upon
official notice of issuance upon such exercise.
The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Common Stock (and/or
other securities) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares or other securities (subject to
payment of the Purchase Price), be duly and validly authorized and issued
and, with respect to shares of Common Stock or other securities, fully paid
and nonassessable.
The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Rights
Certificates or of any certificates for shares of Common Stock (or other
securities, as the case may be) upon the exercise of Rights. The Company
-21-
shall not, however, be required to pay any transfer tax which may be payable
in respect of any transfer or delivery of Rights Certificates to a person
other than, or in respect of the issuance or delivery of the shares of Common
Stock (or other securities, as the case may be) in a name other than that of,
the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for shares
of Common Stock (or other securities, as the case may be), in a name other
than that of the registered holder upon the exercise of any Rights until
such tax shall have been paid (any such tax being payable by the holder of
such Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
The Company shall use its best efforts to (i) file, as soon
as practicable following the Stock Acquisition Date, a registration statement
under the Securities Act of 1933, as amended (the "Act"), with respect to the
securities purchasable upon exercise of the Rights on an appropriate form,
(ii) cause such registration statement to become effective as soon as
practicable after such filing, and (iii) cause such registration statement
to remain effective (with a prospectus at all times meeting the requirements
of the Act and the rules and regulations thereunder) until the date of the
expiration of the rights provided by Section 11 (a)(ii). The Company will
-22-
also take such action as may be appropriate under the blue sky laws of the
various states.
Section 10. Common Stock Record Date. Each person in whose name any
certificate for shares of Common Stock (or other securities, as the case may
be) is issued upon the exercise of Rights shall for all purposes be deemed to
have become the holder of record of the shares of Common Stock (or other
securities, as the case may be) represented thereby on, and such certificate
shall be dated, the date upon which the Rights Certificate evidencing such
Rights was duly presented and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however, that if the date of
such presentation and payment is a date upon which the Common Stock transfer
books of the Company are closed, such person shall be deemed to have become
the record holder of such shares on, and such certificates shall be dated,
the next succeeding Business Day on which the Common Stock transfer books of
the Company are open. Prior to the exercise of the Rights evidenced thereby,
the holder of a Rights Certificate, as such, shall not be entitled to any
rights of a shareholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, the right to
vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
- - -23-
Section 11. Adjustment of Purchase Price, Number and Kind
of Shares or Number of Rights. The Purchase Price, the number of shares
covered by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a)(i) In the event that the Company shall at
any time after the date of this Agreement (A)
declare a dividend on the Common Stock payable
in shares of Common Stock, (B) subdivide the
outstanding Common Stock, (C) combine the
outstanding Common Stock into a smaller number
of shares or (D) issue any shares of its capital
stock in a reclassification of the Common Stock
(including any such reclassification in connection
with a consolidation or merger in which the Company
is the continuing or surviving corporation), except
as otherwise provided in this Section 11 (a) and
in Section 7 (e), the Purchase Price in effect at
the time of the record date for such dividend or
of the effective date of such subdivision, combination
or reclassification, and the number and kind of shares
of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of
capital stock and other securities which, if such Right
had been exercised immediately prior to such date and
at a time when the Common Stock
- - -24-
transfer books of the Company were open, he would
have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs
which would require an adjustment under both
Section 11 (a)(i) and Section 11 (a)(ii), the
adjustment provided for in this Section 11 (a)(i)
shall be in addition to, and shall be made prior to
any adjustment required pursuant to Section 11 (a)(ii).
(ii) In the event that any Person (other than the
Company, any subsidiary of the Company, any employee
benefit plan of the Company or any to its subsidiaries or
any entity holding securities of the Company organized,
appointed or established by the Company or any of its
subsidiaries for or pursuant to the terms of any such
plan), alone or together with its Affiliates and
Associates, shall become an Acquiring Person (except
pursuant to a tender or exchange offer for all
outstanding shares of Common Stock at a price and on
terms determined by at least a majority of the members
of the Board of Directors who are not Acquiring
Persons or Affiliates or Associates of an Acquiring
Person to be both adequate and otherwise in the best
interests of the Company and its various constituents,
including without limitation,
-25-
the long-term and short-term interests of the
Company and its shareholders (other than the
Person or an Affiliate or Associate thereof on
whose behalf the offer is being made) (a "Permitted
Offer")), then proper provision shall be made so that
each holder of a Right, except as provided in
Section 7(e) hereof, shall, for a period of 60 days
after the later of the occurrence of any such event
and the effective date of an appropriate registration
statement pursuant toSection 9, have a right to
receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this
Agreement, such number of shares of Common Stock of
the Company as shall equal the result obtained
by (x) multiplying the then current Purchase Price
by the then number of shares of Common Stock for
which a Right is then exercisable and dividing
that product by (y) 50% of the current market
price per one share of Common Stock (determined
pursuant to Section 11 (d) on the date of the
occurrence of the event set forth in this subparagraph
(ii) (such number of shares being referred to as the
"number of Adjustment Shares"); provided, however,
that if the transaction that would otherwise give
rise to the foregoing adjustment is also subject to
the provisions of Section 13 hereof, then only the
provisions of Section 13 hereof shall
-26-
apply and no adjustment shall be made pursuant to
this Section 11 (a)(ii).
(iii) In the event that there shall not
be sufficient treasury shares or authorized but
unissued shares of Common Stock to permit the
exercise in full of the Rights in accordance with
the foregoing subparagraph (ii), the Company shall
take all such action as may be necessary to authorize
additional shares of Common Stock for issuance upon
exercise of the Rights; provided, however, that if
the Company is unable to cause the authorization of
a sufficient number of additional shares of Common
Stock, then, in the event the Rights become so
exercisable, the Board of Directors may, but shall
not be required to, with respect to each Right,
(A) pay cash in an amount equal to the Purchase
Price, in lieu of issuing shares of Common Stock
and requiring payment therefore; or (B) issue debt
or equity securities or a combination thereof, having
a value equal to the Current Value of the Common Stock
(as defined hereinafter), where the value of such
securities shall be determined by a majority of the
members of the Board of Directors after considering
the advice of a nationally recognized investment
banking firm selected by a majority of the members of
the Board of Directors of the Company, and require
the payment of the Purchase
-27-
Price; or (C) deliver any combination of cash,
property, Common Stock and/or securities having a
value equal to the Current Value of the Common Stock,
and require payment of all or any requisite portions
of the Purchase Price. The Current Value shall be the
product of the current market price per share of
Common Stock (determined pursuant to Section 11 (d) on
the date of the occurrence of the event described
above in subparagraph (ii) multiplied by the number of
shares of Common Stock for which the Right otherwise
would be exercisable if there were sufficient shares
of Common Stock available. To the extent that the
Company determines that some action need be taken
pursuant to clauses (A), (B) or (C) of the proviso
of this Section 11 (a)(iii), a majority of the
members of the Board of Directors may suspend the
exercisability of the Rights for a period of up to 60
days following the date on which the event describe in
Section 11(a)(ii) shall have occurred, in order to
seek any authorization of additional shares of Common
Stock and/or to decide the appropriate form of
distribution to be made pursuant to the above
proviso and to determine the value thereof. In the
event of any such suspension, the Company shall issue
a public announcement stating that the exercisability
of the Rights has been temporarily suspended.
-28-
(b) If the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Common Stock
entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Common Stock (or securities
convertible into Common Stock) at a price per share of Common Stock (or
having a conversion price per share, if a security convertible into Common
Stock) less than the current market price (as defined in Section 11 (d)) per
share of Common Stock on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price
in effect immediately prior to such record date by a fraction, the numerator
of which shall be the number of shares of Common Stock outstanding on such
record date, plus the number of shares of Common Stock which the aggregate
offering price of the total number of shares of Common Stock to be offered
(and/or the aggregate initial conversion price of the convertible securities
so to be offered) would purchase at such current market price and the
denominator of which shall be the number of share of Common Stock outstanding
on such record date, plus the number of additional shares of Common Stock to
be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid in a consideration part or all of which shall
be in a form other than cash, the value of such consideration shall be
determined
-29-
reasonably and with good faith to the holders of Rights by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights
Agent. Shares of Common Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights or warrants are not
so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) If the Company shall fix a record date for the
making of a distribution to all holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness, cash
(other than regular cash dividends out of the earned surplus of the Company),
assets (other than a dividend payable in Common Stock) or subscription rights
or warrants (excluding those referred to in Section 11 (b)), the Purchase
Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the current market price
(as defined in Section 11 (d)) per share of Common Stock on such record date,
less the fair market value (as determined reasonably and with good faith to
the holders of Rights by the
-30-
Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights
Agent) of the portion of the cash, assets or evidences of indebtedness so to
be distributed or of such subscription rights or warrants distributable in
respect of one share of Common Stock and the denominator of which shall be
the current market price per share of Common Stock. Such adjustments shall
be made successively whenever such a record date is fixed; and in the event
that such distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would be in effect if such record
date had not been fixed.
(d) For the purpose of any computation hereunder
the "current market price" per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of such Common
Stock for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that in the
event that the current per share market price of the Common Stock is
determined during a period following the announcement by the issuer of such
Common Stock of (A) a dividend or distribution on such Common Stock payable
in shares of such Common Stock or securities convertible into shares of
Common Stock or (B) any subdivision, combination or reclassification of such
Common Stock, and prior to the expiration of 30 Trading Days after the
ex-dividend date for such dividend or distribution, or the record date for
such
-31-
subdivision, combination or reclassification, then, and in each such case,
the "current market price" shall be properly adjusted to take into account
ex-dividend trading. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the shares of Common Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed
on the principal national securities exchange on which the shares of Common
Stock are listed or admitted to trading or, if the shares of Common Stock
are not listed or admitted to trading on any national securities exchange,
the last quoted price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ")
or such other system then in use, or, if on any such date the shares of
Common Stock are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker
making a market in the Common Stock selected by the Board of Directors of
the Company. If on any such date no market maker is making a market in the
Common
-32-
Stock, the fair value of such shares on such date as determined reasonably
and with good faith by the Board of Directors of the Company shall be used
and shall be binding on the Rights Agent. The term, "Trading Day" shall mean
a day on which the principal national securities exchange on which the shares
of Common Stock are listed or admitted to trading is open for the transaction
of business or, if the shares of Common Stock are not listed admitted to
trading on any national securities exchange, a Business Day. If the Common
Stock is not publicly held or not so listed or traded, "current market price"
per share shall mean the fair value per share determined reasonably and with
good faith to the holders of Rights by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent.
(e) Anything herein to the contrary notwithstanding,
no adjustment in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11
(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest thousandth of a share
of Common Stock, as the case may be. Notwithstanding the first sentence of
this Section 11 (e), any adjustment required by this Section 11 shall be made
no later than the earlier of (i) three years from the
-33-
date of the transaction which mandates such adjustment or (ii) the
Expiration Date.
(f) If as a result of any provision of
Section 11(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Common Stock, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions
with respect to the shares contained in Section 11(a) through (c), inclusive,
and the provisions of Sections 7, 9, 10, 13 and 15 hereof with respect to the
Common Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder shall
evidence the right to purchase, at the adjusted Purchase Price, the number
of shares of Common Stock purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11 (i), upon each adjustment of the Purchase
Price as a result of the calculations made in Section 11 (b) and (c), each
Right outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price,
that number of shares of Common
-34-
Stock (calculated to the nearest thousandth)obtained by (i) multiplying (x)
the number of shares of Common Stock covered by a Right immediately prior to
this adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of
any adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of shares of Common Stock
purchasable upon the exercise of a Right. Each of the Rights outstanding
after the adjustment in the number of Rights shall be exercisable for the
number of shares of Common Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to
such adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price.
The Company shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Rights Certificates have been issued, shall be at
least 10 days later
-35-
than the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be distributed
to holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 15 hereof, the additional Rights
to which such holders shall be entitled as a result of such adjustment, or,
at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Rights Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights to
which such holder shall be entitled after such adjustment. Rights
Certificates so to be distributed shall be issued, executed and countersigned
in the manner provided for herein (and may bear, at the option of the
Company, the adjusted Purchase Price) and shall be registered in the names of
the holders of record of Rights Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of shares of Common Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per share and the number
of shares which were expressed in the initial Rights Certificates issued
-36-
hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value, if any, of
the shares of Common Stock issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall
require that an adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to defer until the
occurrence of such event the issuing to the holder of any Right exercised
after such record date the shares of Common Stock and other capital stock
or securities of the Company, if any, issuable upon such exercise over and
above the shares of Common Stock and other capital stock or securities of
the Company, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided, however, that the Company
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
-37-
(m) Anything to the contrary in this Section 11
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that the Board of Directors of the Company
in its sole discretion shall determine to be advisable in order that any
consolidation or subdivision of the Common Stock, issuance wholly for cash of
any shares of Common Stock at less than the current market price, issuance
wholly for cash of shares of Common Stock or securities which by their terms
are convertible into or exchangeable for shares of Common Stock, stock
dividends or issuance of rights, options or warrants referred to hereinabove
in this Section 11, hereafter made by the Company to holders of its Common
Stock shall not be taxable to such shareholders.
(n) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after the
date of this Agreement and prior to the Distribution Date (i) declare a
dividend on the outstanding shares of Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, (iii) combine the
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its capital stock in a reclassification of the outstanding Common
Stock, the number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter but prior to the Distribution
Date, shall be proportionately
-38-
adjusted so that the number of Rights thereafter associated with each share
of Common Stock following any such event shall equal the result obtained by
multiplying the number of Rights associated with each share of Common Stock
immediately prior to such event by a fraction the numerator of which shall be
the total number of shares of Common Stock outstanding immediately prior to
the occurrence of the event and the denominator of which shall be the total
number of shares of Common Stock outstanding immediately following the
occurrence of such event.
(o) The exercise of Rights under Section 11 (a)(ii)
shall only result in the loss of rights under Section 11 (a)(ii) to the
extend so exercised and shall not otherwise affect the rights represented by
the Rights under this Rights Agreement, including the rights represented by
Section 13.
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall (a) promptly prepare a certificate setting forth
such adjustment and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent and with each transfer
agent for the Common Stock a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Rights Certificate in accordance with
Section 26 hereof. The Rights Agent shall be fully protected in relying on
any such certificate and on any adjustment therein contained.
-39-
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
(a) In the event that, following the Stock
Acquisition Date, directly or indirectly, (x) the Company shall consolidate
with, or merge with and into, any other Person, (y) any Person shall
consolidate with the Company, or merge with and into the Company and the
Company shall be the continuing or surviving corporation of such merger
(other than, in the case of either transaction described in (x) or (y), a
merger or consolidation which would result in all of the Voting Power
represented by the securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into securities of the surviving entity) all of the Voting Power
represented by the securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation and the holders
of such securities not having changed as a result of such merger or
consolidation), or (z) the Company shall sell, mortgage or otherwise transfer
(or one or more of its subsidiaries shall sell, mortgage or otherwise
transfer), in one or more transactions, assets or earning power of the
Company and it subsidiaries (taken as a whole) to any other Person, then,
and in each such case, proper provision shall be made so that (i) following
the Distribution Date, each holder of a Right, subject to Section 7 (e),
shall have the right to receive, upon the
-40-
exercise thereof at the then current Purchase Price in accordance with the
terms of this Agreement, such number of shares of freely tradeable Common
Stock of the Principal Party (as hereinafter defined), free and clear of
liens, rights of call or first refusal, encumbrances or other adverse claims,
as shall be equal to the result obtained by (1) multiplying the then current
Purchase Price by the number of shares of Common Stock for which a Right is
then exercisable (without taking into account any adjustment previously made
pursuant to Section 11 (a)(ii) hereof) and dividing that product by (2) 50%
of the current market price per share of the Common Stock of such Principal
Party (determined pursuant to Section 11 (d) hereof) on the date of
consummation of such consolidation, merger, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue
of such consolidation, merger sale or transfer, all the obligations and
duties of the Company pursuant to this Agreement; (iii) the term "Company"
shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof shall apply
to such Principal Party; and (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock in accordance with Section 9 hereof) in connection
with such consummation as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably may be, in
relation to its shares of
-41-
Common Stock thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean
(i) in the case of any transaction described
in (x) or (y) of the first sentence of
Section 13 (a), the Person that is the issuer
of any securities into which shares of Common
Stock of the Company are converted in such
merger or consolidation, and if no securities
are so issued, the Person that is the other
party to the merger or consolidation
(including, if applicable, the Company, if it
is the surviving corporation); and
(ii) in the case of any transaction described
in (z) of the first sentence in Section 13
(a), the Person that is the party receiving
the greatest portion of the assets or earning
power transferred pursuant to such transaction
or transactions;
provided, however, that in any such case, (1) if the Common Stock of such
Person is not at such time and has not been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect subsidiary of Affiliate of another Person
the Common Stock of which is and has been so registered, "Principal Party"
shall refer to such other Person; (2) in case of such Person is a subsidiary,
directly or indirectly, or
-42-
Affiliate of more than one Person, the shares of Common Stock of two or more
of which are and have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common Stock having the
greatest aggregate market value; and (3) in case such Person is owned,
directly or indirectly, by a joint venture formed by two or more Persons
that are not owned, directly or indirectly, by the same Person, the rules
set forth in (1) and (2) above shall apply to each of the chains of ownership
having an interest in such joint ventures and the Principal Parties in each
such chain shall bean the obligations set forth in this Section 13 in the
same ratio as their direct or indirect interests in such Person bear to the
total of such interests.
(c) The Company shall not consummate any such
consolidation, merger, sale or transfer unless the Principal Party shall
have a sufficient number of authorized shares of its Common Stock that have
not been issued or reserved for issuance to permit the exercise in full of
the Rights in accordance with this Section 13 and unless prior thereto the
Company and each Principal Party and each other Person who may become a
Principal Party as a result of such consolidation, merger, sale or transfer
shall have executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in paragraph (a) and (b) of this
Section 13 and further providing that, as soon as practicable after the date
of any
-43-
consolidation, merger, sale or transfer of assets mentioned in paragraph
(a) of this Section 13, the Principal Party at its own expense will:
(i) prepare and file a registration statement
under the Act with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, will use its best
efforts to cause such registration statement to become effective as soon
as practicable after such filing and will use its best efforts to cause
such registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Act) until the Expiration Date;
(ii) use its best efforts to qualify or
register the Rights and the securities purchasable upon exercise of the
Rights under the blue sky laws of such jurisdictions as may be necessary
or appropriate; and
(iii) deliver to holders fo the Rights historical
financila statements for the Principal Party and each of its Affiliates which
comply in all material respects with the requirements for registration on
Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers
or consolidations or sales or other
-44-
transfers. The rights under this Section 13 shall be in addition to the
rights to exercise Rights and adjustments under Section 11 (a)(ii)d and shall
survive any exercise thereunder.
(d) Notwithstanding anything in this Agreement to
the contrary, Section 13 shall not be applicable to a transaction described
in subparagraphs (x) and (y) of Section 13 (a) if: (i) such transaction is
consummated with a Person or Persons who acquired shares of Common Stock
pursuant to a Permitted Offer (or a wholly owned subsidiary of any such
Person or Persons); (ii) the price per share of Common Stock offered in such
transaction is not less than the price per share of Common Stock paid to all
holders of Common Stock whose shares were purchased pursuant to such
Permitted Offer; and (iii) the form of considering being offered to the
remaining holders of Common Stock pursuant to such transaction is the same as
the form of consideration paid pursuant to such Permitted Offer. Upon
consummation of any such transaction contemplated by this subsection (d), all
Rights hereunder shall expire.
Section 14. Additional Covenants.
(a) After the Stock Acquisition Date, the Company
covenants and agrees that it shall not (i) consolidate with, (ii) merge with
or into, or (iii) sell or transfer to, in one or more transactions, assets
or earning power aggregating more that 50% of the assets or earning power of
the Company and
-45-
its subsidiaries taken as a whole, any other Person, if at the time of or
after such consolidation, merger or sale there are any charter or by-law
provisions or any rights, warrants or other instruments or securities
outstanding, agreements in effect or any other action taken which would
diminish or otherwise eliminate the benefits intended to be afforded by
the Rights. The Company shall not consummate any such consolidation, merger
or sale unless prior thereto the Company and such other Person shall have
executed and delivered to the Rights Agent a supplemental agreement
evidencing compliance with this subsection.
(b) The Company covenants and agrees that, after
the Stock Acquisition Date, it will not, except as permitted by Section
24 or Section 27 hereof, take any action the purpose or effect of which is
to diminish or otherwise eliminate the benefits intended to be afforded by
the Rights.
Section 15. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue
fractions of Rights, except prior to the Distribution Date as provided in
Section 11 (n), or to distribute Rights Certificates which evidence
fractional Rights, In lieu of such fractional Rights, there shall be paid
to the registered holders of the Rights Certificates with regard to which
such fractional Rights would otherwise be issuable, an amount in cash equal
to the same fraction of the current market value of a whole Right.
-46-
For the purpose of this Section 15 (a), the current market value of a whole
Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price of the Rights for any day shall be the
last sale price, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported
by NASDAQ or such other system then in use or, if on any such date the Rights
are not quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in
the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights the fair value of
the Rights on such date as determined reasonably and with good faith to the
holders of Rights by the Board of Directors of the Company shall be used and
shall be binding on the Rights Agent.
(b) The Company shall not be required to issue
fractions of shares of Common Stock upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Common Stock.
In lieu of fractional shares of Common Stock, the Company may pay to the
registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of
the current market value of a share of Common Stock. For purposes
-47-
of this Section 15 (b), the current market value of a share of Common Stock
shall be the closing price of a share of Common Stock (as determined pursuant
to Section 11 (d)(ii) hereof) for the Trading Day immediately prior to the
date of such exercise.
(c) Except as otherwise expressly provided herein,
the holder of a Right by the acceptance of the Rights expressly waive his
right to receive any fractional Rights or any fractional shares upon exercise
of a Right.
Section 16. Rights of Action. All rights of action in
respect of the Agreement are vested in the respective registered holders of
the Rights Certificates (and, prior to the Distribution Date, the registered
holders of the Common Stock); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the Common Stock),
without the consent of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common Stock), may,
in his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by
such Rights Certificate in the manner provided in such Rights Certificate in
this Agreement. Without limiting the foregoing or any remedies available to
the holders of Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy as law for any breach of this
Agreement and
-48-
shall be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement. Holders of Rights shall
be entitled to recover the reasonable costs and expenses, including
attorney's fees, incurred by them in any action to enforce the provisions of
this Agreement.
Section 17. Agreement of Rights Holders. Every holder of a
Right by accepting the same consents and agrees with the
Company and the Rights Agent and with every other holder
of a Right that:
(a) prior to the Distribution Date, the Rights will
be transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights
Certificates are transferable only on the registry books of the Rights Agent
if surrendered at the principal office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and
treat the person in whose name a Rights Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is registered as
the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the
-49-
associated Common Stock certificate made by anyone other than the Company or
the Rights Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary.
Section 18. Rights Certificate Holder Not Deemed a
Shareholder. No holder, as such, of any Rights Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose the holder of the
shares of Common Stock, or any other securities of the Company which may at
any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Rights Certificate be construed to
confer upon the holder of any Rights Certificate, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in Section 25 hereof), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by such Rights
Certificate shall have been exercised in accordance with the provisions
thereof.
Section 19. Concerning the Rights Agent. The Company agrees
to pay to the Rights Agent reasonable compensation for all services rendered
by it hereunder and, from time to time, on demand of the Rights Agent, its
reasonable fees and expenses
-50-
and counsel fees and disbursements and other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability,
or expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by
the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability arising therefrom, directly or indirectly. Such rights to
indemnification shall survive any change of the Rights Agent as described in
Section 22 hereof.
The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it
in connection with its administration of this Agreement in reliance upon any
Rights Certificate or certificate for Common Stock or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to
be signed, executed and, where necessary, verified or acknowledged, by the
proper Person or Persons.
Section 20. Merger or Consolidation or Change of Name of
Rights Agent. Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it
-51-
may be consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent shall
be a party, or any corporation succeeding to the corporate trust business of
the Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties hereto, provided
that such corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 22 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall
not have been countersigned such Right Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all such
cases such Rights Certificates shall have the full force provided in the
Rights Certificates in this Agreement.
In case of any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its price name and deliver
-52-
Rights Certificates so countersigned; and in case at that time any of the
Rights Certificates shall not have been countersigned, the Rights Agent may
countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
Section 21. Duties of Rights Agent. The Rights Agent has
no duties other than as expressly set forth in this Rights Agreement. The
Rights Agent undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the Company and the
holders of Rights Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
selected by it (who may be legal counsel for the Company), and the opinion of
such counsel shall be full and complete authorization and protection to the
Rights Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any Acquiring
Person) be proved or established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be
-53-
deemed to be conclusively proved and established by a certificate signed by
the Chairman of the Board, any Vice Chairman of the Board, any President, any
Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only
for its own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in this
Agreement or in the Rights Certificates (except as to the fact that it has
countersigned the Rights Certificates) or be required to verify the same,
but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement of the execution
and delivery hereof (except the due execution hereof by the Rights Agent) or
in respect of the validity or execution of any Rights Certificate (except
its countersignature thereof); nor shall it be responsible for any breach by
the Company of any convenant or condition contained by this
-54-
Agreement or in any Rights Certificate; nor shall it be responsible for any
adjustment required under the provisions of Section 11 or 13 hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Rights
Certificates after actual notice of any such adjustment); nor shall it be
responsible for any determination by the Board of Directors of the Company of
the current market value of the Rights or Common Stock pursuant to the
provisions of Section 15 hereof; nor shall it by any act hereunder by deemed
to make any representation or warranty as to the authorization or reservation
of any shares of Common Stock or other securities to be issued pursuant to
this Agreement or any Rights Certificate or as to whether any shares of
Common Stock or other securities will, when so issued, be validly authorized
and issued, fully paid and nonassessable.
(f) The Rights Agent shall be under no liability for
interest accrued on any monies received by it pursuant to the exercise of
Rights or otherwise.
(g) The Company agrees that it will perform,
execute, acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent for the carrying
out or performing by the Rights Agent of the provisions of this Agreement.
(h) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance
-55-
of its duties hereunder and certificates delivered pursuant to any provision
hereof from the Chairman of the Board, any Vice Chairman of the Board, any
President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer of the Company, and is authorized to
apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to be
taken by it in good faith in accordance with instructions of any such
officer.
(i) The Rights Agent and any shareholder, director,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become peculiarly interested in
any transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Company or for
any other legal entity.
(j) The Rights Agent may execute and exercise any of
the rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents, and the Rights Agent shall
not be answerable or accountable for any act, omission, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company or
to the holders of the Rights resulting from any
-56-
such act, omission, default, neglect or misconduct, provided reasonable care
was exercised in the selection and continued employment thereof.
(k) No provision of this Agreement shall require
the Rights Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder or in
the exercise of its rights if there shall be reasonable grounds for believing
that repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(l) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to purchase, as the
case may be, has either not been completed or indicates an affirmative
response to clause 1 and/or 2 thereof, the Rights Agent shall not take any
further action with respect to such requested exercise of transfer without
first consulting with the Company.
Section 22. Change of Rights Agent. The Rights Agent or
any successor Rights Agent may resign and be discharged from its duties under
this Agreement upon 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Stock by registered or certified mail, and
to holders of the Rights Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days'
-57-
notice in writing, mailed to the Rights Agent or successor Rights Agent, as
the case may be, and each transfer agent of the Common Stock by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a successor to the
Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who
shall, with such notice, submit his Rights Certificate for inspection by the
Company), then the registered holder of any Right Certificate may apply to
any court of competent jurisdiction for the appointment of an new Rights
Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be (a) a corporation organized and doing business under
the laws of the United States or of the State of New York (or of any other
state of the United States so long as such corporation is authorized to do
business as a banking institution in the State of New York), in good
standing, having a principal office in the State of New York, which is
authorized under such laws to exercise corporate trust powers and is subject
to supervision or examination by federal or state authority and which has at
the time of its appointment as Rights
-58-
Agent a combined capital and surplus of at least $50,000,000 or (b) an
affiliate of a corporation described in clause (a) of this sentence.
After appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property
at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not later than
the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent
of the Common Stock, and mail a notice thereof in writing to the registered
holders of the Rights Certificates. Failure to give any notice provided for
in this Section 22, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Section 23. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors
to reflect any adjustment or change in the Purchase Price per share and the
-59-
number or kind or class of shares or other securities or property purchasable
under the Rights Certificates made in accordance with the provisions of the
Agreement.
Section 24. Redemption and Termination.
(a)(i) The Board of Directors of the Company may,
at its option, at any time prior to the earlier of (x) the time that any
person becomes an Acquiring Person or (y) 5:00 P.M., New York City time, on
the Final Expiration Date, redeem all but not less than all of the then
outstanding Rights at a redemption price of $.05 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price").
(ii) In addition, the Board of Directors of the
Company may redeem all but not less than all of the then outstanding Rights
at the Redemption Price following the occurrence of a Stock Acquisition Date
but prior to any event described in Section 13(a) either (x) in connection
with any event specified in Section 13 (a) in which all holders of Common
Stock are treated alike and not involving an Acquiring Person, or an
Affiliate or Associate of any Acquiring Person or any other Person in which
such Acquiring Person, Affiliate or Associate has any interest, or any other
Person acting directly or indirectly on behalf of or in association with any
such Acquiring Person, Affiliate or Associate, or (y) following the
occurrence of an event set forth in, and the
-60-
expiration of any period during which the holder of Rights may exercise the
rights under, Section 11(a)(ii) if and for as long as the Acquiring Person
is not thereafter the Beneficial Owner of securities representing 20% or more
of the Voting Power, and at the time of redemption there are no other Persons
who are Acquiring Persons.
(b) In the case of a redemption permitted under
Section 24(a)(i), immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights evidence of which shall
have been filed with the Rights Agent and without any further action and
without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price. In the case of a redemption permitted only under Section
24(a)(ii), evidence of which shall have been filed with the Rights Agent,
the right to exercise the Rights will terminate and represent only the right
to receive the Redemption Price only after ten Business Days following the
giving of notice of such redemption to the holders of such Rights if no event
set forth in Section 11 (a)(ii) shall have occurred, and, if such event
shall have occurred, upon the later of ten Business Days following the giving
of such notice or the expiration of any period during which the rights under
Section 11(a)(ii) may be exercised. Within ten days after the
-61-
action of the Board of Directors ordering any such redemption of the Rights,
the Company shall give notice of such redemption to the Rights Agent and the
holders of the then outstanding Rights by mailing such notice to the Rights
Agent and to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the Transfer Agent for the Common Stock. Any notice which
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made.
The Company may, at its option, discharge all of its
obligations with respect to the Rights by (i) issuing a press release
announcing the manner of redemption of the Rights and (ii) mailing payment of
the Redemption Price to the registered holders of the Rights at their last
addresses as they appear on the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the Transfer Agent of the
Common Stock, and upon such action, all outstanding Rights Certificate shall
be null and void without any further action by the Company.
Section 25. Notice of Certain Events. In case the Company
shall propose (a) to pay any dividend payable in stock of any class to the
holders of Common Stock or to make any
-62-
other distribution to the holders of Common Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the Company)
or (b) to offer to the holders of Common Stock rights or warrants to
subscribe for or to purchase any additional shares of Common Stock or shares
of stock of any class or any other securities, rights or options, or (c) to
effect any reclassification of its Common Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Common Stock), or (d) to effect any consolidation or merger into or with, or
to effect any sale or other transfer (or to permit one or more of its
subsidiaries to effect any sale or other transfer), in one or more
transactions, of more than 50% of the assets or earning power of the Company
and its subsidiaries (taken as a whole) to, any other Person, or (e) to
effect the liquidation, dissolution or winding up of the Company, then, in
each such case, the Company shall give to each holder of a Rights
Certificate, in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, distribution of rites or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Common Stock, if any such date is to
be fixed, and such notice shall be so given in the case of any action covered
by clause
-63-
(a) or (b) above at least 20 days prior to the record date for determining
holders of the shares of Common Stock for purposes of such action, and in the
case of any such other action, at least 20 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the shares of Common Stock whichever shall be the earlier.
In case the event set forth in Section 11 (a)(ii) of the
Agreement shall occur, then, in any such case, the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such event,
which shall specify the event and the consequences of the event to holders
of Rights under Section 11 (a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any
Rights Certificate to or on the Company shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
Chock Full O'Nuts Corporation
370 Lexington Avenue
New York, New York 10017
Attention: Chairman of the Board
Subject to the provisions of Section 22, any notice or demand authorized by
this Agreement to be given or made by the Company
-64-
or by the holder of any Rights Certificate to or on the Rights Agent shall
be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Stock Transfer Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 27. Supplements and Amendments. The Company and the
Rights Agent may from time to time supplement or amend this Agreement without
approval of any holders of Right Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein,
(iii) prior to the Distribution Date, to change or supplement the provisions
hereunder which the Company may deem necessary or desirable or (iv) following
the Distribution Date, to change or supplement the provisions hereunder in
any manner which shall not adversely affect the interests of the holdings of
Rights
-65-
Certificates. Upon the delivery of a certificate from an appropriate officer
of the Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment unless the Rights Agent shall have determined in
good faith that such supplement or amendment would adversely affect its
interests under this Agreement. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Stock. Any supplement or amendment
of this Rights Agreement shall be in writing and signed on behalf of the
Company and the Rights Agent.
Section 28. Determination and Actions by the Board of
Directors, etc. For all purposes of this Agreement, any calculation of the
number of shares of Common Stock outstanding at any particular time,
including for purposes of determining the particular percentage of such
outstanding shares of Common Stock or any other securities of which any
Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3 (d)(l)(i) of the General Rules and Regulations under
the Exchange Act as in effect on the date of this Agreement. The Board of
Directors of the Company shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board, or the Company, or a may be necessary or advisable in
the administration of this Agreement, including, without limitation, the
right and power to (i) interpret the
-66-
provisions of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including a
determination to redeem or not redeem or not redeem the Rights or to amend
the Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions
with respect to the foregoing) which are done or made by the Board in good
faith, shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights Certificates and all other parties, and (y)
not subject the Board to any liability to the holders of the Rights
Certificates.
Section 29. Successors. All the convenants and provisions
of this Agreement by or for the benefit of the Company or the Rights Agent
shall bind and inure to the benefit of their respective successors and
assigns hereunder.
Section 30. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation other than
the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the Common Stock) any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Rights Certificates and prior
to the Distribution Date, the Common Stock).
-67-
Section 31. Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
Section 32. Governing Law. This Agreement, each Right and
each Rights Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of New York and for all purposes shall be
governed by and construed in accordance with the laws of such State
applicable to contracts to be made and to be performed entirely within such
State.
Section 33. Counterparts. This Agreement may be executed
in any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of
the several Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above
written.
Attest: CHOCK FULL O'NUTS CORPORATION
[Seal]
_______________________ _____________________________
Name: Martin J. Cullen Name: Leon Pordy, M.D.
Title: Vice President, Title: Chairman of the Board
Treasurer and and Chief Executive
Secretary Officer
Attest: IBJ SCHRODER BANK & TRUST
COMPANY
[Seal]
_________________________ By__________________________
Name: Perry A. Polhemus Name:
Title: Assistant Secretary Title:
- - -69-
Exhibit A
[Form of Rights Certificate]
Certificate No. R- ______________Rights
NOT EXERCISABLE AFTER December 30, 1997, OR EARLIER
UNDER CERTAIN CIRCUMSTANCES AS SET FORTH IN THE
RIGHTS AGREEMENT OR IF NOTICE OF REDEMPTION IS GIVEN.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF
THE COMPANY AT $.05 PER RIGHT ON THE TERMS SET FORTH IN
THE RIGHTS AGREEMENT. [THE RIGHTS REPRESENTED BY THIS
CERTIFICATE WERE ISSUED TO A PERSON WHO WAS AN ACQUIRING
PERSON OR AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON.
THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
MAY BECOME VOID TO THE EXTENT PROVIDED IN AND UNDER
THE CIRCUMSTANCES SPECIFIED IN SECTION 7 (e) OF THE
RIGHTS AGREEMENT]*
Rights Certificate
CHOCK FULL O'NUTS CORPORATION
This certifies that , or registered assigns,
is the registered owner of the number of Rights set forth above, each of
which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement dated as of December 30, 1987 (the
"Rights Agreement") between Chock Full O'Nuts Corporation, a New York
corporation (the "Company"), and IBJ Schroder Bank & Trust
_______________________________
* The portion of the legend in brackets shall be
inserted only if applicable.
A-1
Company (the "Rights Agent"), to purchase from the Company at any time after
the Distribution Date (as such term is defined in the Rights Agreement) and
prior to 5:00 P.M. (New York time) on December 30, 1997 at the principal
office of the Rights Agent in New York, one fully paid, nonassessable Common
Share, $.25 par value (the "Common Share") of the Company, at a purchase
price of $30.00 per share (the "Purchase Price"), upon presentation and
surrender of this Rights Certificate with the appropriate Form of Election to
Purchase duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of shares which may be purchase upon exercise
thereof) set forth above, and the Purchase Price set forth above, are the
number and Purchase Price as of January 22, 1988, based on the Common Shares
as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and
the number of Common Shares or other securities which may be purchased upon
the exercise of the Rights evidenced by this Rights Certificate are subject
to modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions
and conditions are hereby incorporated herein by reference and made a part
hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities
A-2
hereunder of the Rights Agent, the Company and the holders of the Rights
Certificates. Copies of the Rights Agreements are on file at the principal
office of the Company and are also available upon written request to the
Company.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office of the Rights agent,
may be exercised for another Rights Certificate or Rights Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a
like aggregate number of Common Shares as the Rights evidenced by the Rights
Certificate or Rights Certificates surrendered shall have entitled such
holder to purchase. If this Rights Certificate shall be exercised (other
than pursuant to Section 11 (a)(ii) of the Rights Agreement, the holder shall
be entitled to receive this Rights Certificate duly marked to indicate that
such exercise has occurred as set forth in the Rights Agreement.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at
a reemption price of $.05 per Right. Subject to the provisions of the Rights
Agreement, the Company
A-3
at its option, may elect to mail payment of the redemption price to the
registered holder of the Right at the time of redemption, in which event
this certificate may become void without any further action by the Company.
No fractional shares of Common Stock will be issued upon the
exercise of any Right or Rights evidenced hereby but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the holder
of Common Shares or of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall anything contained in th
e Rights Agreement or herein be construed to confer upon the holder hereof,
as such, any of the rights of a shareholder of the Company or any right to
vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or, to receive notice of meetings or other actions
affecting shareholders (except as provided in the Rights Agreement), until
the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
A-4
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal. Dated as of January__, 1988.
ATTEST: [Seal] CHOCK FULL O'NUTS CORPORATION
__________________________ By__________________________
Martin J. Cullen Leon Pordy, M.D.
Vice President, Chairman of the Board
Treasurer and Secretary and Chief Executive
Officer
Countersigned
IBJ SCHRODER BANK & TRUST COMPANY
__________________________________
Authorized Signature
A-5
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED____________________________________________________
hereby sell, assigns and transfers unto_______________________________
______________________________________________________________________
(Please print name and address of transferee)
______________________________________________________________________
this Rights Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
_____________________ Attorney, to transfer the within Rights Certificate
on the books of the within-named Company, with full power of substitution.
Dated:___________________, 19___
______________________
Signature
Signature Guaranteed:
A-6
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidence by this Rights Certificate [ ]
are [ ] are not being sold, assigned and transferred by or on behalf of a
Person who is or was an Acquiring Person or an Affiliate or Associate of any
such Acquiring Person (as such terms are defined pursuant to the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Date:_________________, 19 __ _____________________________
Signature
NOTICE
The signature to the foregoing Assignment must correspond to
the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
A-7
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires
to exercise the Rights Certificate pursuant to
Section 11(a)(ii) of the Rights Agreement.)
To CHOCK FULL O' NUTS CORPORATION:
The undersigned hereby irrevocably elects to exercise
________________Rights represented by this Rights Certificate to purchase
the shares of Common Stock (or such other securities of the Company)
issuable upon the exercise of the Rights and requests that certificates
for such shares be issued in the name of and delivered to:
________________________________________________________________
(Please insert social security or other identifying number)
________________________________________________________________
(Please print name and address)
________________________________________________________________
The Rights Certificate indicating the balance, if any, of
such Rights which may still be exercised pursuant to Section 11 (a)(ii) of
the Rights Agreement shall be returned to the undersigned unless such person
requests that the Rights Certificate be registered in the name of the
delivered to :
________________________________________________________________
Please insert social security or other identifying number
(complete only if Rights Certificate is to be registered in a name other
than the undersigned)
________________________________________________________________
(Please print name and address)
________________________________________________________________
________________________________________________________________
Date:____________, 19__ __________________________________
Signature
Signature Guaranteed:
A-8
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate [ ]
are [ ] are not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person
(as such terms are defined pursuant to the Rights Agreement);
(2) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person
(as such terms are defined pursuant to the Rights Agreement);
(3) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated:___________________, 19__ ________________________
Signature
NOTICE
The signature to the foregoing Election to Purchase must
correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
A-9
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Rights Certificate other than pursuant to
Section 11(a)(ii) of the Rights Agreement.)
To CHOCK FULL O' NUTS CORPORATION:
The undersigned hereby irrevocable elects to exercise
_________________Rights represented by this Rights Certificate to purchase
the shares of Common Stock (or such other securities of the Company or any
other Person) issuable upon the exercise of the Rights and requests that
certificates for such shares be issued in the name of:
________________________________________________________________
(Please insert social security or other identifying number)
________________________________________________________________
(Please print name and address)
________________________________________________________________
The Rights Certificate indicating the balance, if any, of
such Rights which may still be exercised pursuant to Section 11(a)(ii) of
the Rights Agreement shall be returned to the undersigned unless such person
requests that the Rights Certificate be registered in the name of and
delivered to:
________________________________________________________________
Please insert social security or other identifying number
(complete only if Rights Certificate is to be registered in a name
other than the undersigned)
________________________________________________________________
(Please print name and address)
________________________________________________________________
________________________________________________________________
Dated: _______________, 19__ __________________________________
Signature
Signature Guaranteed:
A-10
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate
[ ] are[ ] are not being sold, assigned and transferred by or on behalf of a
Person who is or was an Acquiring Person or an Affiliate or Associate of any
such Acquiring Person (as such terms are defined pursuant to the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Date: _______________, 19__ _____________________________
Signature
NOTICE
The signature to the foregoing Election to Purchase must
correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
A-11
Exhibit B
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On December 30, 1987, the Board of Directors of CHOCK FULL
O' NUTS CORPORATION (the "Company") declared a dividend distribution of one
Right for each outstanding share of common stock, $.25 par value (the "Common
Stock"), of the Company to shareholders of record at the close of business on
January 22, 1988 (the "Record Date"). Except as set forth below, each Right,
when exercisable, entitles the registered holder to purchase from the Company
one share of Common Stock at a price of $30 per share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth
in a Rights Agreement (the "Rights Agreement") between the Company and IBJ
Schroder Bank & Trust Company as Rights Agent.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Right
certificates will be distributed. Until the earlier to occur of (i) a public
announcement that, without the prior consent of the company, (A) a person or
group of affiliated or associated persons has acquired, or obtained the right
to acquire, after December 30, 1987, beneficial ownership of securities
having 20% or more of the voting power of all outstanding voting securities
of the Company, or B) a person or group of affiliated or associated persons
that, on December 30, 1987, beneficially owned securities having 20% or more
of the Company's voting power, has acquired, or obtained the right to
acquire, after December 30, 1987, beneficial ownership of securities
representing an additional 2% or more of the Company's voting power (any suc
h person or group referred to in clauses (A) or (B) being an "Acquiring
Person" and such date being the "Stock Acquisition Date") or (ii) the tenth
day following the commencement of (or a public announcement of an intention
to make) a tender offer or exchange offer which would result in any person or
group and related persons becoming an Acquiring Person, without the prior
consent of the Company or such later date as may be fixed by the Board of
Directors of the Company (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced, with respect to any of
the Common Stock certificates outstanding as of the Record Date, by such
Common Stock certificate together with this Summary of Rights. The Rights
Agreement provides that, until the Distribution Date, the Rights will be
transferred only in conjunction with the corresponding transfer of the Common
Stock certificates. From as soon as practicable after the Record Date and
until the later of the Stock Acquisition Date or the Distribution Date (or
earlier redemption or expiration of the Rights), new Common Stock
certificates issued after the Record
B-1
Date (including Common Stock issued at any time after the Record Date upon
conversion of the Company's outstanding 8% Convertible Subordinated
Debentures due 2006 and 7% Convertible Senior Debentures due 2012) upon
transfer or new issuance of the Common Stock will contain a notation
incorporating the Rights Agreement by reference. Until the later of the
Stock Acquisition Date or the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates
for Common Stock outstanding (with or without this Summary of Rights
attached) will also constitute the transfer of the Rights associated with
the Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Rights Certificates") will be mailed to holders of record of the Common
Stock as of the close of business on the Distribution Date, and the separate
Rights Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date.
the rights will expire on the earliest of (i) December 30, 1997, (ii)
consummation of a merger transaction with a person or group who acquired
Common Stock pursuant to a Permitted Offer (as defined below) and who is
offering the same price per share and form of consideration paid in the
Permitted Offer, or (iii) redemption by the Company as described below.
The Purchase Price payable, and the number of shares of
Common Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i)
in the event of a stock dividend on, or a subdivision, combination or
reclassification of the Common Stock, (ii) upon the grant to holders of the
Common Stock of certain rights or warrants to subscribe for Common Stock,
certain convertible securities or securities having the same or more
favorable rights, privileges and preferences as the Common Stock at less than
the current market price of the Common Stock or (iii) upon the distribution
to holders of the Common Stock of evidences of indebtedness or assets
(excluding regular cash dividends out of earned surplus and dividends
payable in Common Stock) or of subscription rights or warrants (other than
those referred to above).
In the event that a person becomes an Acquiring Person
(unless pursuant to a tender or exchange offer for all outstanding shares of
Common Stock at a price and on terms determined by at least a majority of the
members of the Board of Directors of the Company, who are not an Acquiring
Person or an affiliate or associate of an Acquiring Person, to be both
adequate and otherwise in the best interests of the Company and its various
constituents including, without limitation, both the long term and short
term interests of the Company and its
B-2
shareholders (a "Permitted Offer")), proper provision shall be made so that
each holder of a Right will for a 60 day period thereafter have the right to
receive upon exercise that number of shares of Common Stock having a market
value of two times the then current exercise price of the right, subject to
the availability of a sufficient number of authorized but unissued shares
(such right being called the "Subscription Right").
In the event that after a Stock Acquisition Date the Company
is acquired in a merger or other business combination transaction involving
the Company or 50% of more of its assets or earning power are sold (in one
transaction or a series of transactions), proper provision shall be made so
that each holder of a Right shall thereafter have the right to receive, upon
the exercise thereof at the then current exercise price of the Right, that
number of shares of common stock of the acquiring company (or, in the event
there is more than one acquiring company, the acquiring company receiving
the greatest portion of the assets or earning power transferred) which at the
time of such transaction would have a market value of two times the exercise
price of the Right (such right being called the "Merger Right").
The holder of a Right will continue to have the Merger Right
whether or not such holder exercises the Subscription Right. Upon the
occurrence of any of the events giving rise to the exercisability of the
Subscription Right or the Merger Right, any Rights that are or were at any
time owned by an Acquiring Person engaging in any of such transactions or
receiving the benefits thereof on or after the time the Acquiring Person
becomes such shall become void insofar as they relate to the Subscription
Right or the Merger Right.
With certain exceptions, no adjustments in the Purchase
Price will be required until cumulative adjustments require an adjustment of
at least 1% in such Purchase Price. No fractions of shares will be issued
and, in lieu thereof, an adjustment in cash will be made based on the market
price of the Common Stock on the last trading date prior to the date of
exercise.
At any time prior to the earlier to occur of (i) a person becoming an
Acquiring Person or (ii) the expiration of the Rights, the Company may
redeem the Rights in whole, but not in part at a price of $.05 per Right (the
"Redemption Price"), which redemption shall be effective upon the action of
the Board of Directors. Additionally, the Company may thereafter redeem the
then outstanding Rights in whole, but not in part, at the Redemption Price
provided than such redemption is incidental to a merger or other business
combination transaction or series of transactions involving the Company but
not involving an
B-3
Acquiring Person or any person who was an Acquiring Person or following an
event giving rise to, and the expiration of the exercise period for, the
Subscription Right if and for as long as no person beneficially owns
securities representing 20% or more of the voting power of the Company's
voting securities. The redemption of Rights described in the preceding
sentence shall be effective only as of such time when the Subscription Right
is not exercisable, and in any event, only after 10 business days prior
notice. Upon the effective date of the redemption of the Rights, the right
to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement
on Form 8-A. A copy of the Rights Agreement is available free of charge
from the Company. This summary description of the Rights does no purport to
be complete and is qualified in its entirety by reference to the Rights
Agreement, which is incorporated herein by reference.
B-4
Exhibit 10
Material Contracts (b)
CHOCK FULL O'NUTS CORPORATION
BENEFITS PROTECTION TRUST
TABLE OF CONTENTS
ARTICLE PAGE
1: Definitions 2
2: Creation of Trust 3
3: Expense Account 5
4: Management of Trust Assets 5
5: Administrative Powers 9
6: Trustee's Powers after Change in
Control 10
7: Taxes, Expenses and Compensation
of Trustee 15
8: General Duties of Trustee 16
9: Indemnification 18
10: No Duty to Advance Funds 19
11: Accounts 19
12: Administration of the Plan;
Communications 22
13: Resignation or Removal of Trustee 24
14: Amendment of Agreement; Termination
of Trust 28
15: Prohibition of Diversion 30
16: Prohibition of Assignment of
Interest 31
17: Miscellaneous 31
Exhibit A 35
Exhibit B 36
Exhibit 1 37
Exhibit 2 39
BENEFITS PROTECTION TRUST AGREEMENT
THIS TRUST AGREEMENT, made as of June 2, 1988, by and
between Chock Full O'Nuts Corporation, a corporation organized and existing
under the laws of the State of New York, and National Westminster Bank USA,
a national banking association, organized and existing under the laws of the
United States of America (hereinafter referred to as the "Trustee"),
W I T N E S S E T H :
WHEREAS, the Company (as hereinafter defined) or an
Affiliate (as hereinafter defined) thereof has adopted the plans, programs,
and policies and has entered into the contracts listed on Schedule 1
(hereinafter referred to either specifically by name or collectively as the
"Plans") and may adopt or enter into other such plans which will be listed
from time to time on Schedule 1 and may, from time to time, amend, modify or
terminate any such Plan in accordance with its terms or to comply with any
changes in the law and to increase the number of participants in any such
Plan; and
WHEREAS, the Company desires to establish a Benefits
Protection Trust (hereinafter referred to as this "Trust") in order to
ensure that Participants (as hereinafter defined) and their beneficiaries
will receive the benefits which the Company and its Affiliates are obligated
to provide for them or which they reasonably anticipate receiving pursuant
to the Plans; and
WHEREAS, the Trustee is not a party to the Plans; and
WHEREAS, the aforesaid obligations of the Company are not
funded or otherwise secured and the Company has agreed to take steps to
assure that the future payment of amounts under such Plans will not be
improperly withheld in the event that a "Change in Control" (as hereinafter
defined) of the Company should occur; and
WHEREAS, for purposes of assuring that such payments will
not be improperly withheld, the Company desires to deposit with the Trustee,
subject to the claims of the Company's existing or future general creditors,
amounts of cash or marketable securities for the payment of the fees and
expenses of the Trustee in pursuing claims of the Participants and their
beneficiaries against the Company for such payments under the Plans;
NOW, THEREFORE, the Company and the Trustee agree as follows:
ARTICLE 1: Definitions.
1.1 "Affiliate" shall mean any corporation,
partnership or other entity, the majority
interest in which is held by the Company
directly or through one or more
intermediaries.
1.2 The "Board" shall mean the Board of
Directors of Chock Full O'Nuts Corporation.
1.3 A "Change in Control" will be deemed to have
occurred if following
- - - 2 -
(i) a tender or exchange offer for voting securities of
the Company,
(ii) a proxy contest for the election of directors of the
Company, or
(iii) a merger or consolidation or sale of all or
substantially all of the business or assets of the Company.
the persons constituting the Board immediately prior to the initiation of
such event cease to constitute a majority of the Board upon the occurrence
of such event or within one year after such event.
1.4 "Company" shall mean Chock Full O'Nuts
Corporation, its successors, and assigns.
1.5 "Participants" shall mean active and former
directors and employees of the Company and/or
of its Affiliates.
ARTICLE 2. Creation of Trust.
2.1 The Company hereby establishes with the
Trustee and the Trustee hereby accepts a trust which shall be used
exclusively to pay the fees, expenses and indemnities due or incurred by
the Trustee in accordance with the terms of this Trust Agreement (hereinafter
sometimes referred to as the "Expense Account").
- - - 3 -
2.2 The Company and the Trustee agree that the
Trust created herein shall be revocable at any time before a Change in
Control, but shall not be revocable by the Company or by any successor
thereto after a Change in Control. The Trust established hereunder is
intended to be a grantor trust within the meaning of Section 671 of the
Internal Revenue Code of 1986, as hereafter amended, and all interest and
other income earned on the investment of the Trust shall for such purposes
be the property of, and taxable to, the Company. All taxes on or with
respect to the Trust shall be payable by the Company from its separate funds
and shall not be a charge against the Trust.
2.3 The Company may add plans to this Trust, by
amending Schedule 1 and notifying the Trustee in writing 10 days in advance
of amending Schedule 1, provided such additional plans are substantially
similar in design to those Plans listed on Schedule 1 and subject to the
terms of this Trust Agreement. If the Company amends any existing Plans, it
shall send to the Trustee a copy of any such amendments and no consent of
the Trustee to such amendments is required. Plans which are not
substantially similar in design to those Plans listed on Schedule 1
(including, in particular, any qualified defined benefit pension plan) may
be added to this Trust only with the consent of the Trustee whose consent
will not be unreasonably withheld.
- - - 4 -
ARTICLE 3: Expense Account.
3.1 Concurrently with the execution of this
Trust, the Company will deliver to the Trustee, to be held in trust hereunder
and credited to the Expense Account, the sum of seven hundred thousand
dollars ($700,000) in cash, to be administered and disposed of by the Trustee
as provided herein.
3.2 At any time, the Company shall have the
unlimited right to add to the Expense Account additional amounts of cash.
Such amounts (together with the income attributable thereto) which are over
and above the amount described in Section 3.1 of this Article 3 may be
withdrawn by the Company at any time prior to a Change in Control, but not
after.
ARTICLE 4: Management of Trust Assets.
4.1 Prior to a Change in Control, the Trust
assets shall be held, invested and reinvested by the Trustee, as designated by
the written direction of the Company from time to time. The Trustee shall
not be under any duty, or have any right, to question any such directions of
the Company or to review any securities or other property held pursuant to
such direction, or to make any suggestions to the Company in connection
therewith, or have any liability for any loss resulting from such directions
of the Company; and the Trustee shall as promptly as practicable comply with
any directions given by the Company hereunder. In exercising the powers of the
Company under this Section 4.1 the Company shall act by its Chairman of the
- - - 5 -
Board or President of such designees, each of whom is fully authorized to
exercise such powers. The Trustee may, and shall, follow the written
directions signed by said Chairman of the Board or President or such
designees.
4.2 In the absence of written direction of the
Company, the Trustee shall invest the assets as if a Change in Control had
occurred as provided in Section 4.3 or this Article 4 and Article 6.
4.3 After a Change in Control, the Trustee shall
have exclusive authority and discretion to manage and control the Trust
assets and may employ investment managers including affiliates of the
Trustee to manage the investment of the Trust assets. Pursuant to such
authority and discretion, the Trustee may exercise, from time to time and at
any time, the power:
(a) To invest and reinvest the Trust,
without distinction between principal and income, in shares of stock (whether
common or preferred) or other evidences of ownership, bonds, debentures,
notes or other evidences of indebtedness, unsecured or secured by mortgages
on real or personal property wherever situated (including any part interest
in a bond and mortgage or note and mortgage whether insured or uninsured) and
other property, or part interest in property, real or personal, foreign or
domestic, and in order to reduce
- - - 6 -
the rate of interest rate fluctuations, contracts, as either buyer or seller,
for the future delivery of United States Treasury securities and comparable
Federal-Government-backed securities;
(b) To sell, convey, redeem, exchange,
grant options for the purchase or exchange of, or otherwise dispose of, any
real or personal property, at public or private sale, for cash or upon
credit, with or without security, without obligation on the part of any
person dealing with the Trustee to see to the application of the proceeds of
or to inquire into the validity, expediency or propriety of any such
disposition;
(c) To exercise, personally or by general
or limited proxy, the right to vote any shares of stock, bonds or other
securities held in the Trust; to delegate discretionary voting power to
trustees of a voting trust for any period of time; and to exercise,
personally or by power of attorney, any other right appurtenant to any
securities or other property of the Trust;
(d) To join in or oppose any
reorganization, recapitalization, consolidation, merger or liquidation, or
any plan therefor, or any lease, mortgage or sale of the property of any
organization the securities of which are held in the Trust; to pay from the
Trust any assessments, charges or compensation specified in any plan of
reorganization, recapitalization,
- - - 7 -
consolidation, merger or liquidation; to deposit any property with any
committee or depository; and to retain any property allotted to the Trust
in any reorganization, recapitalization, consolidation, merger or
liquidation;
(e) To exercise or sell any conversion or
subscription or other rights appurtenant to any stock, security or other
property held in the Trust;
(f) To borrow from any lender (including
the Trustee in its individual capacity) money, in any amount and upon any
reasonable terms and conditions, for purposes of this Trust Agreement, and
to pledge or mortgage any property held in the Trust to secure the repayment
of any such loan;
(g) To compromise, settle or arbitrate
any claim, debt, or obligation of or against the Trust; to enforce or
abstain from enforcing any right, claim, debt or obligation (subject to the
provisions of Section 6.3 of Article 6); and to abandon any property
determined by it to be worthless;
(h) To make loans of securities held in
the Trust to registered brokers and dealers upon such terms and conditions
as are permitted by applicable law and regulations, and in each instance to
permit the securities so lent to be registered in the name of the borrower
or a nominee of the borrower, provided that in each instance and loan is
adequately
- - - 8 -
secured and neither the borrower nor any affiliate of the borrower has
discretionary authority or control with respect to the assets to the Trust
involved in the transaction or renders investment advice with respect to
those assets; and
(i) To invest and reinvest any property
in the Trust in any other form or type of investment not specifically
mentioned in this Paragraph.
ARTICLE 5: Administrative Powers.
The Trustee shall have and in its sole and absolute
discretion may exercise from time to time at any time the following
administrative powers and authority with respect to the Trust:
5.1 To hold property of the Trust in its own
name or in the name of a nominee or nominees, without disclosure of the
trust, or in bearer form so that it will pass by delivery, but no such
holding shall relieve the trustee of its responsibility for the safe custody
and disposition of the Trust in accordance with the provisions of this Trust
Agreement; the Trustee's books and records shall at all times show that such
property is part of the Trust; and the Trustee shall be absolutely liable
for any loss occasioned by the acts of its nominee or nominees with respect
to securities registered in the name of the nominee or nominees;
- - - 9 -
5.2 To organize and incorporate under the laws
of any state it may deem advisable one or more corporations (and to acquire
an interest in any such corporation that it may have organized and
incorporated) for the purpose of acquiring and holding title to any
property, interests or rights that the Trustee is authorized to acquire
under Article 4 hereof;
5.3 To employ in the management of the Trust
suitable agents, without liability for any loss occasioned by any such
agents selected by the Trustee with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in a
like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims;
5.4 To make, execute and deliver, as Trustee, any
deeds, conveyances, leases, mortgages, contracts, waivers or other
instruments in writing that the Trustee may deem necessary or desirable in
the exercise of its powers under this Trust Agreement; and
5.5 To do all other acts that the Trustee may
deem necessary or proper to carry out any of the powers set forth in this
Trust Agreement or otherwise in the best interests of the Trust.
ARTICLE 6: Trustee's Powers after Change in
Control.
6.1 After a Change in Control, the Trustee shall
exercise for the sole benefit of the Plan's Participants and their
beneficiaries any of the powers set forth in Section 4.3 of Article 4.
- - - 10 -
6.2 Within thirty (30) days after a Change in
Control, the Company shall notify all Participants, and beneficiaries of the
Plans who are entitled to receive benefits under the Plans, in writing of
the Trustee's availability to aid them in pursuing any claims that may have
against the Company under the terms of those Plans under which they are
covered. The Company shall provide such notice by using the same method as
required by the Department of Labor pursuant to 29 C.F.R. 2520.104b-1 (b) (1)
as now in effect without regard to subsequent amendments. If the Company
fails to do so, the Trustee shall send such notice by certified mail return
receipt requested to all Participants and/or the beneficiaries described
above to their last address provided to the Trustee by the Company prior to
a Change in Control. In addition, the Trustee may, at its option, provide
such notification by placing an advertisement in one newspaper of general
circulation in each of the ten locations in which the largest number of
employees of the Company and its Affiliates are located as communicated by
the Company to the Trustee prior to a Change in Control.
6.3 (a) If, after a Change in Control, a
Participant or beneficiary notifies the Trustee that the Company (or
insurance company, contract administrator or any other party acting on the
Company's behalf, if applicable) has refused to pay a claim under
- - - 11 -
any of the Plans, then, unless the Trustee shall determine that the claim has
no basis in law and fact, the Trustee:
(1) will promptly attempt to
negotiate with the Company to obtain payment, settlement, or other
disposition of the claim, subject to the consent of the Participant or
beneficiary;
(2) will, if negotiations fail
within ninety (90) days to result in a payment, settlement or other
disposition agreeable to the Participant or beneficiary (hereinafter
referred to in this Article 6 as the "Plaintiff"), upon the receipt of
written authorization from the Plaintiff in substantially the form attached
as Exhibit A hereto, institute and maintain legal proceedings (hereinafter
referred to as the "Litigation") against the Company or other appropriate
person or entity to recover on the claim on behalf of the plaintiff; and
(3) may, subject to the consent
of the Plaintiff, settle or discontinue the Litigation.
(b) The Trustee shall direct the course
of the Litigation and shall keep the Plaintiff informed of the progress of
the Litigation as the Trustee deems appropriate, but no less frequently than
quarterly. If, during the Litigation,
- - - 12 -
(1) the Plaintiff directs in
writing that the litigation on behalf of the Plaintiff be settled or
discontinued, the Trustee shall take all appropriate action to follow
such direction, provided that the written direction specifies the terms
and conditions of the settlement or discontinuance, and further provided
that the Plaintiff, if requested by the Trustee, shall execute and deliver
to the Trustee a document in a form acceptable to the Trustee releasing and
holding harmless the Trustee from any liability resulting from the
Trustee's following such direction;
(2) The Plaintiff refuses to
consent to the settlement or other disposition of the Litigation on terms
recommended in writing by the Trustee or does not agree with the Trustee's
conduct of the Litigation, the Trustee may proceed in its sole and absolute
discretion, to take such action as it deems appropriate in the Litigation,
including entering into settlement or discontinuance of the Litigation,
provided that the Trustee shall first afford the Plaintiff at least fourteen
(14) days advance notice of any decision to settle or otherwise discontinue
the Litigation; further provided, however, that the Trustee shall not be
authorized to proceed in the Litigation on behalf of the Plaintiff after
- - - 13 -
(i) the Plaintiff shall have revoked in writing the authorization of the
Trustee to proceed on his behalf (in substantially the form attached as
Exhibit B hereto) and shall have delivered such writing to the Trustee and
(ii) the Plaintiff shall have appointed his own counsel, whose fees and
expenses are to be paid by the Plaintiff and who shall appear in the
Litigation on behalf of the Plaintiff in lieu of counsel retained by the
Trustee. Thereafter, the Trustee shall have no obligation to proceed further
on behalf of such Plaintiff or to pay from the Trustee Expense Account any
costs or expenses incurred in the Litigation after the date of the delivery
of such writing.
(c) The Trustee is empowered to retain,
at the expense of the Trust, counsel and other appropriate experts,
including actuaries and accountants, to aid it in making any determination
under this Article 6 and in determining whether to pursue or settle any
Litigation and to pursue or settle any Litigation. The Trustee shall have
the discretion to determine the form and nature that any Litigation against
the Company, or other appropriate person or entity, shall take, and the
procedural rules and laws applicable to such Litigation shall supersede any
inconsistent provision in this Trust Agreement.
- - - 14 -
6.4 After a Change in Control, the Trustee shall
bill the Company directly, on a monthly basis, for all fees an expenses
described in Section 7.2. The Trustee may commence legal action against the
Company to recover any amount not paid within 30 days of the billing date,
and shall be obligated to commence such an action if the Company's failure
to pay causes a reduction in the assets of the Expense Account contributed
pursuant to Article 3 below six hundred thousand dollars($600,000).
ARTICLE 7: Taxes, Expenses and Compensation of
Trustee
7.1 The Company shall pay any Federal, state,
local or other taxes of whatever kind imposed or levied with respect to the
assets and/or income of the Trust or any part thereof under existing or
future laws, and the Company may contest the validity or amount of any tax,
assessment, claim or demand respecting the Trust or any part thereof. The
Trustee shall deduct any payroll taxes required to be withheld with respect
to any payments made pursuant to the Trust.
7.2 The Trustee shall be reimbursed on a
semi-annual basis prior to a Change in Control and on a monthly basis
thereafter, or on such other basis as the Trustee deems reasonable, for the
fees and expenses set forth in Schedule 2 attached hereto and its reasonable
expenses, including but not limited to the retention of legal counsel
(including but not limited to legal counsel and other professionals retained
pursuant to Article 8 and to legal counsel retained
- - - 15 -
to represent the Trustee in any action brought by the Company or any
Participant against the Trustee), accountants and actuaries and such other
professionals as the trustee determines are necessary or appropriate to
enable it to perform its services as Trustee.
ARTICLE 8: General Duties of Trustee.
8.1 Subject to Article 14 hereof, the Trustee
shall discharge its duties under this Trust Agreement solely in the interest
of the Participants in the Plans and their beneficiaries and (1) for the
exclusive purpose of enforcing the rights of Participants and their
beneficiaries to benefits under the Plans (subject to Section 2.2 of
Article 2 of this Trust Agreement); and (2) with the care, skill, prudence
and diligence under the circumstances then prevailing that a prudent person
acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims.
8.2 The Trustee is responsible for ascertaining
whether a Change in Control has occurred. Among the ways the Trustee may
use to determine whether a Change in Control has occurred is to read the Wall
Street Journal and the New York Times on a daily basis and the Company will
provide to the Trustee, in a timely manner, any Proxy Statements,
Solicitation/Recommendation Statement on 14D-9 Schedules, and information
statements
- - - 16 -
pursuant to Rule 14 (f) of the Securities Exchange Act of 1934, as amended
(the "Act"), to the extent that the Company has filed such documents pursuant
to the federal securities laws and copies of any initial filings and
amendments thereto that the Company receives pursuant to Sections 13 (d) and
14 (d) of the Act.
8.3 The Trustee may consult with counsel, who
may be counsel for the Company prior to a Change in Control or for the
Trustee in its individual capacity, and shall not be deemed imprudent by
reason of its taking or refraining from taking any action in accordance with
the opinion of counsel.
8.4 The Company may designate in writing, prior
to a Change in Control, counsel to be retained by the Trustee after a Change
in Control to enforce the rights of Participants and beneficiaries to
benefits under the Plans. If the designated counsel declines to provide
representation, or the Trustee is not satisfied with the quality of
representation provided, the Trustee may dismiss the designated law firm and
engage another qualified law firm for this purpose; however, the law firm so
engaged may not be the same law firm which represents the Trustee with
respect to its responsibilities as Trustee in its individual capacity under
this Trust Agreement. The Company may not dismiss or engage such counsel or
cause the Trustee to
- - - 17 -
engage or dismiss such counsel after a Change in Control.
ARTICLE 9: Indemnification.
9.1 The Company agrees, to the extent permitted
by law, to indemnify and hold the Trustee harmless from and against any
liability that the Trustee may incur in the administration of the Trust
(including attorneys' fees and expenses), unless arising from the Trustee's
own gross negligence, willful misconduct, or willful breach of the
provisions of its obligations under this Trust Agreement. The Trustee shall
not be required to give any bond or any other security for the faithful
performance of its duties under this Trust Agreement, except as required by
law.
9.2 Any amount payable to the Trustee under this
Article 9 and not previously paid by the Company shall be paid by the Company
promptly upon written demand therefor by the Trustee or, if the Company fails
to make payment within 15 days after such written demand, from the Expense
Account. In the event that payment is made hereunder to the Trustee from
the Expense Account, the Trustee shall promptly notify the Company in writing
of the amount of such payment. The Company agrees that, upon receipt of such
notice, it will deliver to the Trustee to be held in the Trust an amount in
cash equal to any payments made from the Trust to the Trustee pursuant to
this Article 9. The failure of the Company to transfer any
- - - 18 -
such amount shall not in any way impair the Trustee's right to
indemnification, reimbursement and payment pursuant to this Article 9.
The provisions of this Article 9 shall survive the termination of this
Trust Agreement.
ARTICLE 10: No Duty to Advance Funds.
Nothing contained in this Trust Agreement shall require the
Trustee to risk or expend its own funds in the performance of the duties of
the Trustee hereunder. In the acceptance and performance of its duties
hereunder, the Trustee acts solely as trustee and not in its individual
capacity, and all persons, other than the Company, having any claim against
the Trustee related to this Trust Agreement or the actions or agreements of
the Trustee contemplated hereby shall look solely to the Trust for the
payment or satisfaction thereof unless the Trustee's conduct has been willful
or grossly negligent. Without limiting the foregoing, the Trustee shall not
be liable in its individual capacity for the payment of the fees and expenses
of counsel and other professionals retained by the Trustee in accordance with
Articles 6, 7 and 8 hereof.
ARTICLE 11: Accounts.
11.1 (a) The Trustee shall keep accurate and
detailed accounts of all its receipts, investments and disbursements under
this Trust Agreement on a July 31 year ("fiscal year") basis. Such person
or persons as the Company shall designate shall be allowed to inspect the
books of account relating to the Trust upon prior written request at any
reasonable time
- - - 19 -
during business hours of the Trustee.
(b) Within 120 days after the close of
each fiscal year, the Trustee shall transmit to the Company, and certify the
accuracy of, a written statement of the assets and liabilities of the Trust,
showing the current value of each asset at the close of the fiscal year, and
a written account of all the Trustee's transactions relating to the Trust
during the period from the last previous accounting to the close of that
year. For the purposes of this Subsection 11(b) the date of the Trustee's
resignation or removal as provided in Article 13 hereof or the date of
termination of the Trust as provided in Article 14 hereof shall be deemed to
be the close of a year.
(c) Unless the Company shall have filed
with the Trustee written exceptions or objections to an such statement and
account within 120 days after receipt thereof, the Company shall be deemed
to have approved such statement and account; and in such case or upon the
written approval by the Company of any such statement and account, the
Trustee shall be forever released and discharged with respect to all matters
and things contained in such statement and account as though it had been
settled by decree of a court of competent jurisdiction in an action or
proceeding to which the Company and all persons having any beneficial
interest in the Trust were parties.
- - - 20 -
11.2 The Trustee shall determine the fair market
value of the Trust as of each July 31, or more frequently (but not more
often than monthly) if it so desires. If there is a diminution in value of
the Expense Account below six hundred thousand dollars ($600,000) prior to
the occurrence of a Change in Control, the Company shall provide the Trustee
with sufficient funds to make up for any such diminution in value within 15
days after written demand by the Trustee for such payment. At any time other
than after a Change in Control, if the Company fails to comply with the
Trustee's written demand within 15 days to provide the Trustee with
sufficient funds to make up for any diminution in value below six hundred
thousand dollars ($600,000) in the Expense Account, and Trustee may resign
as Trustee upon six (6) months written notice in accordance with Section 13.1
of Article 13 hereof. The Trustee will have no duty to find or secure the
appointment of a successor upon its resignation pursuant to this Section 11.2
of this Article 11, nor shall its resignation or the termination of any
further duties be contingent upon the appointment and qualification of a
successor. Notwithstanding the foregoing, no resignation pursuant to the
foregoing provisions of this Section 11.2 may take effect on or after the
date of a Change in Control.
11.3 Nothing contained in this Trust Agreement or
in the plans shall deprive the Trustee of the right to have a judicial
settlement of its accounts. In any proceeding
- - - 21 -
for a judicial settlement of the Trustee's accounts or for instructions in
connection with the Trust, the only other necessary party thereto in addition
to the Trustee shall be the Company. If the Trustee so elects, it may bring
in as a party or parties defendant any other person or persons. No person
interested in the Trust, other than the Company, shall have a right to compel
an accounting, judicial or otherwise, by the Trustee, and each person shall
be bound by all accountings by the Trustee to the Company, as herein provided
as if the account had been settled by decree of a court of competent
jurisdiction in an action or proceeding to which such person was a party.
ARTICLE 12: Communications.
12.1 The Trustee shall not be responsible in any
respect for administering the Plans nor shall the Trustee be responsible for
the adequacy of the Trust to meet and discharge any payments and liabilities
under the Plans. The Trustee shall be fully protected in relying upon any
written notice, instruction, direction or other communication signed by an
officer of the Company designated pursuant to this Trust Agreement. The
Company, from time to time, shall furnish the Trustee with the names and
specimen signatures of the designated officers of the Company and shall
promptly notify the Trustee of the termination of office of any designated
- - - 22 -
officer of the Company and the appointment of a successor thereto. Until
notified to the contrary, the Trustee shall be fully protected in relying
upon the most recent list of the designated officers of the Company furnished
to it by the Company.
12.2 Any action required by any provision of this
Trust Agreement to be taken by the Board shall be evidenced by a resolution
of such Board certified to the Trustee by the Secretary or an Assistant
Secretary of the Company under its corporate seal, and the Trustee shall be
fully protected in relying upon any resolution so certified to it. Unless
other evidence with respect thereto has been specifically prescribed in this
Trust Agreement, any other action of the Company under any provision of this
Trust Agreement, including any approval of or exceptions to the Trustee's
accounts, shall be evidenced by a certificate signed by an officer of the
Company, and the Trustee shall be fully protected in relying upon such
certificate. The Trustee may accept a certificate signed by an officer of
the Company as proof of any fact or matter that it deems necessary or
desirable to have established in the administration of the Trust (unless
other evidence of such fact or matter is expressly prescribed herein), and
the Trustee shall be fully protected in relying upon the statements in the
certificate.
- - - 23 -
12.3 The Trustee shall be entitled conclusively
to rely upon any written notice, instruction, direction, certificate or other
communication believed by it to be genuine and to be signed by the proper
person or persons.
12.4 Until written notice is received to the
contrary, communications to the Trustee shall be sent to it at its office at
175 Water Street, New York, New York 10038, Attention: Gerald P. Breezley,
Corporate Trust Department, Telecopy (212)602-2166, copy to Cole & Deitz,
175 Water Street, New York, New York 10038, Attention: Jeffrey H. Elkin,
Trust Counsel; communications to the Company shall be sent to it at its
office at 370 Lexington Avenue, New York, New York 10017;
Attention: Chairman of the Board or President, copy to Fried, Frank,
Harris, Shriver & Jacobson, One New York Plaza, New York, New York 10004;
Attention: Allen Kezsbom. Notice will be deemed received by the Trustee
or Company upon the date that such notice is either (1) delivered by hand,
or (2) sent by telecopy, or (3) sent by telex, or (4) by certified mail and
the certified receipt is signed, or (5) any other method of delivery or mail
which is evidenced by a receipt of delivery signed by any employee or agent
of the Trustee or Company.
ARTICLE 13: Resignation or Removal of Trustee.
13.1 The Trustee may resign at any time, other
than after a Change in Control, upon six (6) months written notice to the
Company or such shorter period as is
- - - 24 -
acceptable to the Company (hereinafter referred to as the "Resignation
Period") and immediately after the Resignation Period shall have no further
duties hereunder. The Trustee will have no duty to find or secure the
appointment of a successor upon its resignation pursuant to this Section 13.1
of this Article nor shall its resignation or its termination of any further
duties be contingent upon the appointment and qualification of a successor.
Promptly after receipt of such notice, the Company shall appoint a successo
r trustee, such trustee to become Trustee upon its acceptance of this Trust.
13.2 After a Change in Control, the Trustee may
resign only under one of the following circumstances:
(a) A final decision of a court of
competent jurisdiction removing the Trustee by reason of such court's
determination of the existence of a conflict of interest which prevents the
Trustee from properly performing its duties hereunder. The Trustee agrees
to use its best efforts to avoid any such conflict. For the purpose of this
Trust Agreement, the decision of a court shall not be deemed to be final
unless the decision is not appealable, or no appeal has been taken from the
decision and the time for an appeal has expired. Notwithstanding the
foregoing provisions of this Subsection 13.2(a), such resignation shall not
be effective unless the Trustee has obtained the agreement of a bank to act
as successor trustee which bank (1) is
- - - 25 -
among the 100 largest banks in the United States, as measured by deposits,
and (2) has a rating of "B/C" or greater based upon the most current rating
from Keefe, Bruyett & Woods ("KB&W) or its successor, or if KB&W or its
successor should cease to publish ratings, then a short-term debt rating from
Moody's of "P-1," or greater, or from Standard and Poor's of "A-1." In any
event, the Trustee shall continue to be custodian of the Trust until the new
trustee is in place, and the Trustee shall be entitled to expenses and fees
through the later of the effective date of its resignation as Trustee or the
end of its custodianship of the Trust assets.
(b) The Trustee has exhausted all of its
legal remedies and has been unsuccessful in such litigation to require the
Company to remit to the Trustee such amounts as are billed pursuant to
Section 6.4 of Article 6 hereof and the assets of the Trust have been
exhausted. In such event, the Trustee shall have the right to resign
immediately as Trustee, and immediately upon such resignation shall have no
further duties hereunder. The Trustee will have no duty to find or secure
the appointment of a successor upon its resignation pursuant to this
Subsection 13.2(b), nor shall its resignation or the termination of any
further duties be contingent upon the appointment and qualification of a
successor.
- - - 26 -
13.3 Prior to a Change in Control, the Company
may remove the Trustee upon 30 days written notice to the Trustee, or upon
shorter notice if acceptable to the Trustee. Such removal shall become
effective, however only upon the occurrence of all of the following events:
(a) The appointment by the Company of a
successor trustee; and
(b) The acceptance of the trust by the
successor trustee; and
(c) The delivery of the Trust assets to
the successor trustee.
13.4 Each successor trustee shall have the powers
and duties conferred upon the Trustee in this Trust Agreement, and the term
"Trustee" as used in this Trust Agreement shall be deemed to include any
successor trustee. Upon designation or appointment of a successor trustee,
the Trustee shall transfer and deliver the Trust to the successor trustee,
reserving such reasonable sums as the Trustee shall deem necessary to defray
its expenses in settling its accounts, to pay any of its compensation due and
unpaid and to discharge any obligation of the Trust for which the Trustee may
be liable. If the sums so reserved are not sufficient for these purposes,
the Trustee shall be entitled to recover the amount of any deficiency from
either the Company or the successor trustee, or both. When the Trust shall
have been transferred and delivered to the successor trustee and the accounts
of the Trustee have been settled as provided in
- - - 27 -
Article 14 hereof, the Trustee shall be released and discharged from all
further accountability or liability for the Trust and shall not be
responsible in any way for the further disposition of the Trust or any part
thereof.
13.5 Notwithstanding anything to the contrary, in
the event it resigns or is removed, the Trustee shall have a right to have
its accounts settled as provided in Article 11 hereof.
ARTICLE 14: Amendment of Trust Agreement;
Termination of Trust.
14.1 Subject to Section 14.2 of this Article 14,
the Company expressly reserves the right at any time prior to the occurrence
of a Change in Control to amend in writing or terminate this Trust Agreement
and the Trust created thereby to any extent that it may deem advisable.
No amendment shall be made without the Trustee's consent thereto in writing
if, and to the extent that, the effect of such amendment is to increase the
Trustee's responsibilities hereunder. Such proposed amendment shall be
delivered to the Trustee as a written instrument of amendment, duly executed
and acknowledged by the Company. The Company also shall deliver to the
Trustee a copy of any modifications or amendments to the Plans. The
Trustee's consent shall not be required for the termination of the Trust or
its removal as Trustee.
- - - 28 -
14.2 Notwithstanding any other provision of this
Trust Agreement other than the following sentence, the provisions of this
Trust Agreement and the Trust created thereby may not be amended or
terminated by the Company or the Trustee after a Change in Control. The
Trustee, after the occurrence of a Change in Control, upon written advice of
counsel, may amend the provisions of this Trust Agreement to the extent
required by applicable law.
14.3 In the event the Company terminates the Trust
prior to the occurrence of a Change in Control, the Trustee shall reserve
such sums it deems necessary to pay its fees and expenses, and shall
distribute all remaining assets of the Trust in accordance with the written
directions of the Company and the Trustee shall provide the Company with a
final written account in accordance with Article 11 hereof.
14.4 This Trust shall be terminated upon notice to
the Trustee by the Company of the final payment of all amounts payable by the
Company or its successor thereto to all of the Participants and beneficiaries
pursuant to the Plans, and the payments of all amounts due to the Trustee and
all costs and expenses chargeable to the Trust. Upon termination of this
Trust, the Trustee, the Trustee shall have a right to have its account
settled as provided in Article 11 hereof. Promptly upon termination of this
Trust, and after payment of all fees, expenses and indemnities due to or
incurred by the Trustee hereunder, any remaining portion of the Trust shall
be paid to the Company.
- - - 29 -
ARTICLE 15: Prohibition of Diversion.
15.1 Except as provided in Sections 3.2, 14.1,
and 15.2 of this Article 15, at no time prior to the satisfaction of all
liabilities with respect to Participants and their beneficiaries under the
Plans by the Company or its successor shall any part of the corpus and/or
income of the Trust be used for, or diverted to, purposes other than for the
exclusive benefit of protecting participants and their beneficiaries and the
assets of the Trust shall be held for the exclusive purposes of enforcing the
rights of Participants in the Plans and their beneficiaries and defraying
reasonable expenses of administering the Plans or performing any of the
Trustee's duties under this Trust Agreement.
15.2 Notwithstanding any provision of this Trust
Agreement to the contrary, the assets of the Trust shall at all times be
subject to claims of the general creditors of the Company and its Affiliates.
Upon notice that the Company or any Affiliate may be insolvent, the Trustee
shall not pay benefits from Trust assets, shall hold the assets for the
general creditors of the Company and its Affiliates, shall in its discretion
make an independent determination or promptly seek a judicial determination
regarding the insolvency of the Company and its Affiliates,
- - - 30 -
and shall deliver the assets of the Trust to satisfy the claims of creditors,
as directed by the court. The Trustee shall resume payments under the terms
of the Trust only after determining that the Company and its Affiliates are
not insolvent or after receiving a judicial decision to that effect. The
Company shall have the duty to inform the Trustee of the insolvency of the
Company or its Affiliates. The Company or an Affiliate shall be considered
insolvent if it is unable to pay its debts as they mature or if it is subject
to a pending proceeding as a debtor under the Bankruptcy Code.
ARTICLE 16: Prohibition of Assignment of Interest.
No interest, right or claim in or to any part of the Trust or
any payment therefrom shall be assignable, transferable or subject to sale,
mortgage, pledge, hypothecation, commutation, anticipation, garnishment,
attachment, execution or levy of any kind, and the Trustee shall not
recognize any attempt to assign, transfer, sell, mortgage, pledge,
hypothecate, commit or anticipate the same, except to the extent required by
law.
ARTICLE 17: Miscellaneous.
17.1 This Trust Agreement shall be interpreted,
construed and enforced, and the Trust hereby created shall be administered,
in accordance with the laws of the United States and of the State of New
York. Nothing in this Trust Agreement shall be construed to subject the
Trust created hereunder to the Employee Retirement Income Security Act of
1974, as amended.
- - - 31 -
17.2 In the event that any action is brought by
the Trustee against the Company (1) in its individual capacity, or (2) on
behalf of or in the name of any Plaintiff (s) individually, collectively or
as a class action pursuant to Article 6, the Company hereby agrees and
consents to exclusive jurisdiction and venue in any court of competent
jurisdiction in the State of New York.
17.3 The Company shall, at any time and from time
to time, upon the reasonable request of the Trustee, execute and deliver
such further instruments and do such further acts as may be necessary or
proper to effectuate the purpose of this Trust Agreement.
17.4 The titles to Articles of this Trust
Agreement are placed herein for convenience of reference only, and this Trust
Agreement is not to be construed by reference thereto.
17.5 This Trust Agreement shall bind and inure to
the benefit of the successors and assigns of the Company and the Trustee,
respectively.
17.6 This Trust Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original but
all of which together shall constitute by one instrument, which may be
sufficiently evidenced by any counterpart.
- - - 32 -
17.7 If any provision of this Trust Agreement is
determined to be invalid or unenforceable the remaining provisions shall not
for that reason alone also be determined to be invalid or unenforceable.
17.8 Each Participant and his beneficiary is an
intended beneficiary under this Trust, and shall be entitled to enforce all
terms and provisions hereof with the same force and effect as if such person
had been a party hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be executed in their respective names by their duly authorized
officers under their corporate seals as of the day and year first above
written.
CHOCK FULL O' NUTS CORPORATION
By_________________________________
ATTEST: Chairman of the Board
_________________________
President
NATIONAL WESTMINSTER BANK USA
By__________________________________
ATTEST: Assistant Vice President
_________________________
Trust Officer
- - - 33 -
STATE OF NEW YORK )
: SS.:
COUNTY OF NEW YORK )
On this 2nd day of June, 1988, before me personally came
Dr. Leon Pordy, to me known, who, being by me duly sworn, did depose and
say that he resides at 1125 Park Avenue, New York, NY, and that he is
Chairman of the Board of Chock full o' Nuts Corporation, one of the
corporations described in and which executed the foregoing instrument;
that he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation; and that he signed his name thereto
by like order.
________________________________
NOTARY PUBLIC
STATE OF NEW YORK )
: SS.:
COUNTY OF NEW YORK )
On this 3rd day of June, 1988, before me personally came
Gerald P. Breezley, to me, known, who, being by me duly sworn, did depose
and say that he resides at 501 Court Street., Hoboken, NJ, and that he is
Assistant Vice President of National Westminster Bank USA the national
banking association described in and which executed the foregoing instrument;
that he knows the seal of said national banking association; that the seal
affixed to said instruments such corporate seal; that it was so affixed by
order of the Board of Directors of said national banking association; and
that he signed his name thereto by like order.
________________________________
NOTARY PUBLIC
- - - 34 -
EXHIBIT A
Authorization Pursuant to Article 6.3 of
Chock Full O'Nuts Corporation Benefits Protection Trust
TO: NATIONAL WESTMINSTER BANK USA
This is to authorize the __________________________as Trustee
Chock Full O'Nuts Corporation Benefits Protection Trust (the "Trust") to
institute and maintain legal proceedings against the Company (as defined in
the Trust) or other appropriate person or entity to assert the following
claim(s) on my behalf: [nature of claim]. The Trustee shall have the powers
and be subject to the procedures set forth in Article 6 of the Trust (a copy
of which I have already received and reviewed).
Any proceedings by the Trustee under this authorization may
be initiated in my name as a plaintiff (or as a member of a class) or in the
name of the Trustee, or both, as the Trustee determines is necessary or
appropriate at the time proceedings are commenced.
____________________________
Participant
- - - 35 -
EXHIBIT B
Revocation of Authorization Under Article 6.3 of
CHOCK FULL O' NUTS CORPORATION Benefits Protection Trust
TO: NATIONAL WESTMINSTER BANK USA
This is to notify you that I revoke any prior authorization I
have given to you as Trustee of the Chock Full O'Nuts Corporation Benefits
Protection Trust (the "Trust") to maintain legal proceedings against the
Company (as defined in the Trust), or otherwise to assert the following
claim(s) on my behalf: [nature of claim(s)].
I understand that this Revocation of Authorization is
conditioned upon, and shall not be effective until, the appointment by me of
my own counsel and the appearance of that counsel in any legal proceeding on
my behalf in lieu of counsel retained by the Trustee. I understand further
that, upon the occurrence of these conditions, the Trustee shall have no
obligation to proceed further on my behalf, or to pay any costs or expenses
incurred after the delivery of this Revocation of Authorization.
__________________________
Participant
- - - 36 -
Schedule 1
THE PLANS
The following Company plans and agreements (collectively
referred to as the "Plans") are subject to this Trust:
1. Amendment and Restatement of Employment Agreement
dated as of May 25, 1988, between the Company and Anthony J. Fazzari.
2. Amendment and Restatement of Employment Agreement
dated as of May 25, 1988, between the Company and Richard Kassar.
3. Amendment and Restatement of Employment Agreement
dated as of May 25, 1988, between the Company and George Rudy.
4. Amendment and Restatement of Employment Agreement
dated as of May 25, 1988, between the Company and Howard M. Leitner.
5. Amendment and Restatement of Employment Agreement
dated as of May 25, 1988, between the Company and Dr. Leon Pordy.
6. Amendment and Restatement of Employment Agreement
dated as of May 25, 1988, between the Company and Joseph A. Breslin.
7. Amendment and Restatement of Employment Agreement
dated as of May 25, 1988, between the Company and Martin J. Cullen.
8. Amendment and Restatement of Employment Agreement
dated as of May 25, 1988, between the Company and Neil S. Bonne.
- - - 37 -
9. Employment Agreement dated as of May 25, 1988,
between the Company and Raymond Hickey.
10. Employment Agreement dated as of May 25, 1988,
between the Company and Peter Baer.
11. Employment Agreement dated as of May 25, 1988,
between the Company and Ismar Reich.
12. Employment Agreement dated as of May 25, 1988,
between the Company and Max Apfelbaum.
13. Chock Full O'Nuts Corporation Severance Policy,
effective May 25, 1988.
14. Deferred Compensation Plan for Certain Key
Executives, effective August 1, 1987.
15. Chock Full O'Nuts Incentive Compensation Plan,
effective January 12, 1984 and Stock Bonus Plan and Trust.
- - - 38 -
Schedule 2
NATIONAL WESTMINSTER BANK USA
Fee Schedule
1. Acceptance Fee: $ 7,500
2. Annual Administration Fee:
(Pro-rated through July 31,
1988; thereafter payable
in advance, based on the
Company's fiscal year,
beginning on August 1, 1988.)
(a) Prior to a Change in Control $20,000
payable semi-annually in
advance.
(b) Subsequent to a Change in
Control on a monthly basis
in advance. $50,000
3. Out of Pocket Expenses (As incurred)
4. Reasonable legal fees for (As incurred)
Trustee's Counsel (Cole & Deitz)
for initial review of Schedule 1
Plans and for other services to
Trustee.
- - - 39 -
Exhibit 10
Material Contracts(c)
PRIVILEGED AND CONFIDENTIAL
5588C
05/24/88
CHOCK FULL O' NUTS CORPORATION
SEVERANCE POLICY
1.0 Intent
It is the intent of Chock Full O' Nuts Corporation to provide
severance benefits ("Severance Benefit Payments") for each of
its Employees (as defined below whose employment with the
Company (as defined below) is involuntarily terminated
other than on account of Cause, Disability, Sale of a Business
(all as defined below) or the Employee's death.
2.0 Scope
This Policy shall apply without exception to all Employees who are
described in Section 5.8 below.
3.0 Contractual Right
On the date of a Qualifying Termination (as defined below), each
Employee described in Section 5.8 below shall have a fully vested,
nonforfeitable contractual right, enforceable against the Company,
to the benefits provided for under Section 7.0 of this Policy upon
the conditions specified in Section 6.1 below. Such contractual
right to receive such benefits if the conditions specified in
Section 6.1 are fulfilled shall arise on the date on which the
Qualifying Termination occurs.
4.0 Effective Date
This Policy is effective May ___, 1988 (the "Effective Date").
5.0 Definitions
For purposes of this Policy, the following definitions shall apply:
5.1 Base Pay: "Base Pay" shall mean the Employee's base annual
salary as of the date of his termination of employment or, if
greater, as of the date on which a Change in Control occurs,
divided by Fifty-Two (52).
5.2 Cause: The Company shall have Cause to terminate an
Employee only if the Employee (a) intentionally failed to perform
reasonably assigned duties, (b acted dishonestly or engaged in
willful misconduct in the performance of his duties, (c)
engaged in a transaction in connection with the performance of
his duties to the Company for personal profit to himself or
(d) willfully violated any law rule or regulation in connection
with the performance of his duties (other than traffic violations
or similar offenses).
5.3 Change in Control: For purposes of this Policy, a Change in
Control shall occur if following any event which constitutes
(A) a tender or exchange offer for voting securities of the
Company,
(B) a proxy contest for the election of directors of the
Company, or
(C) a merger or consolidation or sale of all or substantially
all of the business or assets of the Company,
the persons constituting the Board of Directors of the Company immediately
prior to the initiation of such event cease to constitute majority of the
Board of Directors of the Company upon the occurrence of such event or within
two years after such event.
5.4 Class A Employee: "Class A Employee" shall mean an Employee
who, as of the Effective Date, has a base annual salary which is
equal to or greater than $25,000.
5.5 Class B Employee:
"Class B Employee" shall mean any employee who is not a Class A
Employee.
- - -2-
5.6 Company: "Company" shall mean Chock Full O'Nut
Corporation and any successor thereto, including, without
limitation, any person (as such term is used in Sections 13(d)
and 14(d) (2) of the Securities Exchange Act of 1934, as amended),
partnership(s) or corporation(s) acquiring directly or indirectly
all or substantially all of the business or assets of Chock Full
O'Nuts Corporation.
5.7 Disability: "Disability" shall mean physical or mental
infirmity which impairs the Employee's ability to substantially
perform his duties (as they existed immediately prior to the illness
or injury) on a full-time basis for four (4) consecutive calendar
months.
5.8 Employee: The term "Employee" shall mean an active
employee of the Company (or any of its subsidiaries, including
Greenwich Mills Company and its Subsidiaries), other than an active
employee who, (i) is included in a unit of employees covered by a
collective bargaining agreement; or (ii) at the time of his
termination of employment, is covered under an individual employment
or severance agreement (as distinguished from a plan or program
which is applicable to groups of salaried employees generally)
which provides for compensation and/or benefits upon termination
of employment.
5.9 Sale of a Business: For purposes of this Policy a
"Sale of a Business" shall be deemed to have occurred if the
company has sold a subsidiary, division or other
business unit in which the Employee was employed before such sale,
and the Employee has been offered employment with the purchaser
of such subsidiary, division or business unit on substantially
the same terms and conditions under which he worked for the Company.
- - -3-
6.0 When Provisions Apply
6.1 The benefits provided for under Section 7.0 of this
Policy shall be provided to each Employee described in
Section 5.8 above who incurs a Qualifying
Termination. For the purposes of this Policy, a
"Qualifying Termination" shall occur only if an Employee's
employment with the Company is involuntary terminated other
than for Cause, Disability, Sale of a Business
or death.
6.2 The fact that an Employee is eligible to immediately
receive retirement benefits under the Chock Full O'Nuts
Corporation Pension Plan the Greenwich Mills Company
retirement plan or any other Company employee benefit plan,
practice or policy shall not render him ineligible for
the benefits under this Policy.
7.0 Severance Benefit Payment
7.1 Subject to Section 7.3, each Class A Employee
entitled to benefits under this Policy shall receive the
Severance Benefit Payment described below.
Complete Severance Benefit Payment
Years of Service Upon Qualifying Termination
(i) Prior to, or *(ii) Within Two Years
More than Two * After Change in Control
Years After, * Control
a Change in *
Control *
*
(a) 1 - 2 times Base Pay * 4 times Base Pay
5 per Complete Year * per Complete Year
of Service * of Service
*
(b) 6 - 10 times Base Pay * 20 times Base Pay,
10 plus 3 times Base * plus 6 times Base
Pay per Complete * Pay per Complete
Year of Service in * Year of Service in
excess of 5 * excess of 5
*
(c) More 25 times Base Pay, * 50 times Base Pay,
than 10 plus 4 times Base * plus 8 times Base
Pay per Complete * Pay per Complete
Year of Service in * Year of Service in
excess of 10 * excess of 10
-4-
7.2 Subject to Section 7.3, each Class B Employee
entitled to benefits under this Policy shall receive the
Severance Benefit Payment described below.
Complete Severance Benefit Payment
Years of Service Upon Qualifying Termination
(i) Prior to, or *(ii) Within Two Years
More Than Two * After Change in
Years After, * Control
*
(a) 1 - 1.33 times Base Pay * 2.67 times Base Pay
5 per Complete Year * per Complete Year
of Service * of Service
*
(b) 6 - 10 6.67 times Base * 13.33 times Base
Pay, plus 2 times * Pay, plus 4 times
Base Pay per Complete * Base Pay per Complete
Year of Service in * Year of Service in
excess of 5 * excess of 10
*
(c) More 16.67 times Base * 33.33 times Base
than 10 Pay, plus 2.67 * Pay, plus 5.33
times Base Pay per * times Base Pay per
Complete Year of * Complete Year of
Service in excess * Service in excess
of 10 * of 10
7.3 In no event shall the Severance Benefit Payment paid
to an Employee in connection with a Qualifying Termination that occurs prior
to a Change in Control or more than two years after a Change in Control
exceed fifty-two (52) times his Base Pay. In addition, in no event shall
the Severance Benefit Payment paid to an Employee in connection with a
Qualifying Termination that occurs within two years after a Change in Control
exceed One Hundred Four (104) times his Base Pay.
- - -5-
7.4 An Employee shall be credited with a number of weeks
of service equal to the number of weeks of Base Pay he
receives or is entitled to receive as a Severance Benefit
Payment for the purpose of determining eligibility,
vesting and accrual service under all employee benefit
plans of the Company, including, but not limited to, group
health and life insurance, long-term disability, the Chock
Full o'Nuts Corporation Pension Plan, and the Greenwich Mills
Company retirement plan.
7.5 The Severance Benefit Payments described in Sections
7.1 and 7.2 above shall be payable in addition to, and not
in lieu of, all other accrued, vested, earned, or deferred
compensation rights, options, or other benefits which may be
payable or owed to an Employee following termination of
employment under any plan, including but not limited to
accrued vacation or sick pay, compensation or benefits
payable under any employee benefit plans, practices or
policies of the Company (or any of its subsidiaries,
including Greenwich Mills Company and its Subsidiaries).
7.6 All Severance Benefit Payments provided for in
Sections 7.1 and 7.2 above shall be paid within twenty-five
(25) days after the Employee's Qualifying Termination and,
subject to applicable withholding requirements, shall be
paid in a lump sum.
7.7 Severance Benefit Payments shall not be offset or
reduced by any unemployment insurance benefit or income
from subsequent employment that the Employee may receive.
An Employee who is entitled to benefits
under this Policy shall not be required to accept or
to seek other employment as a condition of receiving
such benefits.
7.8 If an employee who is entitled to benefits under
this Policy dies before receiving the Severance Benefit
Payment, such Payment shall be made to the Employee's
surviving spouse, or, if applicable, to the Employee's
estate.
- - -6-
8.0 Successor to Company
This Policy shall bind any successor (whether direct
or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the
business and/or assets of the Company, in the same
manner and to the same extent that the Company
would be obligated under this Policy if no
succession had taken place. In the case of
any transaction in which a successor would not
by the foregoing provision or by operation of law be
bound by this Policy, the Company shall require such
successor expressly and unconditionally to assume
and agree to perform the Company's to assume and
agree to perform the Company's obligations under
this Policy, in the same manner and to the same
extent that the Company would be required to
perform if no such succession had taken place.
9.0 Amendment and Termination on or After a Change
in Control
Prior to the occurrence of a Change in Control,
this Policy may be amended in any respect whatsoever
or terminated by the Board.
If a Change in Control occurs, the Policy may not be
amended or terminated in any respect whatsoever for a
period of two years following such Change in Control
if the effect of such amendment or termination
would result in any reduction or elimination of
any benefits the Employee would have been entitled
to absent such amendment or termination nor shall any
such amendment or termination change or eliminate any
of the circumstances pursuant to which the Employee
would have become entitled to the benefits provided
herein absent such amendment or termination.
10.0 Employment Status
This Policy does not constitute a contract of
employment or impose on the Company any obligation
to retain any individual as an Employee, to change
the status of any Employee's employment, or to change
the Company's policies regarding termination of
employment.
- - -7-
11.0 Administration
The Board of Directors of the Company, or a Committee
appointed by the Board shall be responsible for
implementing, administering and interpreting the
provisions of this Policy.
12.0 Severability
If any provision of this Policy is held invalid or
unenforceable, the remainder of this Policy shall
nevertheless remain in full force and effect, and
if any provision is held invalid or unenforceable
with respect to particular circumstances, it shall
nevertheless remain in full force and effect in
all other circumstances.
13.0 Governing Law
The interpretation, construction and performance of
this Policy shall in all respects be governed by
the laws of New York.
- - -8-
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made and
entered into as of October 16, 1992, by and between CHOCK FULL
O'NUTS CORPORATION, a New York corporation ("Buyer"), and NESTLe
BEVERAGE COMPANY, a Delaware corporation ("Seller"), the holder of
all of the issued and outstanding shares of common stock of Cain's
Coffee Co., a Delaware corporation (the "Company").
RECITALS
A. Seller owns all 15,000 of the issued and outstanding
shares of common stock, $100.00 par value (the "Shares") of the
Company.
B. Seller desires to sell the Shares to Buyer, and Buyer
desires to purchase the Shares from Seller, for the consideration
and on the terms and conditions set forth in this Agreement.
TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of the foregoing recitals and
the mutual covenants, agreements, representations and warranties
contained in this Agreement, and other good and valuable
consideration, the receipt of which is hereby acknowledged, the
parties hereto agree as follows:
1. Sale and Purchase of Shares. Upon the terms and subject
to all of the conditions contained herein, Seller hereby agrees to
sell, assign, transfer and deliver the Shares to Buyer on the
Closing Date (as defined in Section 2.4 hereof), and Buyer hereby
agrees to purchase and accept the Shares from Seller on the Closing
Date.
2. Purchase Price and Payment Thereof.
2.1 Purchase Price. The aggregate purchase price for
the Shares being purchased pursuant to Section 1 and for Seller's
agreement as set forth in Section 5.7 (which shall be allocated
between the Shares and the covenant in the manner required by
Section 5.10) shall be Forty Seven Million Dollars ($47,000,000)
adjusted by that amount (the "Adjustment Amount"), which may be a
positive or a negative number, as determined pursuant to Section
2.2 hereof (together, the "Purchase Price").
2.2 Calculation of Adjustment Amount. Commencing
promptly after the Closing Date, Buyer shall prepare and deliver,
within the ninety (90) days following the Closing Date, to Seller
an unaudited statement of net assets of the Company as of the
Closing Date (the "Closing Statement of Net Assets"), in the form
(including, without limitation, the line items, columns and
headings) of the unaudited Statement of Net Assets at June 30, 1992
attached hereto as Schedule 2.2 (the "Opening Statement"). In
addition, Buyer shall prepare and deliver a calculation of the
amount, if any, payable under Section 2.3.2 (the "Payment
Calculation") which calculation shall be based on the working
capital accounts (i.e. current assets and current liabilities)
shown on both the Closing Statement of Net Assets and the Opening
Statement. Buyer shall prepare the Closing Statement of Net Assets
using United States generally accepted accounting principles,
except as modified to take into account the first three items
listed on Schedule 3.7.1B, applied on a basis which is consistent
with the Opening Statement. The parties acknowledge that the
Closing Statement of Net Assets will be adjusted to include an
accrual relating to 1992 employee bonuses which is the fourth item
on Schedule 3.7.1B. The parties also acknowledge that the Closing
Statement shall not include any liability of the Company for which
Seller has agreed to be solely responsible for the payment thereof
pursuant to the terms of this Agreement or the Tax Indemnity
Agreement. Seller and its representatives shall be entitled to
review the work papers, schedules, memoranda and other documents
used in the preparation by Buyer of the Closing Statement of Net
Assets and the Payment Calculation. In the event that Seller shall
in good faith disagree with the Closing Statement of Net Assets or
the Payment Calculation, Seller and Buyer shall, during the sixty
(60) days after delivery to Seller of the Closing Statement of Net
Assets and the Payment Calculation, negotiate in good faith to
resolve any disagreements with respect thereto. If at the end of
such 60-day period no such resolution is reached, such
disagreements shall be resolved by a nationally recognized firm of
independent public accountants agreed upon by Buyer and Seller.
The determination made by such firm shall be conclusive, binding
on, and non-appealable by, the parties hereto. The fees and
disbursements of such firm of independent public accountants shall
be divided and borne equally by Seller and Buyer. The fact that
Seller's accountants may have made adjustments or determinations in
order to prepare the financial statements referred to in Section
5.5 shall not be disclosed to independent accountants employed to
resolve any disagreement under this Section 2.2.
2.3 Payment of Purchase Price. The Purchase Price is
payable as follows:
2.3.1 Payment at Closing. On the Closing Date,
Buyer shall pay Forty Seven Million Dollars ($47,000,000) to Seller
by wire transfer in immediately available funds to such account as
shall be specified by Seller.
2.3.2 Payment of Adjustment Amount.
(a) If the amount of total current assets
less total current liabilities ("Net Working Capital") shown on the
Closing Statement of Net Assets shall be less than $11,385,000,
Seller shall pay to Buyer an amount equal to the difference between
such Net Working Capital and $11,385,000, together with interest on
such amount from the Closing Date to the date of payment of such
amount at a rate of six percent (6%) per annum, such payment to be
made within two (2) business days after the final determination of
the Adjustment Amount (which determination shall be in accordance
with the procedures set forth in Section 2.2. hereof) by wire
transfer of immediately available funds to an account designated by
Buyer.
(b) If the amount of Net Working Capital
shown on the Closing Statement of Net Assets shall be greater than
$11,385,000, Buyer shall pay to Seller an amount equal to the
difference between such Net Working Capital and $11,385,000,
together with interest on such amount from the Closing Date to the
date of payment of such amount at a rate of six percent (6%) per
annum, such payment to be made within two (2) business days after
the final determination of the Adjustment Amount (which
determination shall be in accordance with the procedures set forth
in Section 2.2 hereof) by wire transfer of immediately available
funds to an account designated by Seller.
2.4 Delivery of Purchased Shares. At the Closing (as
defined in Section 2.5 hereof), Seller shall deliver or cause to be
delivered to Buyer a stock certificate(s) representing all 15,000
of the outstanding shares of Common Stock of the Company, duly
executed in blank or accompanied by a stock power(s) duly executed
in blank, in proper form for transfer. Title to the Shares will be
as provided in Section 3.4.2 hereof.
2.5 Closing Date. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at
the offices of Seller at 345 Spear Street, San Francisco,
California on November 30, 1992, or on such other date and/or place
as may hereafter be agreed upon in writing by the parties hereto
(the "Closing Date").
3. Representations and Warranties of Seller. Seller hereby
represents and warrants to and agrees with Buyer as follows:
3.1 Authority. The Company has the full corporate power
and authority to own, lease and operate its assets, properties and
business as it is now being conducted. This Agreement constitutes
the legal, valid and binding obligation of Seller, enforceable
against it in accordance with its terms, except as enforceability
may be limited by laws relating to insolvency or bankruptcy or by
equitable principles. Seller has the absolute and unrestricted
right, power, authority and capacity to execute and deliver this
Agreement, and to perform its obligations hereunder. Except for
(i) the filing required by the provisions of the Hart-Scott-Rodino
Anti-Trust Improvements Act of 1976 (the "HSR Act"), and (ii) the
filing required by the Federal Trade Commission's Consent Order, a
copy of which is attached hereto as Schedule 3.1 (the "Consent
Order"), no consent, authorization or approval of, exemption by, or
filing with, any domestic governmental or administrative authority,
or any court is required to be obtained or made by Seller in
connection with the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated
hereby.
3.2 Organization and Good Standing. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Company is duly
qualified or otherwise authorized as a foreign corporation to
transact business and is in good standing in each jurisdiction in
which the nature of its business or the character of its properties
require such qualification wherein the failure so to qualify or be
authorized could have a material adverse effect on the business or
properties of the Company. The jurisdictions in which the Company
is so qualified are set forth on Schedule 3.2 attached hereto.
3.3 Interested Parties. Except as set forth on Schedule
3.3 attached hereto, no material asset used in the Company's
business is owned by Seller or by any affiliate of Seller other
than the Company. Except as set forth on Schedule 3.3 and except
for supply arrangements entered into in the ordinary course of the
Company's business, there are no material contracts, agreements or
other arrangements which will continue following the Closing
between the Company and Seller or the Company and any affiliate of
Seller.
3.4 Capital Stock.
3.4.1 Outstanding Stock. The total authorized
capital stock of the Company consists of 50,000 shares of common
stock, $100 par value per share, of which 15,000 shares are issued
and outstanding; all of which issued and outstanding Shares are
owned by Seller. No other class of capital stock of the Company is
authorized or outstanding. All of the Shares are duly authorized
and are validly issued, fully paid and nonassessable.
3.4.2 Title to Purchased Shares. Seller owns
beneficially and of record, free and clear of any lien, security
interest, option or other encumbrance, the Shares and, upon
delivery of and payment for such Shares as herein provided, Seller
will convey to Buyer good and valid title thereto, free and clear
of any lien, security interest, option or other encumbrance of any
kind.
3.5 Options or Other Rights. There are no outstanding
rights, subscriptions, warrants, calls, unsatisfied preemptive
rights, options, conversion rights, commitments or other agreements
of any kind to purchase or otherwise to receive from the Company
any of the outstanding, authorized but unissued, unauthorized or
treasury shares of the capital stock of the Company, including the
Shares, or any other security of the Company, and there is no
outstanding security of any kind convertible into such capital
stock, including the Shares.
3.6 Certificate of Incorporation; By-Laws. Attached
hereto as Schedule 3.6 are true, complete and correct copies of (a)
the Certificate of Incorporation, as amended to date, of the
Company and (b) the By-Laws, as currently in effect, of the
Company.
3.7 The Company's Financial Condition.
3.7.1 Financial Information. Seller has
delivered to Buyer: (a) unaudited statements of operations and cash
flows for the Company for each of the four years ended on or about
December 31, 1988 through December 31, 1991, and for the six month
period ended June 30, 1992 and (b) unaudited statements of net
assets for each of the four years ended on or about December 31,
1988 through December 31, 1991, and at June 30, 1992, copies of
which are attached hereto as Schedule 3.7.1A. Such financial
statements fairly present the financial condition and results of
operations of the Company as of the respective dates thereof and
for the periods therein referred to. Such financial statements
were prepared in accordance with International Accounting
Principles consistently applied and on a basis consistent with
prior periods. Such financial statements comply with United States
generally accepted accounting principles ("GAAP") in all material
respects except as set forth on Schedule 3.7.1B, attached hereto.
In addition, Seller has delivered to Buyer the Opening Statement,
a copy of which is attached hereto as Schedule 2.2. Such Opening
Statement has been prepared in a manner which is consistent with
the financial statements for the six months ended June 30, 1992,
except that the Opening Statement has been adjusted as set forth on
Schedule 3.7.1C to reflect obligations of the Company which have
terminated, obligations which will be the sole responsibility of
Seller after the sale of the Company, adjustments for over accruals
or accounting reclassifications.
3.7.2 Absence of Certain Changes. Except as set
forth on Schedule 3.7.2 attached hereto, since the date of the
Opening Statement, there has not been (i) any transaction not in
the ordinary course of the Company's business; (ii) any change in
the Company's accounting methods or practices (including, but not
limited to, any change in depreciation or amortization policies or
rates); (iii) any sale or transfer of any of the assets of the
Company or any cancellation of any debts, claims or any amendments
to any contracts, except in the ordinary course of business and
consistent with past practice; (iv) the incurrence by the Company
of any liability whatsoever which would in accordance with GAAP be
classified as anything other than a current liability; (v) any
increase in the salary or compensation of any of the employees of
the Company other than in the ordinary course of business
consistent with past practice; or (vi) any other event or condition
of any character which has materially and adversely affected the
assets or the business of the Company, with the possible exception
of general business and economic conditions which are also
applicable to companies situated in similar businesses.
3.7.3 No Undisclosed Liabilities. The Opening
Statement summarizes the Company's liabilities using the accounting
principals described in Section 3.7.1, applied on a consistent
basis with prior periods. To the best of Seller's knowledge, (i)
the summary of liabilities shown on the Opening Statement is true
and correct in all material respects and (ii) the Company has no
contingent liabilities except those which may arise out of those
matters disclosed elsewhere in this Agreement and the schedules
attached hereto.
3.7.4 Disclaimer Regarding Projections. In
connection with Buyer's investigation of the Company, Buyer
received from Seller certain projections, estimates and other
forecasts. Buyer acknowledges that there are uncertainties
inherent in attempting to make such projections, estimates and
forecasts, that Buyer is familiar with such uncertainties, that
Buyer is taking full responsibility for making its own evaluation
of the adequacy and accuracy of all projections, estimates and
other forecasts so furnished to it, and that Buyer shall have no
claim against Seller with respect thereto. Accordingly, neither
Seller nor any of its agents or representatives makes any
representation or warranty with respect to such projections,
estimates and forecasts.
3.8 Title to Assets. Except as set forth in Schedule
3.8 attached hereto, the Company has good title to all of the
assets owned by it (other than the Real Property as to which
Section 3.18 relates), including without limitation, all assets
shown on the Opening Statement but excluding assets disposed of in
the ordinary course of business since the date of the Opening
Statement, free and clear of all liens, security interests and
other encumbrances of any kind other than (i) liens, if any, for
personal property taxes and assessments not yet due and payable,
(ii) leasehold interests or other possessory interests incurred by
the Company in the ordinary course of its business, and (iii) other
liens, security interests incurred in the ordinary course of the
Company's business which individually and in the aggregate do not
have a materially adverse affect on the business or financial
condition of the Company.
3.9 Books and Records. The minute books and other
records of the Company are complete and correct and have been
maintained in accordance with sound business practices. The minute
books of the Company contain accurate and complete records of all
meetings held of, and corporate action taken by, the Company's
stockholder, the Board of Directors and committees of the Board of
Directors of the Company and no meetings of the Company's
stockholder, the Board of Directors of the Company or any committee
thereof has been held for which minutes have not been prepared and
are not contained in such minute books. At the Closing, all of
those books and records will be in the possession of the Company.
3.10 Compliance with Law. Except as set forth on
Schedule 3.10A attached hereto and except with respect to any and
all environmental laws, rules and regulations as to which no
representations are being made except as set forth below or as may
be set forth in Section 9 hereof and except with respect to
intellectual property matters as to which the sole representations
are set forth in Section 3.22, the Company and its use and
occupancy of its properties are in compliance with all applicable
laws, rules and regulations to which the Company or its properties
are subject, including, without limitation, laws, rules and
regulations relating to occupancy, health, safety or employment.
The Company has not failed to obtain or adhere to any license,
permit or authorization (including any license permit or
authorization required by environmental laws) required by it to
operate its business or to occupy or use any of its properties or
assets, which failure individually or in the aggregate has had or
will have a material cost or material adverse effect on the
Company. A list of all such material licenses or permits is
attached hereto as Schedule 3.10B.
3.11 Products. Schedule 3.11 attached hereto, contains
a list of all categories of products presently manufactured or sold
by the Company. None of the products manufactured or sold by the
Company in the past five (5) years has been subject to recall or
recalled by the Company.
3.12 Condition and Sufficiency of Assets. Except as set
forth on Schedule 3.12 attached hereto, any and all machinery and
equipment which is material to the business of the Company is in
good operating condition and repair, normal wear and tear excepted,
and is adequate for the uses to which such machinery and equipment
are being put. The Company's equipment is sufficient for the
continued conduct of the Company's business after the Closing in
substantially the same manner as conducted prior to the Closing.
3.13 No Brokerage or Finder's Fees. Neither the Company
nor Seller has incurred any liability to any broker, finder or
agent other than Lazard Freres & Company for any brokerage fees,
finder's fees or commissions with respect to the transactions
contemplated by this Agreement. Any such fee payable to Lazard
Freres & Company will be the sole and exclusive obligation of
Seller.
3.14 No Violation. Except as set forth in Schedule 3.14,
neither the execution and delivery of this Agreement nor the
consummation or performance of any of the transactions contemplated
hereby will, directly or indirectly: (a) contravene, conflict with
or result (with or without notice or lapse of time) in a violation
of (i) any of the provisions of the current certificate of
incorporation or the Bylaws of the Company or (ii) any resolution
adopted by the Board of Directors or the stockholder of the
Company; (b) contravene, conflict with or result (with or without
notice or lapse of time) in a violation of any federal or state
law, statute or ordinance, or any order, judgment, injunction,
ruling, decision, writ or sentence rendered by any court, agency or
other governmental body applicable to or binding upon the Company
or Seller, or any of the assets owned or used by the Company which
would have a material adverse effect on the Company or its
properties taken as a whole; (c) contravene, conflict with or
result (with or without notice or lapse of time) in a violation or
breach of any of the provisions of, or give any person or entity
the right (with or without notice or lapse of time) to declare a
default or to accelerate the maturity or performance of, to amend
the terms of, or terminate any contract, license or permit which,
if terminated, would have a material adverse effect on the Company
or its properties taken as a whole, and to which the Company is a
party or under which the Company has any rights, or by which the
Company or any of the assets owned or used by the Company may be
bound; or (d) result in the creation or imposition or any security
interest, lien or other encumbrance upon the property or assets of
the Company.
3.15 Consents to Assignment. No consent, approval or
other action of any third party is required to be obtained by the
Company or Seller in connection with the transactions contemplated
in this Agreement except as set forth in Schedule 3.15 attached
hereto; provided, however, that this Section 3.15 shall not apply
with respect to any consent or approval which may be required if
the failure to obtain such consent or approval would not have a
material adverse effect on the business or the properties of the
Company.
3.16 No Litigation. Except as set forth in Schedule 3.16
attached hereto, there are no legal, administrative, arbitration or
other proceedings, or claims, actions or investigations ("Legal
Proceedings") pending and, to the best of Seller's knowledge (based
solely upon the knowledge of Tom Donnell, John Masters, Seller's
General Counsel and the knowledge of the staff members of Seller's
legal department who have direct responsibility for monitoring the
legal affairs of the Company), no other Legal Proceedings are
currently threatened against the Company which, if adversely
determined would have a material adverse effect on the business or
financial condition of the Company. Other than as set forth in
Schedule 3.16 attached hereto, neither the Company nor Seller is
subject to any judgment, order or decree entered in any lawsuit or
proceeding which has had or may have, if adversely determined, a
material adverse effect on the business or financial condition of
the Company. Except as set forth on Schedule 3.16, neither the
Company nor any insurance carrier of the Company has, since January
1, 1991, paid or reserved an amount in excess of $25,000 with
respect to any third-party liability claim (including, without
limitation, product liability claim), for personal injury or
property damage made or threatened against the Company.
3.17 Benefit Plans.
3.17.1 Except as set forth in Schedule 3.17
attached hereto, the Company is not a party to (i) any "employee
benefit plan" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") (an
"Employee Benefit Plan"), (ii) any profit sharing, pension,
deferred compensation, bonus, stock option, stock purchase,
severance, health, welfare or incentive plan or agreement, (iii)
any written plan or policy providing for "fringe benefits" to its
employees, including but not limited to vacation, paid holidays,
personal leave, employee discount, educational benefit or similar
programs, or (iv) any written employment agreement (individually a
"Plan" and collectively the "Plans").
3.17.2 Except as set forth in Schedule 3.17, the
Company has made no contributions to any multiemployer plan
described in Section 3(37) of ERISA (a "Multiemployer Plan") or any
Employee Benefit Plan.
3.17.3 To the best of Seller's knowledge, each
Plan which is an "employee benefit plan", as defined in Section
3(3) of ERISA, complies in all material respects with the
requirements provided by any and all statutes, orders or
governmental rules or regulations currently in effect and
applicable to the Plan, including but not limited to ERISA and the
Code.
3.17.4 All reports, forms and other documents
required to filed with any government entity with respect to any
Plan (including without limitation, summary plan descriptions,
Forms 5500 and summary annual reports) have been timely filed and
are accurate in all material respects.
3.17.5 The Company has no liability nor is it
threatened with any liability (i) for the termination of any single
employer plan under Section 4062 or 4064 of ERISA or any multiple
employer plan under Section 4063 of ERISA, (ii) for any lien
imposed under Section 302(f) of ERISA or Section 412(n) of the
Code, (iii) for any interest payments required under Section 302(e)
or any taxes imposed by Sections 4971, 4975, 4976, 4977 or 4979 of
the Code, (iv) for a fine under Section 501 of ERISA, or (v) for an
transaction within the meaning of Section 4069 of ERISA.
3.17.6 The Company has no current liabilities with
respect to withdrawals from any Multiemployer Plans which could
subject Seller to any controlled group liability under Section
4001(b) of ERISA.
3.17.7 All of the Plans, to extent applicable, are
in compliance with the continuation of group health coverage
provisions contained in Section 4980B of the Code and Sections 601
through 608 of ERISA.
3.17.8 Except for the Central States, Southeast
and Southwest Area Pension Plan, from and after the Closing Date,
neither Buyer nor the Company shall have any obligation under nor
incur any liability whatsoever with respect to any of the plans
listed on Schedule 3.17 or under any unidentified Plan which may
have been maintained by or on behalf of Seller or the Company or to
which Seller or the Company made contributions prior to the Closing
Date.
3.18. Real Property. Schedule 3.18A contains a complete
and accurate legal description of all real property owned by the
Company (the "Real Property") and Schedule 3.18B contains a
complete list of all real property as to which the Company is a
party as lessee. All the leases pertaining to properties described
in Schedule 3.18B are in full force and effect, and there does not
exist any material default or event that with notice or lapse of
time, or both, would constitute a material default by the Company
or, to the best of Seller's knowledge, by any lessor, under any of
these leases. The Company has good title to the Real Property,
free and clear of all mortgages, deeds of trust, encumbrances,
liens and charges of every kind and character, except for (i) liens
for taxes and assessments not yet due and payable, and (ii)
covenants, conditions, restrictions, rights, easements and other
matters which do not materially interfere with the current use of
the Real Property by the Company. Except as set forth on Schedule
3.18C, attached hereto, all buildings on the Real Property are in
good condition and repair, normal wear and tear excepted, and
conform in all material respects with all applicable ordinances,
regulations and building, zoning and other laws. All buildings
located on the Real Property are located within the record property
lines.
3.19 Accounts Receivable. All accounts receivable
reflected on the Opening Statement and all accounts and other
receivables acquired by the Company subsequent to June 30,1992 to
and including the Closing Date arose and/or will arise from bona-
fide transactions in the ordinary course of business. The reserve
for bad debts included in computing amounts set forth on the
Opening Statement was computed in a manner consistent with past
practice.
3.20 Insurance. Schedule 3.20 attached hereto contains
an accurate and complete description of all current material
policies of fire, liability, workers' compensation and other forms
of insurance including, without limitation, surety bonds maintained
with respect to the Company. Such policies are carried by insurers
of recognized responsibility and are in full force and effect. All
such insurance shall be in effect through the Closing Date and
shall be terminated as of midnight on the Closing Date. Except as
set forth on Schedule 3.20, no insurance coverage of the Company is
maintained through self-insurance.
3.21 Ownership of Machinery and Equipment. All of the
machinery, equipment, furniture, vehicles, related capitalized
items and other tangible personal property which are material to
the business of the Company are, and on the Closing Date will be,
owned by the Company, except as otherwise indicated on Schedule
3.21 attached hereto. For purposes of this Section 3.21, tangible
personal property shall not be considered material to the business
of the Company if it is leased pursuant to a lease which may be
cancelled on ninety (90) days notice or less without penalty or if
it is subject to payment of not more than $50,000 prior to
termination.
3.22 Intellectual Properties.
3.22.1 Ownership of Intellectual Properties.
Schedule 3.22A attached hereto contains a complete and correct list
of all patents, patent rights, patent applications, licenses, shop
rights, trademarks, trademark applications, tradenames, copyrights
and similar rights (collectively "Rights") currently owned by the
Company or licensed to the Company for use in the conduct of the
business of the Company, indicating the registered and beneficial
owner and the renewal date thereof. Except as otherwise set forth
in this Section 3.22, the Company owns or has a valid license to
use all Rights necessary to the conduct of its business as such
business is currently being conducted. To Seller's knowledge, the
conduct of the business of the Company, as such business is
currently being conducted, does not materially conflict with valid
intellectual property rights of others, except as otherwise set
forth in this Section 3.22. The Company has entered into a License
Agreement with Societe des Produits Nestle S.A. ("SPN") pursuant to
which it has the right to use such trademarks, tradenames and other
intellectual property rights as are designated on Schedule 3.22B
attached hereto (the "Marks"), subject to the provisions of Section
3.22.2, below which License Agreement will be cancelled on or prior
to the Closing Date.
3.22.2 Interest of Others in Marks. Seller has
disclosed to Buyer, and Buyer acknowledges receipt of, that
material information known or possessed by Seller, which, to the
best of Seller's knowledge (based solely upon the knowledge of
Seller's General Counsel), relates to the trademarks, tradenames,
or other intellectual property rights which are material to the
Company's business, including without limitation, the fact that:
(i) the "CAIN'S" trademark, Registration No. 682,261 with the U.S.
Patent and Trademark Office is restricted to use in the U.S. States
of Oklahoma, Texas, Arkansas, Missouri, Kansas, California, New
Mexico, Arizona, Mississippi and Colorado but is also being used by
the Company in the States of Louisiana, Georgia, Alabama, Iowa,
Wisconsin, Illinois, Kentucky, Tennessee, and Indiana; (ii) John E.
Cain Co., a Massachusetts corporation which has no affiliation with
the Company, owns a registration for "CAIN'S" trademark
Registration No. 992,196 relating to certain food items; (iii)
there are certain state registrations for the "CAIN'S" trademark
which are owned by John E. Cain Co. in the states of Rhode Island,
Connecticut, Delaware, Florida, Maryland, Maine, New Hampshire, New
Jersey, Ohio, Pennsylvania, Virginia, Vermont, New York and
Massachusetts, (iv) Borden Inc. sells a potato chip product under
the "Cain's" name, although Seller knows of no registration by
Borden; and (v) Seller is aware of other current uses of the "CAIN"
or "CAIN'S" name which do not appear to be closely related to
products which are similar to those sold by the Company. Buyer
further acknowledges that there may be other material information
relating to the trademarks or other intellectual property rights
which Seller is not aware of, and has not investigated, which may
affect such trademarks, tradenames or other intellectual property
rights.
3.22.3 Transfer of Marks. Based on the
foregoing, Seller represents and warrants that the Agreement for
the Purchase and Sale of Trademarks, a copy of which is attached
hereto as Exhibit C, and this Agreement, taken together, are
sufficient to transfer to Buyer all of the Company's and SPN's
right, title and interest in and to the Marks, without
representation of any kind as to the scope or extent of the rights
associated with such Marks.
3.23 Inventory. All Inventory reflected on the Opening
Statement and all inventory acquired by the Company subsequent to
June 30, 1992 to and including the Closing Date was and will be
acquired in the ordinary course of business. The inventory
reflected on the Opening Statement has been accounted for using the
first in, first out inventory method; however, there has been no
analysis to determine if any adjustments should be made to take
into account inventories which may have a cost higher than current
market values. The inventory to be reflected on the Closing
Statement of Net Assets will be accounted for, at the lower of cost
(first-in, first-out) or market of such inventory, in accordance
with GAAP.
3.24 Capital Projects and Expenditures. All capital
projects and capital expenditures undertaken by the Company, or to
which the Company is committed, which have not been completed by
the date hereof and which involve an expected expenditure on or
after the date hereof of more than $50,000 to complete are set
forth on Schedule 3.24 attached hereto.
3.25 Subsidiaries. Except as set forth in Schedule 3.25,
the Company does not, directly or indirectly, own any stock or
other equity interest in any other person or entity.
3.26 Compensation, Vacation Time, Bonuses. Attached
hereto as Schedule 3.26A is (i) a list of the names, titles and
annual compensation (including bonus) of each employee of the
Company who, as of the Closing Date, are entitled to receive base
compensation in excess of $50,000 per annum; and (ii) the accrued
vacation time of each such employee. The policies of the Company
do not permit employees to carryover accrued vacation time from
year to year provided, however, under limited circumstances the
Company has allowed employees to carry over up to one-half of their
annual accrued vacation until the end of May the following year.
Traditionally, bonuses paid to employees of the Company have been
calculated and paid in the manner set forth on Schedule 3.26B
attached hereto.
3.27 Bank Accounts. Attached hereto as Schedule 3.27 is
a list of each financial institution in which the Company maintains
an account or safety deposit box, the number of such account or
safety deposit box, and the names of all persons holding check
signing or withdrawal powers or other authority with respect
thereto.
3.28 Suppliers, Distributors and Customers. Schedule
3.28, attached hereto, lists the five largest suppliers of the
Company by dollar amount for the twelve months ending on June 30,
1992, and the five largest direct purchasers of the Company's
products by dollar amount for the six months ending on June 30,
1992. In the last twelve months no such supplier or customer of
the Company has notified the Company in writing that it has
cancelled or otherwise terminated, or threatened in writing to
cancel or otherwise terminate, its relationship with the Company.
3.29 Material Contracts and Other Agreements.
Schedule 3.29A, attached hereto, sets forth all of the (i)
contracts and other agreements with any current officer or
director, and material agreements with affiliates of the Company;
(ii) contracts and other agreements with any labor union or
association representing any employee; (iii) any contracts and
other agreements between the Company and any person which relate to
the sale, distribution or marketing of any of the products of the
Company where the Company's sales to such person in the twelve (12)
month period ending June 30, 1992 exceeded $100,000 except for
purchase orders received from customers of the Company in the
ordinary course of business; (iv) material contracts and other
material agreements pursuant to which any party is required to
purchase or sell a stated portion of its requirements or output
from or to another party; (v) material contracts and other material
agreements for the sale of any of its assets or for the grant to
any person of any preferential rights to purchase any of its
assets; (vi) joint venture agreements; (vii) contracts and other
agreements restraining the Company in any respect from engaging or
competing in any line of business or with any person or in any
geographical area; (viii) contracts and other agreements relating
to the acquisition by the Company of any operating business or the
capital stock of any other person; (ix) contracts and other
agreements relating to the borrowing of money, other than those
relating to the financing of automobiles or other vehicles not in
excess of $100,000; (x) contracts or agreements wherein the Company
has guaranteed the obligation, or agreed to be responsible for the
negligence, of any other person or entity; or (xi) any other
contracts or other agreements pursuant to which payments in excess
of $100,000 have been made or which are for terms longer than
ninety (90) days. The items listed on Schedule 3.29A (hereinafter
the "Material Contracts") have been listed by subsections which
correspond to the subsections used above. True and complete copies
of all of the Material Contracts have been made available to Buyer.
Except as set forth on Schedule 3.29B, all of such Material
Contracts are valid and binding upon the Company. Except as set
forth on Schedule 3.29C, the Company is not in default in any
material respect under any of the Material Contracts, nor, to the
best of Seller's knowledge, is any other party to any of the
Material Contracts in default thereunder in any material respect.
For purposes of this Section 3.29, a contract shall not be
considered material if it is terminable on ninety (90) days notice
or less without penalty or is subject to payment of not more than
$100,000 prior to termination. Except as set forth on Schedule
3.29D attached hereto, no such Material Contract contains any
requirement with which there is a reasonable likelihood that (i)
the Company or any other party thereto will be unable to comply or
(ii) compliance therewith by the Company would have a material
adverse effect on the business of the Company.
3.30 Renegotiation Act. Since January 1, 1990, the
Company has not made any repayments pursuant to the provisions of
the Federal Renegotiation Act on account of any contract with the
United States Government or any agency, department or subdivision
thereof.
3.31 Material Misstatements or Omissions. No
representation or warranty by Seller contained in this Agreement or
the Schedules attached hereto, and no document or certificate
furnished or to be furnished to Buyer in connection herewith or
with the transactions contemplated hereby, contains an untrue
statement of a material fact or omits to state a material fact
necessary to make the statements of fact contained herein or
therein at the time such statement was made not misleading.
4. Representations and Warranties of Buyer. Buyer hereby
further represents and warrants to Seller as follows:
4.1 Authority. This Agreement has been adopted, and its
execution and delivery to Seller and the performance thereof have
been duly authorized by the Board of Directors of Buyer, and no
further action is necessary on the part of Buyer to make this
Agreement valid and binding upon it. Except for the filing
required by the provisions of the HSR Act, no consent,
authorization or approval of, exemption by, or filing with, any
domestic governmental or administrative authority, or any court, is
required to be obtained or made by Buyer in connection with the
execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby.
4.2 Organization and Good Standing. Buyer is a
corporation duly organized, validly existing and in good standing
under the laws of the State of New York.
4.3 Brokerage or Finder's Fees. Buyer has not incurred
any liability to any broker, finder or agent other than Alex. Brown
& Sons Incorporated for any brokerage fees, finder's fees or
commissions with respect to the transactions contemplated by this
Agreement. Any such fee payable to Alex. Brown & Sons Incorporated
will be the sole and exclusive obligation of Buyer.
5. Seller's Covenants and Agreements. Seller hereby affords
Buyer the following affirmative and negative covenants, thereby
agreeing to the following:
5.1 No Corporate Borrowings. From the date hereof
through the Closing Date, Seller will use its best efforts to
ensure that the Company shall not, except in the ordinary course of
business, without the prior written consent of Buyer, borrow monies
for any reason or draw down on any line of credit or long-term debt
obligation, or become the guarantor, surety or endorser of the
obligation of any other person, partnership, corporation or other
business entity.
5.2 Conduct of Business.
5.2.1 Diligent Conduct. From the date hereof
through the Closing Date, Seller will use its best efforts to
ensure that the Company shall (i) conduct its business diligently
and in the ordinary course, (ii) preserve intact its business and
marketing organization, (iii) retain in its employ all of its key
employees and (iv) preserve its relationships with its suppliers,
customers, sales representatives, and others having business
relations with it.
5.2.2 Capital Commitments. From the date hereof
through the Closing Date, Seller will use its best efforts to
ensure that the Company shall not, without the prior written
consent of Buyer, make commitments for capital expenditures in
excess of an aggregate of $100,000; provided, however, that the
Company may make expenditures in the event of an emergency without
the prior written consent of Buyer.
5.2.3 Properties and Assets. From the date
hereof through the Closing Date, Seller will use its best efforts
to ensure that the Company shall not, without the prior written
consent of Buyer, sell or transfer the Real Property or any other
assets, cancel any debts or claims, or mortgage, pledge or subject
to lien, charge or encumbrance of any kind (other than liens for
taxes and assessments not delinquent) any of its assets, except in
the ordinary course of business.
5.2.4 Contracts. From the date hereof
through the Closing Date, Seller will use its best efforts to
ensure that the Company shall not, without the prior written
consent of Buyer, enter into, amend or terminate any Material
Contract other than in the ordinary course of business.
5.2.5 Insurance. From the date hereof through
the Closing Date, Seller will not cancel any of the insurance
policies described in Schedule 3.17 attached hereto.
5.2.6 Compensation of Employees. From the date
hereof through the Closing Date, the Company may, in the ordinary
course of business and consistent with past practice, increase the
compensation payable or to become payable to any of its officers,
employees or agents, or make any bonus payment or similar
arrangement with any such person.
5.2.7 Long Term Liabilities. On or prior to the
Closing Date, Seller shall have caused the Company to pay any and
all liabilities of the Company that would be classified as long-
term liabilities of the Company in accordance with GAAP except as
modified by Schedule 3.7.1B, such that on the Closing Date the
Company shall have no liabilities except for liabilities that would
be classified as current liabilities in accordance with GAAP except
as modified by Schedule 3.7.1B; it being understood that Seller
shall have no obligation to pre-pay lease payments thereafter due
on leased vehicles.
5.3 Access and Information. Subject to the Buyer's
continuing compliance with the provisions of Section 6, prior to
the Closing, Seller shall afford to Buyer and Buyer's counsel,
accountants and other representatives, reasonable access to all
properties, books, contracts, records and personnel of the Company
and any records concerning the Company maintained and accumulated
by its counsel, accountants and other representatives. In
addition, Seller shall use its reasonable efforts to provide Buyer
with all reasonably obtainable information relating to any matter
involving the Company's insurance coverages, exposures and claims
with respect to any claim since January 1, 1989.
5.4 Disposition of Employee Benefit Plans.
5.4.1 Retirement Plans. Seller shall continue
to maintain the employee benefit plans set forth in Schedule 3.17,
attached hereto, for the benefit of the employees of the Company
until the Closing Date. Thereafter Seller shall treat the employees
of the Company as terminated employees in accordance with the
current terms and provisions of such plans; provided, however, that
on the Closing Date Seller agrees to fully vest those employees who
are not vested in the Nestle USA, Inc. Retirement Plan or the
Nestle USA, Inc. Retirement Savings Plan (401K) as of the Closing
Date and who on such date have a minimum of thirty (30) months of
service as determined under the terms of such plans, in those
benefits accrued by them under such plans to and including the
Closing Date. Seller shall have no further obligation with respect
to employees of the Company with less than thirty (30) months of
service.
5.4.2 Disability. Seller shall continue to
provide both short-term and long-term disability and related health
benefits to employees of the Company until the Closing Date, and,
from and after the Closing Date, to each employee or former
employee of the Company who, as of the Closing Date, is receiving
or is entitled to receive such benefits pursuant to any of Seller's
disability plans.
5.4.3 Retiree Health Benefits. Until the
Closing Date Seller shall continue to provide health benefits to
retired employees of the Company who had retired prior to the
Closing Date and, from and after the Closing Date Seller shall
continue to provide health benefits to such retired employees, and
after they retire from the employ of the Company and the Buyer, to
those employees of the Company who were qualified for post
retirement health benefits on the Closing Date (except for the fact
that they were not retired), all of whom are listed on Schedule
5.4.3 attached hereto, on the terms on which they were qualified on
the Closing Date to the extent Seller provides such benefits to
other qualified retirees of Seller. If it is finally determined by
a court of competent jurisdiction that any person employed by the
Company at any time prior to the Closing Date is entitled to post-
retirement health benefits as a result of actions taken by Seller
or the Company prior to the Closing Date relating to conditions of
employment, Seller shall be liable therefore.
5.4.4 Severance Obligations. If any person
employed by the Company on the Closing Date is terminated after the
Closing Date, and it is finally determined by a court of competent
jurisdiction that such person is entitled to severance benefits of
more than two weeks of compensation as a result of actions taken by
Seller or the Company on or prior to the Closing Date relating to
conditions of employment, Seller shall be liable for that portion
of the severance payable to such person which exceeds two weeks of
compensation.
5.4.5 Health Benefits. Seller shall continue to
be responsible for medical expenses incurred by an employee of the
Company following the Closing Date provided such employee was
hospitalized in accordance with the terms of Seller's welfare
benefit plans prior to midnight on the Closing Date. Seller's
obligation under this Section 5.4.5 shall terminate when such
employee is discharged from the hospital and Seller shall have no
liability for such employee's subsequent medical expenses,
including any follow-up doctor's visits or additional
hospitalizations.
5.5 Audited Financial Statements. On or before the
second day prior to the Closing Date, Seller shall use its best
efforts to deliver to Buyer financial statements of the Company for
the years ended December 31, 1991, and December 31, 1990 and the
nine months ended September 30, 1992, which financial statements
(the "Audited Statements") shall have been reported on by a
nationally recognized firm of certified public accountants and
shall be in form satisfactory to meet the rules and regulations of
the Securities and Exchange Commission ("SEC") applicable to Buyer,
including, without limitation, the provisions of Regulation S-X
promulgated by the SEC, using, to the extent permitted under such
rules, accounting principles previously used by the Company applied
in a manner which is consistent with the Company's prior use. Any
failure by Seller to deliver such financial statements shall not
constitute a breach of this Agreement provided Seller has used its
best efforts to fulfill its obligations under this Section 5.5 and
such failure shall not give rise to any damages of any kind, but
shall give Buyer the right to terminate this Agreement as a
consequence of the failure of the condition set forth in Section
8.1.12. Seller's obligation to use its best efforts shall not
require the expenditure of more than $350,000. Buyer will not
unreasonably withhold its consent to any request for a reasonable
extension of time to complete the preparation of the Audited
Statements. Buyer and its accountants shall be afforded reasonable
access to and shall be entitled to review such work papers,
schedules, memoranda and other documents as may have been prepared
by the Company or the accountants in connection with the
preparation of the Audited Statements.
5.6 Intentionally Omitted.
5.7 Covenant Not to Compete. For a period of five (5)
years from and after the Closing Date, neither Seller nor any
affiliate of Seller will compete with the Company in the
foodservice direct store delivery coffee business in those
localities which are serviced by the Company on the Closing Date
(the "Restricted Service Areas"), provided, however, that during
the two (2) year period commencing on the third anniversary of the
Closing Date and terminating on the fifth anniversary of the
Closing Date, Seller, or any affiliate of Seller, may acquire a
company which engages in the foodservice direct store delivery
coffee business in the Restricted Service Areas, and may continue
such business, provided that the sales and revenues derived from
the foodservice direct store delivery coffee business represent no
more than twenty-five percent (25%) of the overall sales and
revenues of the company being acquired in any of the previous three
years before the date of acquisition. Buyer and Seller expressly
acknowledge and agree that, from and after the Closing Date, Seller
may continue its Sark's Coffee retail direct store delivery
business in such areas as it is currently conducted or may
hereafter be expanded. Buyer and Seller expressly acknowledge and
agree that, from and after the Closing Date, Nestle Brands
Foodservice Company, an affiliate of Seller, may continue its
current distribution of foodservice products, as such business may
hereafter be expanded or modified. Except as otherwise authorized
by the terms of this Section 5.7, Seller will not in competition
with the Company (i) solicit or deal with any customer of the
Company; or (ii) hire away, interfere with or attempt to hire away
any employee of the Company. In the event that the provisions of
this Section 5.7 should ever be deemed to exceed the time or
geographic limitations or any other limitations permitted by
applicable laws, then such provisions shall be deemed reformed to
the maximum permitted by applicable laws. Seller specifically
acknowledges and agrees that (i) the foregoing covenant is an
essential element of this Agreement and that, but for the agreement
of Seller to comply with such covenant, Buyer would not have
entered into this Agreement; (ii) the remedy of law for any breach
of the foregoing covenant will be inadequate; and (iii) Buyer, in
addition to any other relief available to it, shall be entitled to
temporary and permanent injunctive relief in the event the Seller
or any affiliate of the Seller violates the provisions of this
Section 5.7.
5.8 HSR Filing. On or prior to October 28, 1992, Seller
shall file with the Federal Trade Commission ("FTC") and the U.S.
Department of Justice ("DofJ") the notification to be filed under
the HSR Act with respect to the transactions contemplated by this
Agreement. Seller shall use its best efforts (a) to respond to any
request for additional information made by such agencies, and (b)
to resist vigorously any assertion that the actions contemplated by
the Agreement constitute a violation of the anti-trust laws of the
United States or any State; provided, however, that Seller shall
not be obligated to litigate any such assertion and shall be deemed
to have complied with the requirements of this Section 5.8 even
though it elects not to pursue litigation if it has pursued all
other reasonable methods of resistance.
5.9 Section 338(h)(10) Election. Seller will join with
Buyer in making an election under Sections 338(g) and 338(h)(10) of
the Internal Revenue Code of 1986, as amended (the "Code") and any
corresponding elections under state and local tax law (collectively
a "Section 338(h)(10) Election") with respect to the purchase and
sale of the stock of the Company hereunder. A regular exclusion
election under Reg. Section 1.338-5T(c)(2) will be made. Seller
will pay any federal tax (including, without limitation, income
tax) attributable to the making of the Section 338(h)(10) Election.
Seller will also pay any state or local tax (including without
limitation, income tax) attributable to an election under state or
local law similar to the election available under Section 338(g) of
the Code (or which results from the making of an election under
Section 338(g) of the Code) with respect to the purchase and sale
of the stock of the Company hereunder where the state or local
jurisdiction (i) does not provide or recognize a Section 338(h)(10)
Election or (ii) does not apply its provisions corresponding to
Section 338(h)(10) of the Code to the purchase and sale of the
stock of the Company.
5.10 Allocation of Purchase Price. The parties agree
that the Purchase Price and the liabilities of the Company will be
allocated to the assets of the Company for all purposes (including
tax and financial accounting purposes) in the manner set forth on
Schedule 5.10 attached hereto. Seller agrees to file all tax
returns (including amended returns and claims for refund) and
information reports in a manner consistent with such allocation.
5.11 Inter-Company Product Sales. For a period of five
(5) years from and after the Closing Date Seller agrees to supply
to the Company, for its use, those products listed on Schedule 5.11
attached hereto, which products represent all of the products
currently sold by Seller (or its affiliates) to the Company.
Seller agrees to sell such products to the Company at prices
calculated in the same manner as the prices for such inter-company
product sales were calculated prior to the Closing. The price for
those products to be co-packed by Seller shall continue to be based
primarily on Seller's cost of ingredients plus an amount which
represents a portion of Seller's fixed overhead costs. Seller
acknowledges that the Company may, but shall not be required to,
purchase some or all of such products at its sole option. Seller
shall provide Buyer with a draft of a contract manufacturing
agreement with respect to those products to be co-packed by Seller
which incorporates the terms specified in this Section 5.11 and
shall use its best efforts to reach an agreement with Buyer as to
the terms thereof on or before the Closing Date and to execute such
agreement on the Closing Date, it being understood and agreed that
Seller's obligations hereunder are not conditioned upon the prior
execution of such agreement.
5.12 Assumption of Future's Contracts. On the Closing
Date and prior to preparation of the Closing Statement of Net
Assets, Seller will assume, and shall be entitled to the benefit
of, any and all open contracts for the future delivery of green
coffee or raw tea to the Company, excepting only those contracts
which cover such raw materials which may then be in transit to the
Company and where title to such raw materials has passed to the
Company. Prior to Closing, Seller will cooperate with Buyer in
Buyer's efforts to assure that the supply of raw materials to the
Company will not be interrupted immediately after the Closing Date,
and upon request, Seller will supply to Buyer from time to time the
list of open contracts entered into by or on behalf of the Company,
including the date of the contract, the price, the amounts covered
by the contract and the scheduled delivery date or dates, and the
amount of inventories on hand at, and in transit to, the Company.
5.13 Assumption of Liability for Claims of Common
Carriers. The parties acknowledge that the Company has received
and may hereafter receive a number of claims from bankruptcy
trustees who represent various common carriers to the effect that
such carriers undercharged the Company for shipping product by
failing to charge the appropriate ICC tariff fee. Seller agrees to
defend the Company against any such claims to the extent the claim
relates to services provided prior to the Closing Date and to
assume liability for amounts which it is finally determined that
the Company owes to any bankrupt common carrier provided such
amounts relate to services provided to the Company prior to the
Closing Date. If Buyer or the Company shall admit liability for
any such claim or take any action which has a material adverse
impact on Seller's ability to defend itself against such claims,
this covenant shall terminate with respect to the claims so
involved.
6. Buyer's Covenants and Agreements. Buyer hereby affords
Seller the following affirmative and negative covenants, thereby
agreeing to the following:
6.1 Nondisclosure of Confidential Information of the
Company. Buyer acknowledges that it remains bound by the terms of
the confidentiality agreement heretofore signed by it and attached
hereto as Exhibit A.
6.2 Employee Terminations.
6.2.1 Severance Benefits. Buyer agrees that if
any person employed by the Company on the Closing Date is
terminated, other than for cause, Buyer shall be responsible for
paying to each such employee as a severance benefit two weeks of
compensation if such person had been employed by the Company for
more than one year and one week of compensation if such person had
been employed by the company for three or more months but not more
than one year.
6.2.2 Warn Notice. Buyer acknowledges that it
shall be Buyer's responsibility to provide any notice of layoff or
plant closing that might be required pursuant to the Worker
Adjustment and Retraining Notification Act of 1988 with respect to
any plant closings or terminations from and after the Closing Date.
6.3 Consent Order. Buyer agrees to be bound by the
terms of the Federal Trade Commission's Consent Order attached
hereto as Schedule 3.1.
6.4 Assumption of Leases. Buyer agrees to assume all of
Seller's obligations arising from and after the Closing Date (i)
under the fleet vehicles leases with respect to those vehicles
disclosed on Schedule 6.4 attached hereto, and (ii) under the AS400
computer lease; provided that Buyer is receiving the benefits
thereof. If either of the lessors of such vehicles or the AS400
lessor fails to consent to an assignment of such leases, Seller
agrees either (i) to continue to provide Buyer with the benefits of
such lease in which event Buyer shall continue to pay all of
Seller's obligations thereunder or (ii) to terminate such leases
and to pay any penalties imposed as a result of such early
termination.
6.5 Disposition of Employee Benefit Plans. Buyer agrees
that except as otherwise contemplated by Section 5.4 hereof, from
and after midnight on the Closing Date, the Company and each of its
salaried employees and hourly employees shall cease participating
in the welfare benefit plans maintained by Seller and commence
participation in the welfare benefit plans presently maintained by
Buyer to the extent, if any, that each such employee qualifies for
such participation pursuant to the terms of such plans. Buyer
further agrees that Seller's medical and dental insurance plans
shall only be responsible for medical and dental expenses incurred
before the Closing Date or covered by Section 5.4 hereof.
6.6 HSR Filing. On or prior to October 28, 1992, Buyer
shall file with the FTC and the DofJ the notification required to
be filed under the HSR Act with respect to the transactions
contemplated by this Agreement accompanied by the appropriate
filing fee. Buyer shall use its best efforts (a) to respond to any
request for additional information made by such agencies, and (b)
to resist vigorously any assertion that the actions contemplated by
this Agreement constitute a violation of the anti-trust laws of the
United States or any State; provided, however, that Buyer shall not
be obligated to litigate any such assertion and shall be deemed to
have complied with the requirements of this Section 6.6 even though
it elects not to pursue litigation if it has pursued all other
reasonable methods of resistance.
6.7 Allocation of Purchase Price. The parties agree
that the Purchase Price and the liabilities of the Company will be
allocated to the assets of the Company for all purposes (including
tax and financial accounting purposes) in the manner set forth on
Schedule 5.10 attached hereto. Buyer agrees to file and to cause
the Company to file, all tax returns (including amended returns and
claims for refund) and information reports in a manner consistent
with such allocation.
6.8 Access to Records. Buyer agrees to allow
representatives of Seller, during a reasonable time following the
Closing, access to the original books and records being transferred
to Buyer for the purpose of defending any claim or cause of action
which may be alleged or filed against Seller relative to the
Company. Buyer further agrees that it will cooperate with Seller
in such matters to the extent requested by Seller, at the cost of
Seller, including compensation for time spent by personnel of Buyer
and the reimbursement of Buyer's out-of-pocket costs. Buyer also
agrees to notify Seller prior to the destruction of records
relating to periods prior to the Closing.
6.9 Inter-Company Product Sales. Buyer shall use its
best efforts to reach an agreement with Seller as to the terms of
the contract manufacturing agreement referred to in Section 5.11
hereof on or before the Closing Date and to execute such agreement
on the Closing Date.
7. Termination of Agreement. From and after December 30,
1992 either party who is not otherwise in default under this
Agreement may terminate this Agreement by giving a written notice
of termination to the other party. In addition, at any time the
parties may mutually agree to an early termination. No party by
its own actions may intentionally delay the Closing beyond December
30 in order to have a right of termination. Any intentional delay
by a party shall result in an extension of the December 30 date
insofar as that party (but not the other party) is concerned. A
termination shall be effective on the date that a termination
notice is properly given, a party exercises a right to terminate
at Closing because of the failure of a material condition (if the
Closing is on or after December 30, 1992) or the effective
termination date under a mutual agreement (the "Termination Date").
From and after the Termination Date this Agreement shall become
void and shall have no further force or effect whatsoever, except
that the provisions of this Section 7 and of Section 6.1 shall
survive the termination and shall continue in full force and
effect. If this Agreement is terminated by other than mutual
agreement, and the non-terminating party is not in material breach
of its obligations contained in this Agreement, then the
terminating party shall pay to the non-terminating party, an amount
equal to all reasonable expenses actually incurred by the non-
terminating party in connection with this transaction.
8. Conditions Precedent to Closing.
8.1 Conditions Precedent to Obligations of Buyer. The
Closing shall not take place unless all of the following conditions
are either waived by Buyer or fulfilled.
8.1.1 Correctness of Representations and
Warranties. The representations and warranties of Seller contained
in this Agreement or any other document delivered to Buyer at the
Closing in connection with this Agreement shall be true on and as
of the Closing Date, as if made on and as of the Closing Date.
8.1.2 Performance of Covenants and Agreements.
Seller shall have performed and complied with all covenants,
obligations and agreements to be performed or complied with by it
on or before the Closing Date pursuant to this Agreement.
8.1.3 Opinion of Seller's Counsel. Buyer shall
have received an opinion from Seller's General Counsel dated the
Closing Date substantially in the form of Exhibit B attached
hereto. In rendering such opinion such counsel may rely on
governmental advice, factual certificates, opinions of local
counsel and such other matters as such counsel may deem reasonably
appropriate and as are acceptable to Buyer's counsel. Such opinion
may also contain such assumptions and qualifications as such
counsel deems appropriate and as are acceptable to Buyer's counsel.
8.1.4 Good Title to Shares. Seller shall have
transferred all the Shares to Buyer, free and clear of all liens,
encumbrances or restrictions. No claim shall have been filed, made
or threatened by any person or entity asserting that he or she is
entitled to any part of the Purchase Price paid for the Shares.
8.1.5 No Prohibition of Transaction. No
proceeding or regulation or legislation shall have been instituted,
threatened or proposed before, nor any order issued by, any
governmental body to enjoin, restrain or prohibit or obtain
substantial damages (a) in respect of, or which is related to, or
arises out of, this Agreement or the consummation of these
transactions, or (b) which, in the reasonable judgment of Buyer,
could have a materially adverse effect on the assets, liabilities,
business prospects, results of operations or financial condition of
the Company.
8.1.6 Compliance with Law. Seller and Company
shall have obtained any and all permits, approvals and consents of
any governmental body which counsel for Buyer may reasonably deem
necessary or appropriate so that consummation of these transactions
will be in compliance with applicable requirements, including
without limitation those specifically set forth on Schedule 8.1.6
attached hereto.
8.1.7 FIRPTA Affidavit. Buyer shall have
received from Seller an affidavit declaring that it is not a
foreign corporation, foreign partnership, foreign trust or foreign
estate as those terms are defined in the Internal Revenue Code and
Income Tax Regulations.
8.1.8 Consents. On or prior to the Closing
Date, Seller shall furnish Buyer with evidence of such consents as
are listed on Schedule 3.15 attached hereto; provided, however,
that although Seller shall use its best efforts to obtain the
consent of the lessors of the vehicles referred to on Schedule 6.4
attached hereto and of the lessor of the AS400 computer equipment,
the parties hereto agree that Seller shall have no liability if it
is unable to secure such consent and that Buyer will assume the
obligations established by Section 6.4 hereof.
8.1.9 Sale of Marks. Buyer and Societe des
Produits Nestle S.A. ("SPN"), the owner of the Marks, shall have
entered into a purchase and sale agreement substantially in the
form of Exhibit C attached hereto, pursuant to which SPN shall sell
and Buyer shall purchase the Marks and such purchase and sale shall
have been completed simultaneously with the Closing.
8.1.10 Tax Indemnity Agreement. Buyer, Seller,
the Company and Nestle Holdings, Inc. shall have entered into a Tax
Indemnity Agreement substantially in the form of Exhibit D attached
hereto.
8.1.11 HSR Filing Period. The applicable waiting
period under the HSR Act shall have expired.
8.1.12 Financial Information. Seller has
delivered to Buyer the audited financial statements referred to in
Section 5.5.
8.2 Conditions Precedent to Obligations of Seller. The
Closing shall not take place unless all of the following conditions
are either waived by Seller or fulfilled:
8.2.1 Correctness of Representations and
Warranties. The representations and warranties of Buyer contained
in this Agreement or any other document delivered by Buyer to
Seller at the Closing in connection with this Agreement shall be
true on and as of the Closing Date, as if made on and as of the
Closing Date.
8.2.2 Performance of Covenants and Agreements.
Buyer shall have performed and complied with all covenants,
obligations and agreements to be performed or complied with by it
on or before the Closing Date pursuant to this Agreement.
8.2.3 Opinion of Buyer's Counsel. Seller shall
have received from Dreyer and Traub, counsel for Buyer, an opinion
dated the Closing Date, substantially in the form of Exhibit E
attached hereto. In rendering such opinion such counsel may rely
on governmental advice, factual certificates, opinions of local
counsel and such other matters as such counsel may deem reasonably
appropriate and as are acceptable to Seller's counsel. Such
opinion may also contain such assumptions and qualifications as
such counsel deems appropriate and as are acceptable to Seller's
counsel.
8.2.4 Compliance with Law. Buyer shall have
obtained any and all permits, approvals and consents of any
governmental body which counsel for Seller may reasonably deem
necessary or appropriate so that consummation of these transactions
will be in compliance with applicable requirements, including
without limitation those specifically set forth in Schedule 8.2.4.
8.2.5 No Litigation. No suit, action,
arbitration or legal administrative or other proceeding or
governmental investigation shall be pending or threatened against
the Company or Seller in relation to or affecting consummation of
the transactions contemplated herein.
8.2.6 Tax Indemnity Agreement. Buyer, Seller
the Company and Nestle Holdings, Inc. shall have entered into a Tax
Indemnity Agreement substantially in the form of Exhibit D attached
hereto.
8.2.7 HSR Filing Period. The applicable waiting
period under the HSR Act shall have expired.
8.2.8 Sale of Marks. Buyer and SPN shall have
entered into a purchase and sale agreement substantially in the
form of Exhibit C attached hereto, pursuant to which SPN shall sell
and Buyer shall purchase the Marks and such purchase and sale shall
have been completed simultaneously with the Closing.
9. Mutual Covenants.
9.1 Public Statements. Except as may be required by
law, from the date of this Agreement until the Closing Date, the
parties hereto will not make, issue or release any oral or written
public announcement or statement concerning, or acknowledgment of
the existence of, or reveal the terms, conditions and status of the
transaction contemplated by this Agreement, without first making a
good-faith attempt to obtain the prior approval of, or concurrence
in, the contents of such announcement, acknowledgement or statement
by the other parties, which approval or concurrence will not be
unreasonably withheld or delayed.
9.2 Assumption of Certain Potential Environmental Liabilities
of the Company by Seller and Buyer. The parties agree that this
Section 9.2 is intended merely to provide an allocation of
potential exposure as between the parties hereto, and nothing in
this Section 9.2 shall constitute an admission of any liability,
responsibility, wrongful or negligent conduct or bad faith by the
Company or by any of the parties hereto.
9.2.1 Seller's Assumption. Upon the terms and
subject to all of the conditions contained in this Agreement, and
for the consideration Seller has received from Buyer under this
Agreement on the date hereof, Seller agrees that Seller shall
assume and shall indemnify Buyer and the Company from and against
any and all Indemnified Losses (as defined in Section 10.1) up to
the Maximum Environmental Liability Amount (as defined in Section
10.4) relating to:
(i) the matters set forth as Items 4 and 5 on Schedule
3.16
(ii) On-site Environmental Liability (as hereinafter
defined) existing on the Closing Date and/or arising from
activities of the Company occurring prior to the Closing
Date, and
(iii) Off-site Environmental LiabilitY (as hereinafter
defined) existing on the Closing Date and/or arising from
activities of the Company occurring prior to the Closing
Date.
Seller's obligation under this Subsection 9.2.1 shall be
to pay Indemnified Losses with respect to remediation or
investigation of the matters described in clauses (i), (ii) and
(iii) of the preceding sentence. Remediation and investigation
costs shall be deemed to include applicable fines and penalties and
damages to third parties arising from On-site Environmental
Liability and Off-site Environmental Liability. In undertaking to
fulfill any obligation to remediate or investigate any On-site
Environmental Liability or Off-site Environmental Liability, Seller
either shall employ qualified third party providers to perform the
work on a timely basis in a workmanlike manner in accordance with
all laws, and in a manner which shall not unreasonably interfere
with the operations of the Company, or shall pay to unrelated third
parties the Company's share of costs incurred by them to complete
the required remediation or investigation. Seller shall not in any
event be responsible for or pay consequential, punitive or other
costs or damages incurred by the Company or Buyer over and above
the actual costs necessary to effect Seller's obligations under
clauses (i), (ii) or (iii) of the first sentence of this
Subsection, except for consequential damages of the Company or
Buyer arising as a direct result of a Governmental Shutdown (as
hereinafter defined). The term "On-site Environmental Liability"
shall mean liabilities with respect to the remediation and
investigation of Hazardous Substances (as hereinafter defined)
deposited, stored or buried under any of the Real Property
described on Schedule 3.18A or the leased property described on
Schedule 3.18B or any other property owned or occupied by the
Company at any time prior to the Closing Date pursuant to (i) any
valid governmental request, claim, directive or order based upon
any requirement of law existing on the date of this Agreement,
whether issued before or after the date of this Agreement, or (ii)
any liability (whether incurred before or after the date of this
Agreement) to any other person or entity arising from any
requirement of law existing on the date of this Agreement. The
term "Off-site Environmental Liability" shall mean amounts incurred
to pay the Company's share of any costs which arise as a result of
(i) any valid governmental request, claim, directive or order based
upon any requirement of law existing on the date of this Agreement,
whether issued before or after the date of this Agreement, or (ii)
any liability (whether incurred before or after the date of this
Agreement) to any other person or entity arising from any
requirement of law existing on the Date of this Agreement which
requires the Company to pay or share in the costs associated with
the clean-up of Hazardous Substances (as hereinafter defined) which
were removed from the Company's premises and which were disposed of
by or on behalf of the Company or by a contractor employed by the
Company. If any On-site Environmental Liability or Off-site
Environmental Liability relates to activities conducted both before
and after the Closing Date, Seller shall be responsible only for
the proportionate share of the Indemnified Losses relating to
activities occurring prior to the Closing Date. The term
"Governmental Shutdown" means the closure of a Company plant or
other significant facility for a period of three or more months as
a consequence of a court or administrative order issued on the
basis of a violation of an environmental law existing on the date
of this Agreement. The term "Hazardous Substances" shall mean
flammable explosives, radioactive materials, hazardous, toxic or
dangerous wastes, petroleum or waste oil products, asbestos and
urea formaldehyde.
9.2.2 Buyer's Obligation to Cooperate. Buyer on
behalf of itself and the Company hereby agrees (i) to cooperate
fully and in good faith and to do any and all such things as
Seller, its agents, employees and technical professionals may
reasonably request as being necessary or desirable to effect the
obligation to be undertaken by Seller pursuant to Subsection 9.2.1,
and (ii) to provide Seller assistance in undertaking to reduce the
Company's exposure with respect to any environmental liabilities
which may be covered by Subsection 9.2.1 or to prove that the
Company is not obligated or has only a limited obligation with
respect to any such exposure. Without limiting the foregoing,
Buyer shall cause the Company and its employees to cooperate fully
with the Seller and to afford the Seller, its agents, employees and
technical professionals access to relevant records relating to
matters which may be Seller's responsibility under Subsection
9.2.1. Nothing in this Section 9.2.2 shall be deemed to require
that Buyer or the Company incur any third party expenses; provided,
however that neither Buyer nor the Company shall be entitled to
reimbursement for any costs or expenses incurred by them or by
their agents or employees or by any technical professionals they
elect to employ in connection with their obligations under this
Subsection 9.2.2. If Seller believes that Buyer and/or Company
have failed to co-operate in the manner required by this Section
9.2.2, Seller shall give Buyer written notice specifying the basis
for such non-cooperation and Buyer shall have thirty (30) days
within which to remedy such failure to cooperate. At the end of
such thirty (30) day period, if Buyer is materially in violation of
its obligations under the provisions of this Section 9.2.2,
Seller's obligations under this Subsection 9.2.2 shall terminate
with respect to the particular environmental liability with respect
to which the non-cooperation notice was given ("Non-Cooperation
Liability"), and from and after such termination all Indemnified
Losses incurred in connection with such Non-Cooperation Liability
shall be the sole obligation and responsibility of the Buyer and
the Company.
9.2.3 Notice of Remediation. If Buyer believes that
Seller is obligated to remedy an On-Site Environmental Liability or
an Off-site Liability under clause (ii) or clause (iii) of the
first sentence of Subsection 9.2.1, Buyer shall give Seller prompt
written notice specifying in reasonable detail the nature of the
On-site Environmental Liability or the Off-site Environmental
Liability, as the case may be (an "Environmental Notice"). If
Seller is required to remedy the alleged On-site Environmental
Liability or the alleged Off-site Environmental Liability described
in an Environmental Notice the parties shall meet to establish a
reasonable plan of remediation. If either Seller does not believe
it is required to remedy the alleged On-site Environmental
Liability or alleged Off-site Environmental Liability described in
an Environmental Notice or the parties are unable to agree upon a
plan of remediation, either party may request arbitration under
Section 11 to resolve the matter.
9.2.4 Expiration. All of the Seller's obligations
under this Section 9.2 shall lapse and shall be of no further force
or effect whatsoever from and after the earliest of (i) the date
when the Company has made the payments or has otherwise incurred
costs under this Section 9.2 in an aggregate amount which equals or
exceeds the Maximum Environmental Liability Amount, (ii) the date
when the Company is no longer an affiliate of the Buyer (provided,
however, that Seller's obligations hereunder shall not expire if
the Company is merged into Buyer). In addition, Seller's
obligations under this Section 9.2.1 shall terminate in their
entirety and shall be of no further force and effect with respect
to any On-site Environmental Liability unless an Environmental
Notice with respect thereto has been given to the Seller on or
before the fifth (5th) anniversary of the Closing Date and Seller's
obligations under this Section 9.2.1 shall terminate in their
entirety and shall be of no further force or effect with respect to
any Off-site Environmental Liability unless an Environmental Notice
with respect thereto has been given to the Seller on or before the
tenth (10th) anniversary of the Closing Date.
9.3 Other Actions. Each party hereto agrees to execute and
to deliver such instruments, in form and substance mutually
agreeable to the other party hereto, as such other party may
reasonably require in order to carry out the terms of this
Agreement or the transactions contemplated by this Agreement.
9.4 Best Efforts. Each party hereto will use those
efforts that a prudent person desirous of achieving a result would
use under similar circumstances to ensure that such result is
achieved as expeditiously as possible in order to cause all
conditions to the consummation of the transactions contemplated
hereby to be satisfied, and shall not take any action that would
cause any of its representations and warranties in this Agreement
not to be true and correct as of the Closing Date.
10. Indemnifications.
10.1 Seller's Promise to Indemnify. Subject to Section
10.4 hereof, Seller agrees to indemnify, defend and hold harmless
Buyer and the Company against any and all losses, claims,
liabilities, damages, actions, penalties, fines, costs and
expenses, including attorneys' fees and costs (the "Indemnified
Losses"), arising from, in connection with or with respect to the
following items: (i) any misrepresentation, breach or inaccuracy
of any representation or warranty set forth in Section 3 hereof
(except Section 3.17.8), or (ii) any nonfulfillment of or failure
to comply with any agreement, condition or covenant on the part of
Seller under this Agreement (except Sections 5.4, 5.7, 5.10, 5.11
and 9.2) or in any agreement or document delivered pursuant hereto
or in connection herewith or with the Closing of the transactions
contemplated hereby, (iii) any claim against Buyer or the Company
for liability based upon those items which Seller has assumed
liability for pursuant to Sections 3.17.8, 5.4, 5.7, 5.10, 5.11 and
9.2 hereof and the Tax Indemnity Agreement, or (iv) any claim for
bodily injury or property damage against Buyer or the Company
relating to any product sold or distributed by the Company prior to
the Closing Date; provided, however, that as a condition precedent
to any indemnification pursuant to clause (i) or (ii) hereof, the
Indemnitor (as hereinafter defined) shall have received written
notice of a claim from the Indemnified Party (as hereinafter
defined) pursuant to Section 10.3 within sixty (60) days of the
expiration of an eighteen month period following the Closing Date,
and provided further that as a condition precedent to any
indemnification pursuant to clause (iv) hereof, the Indemnitor
shall have received written notice of a claim from the Indemnified
Party (as hereinafter defined) within sixty (60) days of the fifth
anniversary of the Closing Date.
10.2 Buyer's Promise to Indemnify. Buyer agrees to
indemnify, defend and hold harmless Seller against any and all
Indemnified Losses, arising from, in connection with or with
respect to the following items: (i) any misrepresentation, breach
or inaccuracy of any representation or warranty set forth in
Section 4 hereof, or (ii) any nonfulfillment of or failure to
comply with any agreement, condition or covenant on the part of
Buyer under this Agreement or in any agreement or document
delivered pursuant hereto or in connection herewith or with the
Closing of the transactions contemplated hereby, or (iii) any claim
against Seller for liability based upon those items which Seller
has not assumed liability for pursuant to Section 9.2 hereof, or
(iv) any loss, cost, claim, liability or expense arising out of the
operation or ownership of the Company's business from and after the
Closing Date, including, but not limited to, any claim for (a)
wrongful discharge or (b) breach of any employment contract or
union agreement listed on any schedule attached hereto which arises
from any termination which occurs on or after the Closing Date or
any claim of failure to provide severance benefits or notice of
layoffs or plant closings as required by Section 6.2 hereof;
provided, however, that as a condition precedent to any
indemnification pursuant to clause (i) or (ii) of this Section
10.2, the Indemnitor (as hereinafter defined) shall have received
written notice of a claim from the Indemnified Party (as
hereinafter defined) pursuant to Section 10.3 within sixty (60)
days of the expiration of an eighteen month period following the
Closing Date; provided, further, that the indemnification
obligation set forth in clauses (iii) and (iv) of this Section 10.2
shall survive in perpetuity.
10.3 Procedure for Indemnification. If there is
asserted any claim, liability or obligation that in the judgment of
a party indemnified above (the "Indemnified Party") may give rise
to any Indemnified Losses, or if the Indemnified Party determines
the existence of the foregoing whether or not the same shall have
been asserted, such Indemnified Party shall give the party from
whom indemnity is sought (the "Indemnitor") notice within thirty
(30) business days of the assertion of any claim, liability or
obligation, or within fifteen (15) business days of receipt of
notice of the filing of any lawsuit based upon such assertion, or,
with respect to a claim not yet asserted against the Indemnified
Party, within fifteen (15) days after the determination by an
executive officer of the Indemnified Party of the same, and shall
give Indemnitor a reasonable opportunity of assuming the defense of
such claim, liability or obligation, using counsel acceptable to
the Indemnified Party; provided, however, that the Indemnified
Party shall have the right to participate in such defense, except
that if the Indemnified Party retains separate counsel, other than
in the event of a conflict of interest requiring the retention of
separate counsel, the Indemnified Party shall assume the expense of
the separate counsel. Failure by the Indemnified Party to give
timely notice pursuant to this Section 10.3 shall not relieve the
Indemnitor of its obligations, except to the extent that the
Indemnitor is actually prejudiced by such failure to give timely
notice. No settlement or adjustment shall be made without the
Indemnified Party's prior written consent, which consent will not
be unreasonably withheld. If Indemnitor fails to contest in good
faith any such claim, liability or obligation, the Indemnified
Party shall have the right to defend, settle or pay the same and
pursue its remedies against Indemnitor hereunder. The Indemnified
Party shall cooperate with Indemnitor in any such defense which
Indemnitor elects to assume in the event Indemnitor makes such
request to the Indemnified party and such request is reasonable,
provided Indemnitor will hold the Indemnified Party harmless from
all its out-of-pocket expenses, including attorneys' fees, incurred
in connection with the Indemnified Party's cooperation. If there
is a disagreement among the parties as to whether any claim,
liability or obligation may give rise to any Indemnified Loss, then
the Indemnified Party shall have the right to defend, settle or pay
the same, or to pursue its remedies against Indemnitor hereunder;
provided, however, Indemnitor shall have the right to participate
in such defense and no settlement or adjustment shall be made
without Indemnitor's prior written consent, which consent shall not
be unreasonably withheld.
10.4 Limitations on Seller's Liability. Except for
Indemnified Losses incurred as a consequence of Seller's breach of
a representation or warranty contained in any one or more of
Sections 3.13 or 3.17.8 or Seller's covenants and agreements
contained in Sections 5.2.8, 5.4, 5.7, 5.9, 5.10, 5.11, 9.2 or the
Tax Indemnity Agreement (the "Fully Indemnified Provisions"), which
Indemnified Losses Seller shall pay or reimburse without regard to
a minimum amount, until such time as it is determined that
Indemnified Losses which would be Seller's responsibility under
this Section 10 arising as a consequence of any other provisions
other than the Fully Indemnified Provisions of this Agreement,
calculated by excluding amounts paid under the Fully Indemnified
Provisions, exceed $750,000, Seller shall have no responsibility
under this Section 10. However, once the $750,000 amount has been
exceeded, Seller's responsibility shall extend to the full
indemnified amount, including the items which were encompassed in
the first $750,000. Notwithstanding any other provision of this
Agreement or any provision of law, Seller's maximum liability for
indemnification, breach of contract, or under any other theory of
law, under this Agreement or in any other way related to the
transactions contemplated by this Agreement shall not exceed
$26,000,000 (the "Maximum Liability Amount"). The maximum amount
for which Seller will have responsibility under this Section 10
will equal the Maximum Liability Amount. The maximum amount for
which Seller will have responsibility under Section 9.2 (the
"Maximum Environmental Liability Amount") will equal the Maximum
Liability Amount, less any amounts incurred or payable by Seller
under this Section 10.4 and less any other amounts which may be
credited against the Maximum Liability Amount as provided in this
Section 10.4.
10.5 No Double Benefit. No amount which results in a
downward adjustment under Section 2.3.2 or caused Nine Month
Operating Profit to be reduced below $6,688,000 under Section
12.4.3 shall be counted as an Indemnified Loss under this Section
10.
11. Arbitration.
11.1 Binding Arbitration of All Disputes. Any and all
disputes or claims between the parties hereto arising out of or
relating to the validity, interpretation, enforceability, or
performance of this Agreement, including, without limitation, this
arbitration clause, shall be solely and finally settled by binding
arbitration in New York, New York and, except as otherwise provided
in this Section 11, in accordance with the then prevailing
commercial arbitration rules (the "Rules"), but not under the
auspices, of the American Arbitration Association, provided that in
any case where the rules of the American Arbitration Association or
its successor do not exist or in the opinion of the arbitrators
cannot be equitably applied, the arbitration shall proceed in
accordance with the laws relating to arbitration then in effect in
the State of New York. The parties hereto expressly agree that
binding arbitration is intended by the parties to be the sole
procedure available to either party for the resolution of any and
all disputes or claims between the parties, and each party hereby
waives the right to pursue any other procedure, including, without
limitation, litigation, mediation, or any other form of dispute
resolution other than that procedure described in this Section 11.
Each party irrevocably waives any and all rights to trial by judge
or jury relating to any such disputes or claims.
11.2 Demand and Designation of Arbitrator. By written
notice to the other party (the "Demand Notice"), either party may
demand that a disputed matter be submitted to arbitration. In the
Demand Notice, the party shall specify the nature of the dispute
and shall list not less than three persons who the party believes
to possess the Required Qualifications (as hereinafter defined) to
serve as an arbitrator. Within twenty (20) days of the notice,
both parties shall agree upon the selection of an arbitrator, who
may or may not have appeared in the list in the Demand Notice but
who has the Required Qualifications. If at the end of the twenty
(20) day period the parties have been unable to agree upon a single
arbitrator, then (i) within (30) days of the Demand Notice, each
party shall nominate an arbitrator who has the Required
Qualifications, (ii) if at the end of the thirty (30) day period
one of the parties has failed to nominate an arbitrator, the party
who has made a nomination shall have an additional five (5) days to
designate on behalf of the party who failed to make a nomination an
additional arbitrator who has the Required Qualifications on behalf
of the party who failed to make a nomination, and (iii) within the
later of ninety (90) days following the Demand Notice or forty-five
(45) days following their appointment, the two arbitrators shall
select a third arbitrator who also possesses the qualifications
specified below. If the two arbitrators are not able to agree on
a third arbitrator, one shall be appointed by the American
Arbitration Association. The parties agree that the "Required
Qualifications" for any arbitrator shall include the following
characteristics: (i) each arbitrator must be reasonably
knowledgeable (through employment, education, general business or
professional experience, or otherwise) about the food and beverage
business being conducted by the Company; (ii) each arbitrator must
be reasonably familiar with acquisitions of businesses of similar
nature; (iii) each arbitrator must be reasonably proficient at
analyzing financial information; and (iv) each arbitrator shall
have no current or prior record of employment on a full or part
time basis or as a consultant with any party or affiliate of a
party. Any objections to the qualifications of the arbitrators not
resolved by mutual agreement shall also be a proper subject of
arbitration.
11.3 Discovery Procedures and Evidence. The
arbitrator(s) shall permit discovery, and upon application to the
arbitrator the parties may conduct discovery reasonably necessary
for full understanding of any legitimate issue raised in the
arbitration in accordance with the discovery rules of the Federal
Rules of Civil Procedure (the "FRCP") then in effect. However, the
arbitrators shall not be bound to follow formal rules of evidence
and may impose time limits during which discovery procedures may be
pursued.
11.4 Decision and Enforcement. The arbitrator(s) shall
decide the dispute or claim in accordance with the Rules applying
the substantive law of the State of New York; provided, however,
the arbitrators shall not be empowered to award punitive damages,
and their powers shall be further limited solely to the provision
of compensatory damages (except as specifically authorized by
Section 9.2) to the extent the arbitrator is, or the arbitrators
are, satisfied, as the case may be, that the claiming party has
adequately demonstrated actual direct damages. Compensatory
damages may include all costs of arbitration, including reasonable
attorney's fees and costs incurred in connection with the
arbitration or enforcement or collection of the arbitration award.
Judgment upon the arbitration award may be entered in or enforced
by any court having jurisdiction over the parties or their assets.
No party shall take any dispute or claim subject to arbitration
hereunder to any court until an arbitration decision has been made.
11.5 Fees of Arbitrators. If one arbitrator has been
selected by both the parties, each party shall pay 50% of the costs
and expenses of the arbitration. If three arbitrators have been
selected, each party shall bear the full cost of the arbitrator
that the party originally selected (or which was selected by the
other party on that party's behalf), and shall pay 50% of the cost
of the third arbitrator and 50% of the other costs of arbitration.
All such fees and costs shall be paid promptly as incurred, but
nothing in this paragraph shall preclude the arbitrators from
awarding such fees and costs as a part of compensatory damages as
provided in Section 11.4 in which case a prevailing party may
become entitled to partial or complete reimbursement of fees and
costs previously advanced.
11.6 Service of Process. The parties agree that service
of process and any notices required under this Section 11 or in
connection with any arbitration conducted under this Section 11 may
be given in the manner provided for the giving of notices under
this Agreement as provided in Section 12.3.
11.7 Conflict in Governing Standards. In the event of
any conflict between the provisions of (i) this Section 11, (ii)
the Rules, or (iii) the FRCP, the provisions of this Section 11
shall prevail. Only the discovery provisions of the FRCP are
referred to herein, but in the event such provisions are not
inconsistent with the provisions of this Section 11 but are
inconsistent with the Rules, the provisions of the FRCP shall
prevail. The arbitrator or arbitrators, as the case may be, shall
have the sole and exclusive right to interpret the provisions of
this Section 11.
12. General Provisions.
12.1 Schedules. The disclosures in the Schedules hereto
are to be taken as relating to the representations and warranties
as a whole without regard to reference to a specific section of the
Agreement.
12.2 Further Assurances. Each party hereto will, from
time to time after the Closing, execute and deliver, and use their
best efforts to cause other persons to execute and deliver, any
such further documents and instruments, and will do or use their
best efforts to cause to be done such other acts, as any party may
reasonably request more completely to consummate and make effective
the contemplated transactions.
12.3 Notices. Notices and other communications provided
for herein shall be in writing, shall be sent via overnight
courier, shall be deemed to have been given when received and shall
be sent to the following addresses, or such other addresses as may
be hereafter specified in a notice given in accordance with the
terms of this Section 12.3, and, in any event, a copy of all such
notices and communications shall be sent via telecopier to the fax
number set forth below:
Seller: Nestle Beverage Company
345 Spear Street
San Francisco, CA 94105
Attn: Legal Department
Fax: (415) 546-1412
Buyer: Chock Full O'Nuts Corporation
370 Lexington Avenue
New York, New York 10017
Attn: Mr. Joseph Breslin,
Chairman of the Board
Fax: (212) 679-9737
With a Copy to: Dreyer and Traub
101 Park Avenue
New York, New York 10178
Attn: George Lander, Esq.
Fax: (212) 984-6262
12.4 Assignment. This Agreement shall not be assignable
by any party without the prior written consent of the other party.
Nothing contained in this Agreement, express or implied, is
intended to confer upon any person or entity other than the parties
hereto and their successors in interest and permitted assignees,
any rights or remedies under or by reason of this Agreement unless
expressly so stated to the contrary.
12.5 Time is of the Essence. Time is of the essence in
respect to all provisions of this Agreement in which a definite
time for performance is specified, provided, however, that the
foregoing shall not be construed to limit or deprive a party of the
benefit of any grace or use period provided for in this Agreement.
12.6 Entire Agreement. This Agreement and the schedules,
exhibits and certificates specifically referred to herein or
required to be delivered pursuant to the terms hereof represent the
entire agreement of the parties hereto with respect to the subject
matter hereof, superseding all prior agreements, understandings,
discussions, negotiations and commitments of any kind. This
Agreement may not be amended or supplemented, nor may any rights
hereunder be waived, except in a writing signed by each of the
parties affected thereby.
12.7 Expenses. Except as set forth below or as otherwise
specified herein, each party hereto shall pay its own legal,
accounting, out-of-pocket and other expenses incident to this
Agreement and to any action taken by such party in preparation for
carrying this Agreement into effect. In addition, Seller shall be
responsible for payment of the fees charged by Lazard Freres &
Company in connection with this transaction.
12.8 Section Headings. The section headings in this
Agreement are included for convenience only, are not a part of this
Agreement and shall not be used in construing it.
12.9 Severability. In the event that any provision or
any part of any provision of this Agreement is held to be illegal,
invalid or unenforceable, such illegality, invalidity or
unenforceability shall not affect the validity or enforceability of
any other provision or part hereof.
12.10 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
12.11 Governing Law. The validity, interpretation,
enforceability, and performance of this Agreement shall be governed
by and construed in accordance with the laws of the State of New
York.
12.12 Survival of Representations and Covenants. The
respective representations and warranties and covenants of each
party to this Agreement shall: (a) not be deemed waived or
otherwise affected by any investigation made by or on behalf of the
other party, and (b) survive the Closing and the consummation of
the transactions contemplated hereby for eighteen (18) months
following the Closing, at which time they shall be of no further
force or effect, unless otherwise specified herein.
12.13 Definition of Knowledge. For purposes of Section
3 of this Agreement, all representations which are made as to the
"knowledge of Seller" shall be deemed to have been made based upon
the knowledge of either Tom Donnell, the President of the Company,
or John Masters, the Vice President of Seller in charge of Seller's
coffee division.
12.14 Special Adjustment with Respect to September
1992 Statements.
12.14.1 Operating Profit. The term "Operating Profit"
shall mean Gross Sales by the Company less only (i) discounts and
allowances, (ii) cost of goods (manufactured and purchased),
including variable distribution costs and factory fixed overheads,
(iii) depreciation on factory plant and equipment, vehicles,
buildings and fixtures and restaurant equipment, (iv) fixed
distribution and selling expenses, and (v) general and
administrative expenses. Intercompany charges, including royalties
and operational interest, have not been deducted from operating
profit in order to reflect the Company's stand alone results. Any
calculation of Operating Profit shall be computed in accordance
with GAAP, except as modified by the provisions of Schedule 3.7.1B,
in a manner which is consistent with the Opening Statement and with
historical financial information previously supplied by Seller to
Buyer. This calculation shall include adjustments which are
required or permitted by GAAP which management has normally made at
year end and which management believes are necessary to conform the
results to the requirements of GAAP. The parties hereto agree that
notwithstanding the preceding provisions of this Section, Operating
Profit will not be reduced for any amount relating to annual
bonuses paid or to be paid with respect to the 1992 year and no
amount shall be accrued or expensed with respect to such bonuses.
12.14.2 Preparation. Seller shall prepare and deliver
to Buyer at least two days prior to the Closing Date an Operating
Profit statement for the nine months ended September 30, 1992 (the
"Nine Month Operating Statement"). Buyer and its representatives
shall be entitled to review the work papers, schedules and
memoranda and other documents used in the preparation by Seller of
the Nine Month Operating Statement.
12.14.3 Price Adjustment. If the Operating Profit
shown on the Nine Month Operating Statement (the "Nine Month
Operating Profit") is less than $6,688,000, then the Purchase Price
shall be reduced by an amount equal to the difference between
$6,688,000 and the greater of the (i) the Nine Month Operating
Profit and (ii) $6,200,000. If the Nine Month Operating Profit is
less than $6,200,000, then the Purchase Price shall be further
reduced by the amount determined by multiplying (A) the difference
between $6,200,000 and the greater of (x) the Nine Month Operating
Profit and (y) $5,600,000 by (B) five. If the Nine Month Operating
Profit is less than the $5,600,000, then there shall be no further
reduction in the Purchase Price, but until the earlier of the tenth
day following Buyer's receipt of the Nine Month Operating Statement
or the Closing Date Buyer shall have the option exercisable by
written notice to Seller to terminate this Agreement. If a
termination occurs pursuant to the provisions of the preceding
sentence, neither party shall have any further obligation under
this Agreement of any kind and each shall bear any and all costs or
expenses incurred by it. If Buyer fails to exercise its right to
terminate in accordance with the preceding provisions of this
Section 12.14 on a timely basis, such right shall terminate and
shall be of no further force or effect.
12.14.4 Disputes. If Buyer shall in good faith
disagree with the calculation of the Nine Month Operating Profit
and the parties are unable to resolve the issues within three
business days following the Seller's receipt of a written notice of
objection setting forth in reasonable detail the nature of Buyer's
disagreement, then the matter shall be resolved by a nationally
recognized firm of independent public accountants agreed upon by
Buyer and Seller. The determination made by such firm shall be
conclusive, binding on, and non-appealable by, the parties hereto.
The fees and disbursements of such firm of independent public
accountants shall be divided and borne equally by Seller and Buyer.
12.15 Definition of Affiliate. For purposes of this
Agreement, the term "affiliate" when used in connection with a
company (e.g., Seller) shall mean a company (i) which is owned by
such company, either directly or indirectly, (ii) which owns such
company, either directly or indirectly, or (iii) which is under
common control with such company. For purposes of this definition,
a company shall be deemed to be in a position of ownership or
control of a company if it holds at least 51% of the outstanding
stock of such company.<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above mentioned.
BUYER: SELLER:
CHOCK FULL O'NUTS CORPORATION NESTLe BEVERAGE COMPANY,
a New York corporation a Delaware corporation
By: By:
Title: Title:
EXHIBIT 4 (A) (B)
CROSS-REFERENCE TABLE
CHOCK FULL O'NUTS CORPORATION
Trust Indenture
Act Section Indenture Section
310 (a) (1) 7.10
(a) (2) 7.10
(a) (3) Not Applicable
(a) (4) Not Applicable
(b) 7.08; 7.10; 12.02
(c) Not Applicable
311 (a) 7.11
(b) 7.11
(c) Not Applicable
312 (a) 2.05
(b) 12.03
(c) 12.03
313 (a) 7.06
(b) (1) Not Applicable
(b) (1) 7.06
(c) 7.06; 12.02
(d) 7.06
314 (a) 4.02; 12.02
(b) Not Applicable
(c) (1) 12.04
(c) (2) 12.04
(c) (3) Not Applicable
(d) Not Applicable
(e) 12.05
(f) Not Applicable
315 (a) 7.01 (b)
(b) 7.05; 12.02
(c) 7.01 (a)
(d) 7.01 ( c)
(e) 6.11
316 (a) (last sentence) 12.06
(a) (1) (A) 6.05
(a) (1) (B) 6.04
(a) (2) Not Applicable
(b) 6.07
317 (a) (1) 6.08
(a) (2) 6.09
(b) 2.04
318 (a) 12.01
Note: This Cross-Reference Table shall not, for any purpose, be deemed
to be a part of the Indenture.
CHOCK FULL O'NUTS CORPORATION
$50,000,000*
8% Convertible Subordinated Debentures due
September 15, 2006
INDENTURE
Dated as of September 15, 1986
MANUFACTURERS HANOVER TRUST COMPANY
* Subject to a 30-day option to purchase up to an additional $7,500,000
principal amount of Convertible Subordinated Debentures granted to
the underwriters by the Company.
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions 1
SECTION 1.02. Other Definitions 4
SECTION 1.03. Incorporation by Reference of Trust Indenture Act 4
SECTION 1.04. Rules of Construction 4
ARTICLE 2
SECTION 2.01. Dating; Incorporation of Form in Indenture 5
SECTION 2.02. Execution and Authentication 5
SECTION 2.03. Registrar and Agents 5
SECTION 2.04. Paying Agent to Hold Money in Trust 6
SECTION 2.05. Securityholder Lists 6
SECTION 2.06. Transfer and Exchange 6
SECTION 2.07. Replacement Securities 7
SECTION 2.08. Outstanding Securities 7
SECTION 2.09. Temporary Securities 7
SECTION 2.10. Cancellation 7
SECTION 2.11. Defaulted Interest 7
SECTION 2.12. Persons Deemed Owners 8
ARTICLE 3
REDEMPTION
SECTION 3.01. Notices to Trustee 8
SECTION 3.02. Selection of Securities to be Redeemed 8
SECTION 3.03. Notice of Redemption 8
SECTION 3.04. Effect of Notice of Redemption 9
SECTION 3.05. Deposit of Redemption Price 9
SECTION 3.06. Securities Redeemed in Part 9
SECTION 3.07. Mandatory Redemption Provisions 9
- - -i-
Page
ARTICLE 4
COVENANTS
SECTION 4.01. Payment of Securities 10
SECTION 4.02. SEC Reports 10
SECTION 4.03. Waiver of Stay, Extension or Usury Laws 10
SECTION 4.04. Limitation on Dividends and Other Distributions 10
SECTION 4.05 Liquidation 12
SECTION 4.06. Notice of Defaults 13
SECTION 4.07. Compliance Certificates 13
SECTION 4.08. Maintenance of Consolidated Net Worth 13
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, etc. 15
SECTION 5.02. Successor Corporation Substituted 15
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default 15
SECTION 6.02. Acceleration 16
SECTION 6.03. Other Remedies 17
SECTION 6.04. Waiver of Defaults and Events of Default 17
SECTION 6.05. Control by Majority 17
SECTION 6.06. Limitation on Suits 17
SECTION 6.07. Rights of Holders to Receive Payment 18
SECTION 6.08. Collection Suit by Trustee 18
SECTION 6.10. Priorities 19
SECTION 6.11. Undertaking for Costs 19
ARTICLE 7
TRUSTEE
SECTION 7.01. Duties of Trustee 19
SECTION 7.02. Rights of Trustee 20
SECTION 7.03. Individual Rights of Trustee 21
SECTION 7.04. Trustee's Disclaimer 21
SECTION 7.05. Notice of Defaults 21
SECTION 7.06. Reports by Trustee to Holders 21
SECTION 7.07. Compensation and Indemnity 21
SECTION 7.08. Replacement of Trustee 22
SECTION 7.09. Successor Trustee by Merger, etc. 22
SECTION 7.10. Eligibility; Disqualification 22
SECTION 7.11. Preferential Collection of Claims Against Company 23
- - -ii-
Page
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01. Satisfaction, Discharge and Defeasance of the Securities23
SECTION 8.02 Satisfaction and Discharge of Indenture 23
SECTION 8.03. Survival of Certain Obligations 24
SECTION 8.04. Application of Trust Money 24
SECTION 8.05 Paying Agent to Repay Monies Held 24
SECTION 8.06. Return of Unclaimed Monies 25
SECTION 8.07. Reinstatement 25
ARTICLE 9
AMENDMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders 25
SECTION 9.02. With Consent of Holders 26
SECTION 9.03. Compliance with Trust Indenture Act 26
SECTION 9.04. Revocation and Effect of Consents 26
SECTION 9.05 Notation on or Exchange of Securities 27
SECTION 9.06. Trustee to Sign Amendments, etc. 27
ARTICLE 10
SUBORDINATION
SECTION 10.01. Securities Subordinated to Senior Indebtedness 27
SECTION 10.02. Company Not to Make Payments with Respect to
Securities in Certain Circumstances 27
SECTION 10.03. Securities Subordinated to Prior Payment of All
Senior Indebtedness on Dissolution, Liquidation or
Reorganization of Company 28
SECTION 10.04. Securityholders to be Subrogated to Rights of Holders
or Senior Indebtedness 30
SECTION 10.05. Obligation of the Company Unconditional 30
SECTION 10.06. Trustee Entitled to Assume Payments Not Prohibited
in Absence of Notice 31
SECTION 10.07. Application by Trustee of Monies Deposited with it 31
SECTION 10.08. Continuing Offer of Subordination 31
SECTION 10.09. Subordination Rights Not Impaired by Acts or Omissions
of Company or Holders of Senior Indebtedness 32
SECTION 10.10. Securityholders Authorize Trustee to Effectuate
Subordination of Securities 32
SECTION 10.11. Right of Trustee to Hold Senior Indebtedness; Trustee
Owes No Fiduciary Duty to Holders of Senior
Indebtedness 33
SECTION 10.12. Article 10 Not to Prevent Events of Default 33
SECTION 10.13. Officers' Certificate 33
SECTION 10.14. Paying Agents Other than the Trustee 33
- - -iii-
Page
ARTICLE 11
CONVERSION OF DEBENTURES
SECTION 11.01. Right of Conversion; Conversion Price 33
SECTION 11.02. Issuance of Common Stock on Conversion 34
SECTION 11.03. No Adjustment for Interest or Dividends 34
SECTION 11.04. Adjustment of Conversion Price 35
SECTION 11.05. No Fractional Shares 38
SECTION 11.06. Effect of Reclassification, Consolidation, Merger,
Sale, Lease or Conveyance 39
SECTION 11.07. Covenant to Reserve Shares 40
SECTION 11.08. Compliance with Legal and Governmental Requirements 40
SECTION 11.09. Payment of Taxes 41
SECTION 11.10. Notice of Certain Events 41
SECTION 11.11. Responsibility of Trustee and Conversion Agent 41
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. Trust Indenture Act Controls 42
SECTION 12.02. Notices 42
SECTION 12.03. Communications by Holders with other Holders 43
SECTION 12.04. Certificate and Opinion as to Conditions Precedent 43
SECTION 12.05. Statements Required in Certificate and Opinion 43
SECTION 12.06. When Treasury Securities Disregarded 43
SECTION 12.07. Rules by Trustee and Agents 44
SECTION 12.08. Legal Holidays 44
SECTION 12.09. Governing Law 44
SECTION 12.10. No Adverse Interpretation of Other Agreements 44
SECTION 12.11. No Recourse Against Others 44
SECTION 12.12. Successors 44
SECTION 12.13. Multiple Counterparts 44
SECTION 12.14. Table of Contents, Headings, etc. 44
SECTION 12.15. Severability 44
Signature 45
Exhibit A - Form of Security
- - -iv-
INDENTURE dated as of September 15, 1986 between CHOCK FULL O'NUTS
CORPORATION,a New York corporation ("Company") and MANUFACTURERS HANOVER
TRUST COMPANY, a New York corporation ("Trustee").
Each party agrees as follows for the benefits of the other party and
for the equal and ratable benefit of the Holders of the Company's 8%
Convertible Subordinated Debentures due September 15, 2006 ("Securities"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
SECTION 1.01 Definitions
"Affiliate" means any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company.
"Agent" means any Registrar, Paying Agent, Conversion Agent,
co-registrar or agent for service of notices and demands, See Section 2.03.
"Board of Directors" means the Board of Directors of the Company or
any committee of the Board.
"Business Day" means a day that is not a Legal Holiday.
"Capital Stock" means any and all shares or other equivalents
(however designated) of corporate stock except Redeemable Preferred Stock.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to the Indenture and thereafter means
the successor.
"Consolidated Net Income" means, for any period, the aggregate of
the Net Income of the Company and its subsidiaries for such period
determined in accordance with generally accepted accounting principles
consistently applied, provided that (i) the Net Income of any person
which is not a Subsidiary and which is consolidated with the Company or
is accounted for by the Company by the equity method of accounting shall
be included only to the extent of the amount of cash dividends or cash
distributions paid to the Company or a Subsidiary, (ii) the Net Income
of any person acquired by the Company or a Subsidiary in a pooling of
interests transaction for any period prior to the date of such acquisition
shall be excluded and (iii) the Net Income of any Subsidiary that is
subject to restrictions, direct or indirect, on the payment of dividends
or the making of distributions to the Company shall be excluded to the
extent of such restrictions.
"Consolidated Net Worth", as applied to any Person, means the
consolidated Stockholders' Equity (exclusive any Redeemable Preferred
Stock) of such Person and its consolidated subsidiaries.
"Corporate Trust Office" means the office of the Trustee at which
at any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is
located at 600 Fifth Avenue, New York, New York 10020.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
1
"Holder" or "Securityholder" means the person in whose name a
Security is registered on the Registrar's books.
"Indenture" means this Indenture as amended or supplemented from
time to time.
"Net Income" of any person means the net income (loss) of such
person, determined in accordance with generally accepted accounting
principles consistently applied; excluding, however, from the determination
of Net Income any gain (but not loss) realized upon the sale or other
disposition (including, without limitation, dispositions pursuant to Sale
and Leaseback transactions) of any real property or equipment of such
person, which is not sold or otherwise disposed of in the ordinary course
of business, or of any Capital Stock of the company or a Subsidiary owned
by such person except to the extent that any such gain over the net book
value of any such assets is represented by cash or fair value of other
consideration as such value is determined in good faith by the Board of
Directors of the Company.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, the Secretary or the Controller of the Company.
"Officers' Certificate" means a written opinion from legal counsel
who is acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee. See Sections 12.04 and 12.05.
"Opinion of Counsel" means a written opinion from legal counsel
who is acceptable to the Trustee. The counsel may be an employee or the
counsel to the Company or the Trustee. See Sections 12.04 and 12.05.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Principal" of a Security means the principal of the Security plus,
when appropriate, the premium, if any, on the Security.
"Redeemable Preferred Stock" mean (I) preferred stock of the
Company which is subject to mandatory redemption or which is redeemable
at the option of the holder thereof or (ii) corporate stock which may be
exchanged or converted, directly or indirectly, into any security other
than (A) Common Stock or (B) non-Redeemable Preferred Stock until
extinguishment of the exchange rights, either by the terms of such
Stock or pursuant to an irrevocable election the Company.
"Redemption Date" when used with respect to any Security to be
redeemed means the date fixed for such redemption pursuant to this Indenture.
"Redemption Price", when used with respect to any Securities to be
redeemed, means the price fixed for such redemption pursuant to this
Indenture as set forth in the form of Security annexed hereto as Exhibit A.
"Sale and Lease-Back Transaction" means any arrangement with any
person (other than the Company or a Subsidiary), or to which any such
person is a party, providing for the leasing to the Company or a
Subsidiary of any property owned by the Company or a Subsidiary and
sold or transferred by the Company or such Subsidiary to such person or
to any other person (other than the Company or Subsidiary).
"SEC" means the Securities and Exchange Commission.
"Securities" means the securities that are issued under this
Indenture as amended or supplemented from time to time, pursuant to this
Indenture.
2
"Senior Indebtedness" means the principal, premium, if any, and
interest on Indebtedness of the Company (including, without limitation,
that certain Guaranty Agreement between the Company and the First Missouri
Bank and Trust Company dated as of December 1, 1984, that certain Loan
Agreement between the Company as successor to Chock Full O'Nuts Coffee
Corporation ("Coffee") and the Industrial Development Authority of the
City of St. Louis, Missouri ("Authority") dated as of December 1, 1984,
and that certain Promissory Note in the original principal amount of
$2,000,000 made on December 28, 1984 payable to the Authority to which
the Company is the obligor as the successor to Coffee) outstanding at
any time other than the Securities, Indebtedness of the Company to a
Subsidiary for money borrowed or advanced from any Subsidiary and
Indebtedness which by its terms expressly provides that it is not
superior in right of payment to the Securities.
"Indebtedness" with respect any person means:
(1) any debt (I) for borrowed money, or (ii) evidenced by a bond, note,
debenture, or similar instrument (including purchase money obligations)
given in connection with or assumed as all or a part of the consideration
for the acquisition of property or assets, whether by purchase, merger,
consolidation or otherwise, but shall not include any trade accounts
payable, or (iii) which is a direct or indirect obligation which arises
as a result of banker's acceptances or drawings under bank letters of
credit issued to secure obligations of such person, whether contingent or
otherwise;
(2) any debt of others described in the preceding clause (1) which such
person has guaranteed or for which it is otherwise liable;
(3) any obligation secured by a lien to which the property or assets of
such person are subject, whether or not the obligations secured thereby
shall have been assumed by or shall otherwise be such person's legal
liability;
(4) the obligation of such person as lessee under any lease of property
which is reflected on such person's balance sheet as a capitalized lease;
and
(5) any deferral, amendment, renewal, extension, supplement or refunding
of any liability of the kind described in any of the preceding
clauses (1), (2), (3) and (4), and
"Stockholders' Equity" as applied to any Person means such Person's
stockholders' equity as determined according to generally accepted
accounting principles, but shall not include any amounts attributable to
securities which do not constitute Capital Stock.
"Subsidiary" means a corporation the majority of whose voting stock
is owned by the Company or a Subsidiary. Voting stock is Capital Stock
having voting power under ordinary circumstances to elect directors.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
77aaa-77bbbb) as in effect ion the date of this Indenture.
"Trustee" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture an thereafter means the
successor.
"Trust Officer" means any officer or assistant officer of the
Trustee assigned by the Trustee to administer its corporate trust matters.
"United States" means the United States of America.
3
SECTION 1.02 Other Definitions.
Term Defined in Section
"Bankruptcy Law" 6.01
"Conversion Agent" 2.03
"Current Market Price" 11.04 (g)
"Custodian" 6.01
"Event of Default" 6.01
"Legal Holiday" 12.08
"Paying Agent" 2.03
"Registrar" 2.03
"US Government Obligations" 8.01
SECTION 1.03 Incorporation Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"Commission" means to SEC.
"indenture securities" means the Securities.
"indenture security holder" means Securityholder.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any
other obligor on the indenture securities.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them.
SECTION 1.04 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles in effect
on the date hereof;
(3) "or" is not exclusive; and
(4) words in the singular include the plural, and in the plural
include the singular.
4
ARTICLE 2
THE SECURITIES
SECTION 2.01 Dating; Incorporated of Form in Indenture.
The Securities and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A which is incorporated in
and made part of this Indenture. The Securities may have notations,
legends or endorsements required by law, stock exchange rule, agreements
to which the Company is subject, or usage. The Company shall approve the
form of the Securities and any notation, legend or endorsement on them.
Each Security shall be dated the date of its authentication.
SECTION 2.02 Execution and Authentication.
Two Officers shall sign the Securities for the Company by manual or
facsimile signature. The Company's seal shall be impressed, affixed,
imprinted or reproduced on the Securities and may by in facsimile form.
If an Officer whose signature is on a Security no longer holds that
office at the tine the Trustee authenticates the Security, the Security
shall be nevertheless valid.
A Security shall not be valid until the Trustee manually signs the
certificate of authentication on the Security on the Security. Such
signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee shall authenticate Securities for original issue in the
aggregate principal amount of up to $57,500,000 upon the execution of the
Indenture and a written order or orders of the Company signed by two
Officers or by an Officer and an Assistant Treasurer of the Company. The
aggregate principal amount of Securities outstanding at any time may not
exceed that amount except as provided in Section 2.07.
The Trustee may appoint an authenticating agent to authenticate
Securities. An authenticating agent may authenticate Securities whenever
the Trustee may do so. Each reference in this Indenture to authentication
by the Trustee includes authentication by such agent. An authenticating
agent has the same rights as an Agent to deal with the Company or an
Affiliate.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 and any integral multiple
thereof.
SECTION 2.03 Registrar and Agents.
The Company shall maintain an office or agency where Securities
may be presented for registration of transfer or for exchange ("Registrar"),
an office or agency where Securities may be presented for payment ("Paying
Agent"), an office or agency where Securities may be presented for conversion
("Conversion Agent") and an office or agency where notices and demands to or
upon the Company in respect of the Securities and this Indenture may be
served. The Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company may have one or more co-registrars,
one of more additional paying agents and one or more additional conversion
agents. The Company or any Subsidiary may act as Paying Agent and/or
Conversion Agent. The term "Paying Agent" includes any additional paying
agent and the term "Conversion Agent" includes any additional conversion
agent.
5
The Company shall enter into an appropriate agency agreement with
any Registrar, Paying Agent, Conversion Agent or co-registrar not a party to
this Indenture. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Company shall notify the Trustee
of the name and address of any such Agent. If the company fails to maintain
a Registrar, Paying Agent, Conversion Agent or agent for service of notices
and demands, or fails to give the foregoing notice the Trustee shall act as
such.
The Company initially appoints the Trustee as Registrar, Paying
Agent, Conversion Agent and agent for service of notices and demands.
SECTION 2.04 Paying Agent to Hold Money in Trust.
On or prior to each due date of the principal of and interest on
any Securities, the Company shall deposit with each Paying Agent a sum
sufficient to pay such principal, premium, if any, and interest so becoming
due. The Company shall require each Paying Agent to agree in writing that
it will hold in trust for the benefit of Securityholders or the Trustee all
money held by the Paying Agent for the payment of, premium if any, or
interest on the Securities and to notify the Trustee of any default by
the Company (or any other obligor on the Securities) in making any such
payment. If the company or a Subsidiary acts as Paying Agent, it shall
on or before each due date of the principal of, premium, if any, or interest
on any Securities segregate the money and hold it as a separate trust fund.
The Company at any time may require a Paying Agent to pay all money held by
it to the Trustee and the Trustee may at any time during the continuance of
any payment default, upon written request to a Paying Agent, require such
Paying Agent to forthwith pay to the Trustee all sums so held in trust by
such Paying Agent. Upon doing so, the Paying Agent (other than the Company)
shall have no further liability for the money.
SECTION 2.05 Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses
of Securityholders If the Trustee is not the Registrar, the Company shall
furnish to the Trustee on or before each semiannual interest payment date
and at such times as the Trustee may request in writing a list in such form
an as of such date as the Trustee may reasonably require of the names and
addresses of Securityholders.
SECTION 2.06 Transfer and Exchange.
When a Security is presented to the Registrar or a co-registrar with
a request to register the transfer, the Registrar or co-registrar shall
register the transfer as requested and when Securities are presented to
the Registrar or a co-registrar with a request to exchange them for an
equal principal amount of Securities of other authorized denominations,
the Registrar shall make the exchange as requested provided that every
Security presented or surrendered for registration of transfer or exchange
shall be duly endorsed, or by accompanied by a written instrument of transfer
inform satisfactory to the Company and the Registrar duly executed by the
Holder thereof or his attorney duly authorized in writing. To permit
transfers and exchanges, the Company shall execute and the Trustee shall
authenticate Securities at the Registrar's or co-registrar's request.
The Company may charge a reasonable fee for any transfer or exchange and
may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto, but this
provision shall not apply to any exchange pursuant to Section 2.09, 3.06,
9.05, or 11.02.
6
SECTION 2.07 Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if the
Holder of a Security presents evidence to the satisfaction of the
Company and the Trustee that the Security has been lost, destroyed
or wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Security if the requirements of the
Trustee and the Company are met. An indemnity bond may be required
that is sufficient in the judgment of the Company and the Trustee to
protect the Company, the Trustee or any Agent from any loss which
any of them may suffer if a Security is replaced. The Company may charge
for its expense in replacing a Security.
SECTION 2.08 Outstanding Securities.
Securities outstanding at any time are all Securities authenticated
by the Trustee except for those canceled by it and those described in this
Section 2.08 as not outstanding.
If a Security is replaced pursuant to Section 2.07, it ceases to
be outstanding until the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent (other than the Company or a Subsidiary) holds
on a Redemption Date or maturity date money deposited with it by or on
behalf of the Company sufficient to pay the principal of the accrued
interest on Securities payable on that date, then on and after that date
such securities cease to be outstanding and interest on them ceases to
accrue.
Subject to Section 12.06, a Security does not cease to be
outstanding because the Company or an Affiliate holds the Security.
SECTION 2.09 Temporary Securities.
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities but
may have variations that the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Securities in exchange for temporary
Securities.
SECTION 2.10 Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar, the Paying Agent and the Conversion Agent
shall forward to the trustee any Securities surrendered to them for
transfer, exchange or payment. The Trustee shall cancel all securities
surrendered for transfer, exchange, payment or cancellation and destroy
canceled Securities and deliver a certificate of such destruction to the
Company unless the Company directs the Trustee to deliver canceled Securities
to the Company. Subject to Section 2.07, the Company may not issue
Securities to replace Securities that it has previously paid or delivered to
the Trustee for cancellation.
SECTION 2.11 Defaulted Interest.
If the Company defaults in a payment of interest on the Securities,
it shall pay the defaulted interest to the Persons who are Security Holders
on a subsequent special record date. The Company shall fix the special
record date and payment date in a manner satisfactory to the Trustee. At
least 15 days before the special record date, the Company shall mail to
each Securityholder a notice that states the special record date, the
payment date, and the amount of defaulted interest to be paid. The Company
may pay defaulted interest in any other lawful manner.
7
SECTION 2.12 Persons Deemed Owners.
Prior to presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name such Security is registered as the owner of
such Security and neither the Company, the Trustee nor any agent of the
Company or the Trustee shall be affected by notice to the contrary.
ARTICLE 3
REDEMPTION
SECTION 3.01 Notices to Trustee.
If the Company wants to redeem the Securities pursuant to Paragraph 5
of the Securities, it shall notify the Trustee of the Redemption Date and
the principal amount of Securities to be redeemed.
If the Company wants to reduce the principal amount of Securities to
be acquired pursuant to Paragraph 6 of the Securities, it shall notify the
Trustee of the amount of the reduction and the basis for it. If the Company
wants to credit against any such redemption Securities it has not previously
delivered to the Trustee for cancellation, it shall deliver the Securities
with such notice.
The Company shall give each notice provided for in this Section 3.01
at least 60 days before the Redemption Date or such other period as the
Company and the Trustee may agree.
SECTION 3.02 Selection of Securities to be Redeemed.
If less than all the Securities are to be redeemed, the Trustee
shall select the Securities to be redeemed by a method the Trustee
considers fair and appropriate. The Trustee shall make the selection from
Securities outstanding and not previously called for redemption. The
Trustee may select for redemption portions of the principal of Securities
that have denominations larger than $1,000. Securities and portions of them
it selects shall be in amounts of $1,000 or multiples of $1,000. Provisions
of this Indenture that apply to Securities called for redemption also apply
to portions of Securities called for redemption.
SECTION 3.03 Notice of Redemption.
At least 15 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first-class mail to each
Holder of Securities to be redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) The Redemption Date;
(2) the Redemption Price;
(3) the then current conversion price;
(4) the name and address of the Paying Agent and the Conversion
Agent;
(5) that Securities called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(6) that interest on Securities called redemption ceases to
accrue on and after the Redemption Date;
8
(7) Whether the redemption is pursuant to the optional or
mandatory redemption provisions of the Securities;
(8) that the right to convert the Securities as provided in
Article 11 expires at the close of business on the Business Day prior to
the Redemption Date; and
(9) if any Security is being redeemed in part, the portion of
the principal amount of such Security to be redeemed and that, after the
Redemption Date, upon surrender of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion
thereof will be issued.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense.
SECTION 3.04 Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for redemption
become due and payable on the Redemption Date and at the Redemption Price.
Upon surrender to the Paying Agent, such Securities shall be paid at the
Redemption Price, plus accrued interest to the Redemption Date.
SECTION 3.05 Deposit of Redemption Price.
On or prior to the Redemption Date, the Company shall deposit with
the Paying Agent (or if the Company or a Subsidiary is the Paying Agent,
shall segregate and hold in trust or cause such Subsidiary to segregate ad
hold in trust) money sufficient to pay the Redemption Price of and accrued
interest on all Securities to be redeemed on that date.
SECTION 3.06 Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Trustee
shall authenticate for the Holder a new Security equal in principal amount
to the unredeemed portion of the Security surrendered.
SECTION 3.07 Mandatory Redemption Provisions.
The Company shall redeem 7.5% of the principal amount of the
Securities originally issued, on the dates, upon the terms and subject
to the conditions set forth in Paragraph 6 of the Securities. Any such
redemption shall be made pursuant to the provisions of the Article.
9
ARTICLE 4
COVENANTS
SECTION 4.01 Payment of the Securities.
The Company shall pay the principal of, premium, if any, and interest
on the Securities on the dates and in the manner provide in the Securities
and this Indenture. An installment of principal, premium, if any, or
interest shall be considered paid on the date it is due if the Trustee or
Paying Agent (other than the Company or a Subsidiary) holds on that date
money designated for and sufficient to pay the installment. The Company
shall pay interest on overdue principal at the rate borne by the Securities;
it shall pay interest on, including post-petition interest in the event of a
proceeding under the Bankruptcy Laws, overdue installments of interest at
the same rate to the extent lawful.
SECTION 4.02 SEC Reports.
The Company shall file with the Trustee, within 15 days after it
files them with the SEC, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the
foregoing as the SEC may by rules and regulations prescribe) which the
Company is required to file with the SEC pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended. The Company shall also
comply with the other provision of TIA 314(a).
So long as the Securities remain outstanding, the Company shall
cause its annual reports to shareholders (containing audited financial
statements) and any other financial reports furnished by it to shareholders
to be mailed to the Holders at their addresses appearing in the register of
Securities maintained by the Registrar.
SECTION 4.03 Waiver of Stay, Extension or Usuary Laws,
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law or any
usury law or other law that would prohibit or forgive the Company from
paying all or any portion of the principal of or interest on the Securities
as contemplated herein, wherever enacted, now or at any time hereafter in
force, or that may affect the covenants or the performance of this Indenture;
and (to the extent that it may lawfully do so) that Company hereby expressly
waives all benefit or advantage of any such law, and covenants that it will
not hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
SECTION 4.04 Limitation on Dividends and Other Distributions.
The Company will not declare or pay any dividend or make any
distribution on its Redeemable Preferred Stock held by Subsidiaries or on
its Capital Stock or to holders of its Capital Stock (other than dividends
or distributions payable in Capital Stock of the Company), or purchase,
redeem or otherwise acquire or retire for value any of its Capital Stock or
Redeemable Preferred Stock held by Subsidiaries or any warrants, right or
options to purchase or acquire any shares of its Capital Stock or Redeemable
Preferred Stock held by Subsidiaries or permit any Subsidiary to purchase,
redeem or otherwise acquire or retire for value any such Capital Stock or
Redeemable Preferred Stock so held or any warrants, rights or options to
purchase or acquire any shares of its Capital Stock or Redeemable Preferred
Stock so held:
10
(1) if at the time of such action an Event of Default has occurred and
it continuing or would exist immediately after giving effect to such action;
or
(2) if, upon giving effect to such dividend, distribution, purchase,
redemption, other acquisition or retirement, the aggregate amount expended
for all such purposes (the amount expended for such distribution, if other
than in cash, to be determined by the Board of Directors, whose determination
shall be conclusive and evidenced by a resolution of the Board of Directors
filed with the Trustee) subsequent to July 31, 1986, exceeds the sum of:
(A) 50% of aggregate Consolidated Net Income accrued on a cumulative
basis subsequent to July 31, 1986 (or, in case such aggregate Consolidated
Net Income shall be a deficit, minus 100% of such deficit);
(B) the aggregate of the net proceeds received by the Company from the
issue or sale of its Capital Stock subsequent to July 31, 1986, (other than
to a Subsidiary) including, without limitation, any such issue or sale in
connection with the conversion of any Indebtedness (including the Securities)
or of any Redeemable Preferred Stock of the Company, said net proceeds being
deemed for the purpose of this Section 4.04 to equal the aggregate of (a)
the cash, if any, received by the Company from such issue or sale, plus (b)
the fair value of the consideration other than cash (as determined by the
Board of Directors, whose determination shall be conclusive and evidence
by the resolution of the Board of Directors filed with the Trustee) received
by the Company from such issue or sale, and
(C) $5,000,000
provided, however, that the provisions of the Section 4.04 shall not prevent
(I) the payment of any dividend within 60 days after the date of declaration
thereof, it at said date of declaration such payment complied with the
provisions hereof; or (ii) the retirement of any shares of the Company's
Capital Stock by exchange for, or upon conversion of, or out of the proceeds
of the substantially concurrent sale (other than to a Subsidiary) of shares
of its Capital Stock, and neither such retirement nor the proceeds of any
such sale or exchange shall be included in any computation made under this
Section 4.04.
For purposes of this Section 4.04, a distribution to holders of the
Company's Capital Stock or Redeemable Preferred Stock held by subsidiaries
of (i) shares of Capital Stock of any subsidiary or Redeemable Preferred
Stock of any Subsidiary or similar securities of any Subsidiary of the
Company, or (ii) other assets of the Company, without, in either case, the
receipt of equivalent consideration therefor shall be regarded as the
equivalent of a cash dividend equal to the excess of the fair market value
of the shares or other assets being so distributed at the time of such
distribution over the consideration, if any, received therefor. The fair
market value of such shares or other assets and the value of any
consideration therefore other than cash shall be determined by the Board of
Directors, whose determination shall be conclusive and evidenced by a
resolution of the Board of Directors filed with the Trustee.
For purposes of this Section 4.04, the net proceeds from the issuance
of shares of Capital Stock of the Company issued (a) upon conversion of debt
securities shall be deemed to be the net book value of such debt securities
or Redeemable Preferred Stock at the date of conversion (plus the additional
amount required to be paid upon such conversion, if any) less any cash
payment on account of fractional shares of (b) upon
11
exercise of warrants, rights and options shall be deemed to be the exercise
price thereof less any cash payment on account of fractional shares. For
purposes of this paragraph, the "net book value" of a security shall be the
amount received by the Company on the issuance of such security, as adjusted
on the books of the Company to the date of conversion. The foregoing shall
not be interpreted to limit the authority of the Board of Directors, as set
forth above, to determine the value of other securities of the Company or
other property received as net proceeds, provided, however, that the value
of the other property shall not exceed the net book value of such property.
Before the Company pays any dividend or makes any distribution on
its Capital Stock or Redeemable Preferred Stock held by Subsidiaries (other
than dividends or distributions payable in Capital Stock of the Company), or
purchases, redeems or otherwise acquires or retires for value any Capital
Stock or Redeemable Preferred Stock or permits any Subsidiary to purchase,
redeem or otherwise acquire or retire for value any such Capital Stock or
Redeemable Preferred Stock, the Company shall file with the Trustee an
Officers' Certificate (upon which the Trustee may conclusively rely) which
shall conform to the provisions of Section 12.04 and 12.05 hereof and which
shall set for the applicable computation required by subdivision (2) of this
Section 4.04.
SECTION 4.05 Liquidation.
The Board of Directors or the Stockholders of the Company may not
adopt a plan of liquidation which plan provides for, contemplates or the
effectuation of which is preceded by (A) the sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company
otherwise than substantially as an entirety (Section 5.01 of the Indenture
being the Section which governs any such sale, lease, conveyance or other
disposition substantially as an entirety), and (B) the distribution of all
or substantially all of the proceeds of such sale lease, conveyance or other
disposition and of the remaining assets of the Company to the holders of
Capital Stock of the Company, unless the Company shall in connection with
the adoption of such plan make provision for, or agree that prior to making
any liquidating distributions it will make provision for, the satisfaction of
the Company's obligations hereunder and under the Securities as to the
payment of principal and interest. The Company shall be deemed to make
provision for such payments only if (i) the Company delivers in trust to
the Trustee U.S. Government Obligations in an aggregate principal amount
equal to the unpaid principal amount of the Securities and having maturities
and interest payment dates on or before the dates on which the principal of
and interest on the Securities are due, or (ii) there is an express
assumption of the due and punctual payment of the Company's obligations
hereunder and under the Securities and performance and observance of all
covenants and conditions to be performed by the Company hereunder, by the
execution and delivery of a supplemental indenture in form satisfactory to
the Trustee by a person which acquires, or will acquire (otherwise than
pursuant to a lease) a portion of the assets of the Company, provided that
at the time of such assumption no default or Event of Default shall have
occurred and be continuing and such person will have a Consolidated Net
Worth (immediately after the date of such express assumption) and pro-forma
aggregate earnings adjusted to reflect the acquisition for such person's
four full fiscal quarters (immediately preceding the date of such express
assumption) equal to not less than the Consolidated Net Worth of the Company
(immediately preceding the date of such express assumption) and the aggregate
Net Income of the Company and its consolidated subsidiaries (for its four
full fiscal quarters immediately preceding the date of such express
assumption), respectively, and which is organized under the laws of the
United States, any State thereof or the District of Columbia; provided,
further, that the Company shall not make any liquidating distribution until
after the company shall have certified to the Trustee with an Officers'
Certificate at least five days prior to the making of any liquidating
distribution that it has complied with the provisions of this Section 4.05.
In the Event that the Company shall liquidate in compliance with clauses (A)
or (B) above, it shall be relieved of all obligations hereunder except as set
forth below.
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However, in the case of a liquidation pursuant to clause (A), the
Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08,
8.06 and 8.07 shall survive until the Securities are no longer outstanding.
Thereafter the Company's obligations in Section 7.07 shall survive.
SECTION 4.06 Notice of Defaults.
In the event that any Event of Default under Section 6.01(4) hereof
occurs, the Company shall promptly give written notice to the Trustee of
such Default. The Company will deliver to the Trustee, within 5 days after
the occurrence thereof, written notice of any event which with the giving of
notice and/or the lapse of time would become an Event of Default under
Section 6.01(4) hereof.
SECTION 4.07 Compliance Certificates.
The Company shall deliver to the Trustee within 120 days after the
end of each fiscal year of the Company, which as of the date of this
Indenture is July 31, an Officers' Certificate stating whether or not the
signers know of any Default or Events of Default. If they do know of such
a Default or Event of Default, the certificate shall describe the Default
or Event of Default and the efforts to remedy the same. The certificate need
not comply with Section 12.05.
SECTION 4.08 Maintenance of Consolidated Net Worth.
If the Company's Consolidated Net Worth at the end of each of any
two consecutive fiscal quarters is less than 50% of the Consolidated Net
Worth of the Company at July 31, 1986, then the Company shall make an offer
to acquire (an "Offer") on the last day of the next following fiscal quarter
(the "Accelerated Payment Date") 7.5% of the principal amount of Securities
originally issued (or such lesser amount as may be outstanding at the time)
at a purchase price of 100% of principal amount plus accrued interest to the
Accelerated Payment Date. The Company may credit against its obligation to
offer to repurchase Securities hereunder the principal amount of Securities
acquired by the Company and surrendered for cancellation through purchase,
redemption (otherwise than pursuant to Paragraph 6 of the Securities) or
exchange, or upon conversation, and which were not previously used as a
credit against (I) the redemption obligation set forth in Paragraph 6 of the
Securities or (ii) any obligation to offer to repurchase Securities pursuant
to this Section. In no event shall the failure to meet the minimum
Consolidated Net Worth stated above at the end of any fiscal quarter be
counted toward the making of more than one Offer hereunder.
The Company shall provide the Trustee with notice of the Offer at
least 30 days before any such Accelerated Payment Date (unless shorter notice
shall be acceptable to the Trustee) but in no case less than 15 days before
the notice of any Offer is mailed to Holders. The Company shall notify the
Trustee promptly after the occurrence of any of the events specified in this
Section 4.08
Notice of an Offer shall be mailed by the Trustee to all Holders not
less than 15 days nor more than 60 days before the Accelerated Payment Date
to the Holders of the Securities at their last registered addresses. The
Offer shall remain open from the time of mailing until five days before the
Accelerated Payment Date. The notice shall be accompanied by a copy of the
information regarding the Company required to contained in a Quarterly Report
on Form 10-Q for the second fiscal quarter referred to above if such second
fiscal quarter is one of the Company's first three fiscal quarters. If such
second fiscal quarter is the Company's last fiscal quarter, a copy of the
information required to be contained in an Annual Report to Shareholders
pursuant to Rule 14a-3 under the Securities Exchange Act of 1934 for the
fiscal year ending with such second fiscal shall either accompany the notice
or be delivered to Holders not less than 15 days before the Accelerated
Payment Date. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Securities pursuant to the Offer.
The notice, which shall govern the terms of the offer, shall state:
13
(1) that the offer is being made pursuant to this Section 4.08;
(2) the purchase price and the Accelerated Payment Date;
(3) that any Security not tendered or accepted for payment will
continue to accrue interest;
(4) that any Security accepted for payment pursuant to the Offer
shall cease to accrue interest after the Accelerated Payment Date;
(5) that Holders electing to have a Security purchased pursuant
to an Offer will be required to surrender the Security, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the
Security completed, to the Paying Agent at the address specified in the
notice at least five days before the Accelerated Payment Date:
(6) that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than three Business Days prior to the
Accelerated Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Security
the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have the Security purchased; and
(7) that Holders whose Securities were purchased only in part
will be issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered.
Before an Accelerated Payment Date, the Company shall (i) accept for
payment on a pro rata basis (rounded to the nearest $1,000) Securities on
portions thereof tendered pursuant to the Offer; provided, however, that all
Securities or portions thereof accepted for payment shall be amounts of
$1,000 or multiples of $1,000, (ii) deposit with the Paying Agent money
sufficient to pay the purchase price of all Securities or portions thereof
so accepted and (iii) deliver to the Trustee Securities so accepted together
with an Officer's Certificate stating the Securities or portions thereof
accepted for payment by the Company. The Paying Agent shall promptly mail
or deliver to Holders of Securities so accepted payment in an amount equal
to the purchase price, and the Trustee shall promptly authenticate and mail
or deliver to such Holders a new Security equal in principal amount to any
unpurchased portion of the Security surrendered. Any Securities not so
accepted shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company will publicly announce by a press release the results
of the Offer on the Accelerated Payment Date. For purposes of this
Section 4.08, the Trustee shall act as the Paying Agent.
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ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01 When Company May Merge, etc.
The Company shall not consolidate with or merge into, or transfer all
or substantially all of its assets to , another Person unless (I) the
resulting, surviving or transferee Person is a corporation which assumes by
supplemental indenture all the obligations of the Company under the
Securities and this Indenture; (ii) such corporation is organized and
existing under the laws of the United States, a State thereof or the
District of Columbia; (iii) such corporation and its consolidated
subsidiaries shall have consolidated Stockholders' Equity immediately after
such transaction at least equal to the consolidated Stockholders' Equity of
the Company and its consolidated subsidiaries immediately prior to such
transaction; (iv) immediately after giving effect to such transaction no
Default or Event of Default shall have happened and be continuing, and (v)
the Company shall have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger or
transfer and such supplemental indenture comply with this Indenture, and
thereafter all obligations of the Company shall terminate.
SECTION 5.02 Successor Corporation Substituted.
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company in accordance with Section
5.01, the successor corporation formed by such consolidation or into which
the Company is merged or to which such transfer is made shall succeed to,
and be substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such successor
corporation has been named as the Company herein.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest on any
Security when the same becomes due and payable and the default continues
for a period of 30 days;
(2) the Company defaults in the payment of the principal of (and
premium, if any, on) any Security when the same becomes due and payable at
maturity, upon redemption or otherwise (including payment pursuant to
Paragraph 5 or Paragraph 6 of the Securities or Section 4.08 hereof:
(3) the Company fails to comply with any of its other agreements
in the Securities or this Indenture and the default continues for the period
and after the notice specified in the last paragraph of this Section 6.01;
(4) there shall be a default under any bond, debenture, note or
other evidence of Indebtedness or under any mortgage, indenture or other
instrument under which there may be issued or by which there may be secured
or evidenced and Indebtedness of the Company
15
or any Subsidiary, whether any such Indebtedness now exists or shall
hereafter be created, which (a) is a default in the payment of the principal,
premium, if any, or interest on such Indebtedness unless such default is
cured within 30 days after the date such payment is due or (b) if any other
default, such default shall have resulted in such Indebtedness becoming or
being declared due and payable prior to the date on which it would otherwise
have become due and payable or on maturity, without such acceleration having
been rescinded or annulled with 10 days after notice to the Company of such
acceleration, or such Indebtedness having been discharged; provided, however,
that no default under this paragraph (4) shall exist if the aggregate amount
of such Indebtedness with respect to which a payment default under clause (a)
or an acceleration under clause (b) had occurred shall be less than
$2,000,000;
(5) the Company pursuant to or within the meaning of any
Bankruptcy Law;
(A) commences a voluntary case or proceeding,
(B) consents to the entry of an order for relief against it in
an involuntary case or proceeding,
(C) consents to the appointment of a Custodian of it or for all
or substantially all of its property, or
(D) makes a general assignment for the benefit of its creditors;
(6) a court of competent jurisdiction an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company in an involuntary case or
proceeding,
(B) appoints a Custodian of the Company or for all or
substantially all of its property, or
(C) orders the liquidation of the Company,
and the order or decree remains unstayed and in effect for 90 days.
The term "Bankruptcy Law" means Title 11 U.S. Code or any similar
Federal or State law for the relief of debtors. The term "Custodian" means
any receiver, trustee, assignee, liquidator, sequestrator or similar officia
l under any Bankruptcy Law.
A default under clause (3) (other than defaults under Sections 4.04,
4.05 and 4.08, which defaults shall be Events of Defaults without the notice
or passage of time specified in this paragraph) is not an Event of Default
until the Trustee notifies the Company, or the Holders of at least 25% in
principal amount of the Securities then outstanding notify the Company and
the Trustee of the default and the Company does not cure the default within
30 days after receipt of such notice. The notice must specify the default,
demand that it be remedied and state that the notice is a "Notice of
Default".
SECTION 6.02 Acceleration.
If an Event of Default occurs and is continuing, the Trustee by
notice to the Company, or the Holders of at least 25% in principal amount of
the Securities then outstanding by notice
16
to the Company and the Trustee, may declare to be due and payable immediately
the principal amount of the Securities plus accrued interest to the date of
acceleration. Upon any such declaration, such amount shall be due and
payable immediately, and upon payment of such amount all of the Company's
obligations under the Securities and this Indenture, other than obligations
under Section 7.07, shall terminate. The Holders of a majority in principal
amount of the outstanding Securities by notice to the Trustee may rescind
an acceleration and its consequences if (x) all existing Events of Default,
other than the non-payment of the principal of the Securities, which have
become due solely by such declaration of acceleration, have been cured or
waived, (y) to the extent the payment of such interest is lawful, interest
on overdue installments of interest and overdue principal which has become
due otherwise than by such declaration of acceleration, has been paid, and
(z) the rescission would not conflict with any judgment or decree of a court
of competent jurisdiction. Notwithstanding anything contained in this
Indenture or in the Securities to the contrary, in the case of any Event of
Default specified in Section 6.01 occurring by reason of any willful action
(or inaction) take (or not taken) by or on behalf of the Company, then upon
the acceleration resulting therefrom, the unpaid principal amount of the
Securities, to the extent lawful, shall deemed to be equal to the product of
(I) the unpaid principal amount thereof and (ii) the then applicable
percentage specified in Paragraph 5 of the Securities.
SECTION 6.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal (and premium, if any) or interest on the Securities or
to enforce the performance of any provision of the Securities or this
Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Securityholder in exercising any
right or remedy accruing upon an Event of Default shall not impair the right
or remedy or constitute a waiver of or acquiescence in the Event of Default.
No remedy is exclusive of any other remedy. All available remedies are
cumulative.
SECTION 6.04 Waiver of Defaults and Events of Default.
Subject to Section 9.02, the Holders of a majority in principal
amount of the Securities then outstanding, on behalf of the Holders of all
of the Securities, by notice to the Trustee may waive a Default or Event or
Event of Default and its consequences. When a Default or Event of Default
is waived, it is cured and ceases.
SECTION 6.05 Control by Majority.
The Holder of a majority in principal amount of the Securities then
outstanding may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on it. The Trustee, however, may refuse to follow any
direction that conflicts with law or this Indenture, that the Trustee
determines may be unduly prejudicial to the rights of other Securityholders
or that may involve the Trustee in personal liability; provided that, the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
SECTION 6.06 Limitation on Suits.
A Securityholder may not pursue any remedy with respect to this
Indenture or the Security unless:
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(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 25% in principal amount of the
Securities then outstanding make a written request to the Trustee to pursue
the remedy;
(3) such Holder or Holders offer the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expenses;
(4) the Trustee does not comply with the request within 60 days
after receipt of the notice, request and offer of indemnity; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60 day period by the Holders of a majority
in principal amount of the Securities then outstanding.
A securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.07 Rights of Holders to Receive Payment.
Subject to Article 10, notwithstanding any other provision of this
Indenture, the right of any Holder of a Security to receive payment of
principal of, premium, if any, and interest on the Security, on or after the
respective due dates expressed in the Security, or to bring suit for the
enforcement of any such payment on or after such respective due dates
expressed in the Security, or to bring suit for the enforcement of any
such payment on or after such respective dates, is absolute and unconditional
and shall not be impaired or affected without the consent of the Holder.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Security to convert the Security or to bring suit for the
enforcement of such right shall not be impaired or affected without the
consent of the Holder.
SECTION 6.08 Collection Suite by Trustee.
If an Event of Default in payment of interest or principal (and
premium, if any) specified in Section 6.01 (1) or (2) occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee
of an express trust against the Company or any other obligor on the
Securities for the whole amount of unpaid principal (and premium, if any)
and accrued interest remaining unpaid, together with interest on overdue
principal (and premium, if any) and to the extent that payment of such
interest is lawful, interest on overdue installments of interest, in each
case at the rate borne by the Securities and such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expense, disbursement and advances of the Trustee,
its agents and counsel.
SECTION 6.09 Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of
the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Securityholders allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Securities), its creditors or its property
and shall be entitled and empowered to collect and receive any monies or
other property payable or deliverable on any such claims and to distribute
the same. Any Custodian in any such judicial proceeding is hereby authorized
by each Securityholder to make such payments to the Trustee, and in the
event that the Trustee shall consent to the making of such payments directly
to the Securityholders, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee
its agents and counsel, and any other amounts due the Trustee under
Section 7.07.
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Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Securityholder
any plan of reorganization, arrangement, adjustment or composition affecting
the Securities or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Securityholder in any such
proceedings.
SECTION 6.10 Priorities.
If the Trustee collects any money pursuant to this Article 6, it
shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of Senior Indebtedness to the extent
required by Article 10;
THIRD: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratable, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively, and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any payment
to Securityholders pursuant to this Section 6.10.
SECTION 6.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted
by it as Trustee, a court in its discretion may require the filing by any
party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorney's fees, against any party litigant in the suit, having
due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.08, or a suit by Holders
of more than 10% in principal amount of the Securities then outstanding.
ARTICLE 7
TRUSTEE
SECTION 7.01 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise its rights and powers and use the same degree of care
and skill in their exercise as a prudent person would exercise or use under
the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are
specifically set forth in this Indenture and no others.
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(2) In the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. The
Trustee, however, shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of
paragraph (b) of this Section 7.01.
(2) The Trustee shall not be liable for any error in
judgment made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b), and (c) of this Section 7.01.
(e) The Trustee may refuse to perform any duty or exercise any
right or power unless it receives indemnity satisfactory to it against any
loss, liability, expense or fee.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree with the Company. Money held
in trust by the Trustee need not be segregated from other funds except to
the extent required by law.
SECTION 7.02 Rights of Trustee.
Subject to Section 7.01.
(1) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The
Trustee need not investigate any fact or matter stated in the document.
(2) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, which shall
conform to Section 12.05. The Trustee shall not be liable for any action
it takes or omits to take in good faith in reliance on such Certificate or
Opinion.
(3) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with
due care.
(4) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers.
20
SECTION 7.03 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or
its Affiliates with the same rights it would have if it were not Trustee.
Any Agent may do the same with like rights. The Trustee, however, is subject
to Sections 7.10 and 7.11.
SECTION 7.04 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy
of this Indenture or the Securities, it shall not be accountable for the
Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement in the Securities other than its certificate
of authentication or in any document used in the sale of the Securities other
than any statement in writing provided by the Trustee for use in such
document.
SECTION 7.05 Notice of Defaults.
In a Default occurs and is continuing and if it is known to the
Trustee, the Trustee shall mail to each Securityholder notice of the Default
within 90 days after it occurs. Except in the case of a default in payment
of principal of, premium, if any, or interest on any Security, the Trustee
may withhold the notice if and so long as a committee of its Trust Officers
in good faith determines that withholding the notice is in the interests of
Securityholders.
SECTION 7.06 Reports by Trustee to Holder.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, the Trustee shall mail to each Securityholder a
brief report dated as of such May 15 that complies with TIA 313(a). The
Trustee also shall comply with TIA 313 (b) and 313(c).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange on which the Securities
are listed. The Company agrees to notify the Trustee whenever the Securities
become listed on any stock exchange.
SECTION 7.07 Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services (which compensation shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust). The Company shall reimburse the Trustee upon request for all
reasonable disbursements, expenses and advances incurred or made by it.
Such expenses may include the reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee for, and hold it harmless
against, any loss of liability incurred by it in connection with its duties
under this Indenture. The Trustee shall notify the Company promptly of any
claim asserted against the Trustee for which it may seek indemnity.
The Company need not reimburse the Trustee for any expenses or
indemnify it against any loss or liability incurred by it through its
negligence or bad faith.
21
To secure the Company's payment obligations in this Section 7.07,
the Trustee shall have a lien prior to the Securities on all money or
property held or collected by the Trustee, except such money or property
held in trust to pay principal and interest on particular Securities and
such lien shall not be subordinate to any Senior Indebtedness.
SECTION 7.08 Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
The Trustee may resign by so notifying the Company. The Holders of
a majority in principal amount of the Securities then outstanding may remove
the Trustee by so notifying the Trustee and may appoint a successor Trustee
with the Company's written consent. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee.
If a successor Trustee does not take office within 45 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holders of a majority in principal amount of the Securities then
outstanding may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after
that, the retiring Trustee shall, upon payment of its charges, transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for a Section 7.07, the resignation or removal of the retiring
Trustee shall become effective, and the successor Trustee shall have all the
rights, powers and duties of the Trustee under this Indenture. A successor
Trustee shall mail notice of its succession to each Security holder.
SECTION 7.09 Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10 Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA 310(a)(1). The Trustee have a combined capital and
surplus of at least
22
$50,000,000 as set forth in its most recent published annual report of
condition. The Trustee shall comply with TIA 310(b)(9).
SECTION 7.11 Preferential Collection of Claims Against Company.
The Trustee is subject is TIA 311(a), excluding any creditor
relationship listed in TIA 311(b). A Trustee who has resigned or been
removed shall be subject to TIA 311(a) to the extent indicated therein.
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE
I
SECTION 8.01 Satisfaction, Discharge and Defeasance of the Securities.
The Company shall be deemed to have paid and discharged the entire
indebtedness on the Securities from and after the ninety-first day after the
date of the deposit referred to in paragraph (a) below, the provisions of
this Indenture shall no longer be in effect in respect of the Securities,
and the Trustee, at the expense of the Company, shall executive proper
instruments acknowledging satisfaction and discharge of such indebtedness;
provided that the following conditions shall have been satisfied:
(a) the Company has deposited or caused to be deposited
with the Trustee irrevocably as trust funds in trust, specifically pledged
as security for, and dedicated solely to, the benefit of the Holders of the
Securities, with referenced to this Section 8.01, (i) money or (ii) US
Government Obligations or (iii) a combination thereof, sufficient, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to
pay and discharge the entire indebtedness on all the Securities for
principal, premium, if any, and interest, if any, to September 15, 2006 as
such principal, premium or interest, if any, becomes due and payable in
accordance with the terms of this Indenture and the Securities;
(b) the Company has paid or caused to be paid all other
sums payable hereunder by the Company in connection with the Securities,
including all fees and expenses of the Trustee; and
(c) the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
the entire indebtedness on the Securities have been complied with.
"U.S. Government Obligations" means direct, non-callable
obligations of, or non-callable obligations guaranteed by, the United States
of America for the timely payment of which obligation or guarantee the full
faith and credit of the United States of America is pledged.
SECTION 8.02 Satisfaction and Discharge of Indenture.
In addition to the rights under Section 8.01, the Company may
terminate all of its obligations under this Indenture when:
23
(a) All of the Securities therefore authenticated and
delivered (other than (A) Securities which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section 2.07
hereof and (B) Securities for whose payment money has therefore been
deposited with the Trustee or the Paying Agent in trust or segregated and
held in trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 2.04 and Section 8.06
hereof) have been delivered to the Trustee for cancellation;
(b) the Company has paid or caused to be paid all other
sums payable hereunder by the Company in connection with the outstanding
Securities, including all fees and expenses of Trustee; and
(c) the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture have been complied with.
SECTION 8.03 Survival of Certain Obligations.
Nothwithstanding the satisfaction and discharge of this Indenture
pursuant to Section 8.01 and 8.02, the respective obligations of the Company
in Paragraph 12 of the Securities in Section 2.03, 2.04, 2.05, 2.06, 2.07,
4.01, 7.07, 7.08, 8.06, 8.07 and in Article 11 shall survive until the
Securities are no longer outstanding, and thereafter the obligations of the
Company in such Paragraph 12 and in Sections 7.07 and 8.06 shall survive.
Nothing contained in this Article Eight shall abrogate any of the
obligations or duties of the Trustee under the Indenture.
SECTION 8.04 Application of Trust Money.
(a) Subject to the provisions of Section 8.06, all money
and U.S. Government Obligations deposited with the Trustee for the Securities
pursuant to Section 8.01 or Section 8.02, and all money received by the
Trustee in respect of U.S. Government Obligations deposited with the Trustee
for the Securities pursuant to Section 8.01 or Section 8.02 shall be held
in trust and applied by it, in accordance with the provisions of the
Securities and this Indenture, to the payment, either directly or through
any Paying Agent (including the Company acting as its own Paying Agent) as
the Trustee may determine, to the Persons entitled thereto, of the principal,
premium, if any, and interest, if any, on the Securities; but such money need
not be segregated from other funds except to the extent required by law.
Money and U.S. Government Obligations so held in trust are not subject to the
subordination provisions of Article 10.
(b) The Trustee shall deliver or pay to the Company from
time to time upon Company request any U.S. Government Obligations, or money
held by it as provided in Section 8.01 or Section 8.02 which, in the opinion
of a nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, are then in
excess of the amount thereof which then would have been required to be
deposited for the purpose for which such U.S. Government Obligations, or
money were deposited or received.
SECTION 8.05 Paying Agent to Repay Monies Held.
Upon the satisfaction and discharge of this Indenture, all monies
then held by any Paying Agent under the provisions of this Indenture shall,
upon demand of the Company,
24
be repaid to it or paid to the appropriate Trustee, and thereupon such Paying
Agent shall be released from all further liability with respect to such
monies.
SECTION 8.06 Return of Unclaimed Monies.
Any monies deposited with or paid to the Trustee or any Paying Agent
for the Securities, or then held by the Company, in trust for the payment of
the principal, premium, if any, and interest, if any, on the Securities and
not applied but remaining unclaimed by the Holders of the Securities for two
years after the date upon which the principal of and interest, if any, on the
Securities, as the case may be, shall have become due and payable, shall,
unless otherwise required by mandatory provisions of applicable escheat or
abandoned or unclaimed property law, be repaid to the Company by such Trustee
or any Paying Agent on demand or (if then held by the Company) shall be
discharged from such trust; and the Holders of the Securities entitled to
receive such payment shall thereafter look only to the Company for the
payment thereof; provided, however, that, before being required to make any
such repayment, such Trustees may (at the expense of the Company) cause to be
published once in an authorized newspaper in the same city in which the place
of payment with respect to the Securities shall be located and in an
authorized newspaper in the City of New York, or mail to each such Holder,
a notice (in such form as may be deemed appropriate by such Trustee) that
said monies remain unclaimed and that, after a date named herein, any
unclaimed balance of said monies then remaining will be returned to the
Company.
SECTION 8.07 Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 8.01 by reason of any legal
proceeding or by reason of any order or judgment of any courts or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.01 until such time as the Trustee or Paying Agent is
permitted to apply all such money or U.S. Government Obligations in
accordance with Section 8.01; provided, however, that if the Company has
made any payment of interest on or principal of any Securities because of
the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS AND WAIVERS
SECTION 9.01 Without Consent of Holders.
The Company and the Trustee may amend or supplement this Indenture
(any indenture supplemental hereto to be in a form satisfactory to the
Trustee) or the Securities without notice to or consent of any
Securityholder:
(1) to comply with Section 5.01;
(2) to provide for uncertificated Securities in addition to or
in place of certificate Securities, or
(3) to cure any ambiguity, defect or inconsistency, or to make
any other change that does not adversely effect the right of any
Securityholder.
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SECTION 9.02 With Consent of Holders.
The Company and the Trustee may amend this Indenture or the
Securities without notice to any Securityholder but with the written consent
of the Holders of at least a majority in principal amount of the Securities
then outstanding. The Holders of a majority in principal amount of the
Securities then outstanding may waive compliance in a particular instance by
the Company with any provision of this Indenture or the Securities without
notice to any Securityholder. Subject to Section 9.04, without the consent
of each Securityholder affected, however, an amendment, supplement or
waiver, including a waiver pursuant to Section 6.04, may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment or waiver;
(2) reduce the rate of or extend the time for payment of interest on any
Security;
(3) reduce the principal of or extend the fixed maturity of any Security;
(4) waive (except, unless theretofore cured) a default in the payment of
the principal of (and premium, if any on), interest on or redemption amounts
with respect to any Security;
(5) make any Security payable in money other than that stated in the
Security;
(6) make any change in Sections 6.04, 6.07 or 9.02 (third sentence);
(7) make any change that adversely affects the right to convert any
Security; or
(8) make any change in Article 10 that adversely affects the rights
of any Securityholder.
After an amendment under this Section becomes effective the Company
shall mail to Securityholders a notice briefly describing such amendment.
SECTION 9.03 Compliance with Trust Indenture Act,
Every amendment or supplement to the Indenture or the Securities
shall comply with TIA as then in effect.
SECTION 9.04 Revocation and Effect of Consents.
Subject to this Indenture, each amendment, waiver or instrument
evidencing other action shall become effective in accordance with its terms.
Until an amendment, waiver or other action becomes effective, a consent to
it by a Holder of a Security is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the
same debt as the consenting Holder's Security, even if notation of the
consent is not made on any Security. Any such Holder or subsequent Holder,
however, may revoke the consent as to his Security or portion of a Security,
if the Trustee receives the notice of revocation before the date amendment,
waiver or other action becomes effective.
After an amendment, waiver or other action becomes effective, it
shall bind every Securityholder, unless it makes a change described in any
of clauses (1) through (8) of Section 9.02. In that case the amendment,
waiver or other action shall bind each Holder
26
of a Security or portion of a Security that evidences the same debt as the
consenting Holder's Security.
SECTION 9.05 Notation on or Exchange of Securities.
If an amendment or waiver changes the terms of a Security, the
Trustee may request the Holder of the Security to deliver it to the Trustee.
The trustee may place an appropriate notation on the Security about the
changed terms and return it to the Holder. Alternatively, if the Company or
the Trustee so determine, the Company in exchange for the Security shall
issue and the Trustee shall authenticate a new Security that reflects the
changed terms.
SECTION 9.06 Trustee to Sign Amendments, etc.
The Trustee need not sign any amendment that adversely affects its
rights. In signing or refusing to sign any amendment the Trustee shall be
entitled to receive and, subject to Section 7.01, shall be fully protected
in relying upon, an Opinion of Counsel stating that such amendment is
authorized or permitted by this Indenture. The Company may not sign an
amendment until its Board of Directors approves it.
ARTICLE 10
SUBORDINATION
SECTION 10.01 Securities Subordinated to Senior Indebtedness.
The Company agrees, and each Holder of the Securities by his
acceptance thereof likewise agrees, that the payment of the principal of,
premium, if any, and interest on the Securities is subordinated and junior
in right of payment, to the extent and in the manner provided in this Article
10, except as provided in Section 8.04, to the prior payment in full of all
Senior Indebtedness whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed.
The Senior Indebtedness of the Company shall continue to be Senior
Indebtedness and entitled to the benefits of these subordination provisions
irrespective of any amendment, modification or waiver of any term of any
instrument relating to the Senior Indebtedness or the extension or renewal
of the Senior Indebtedness.
All the provisions of this Indenture and the Securities shall be
subject to the provisions of this Article 10 so far as they may be applicable
thereto, except that nothing in the Article 10 shall apply to claims for,
or payments to, the Trustee under or pursuant to Section 7.07.
SECTION 10.02 Company Not to Make Payments with Respect to Securities in
Certain Circumstances.
(a) In the event the Company shall default in the payment of any
principal of, premium, if any, or interest on any Senior Indebtedness when
the same becomes due and payable, whether at maturity or at a date fixed for
prepayment or by declaration or otherwise, then, unless and until such
default shall have been cured or waived or shall have ceased to exist, no
direct or indirect payment (in cash, property, securities, by set-off or
otherwise) shall be made or agreed to be made on account of the principal
of, premium, if any, or interest on the Securities, or on account of the
mandatory redemption provision in the Securities (except mandatory redemption
payments made in respect of Securities acquired by the Company before the
coming due of such Senior Indebtedness). or in respect of any retirement,
purchase or other acquisition of any of the Securities.
27
(b) Upon the happening of an event of default with respect to
any Senior Indebtedness, as defined therein or in the instrument under which
the same is outstanding, permitting the holders thereof to accelerate the
maturity thereof (other than under circumstances when the terms of the
preceding paragraph are applicable), upon written notice thereof given to
the Company and the Trustee by any holder or holders of such Senior
Indebtedness or their representative or representatives ("Payment Notice"),
then, unless and until such event of default shall have been cured or
waived or shall have ceased to exist, no direct or indirect payment (in cash,
property, securities, by set-off or otherwise) shall be made or agreed to be
made on account of the principal of, premium if any or interest on the
Securities or on account of the mandatory redemption provision of the
Securities (except mandatory redemption payments made in Securities acquired
by the Company before such Payment Notice), or in respect of any retirement,
purchase or other acquisition of any of the Securities; provided, however,
that this paragraph (b) shall prevent any such payment (which is not
otherwise prohibited by the immediately preceding paragraph) only for a
period which is the longer of (i) 90 days after Payment Notice shall have
been given or (ii) any period during which the Senior Indebtedness in respect
of which such event of default exists has become due and payable in its
entirety and (A) such acceleration has not been rescinded or annulled or (B)
such acceleration is being contested in good faith by the Company in an
appropriate judicial proceeding. Notwithstanding the foregoing, no event of
default which existed or was continuing on the date of any Payment Notice
shall be made the basis for the giving of a second Payment Notice unless
all events of default existing or continuing on the date of such first
Payment Notice shall have been cured or waived after such date.
(c) If any payment or distribution of any character, whether in
cash, property or securities (including any collateral at any time securing
the Securities, but not including shares of stock of the Company as
reorganized or readjusted or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated, at least to the same extent as the
Securities, to the payment of all Senior Indebtedness which may at the time
be outstanding, provided that the rights of the holders of the Senior
Indebtedness are not altered by such reorganization or readjustment),
including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness of the
Company being subordinated to the payment of the Securities, shall be
received by the Trustee or any holder of the Securities, in contravention of
any of the terms hereof and before all the Senior Indebtedness shall have
been paid in full, such payment or distribution shall be paid over or
delivered and transferred to the holders of the Senior Indebtedness (pro
rata to each such holder on the basis of the respective amounts of Senior
Indebtedness held by such holder) or their representatives, to the extent
necessary to pay all Senior Indebtedness in full, after giving effect to any
concurrent payment or distribution to or for the holders of Senior
Indebtedness; provided, however, that such payment or distribution need not
be so paid over or delivered and transferred at any time when the provisions
of subsections (a) and (b) of this Section 10.02 would no longer prevent
payments by the Company to be Holders of the Securities.
SECTION 10.03 Securities Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization of Company.
(a) Upon any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities (including
any collateral at any time securing the Securities), to creditors upon any
dissolution or winding up or total or partial liquidation or reorganization
or readjustment of the Company, whether voluntary or involuntary, in
bankruptcy, insolvency, receivership or other cases or proceedings, all
principal of and interest due or to become due upon all Senior Indebtedness
shall first be paid in full before the Holders of the Securities shall be
entitled to receive any assets (including any collateral at any time securing
the Securities, but not including shares or
28
stock of the Company as reorganized or readjusted or securities of the
Company or any other corporation provided for by a plan of reorganization or
readjustment, the payment of which is subordinated, at least to the same
extent as the Securities, to the payment of all Senior Indebtedness which
may at the time be outstanding, provided that the rights of the holders of
the Senior Indebtedness are not altered by such reorganization or
readjustment) so paid or distributed in respect of the Securities (for
principal, premium, if any, or interest); and upon any such dissolution or
winding up or liquidation or reorganization or readjustment, any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities (including any collateral at any time securing
the Securities, but not including shares of stock of the Company as
reorganized or readjusted or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated, at least to the same extent as the
Securities, to the payment of all Senior Indebtedness which may at the time
be outstanding, provided that the rights of the holders of the Senior
Indebtedness are not altered by such reorganization or readjustment), to
which the Holders of the Securities would be entitled except for the
provisions of this Section 10.03, including any such payment or distribution
which may be payable or deliverable by reason of the payment of any other
indebtedness of the Company being subordinated to the payment of the
Securities, shall be paid or distributed by the Company or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making
such payment or distribution directly to the holders of Senior Indebtedness
(pro rata to each such holder on the basis of the respective amounts of
Senior Indebtedness held by such holder) or their representatives, to the
extent necessary to pay all Senior Indebtedness in full, after giving effect
to any concurrent payment or distribution to or for the holders of Senior
Indebtedness, before any payment or distribution in respect of the Securities
(for principal, premium, if any, or interest) is made to the Holders of the
Securities.
(b) Upon any payment or distribution in connection with any cases
or proceedings referred to in subsection (a) of this Section 10.03, the
Trustee and the Holders of the Securities shall be entitled to rely upon any
order or decree of a court of competent jurisdiction in which such cases or
proceedings are pending, and the Trustee and the Holders of the Securities
shall be entitled to rely upon a certificate of the liquidating trustee or
agent or other Person making such payment or distribution to the Trustee or
to the Holders of the Securities for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of the
Senior Indebtedness and other indebtedness of the Company, the amount thereof
or payable thereon, the amount or amounts paid or distributed thereon and
all other facts pertinent thereto or to this Section 10.03.
(c) If any payment or distribution of any character, whether in
cash, property or securities (including any collateral at any time securing
the Securities, but not including shares of stock of the Company as
reorganized or readjusted or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated, at least to the same extent as the
Securities, to the payment of all senior Indebtedness which may at the time
be outstanding, provided that the rights of the holders of the Senior
Indebtedness are not altered by such reorganization or readjustment),
including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness of the
Company being subordinated to the payment of the Securities, shall be
received by the Trustee or any Holder of the Securities in contravention of
any of the terms of this Article 10 and before all the Senior Indebtedness
shall have been paid in full, such payment or distribution shall be paid
over or delivered and transferred to the holders of the Senior Indebtedness
(pro rata to each such holder on the basis of the respective amounts of
Senior Indebtedness held by such holder) or their representatives, to the
extent necessary to pay all Senior Indebtedness in full, after giving
29
effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness; provided, however, that such payment or distribution
need not be so paid over or delivered and transferred at any time when the
provisions of subsection (a) of this Section 10.03 would no longer prevent
payments by the Company to the Holders of the Securities;
(d) The Company shall give prompt written notice to the Trustee
of any insolvency or bankruptcy case or proceeding in respect of the Company
and of any cases or proceedings for voluntary liquidation, dissolution or
other winding up of the Company (whether or not involving insolvency or
bankruptcy), within the meaning of this Section 10.03 or any other proceeding
or event contemplated by this Section 10.03, of the declaration of any
Senior Indebtedness as due and payable before its expressed Maturity, and of
any event which pursuant to this Article 10 would prevent payment by the
Company of the principal of, premium, if any, or interest on the Securities.
SECTION 10.04 Securityholders to be Subrogated to Rights of Holders of
Senior Indebtedness.
Senior Indebtedness shall not be deemed to have been paid in full
unless the holders thereof shall have received cash, or other property
satisfactory to the holders of Senior Indebtedness , equal to the amount of
such Senior Indebtedness then outstanding. Upon the payment in full of all
Senior Indebtedness and not before, the Holders of the Securities shall be
subrogated (equally and ratably with the holders of all indebtedness of the
Company which, by its express terms, ranks on a parity with the Securities
and is entitled to like rights of subrogation) to the rights of the holders
of Senior Indebtedness to receive payments or distributions of assets of the
Company applicable to the Senior Indebtedness until the Securities shall be
paid in full. For purposes of such subrogation, no payments or distributions
on the Senior Indebtedness, pursuant to Sections 10.02 and 10.03 hereof
shall, as between the Company, its creditors other than the holders if
Senior Indebtedness, the Holders of the Securities, be deemed to be a
payment or distribution by the Company to or on account of the Senior
Indebtedness, and no payments or distribution to the Trustee or the Holders
of the Securities of assets by virtue of the subrogation herein provided for
shall, as between the Company, its creditors other than the holders of
Senior Indebtedness, and the Holders of the Securities, be deemed to be a
payment to or on account of the Securities. The provisions of this
Article 10 are solely for the purpose of defining the relative rights of the
Holders of the Securities, on the one hand, and the holders of Senior
Indebtedness on the other hand.
SECTION 10.05 Obligation of the Company Unconditional.
Nothing contained in this Article 10 or elsewhere in this Indenture
or in the Securities is intended to or shall impair the obligations of the
Company, which is unconditional and absolute, to pay the principal of,
premium, if any, and interest on the Securities as and when the same shall
become due and payable in accordance with their terms, or to affect the
relative rights of the Holders of the Securities and creditors of the Company
other than the holders of Senior Indebtedness, nor shall anything herein or
therein prevent the Trustee or the Holder of any Securities from exercising
all remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article 10, of the
holders of Senior Indebtedness in respect of cash, property or securities
of the Company otherwise payable or delivered to the Trustee or such Holder
upon the exercise of any such remedy.
30
SECTION 10.06 Trustee Entitled to Assume Payments Not Prohibited in Absence
of Notice.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or
by the Trustee, and the Trustee shall not be required to withhold payment to
the Holders of Securities as provided in Section 10.02(c), unless the Trustee
shall have received written notice thereof, two Business Days prior to the
day such payment is due, at its Corporate Trust Office from the Company or
from the one or more holders of Senior Indebtedness or from any
representative thereof or trustee therefor identifying the specific sections
of this Indenture involved and describing in detail the facts that would
obligate the Trustee to withhold payments to Holders of Securities, as well
as any other facts required by the next succeeding paragraph of this Section
10.06; and, prior to the receipt of any such written notice, the Trustee,
subject to the provisions of section 7.01 and 7.02, shall be entitled to
assume conclusively that no such facts exits.
The Trustee shall be entitled to rely on the delivery to it of a
written notice by a Person representing himself to be a holder of Senior
Indebtedness (or a trustee on behalf of such holder) to establish that such
notice has been given by a holder of Senior Indebtedness or a trustee on
behalf of any such holder. In the event that the Trustee determines in good
faith that further evidence is required with respect to the right of any
Person as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article 10, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Indebtedness held by such Person, the extent to which
such Person is entitled to participate in such payment or distribution and
other facts pertinent to the rights of such Person under this Article 10, and
if such evidence is not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to
receive such payment or until such time as the Trustee shall be otherwise
satisfied as to the right of such Person to receive such payment.
SECTION 10.07 Application by Trustee of Monies Deposited with It.
Nothing contained in this Article 10 or elsewhere in this
Indenture, or in any of the Securities, shall (i) affect the obligations of
the Company to make, or prevent the Company from making, at any time except
during the pendency of a proceeding referred to in subjection (a) of
Section 10.03 and except during the continuance of any default specified in
subsection (a) or (b) of Section 10.02 to the extent provided therein,
payments at any time of principal of, premium, if any, or interest on the
Securities, (ii) prevent the application by the Trustee or any Paying Agent
of any monies held by the Trustee or such Paying Agent, in trust for the
benefit of the Holders of Securities as to which notice of redemption shall
have been mailed or published, to the payment of or on account of principal
of, premium, if any, or interest on the Securities if, at the time of such
mailing or publishing, such payment would not have been prohibited by the
provisions of this Article 10, or (iii) prevent the application by the
Trustee or any Paying Agent of any monies deposited with it hereunder to
(or, if the Company is acting as its own Paying Agent, segregated and held
in trust as provided in Section 2.04 for) the payment of or on account of
the principal of, premium, if any, or interest on Securities if, at the time
of such deposit (or at the time such monies were so segregated and held in
trust), such payment would not have been prohibited by the provisions of this
Article 10.
SECTION 10.08 Continuing Offer of Subordination.
The provisions of this Article 10 are made for the benefit of all
Persons who become holders of or continue to hold Senior Indebtedness, and
such holders are hereby made obligees under this Article 10 to the same
extent as if their names were written herein as such, and they and/or each
of them may proceed to enforce such provisions.
31
In furthermore of the foregoing, each holder of Senior Indebtedness
is hereby irrevocable authorized and empowered but shall not be obligated to
demand, sue for, collect, receive and execute a receipt for such holder's
ratable share of all payments and distributions in respect of the Securities
which are required to be paid or delivered to holders of Senior Indebtedness
as provided in this Article 10, and to file and prove all such claims and
take all such other action (including the right to vote such holder's ratable
share of the Securities) in the name of the Holders of Securities or
otherwise, as such holder of Senior Indebtedness may reasonably determine to
be necessary for the enforcement of the rights provided in this Article 10,
and at the Company's expense (which expense must be paid by the Company in
advance to each Securityholder from whom the Company requests such
instruments and such other action) the Company may require the delivery to a
holder of Senior Indebtedness by each Holder of Securities of such
instruments reasonably necessary to confirm such authorization, such as
powers of attorney, proofs of claim, assignments of claim and other
instruments in form and substance reasonably satisfactory to the
Securityholders, and the taking of all such other reasonable action, as the
Company may reasonably request in order to enable such holder of Senior
Indebtedness to enforce such holder's ratable share of all Securities and
all such payments and distributions in respect thereof.
The Trustee shall have no obligations whatsoever with respect to
compliance with any of the provisions of this Section 10.08 by any Holder.
SECTION 10.09 Subordination Rights Not Impaired by Acts or Omission of
Company or Holders of Senior Indebtedness.
The Holders of Senior Indebtedness may at any time or from time to
time, and in their absolute discretion, change the manner, place or terms of
payment of, change or extend the time of payment of, or renew or alter, any
Senior Indebtedness, or amend or supplement any instrument pursuant to which
any Senior Indebtedness is issued, or exercise or refrain from exercising any
other of their right under the Senior Indebtedness including, without
limitation, the waiver of defaults thereunder, all without notice to or
assent from the Holders of the Securities or the Trustee. No right of any
present or future holders of any Senior Indebtedness to enforce subordination
as provided herein shall at any time in any way be prejudiced or impaired by
any act or failure to act on the part at the Company or by any act or failure
to act by any such holder or by any noncompliance by the Company with the
terms of this Indenture, regardless of any knowledge thereof which any such
holder may have or be otherwise charged with.
SECTION 10.10 Securityholders Authorize Trustee to Effectuate Subordination
of Securities.
Each holder of the Securities by his acceptance thereof authorizes
and expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article 10 and irrevocably appoints the Trustee his attorney-in-fact for such
purpose, including, in the event of any dissolution, winding up, liquidation
or reorganization of the Company (whether in bankruptcy, insolvency or
receivership proceedings or otherwise) tending towards liquidation of the
business and assets of the Company, the timely filling of a claim for the
unpaid balance of its or his Securities in the form required in said
proceedings and causing said claim to be approved. If the Trustee does not
file a proper claim or proof of debt in the form required in such proceeding
prior to 30 days before the expiration of the time to file such claim or
claims, then the holders of Senior Indebtedness have the right to file and
are hereby authorized to file an appropriate claim for and on behalf of the
Holders of said Securities.
32
SECTION 10.11 Right of Trustee to Hold Senior Indebtedness; Trustee Owes No
Fiduciary Duty to Holders of Senior Indebtedness.
The Trustee, in its individual capacity, shall be entitled to all of
the rights set forth in this Article 10 in respect of any Senior Indebtedness
at any time held by it to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall be construed to deprive
the Trustee of any of its rights as such holder.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article 10, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not
be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and
the Trustee shall not be liable to any holder of Senior Indebtedness if it
shall mistakenly pay over or deliver to Holders of Securities, the Company or
any other person monies or assets to which any holder of Senior Indebtedness
shall be entitled by virtue of this Article 10 or otherwise.
SECTION 10.12 Article 10 Not To Prevent Events of Default.
The failure to make a payment on account of principal of or interest
on the Securities by reason of any provision in this Article 10 shall not be
construed as preventing occurrence of an Event of Default under Section 6.01.
SECTION 10.13 Officers' Certificate.
If there occurs an event referred to in Section 10.02(a) or (b) or
the first sentence of Section 10.03(a), the Company shall promptly give to
the Trustee an Officers' Certificate (on which the Trustee may conclusively
rely) identifying all holders of Senior Indebtedness and the principal
amount of Senior Indebtedness then outstanding held by each such holder and
stating the reasons why such Officers' Certificate is being delivered to the
Trustee.
SECTION 10.14 Paying Agents other than the Trustee.
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article 10 shall in such case (unless the context
shall otherwise require) be construed as extending to and including such
Paying Agent within its meaning as fully for all intents as purposes as if
such Paying Agent were named in this Article 10 in addition to or in place of
the Trustee, provided, however, that Sections 10.05 and 10.11 hereof shall
not apply to the Company if it acts as Paying Agent.
ARTICLE 11
CONVERSION OF SECURITIES
SECTION 11.01 Right of Conversion; Conversion Price.
The Holder of any Security or Securities shall have the right, at
his option, at any time before the close of business on September 15, 2006
(except that, with respect to any Security or portion of a Security which
shall be called for redemption, such right shall terminate, at the close of
business on the Business Day prior to the date fixed for redemption of such
Security or portion of a Security unless the Company shall
33
default in payment due upon redemption thereof), to convert, subject to the
terms and provisions of this Article 11, the principal of any such security
or Securities or any portion thereof which is $1,000 or an integral multiple
thereof into shares of Common Stock of the Company, initially at the
conversion price per share of $10.20; or, in case an adjustment of such price
had taken place pursuant to the provision of Section 11.04, then at the price
as last adjusted (such price or adjusted price being referred to herein as
the "conversion price"), upon surrender of the Security or Securities, the
principal of which is so to be converted, accompanied by written notice of
conversion duly executed, to the Company, at any time during usual business
hours at the office or agency maintained by it for such purpose, and, if so
required by the Conversion Agent or Registrar, accompanied by a written
instrument or instruments of transfer in form satisfactory to the Conversion
Agent or Registrar duly executed by the Holder or his attorney duly
authorized in writing. For convenience, the conversion of any portion of
the principal of any Security or Securities into the Common Stock of the
Company is hereinafter sometimes referred to as the conversion of such
Security or Securities.
SECTION 11.02 Issuance of Common Stock on Conversion.
As promptly as practicable after the surrender, as herein provided,
of any Security or Securities for conversion, the Company shall deliver or
cause to be delivered at its said office or agency, to or upon the written
order of the holder of the Security or Securities so surrendered,
certificates representing the number of fully paid and non-assessable shares
of Common Stock of the Company into which such Security or Securities may be
converted in accordance with the provisions of this Article 11. Such
conversion shall be deemed to have been made at the close of business on the
date that such Security or Securities shall have been surrendered for
conversion with a written notice of conversion duly executed, so that the
rights of the holder of such Security or Securities as a Securityholder shall
cease at such time and, subject to the following provisions of this paragraph
the person or persons entitled to receive the shares of Common Stock upon
conversion of such Security or Securities shall be treated for all purposes
as having become the record holder or holders of such shares of Common Stock
at such time and such conversion shall be at the conversion price in affect
at such time; provided, however, that no such surrender on any date when the
stock transfer books of the Company shall closed shall be effective to
constitute the person or persons entitled to receive the shares of Common
Stock upon such conversion as the record holder or holders of such shares of
Common Stock on such date, but such surrender shall be effective to
constitute the person or persons entitled to receive such shares of Common
Stock as the record holder or holders thereof for all purposes at the close
of business on the next succeeding day on which stock transfer books are
open; such conversion shall be at the conversion price in effect on the date
that such Security or Securities shall have been surrendered for conversion,
as if the stock transfer books of the Company had not been closed.
Upon conversion of any Security which is converted in part only, the
Company shall execute and the Trustee shall authenticate and deliver to or
on the order of the Holder thereof, at the expense of the Company, a new
Security or Securities of authorized denominations in principal amount equal
to the unconverted portion of such Security.
SECTION 11.03 No Adjustment for Interest or Dividends.
No payment or adjustment in respect of interest on the Securities or
dividends on the Common Stock shall be made upon the conversion of any
Security or Securities;
34
provided, however, that if a Security or any portion thereof shall be
converted subsequent to any regular record date and on or prior to the next
succeeding interest payment date, the interest falling due on such interest
payment date shall be payable on such interest payment date notwithstanding
such conversion, and such interest (whether or not punctually paid or duly
provided for) shall be paid to the person in whose name such Security is
registered at the close of business on such regular record date (unless such
Security shall have been called for redemption and the redemption date is
prior to such interest payment date).
SECTION 11.04 Adjustment of Conversion Price.
The conversion price shall be subject to adjustment from time to time as
follows:
(a) In case the Company shall (i) declare a dividend or make a
distribution on the outstanding shares of its Common Stock in shares of its
Common Stock, (ii) subdivide or reclassify the outstanding shares of its
Common Stock into a greater number of shares, or (iii) combine or
reclassify the outstanding shares of its Common Stock into a smaller number
of shares, the conversion price in effect at the time of the record date for
such dividend or distribution or the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted so that
the Holder of any Security surrendered for conversion after such time shall
be entitled to receive the number of shares of Common Stock of the Company
which he would have owned or been entitled to receive had such Security been
converted immediately prior to such time. The adjustment shall become
effective immediately after the record date in the case of a dividend or
distribution and immediately after the effective date in the case of a
subdivision, combination or reclassification. Any shares of Common Stock of
the Company issuable in payment of a dividend shall be deemed to have been
issued immediately prior to the time of the record date for such dividend
for purposes of calculating the number of outstanding shares of Common Stock
of the Company under subsections (b) and (c) below. In the event that any
of the events for which a record date is set do not occur, the conversion
price then in effect shall be readjusted effective as of the date when the
Board of Directors determines not to effect such event, to the conversion
price which would be then in effect if such record date had not been fixed.
Such adjustment shall be made successively whenever any event specified above
shall occur.
(b) In case the Company shall fix a record date for the issuance of
rights or warrants to all holders of its Common Stock entitling them (for a
period expiring within 45 days after the record date mentioned below) to
subscribe for or purchase shares of its Common Stock (or securities
convertible into shares of its Common Stock) at a price per share (or
having an initial conversion price per share) less than the Current Market
Price (as defined in subsection (g) below) of a share of Common Stock of the
Company on such record date, the conversion price shall be adjusted
immediately thereafter so that it shall equal the price determined by
multiplying the conversion price in effect immediately prior thereto by a
fraction, of which the numerator shall be the number of shares of Common
Stock of the Company outstanding on such record date plus the number of
shares of Common Stock of the Company which the aggregate offering price of
the number of shares of such Common Stock so offered (or the aggregate
initial conversion price of the convertible securities so offered) would
purchase at the Current Market Price per share, and of which the denominator
shall be the number of shares of Common Stock of the Company outstanding on
such record date plus the number of additional shares of Common Stock of the
Company offered for subscription or purchase (or into which the convertible
securities so offered are initially convertible). Shares of Common Stock of
the Company owned or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall
be made successively whenever such a record date is fixed and shall become
effective immediately after such record date. In the event that such rights
or warrants are not issued, the conversion price then in effect shall be
readjusted, effective as of the
35
date when the Board of Directors determines not to issue such rights or
warrants, to the conversion price which would then be in effect if such
record date had not been fixed.
(c) In case the Company fixes a record date for the making of a
distribution to all holders of shares of its Common Stock (i) of shares of
any class other than its Common Stock (ii) of evidences of indebtedness of
the Company or Subsidiary or (iii) of assets (excluding cash dividends or
distributions, and dividends or distributions referred to in subsection (a)
above) or (iv) of rights or warrants (excluding those referred to in
subsection (b) above), in each such case the conversion price shall be
adjusted immediately thereafter so that it shall equal the price determined
by multiplying the conversion price in effect immediately prior thereto by a
fraction, of which the numerator shall be the number of shares of Common
Stock of the Company outstanding on such record date multiplied by the
Current Market Price per share on such record date, less the fair market
value (as determined by the Board of Directors, whose determination shall be
conclusive, and described in a resolution of the Board of Directors certified
by the Secretary or an Assistant Secretary of the Company and filed with the
Trustee) of said shares or evidence or indebtedness or assets or rights or
warrants so distributed, and of which the denominator shall be the number of
shares of Common Stock of the Company outstanding on such record date
multiplied by such Current Market Price per share. Such adjustment shall be
made successively whenever such a record date is fixed and shall become
effective immediately after such record date. In the event that such
distribution is not so made, the conversion price then in effect shall be
readjusted, effective as of the date when the Board of Directors determines
not to distribute such shares, evidences of indebtedness, assets, rights or
warrants, as the case may be, to the conversion price which would then be in
effect if such record date had not been fixed.
(d) In case the Company shall issue shares of Common Stock, (excluding
shares issued (i) in any of the transactions described in subsection (a)
above, (ii) upon conversion or exchange of securities convertible into or
exchangeable for Common Stock of the Company, (iii) to employees under the
Company's 1984 Incentive Compensation Plan, if such shares would otherwise
be included in this Section 11.04(d), (iv) to the Company's employees under
bona fide employee benefit plans adopted by the Company's Board of Directors
and approved by its stockholders, if such shares would otherwise be included
in this Section 11.04(d) (but only to the extent that the aggregated number
of shares excluded by this subdivision (iv), and issued after the date of
this Indenture shall not exceed 50% of the Company's Common Stock outstanding
at the time of any such issuance), or (v) upon exercise of rights of warrants
issued to the holders of Common Stock of the Company, or issued to acquire,
or in connection with the acquisition of, all or any portion of a business as
a going concern, whether such acquisition shall be effected by purchase of
assets, exchange of securities, merger, consolidation or otherwise, or upon
exercise of rights or warrants issued in a bona fide public offering pursuant
to a firm commitment underwriting, but only if no adjustment is required
pursuant to this Section 11.04 (without regard to subsection (i) of this
Section 11.04) with respect to the transaction giving rise to such rights)
for a consideration per share less than the Current Market Price per share
on the date the Company fixes the offering price of such additional shares,
the conversion price shall be adjusted immediately thereafter so that it
shall equal the price determined by multiplying the conversion price in
effect immediately prior thereto by a fraction, of which the numerator shall
be the total number of shares of Common Stock of the Company outstanding
immediately prior to the issuance of such additional shares plus the number
of shares of Common Stock of the Company which the aggregate consideration
received (determined as provided in subsection (f) below) for the issuance of
such additional shares would purchase at the Current Market Price per share,
and of which the denominator shall be the number of shares of Common Stock of
the Company outstanding immediately after the issuance of such additional
shares. Such adjustment shall be made successively whenever such an issuance
is made and shall become effective immediately after such an issuance is made
and shall become effective immediately after such issuance.
36
(e) In case the Company shall issue any securities convertible into or
exchangeable for its Common Stock (excluding securities issued in
transactions described in subsections (b) and (c) above, or the Securities)
for a consideration per share of Common Stock of the Company initially
deliverable upon conversion or exchange of such securities (determined as
provided in subsection(f) below) less than the Current Market Price per share
in effect immediately prior to the issuance of such securities, the
conversion price shall be adjusted immediately thereafter so that it shall
equal the price determined by multiplying the conversion price in effect
immediately prior thereto by a fraction, of which the numerator shall be the
number of shares of Common Stock of the Company outstanding immediately
prior to the issuance of such securities plus the number of shares of Common
Stock which the aggregate consideration received (determined as provide in
subsection (f) below) for such securities would purchase at the Current
Market Price per share, and of which the denominator shall be the number of
shares of Common Stock outstanding immediately prior to such issuance plus
the maximum number of shares of Common Stock of the Company deliverable upon
conversion of or in exchange for such securities at the initial conversion or
exchange price or rate. Such adjustment shall be make successively whenever
such an issuance is made and shall become effective immediately after such
issuance.
Upon the termination of the right to convert or exchange such securities, the
conversion price shall forthwith be readjusted to such conversion price as
would have obtained had the adjustments made upon the issuance of such
convertible or exchangeable securities been made upon the basis of the
delivery of only number of shares of Common Stock actually delivered upon
conversion or exchange of such securities and upon the basis of the
consideration actually received by the Company (determined as provided in
subsection (f) below) for such securities.
(f) For purposes of any computation respecting consideration received
pursuant to subsections (d) and (e) above, the following shall apply:
(i) in the case of the issuance of shares of Common Stock of the
Company for cash, the consideration shall be the amount of such cash,
provided that in no case shall any deductions be made for any commissions,
discounts or other expenses incurred by the Company for any underwriting of
the issue or otherwise in connection therewith;
(ii) in the case of the issuance of shares of Common Stock of
the Company for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair market value
thereof as determined by the Board of Directors (irrespective of the
accounting treatment thereof), whose determination shall be conclusive, and
described in a Certified Resolution which shall be filed with the Trustee and
each Conversion Agent; and
(iii) in the case of the issuance of securities convertible into
or exchangeable for shares of Common Stock of the Company, the aggregate
consideration received therefor shall be deemed to be the consideration
received by the Company for the issuance of such securities plus the
additional minimum consideration, if any to be received by the Company upon
the conversion or exchange thereof (the consideration in each case to be
determined in the same manner as provided in subparagraphs (i) and (ii) of
this subsection (f).
(g) For the purpose of any contemplation under subsection (b), (c), (d)
and (e) above the "Current Market Price" per share at any date shall be
deemed to be the average of the daily closing prices for 30 consecutive
trading days commencing 45 trading days before such date. The closing price
for each day shall be the last reported sale price regular way or, in case
no such reported sale takes place on such day, the average of the last
reported bid and asked prices
37
regular way, in either case on the principal national securities exchange
registered under the Securities Exchange Act of 1934 on which the Common
Stock of the Company is admitted to trading or listed, or if not listed or
admitted to trading on any national securities exchange, the average of the
highest report bid and lowest reported asked prices as furnished by the
National Quotation Bureau Incorporated or such other nationally recognized
quotation service selected by the Company for the purpose, if said Bureau is
not at the time furnishing quotations.
(h) In any case in which this Article 11 shall require that an adjustment
shall become effective immediately after a record date for an event, the
Company may defer until the occurrence of such event (i) issuing to the
Holder of any Security converted after such record date and before the
occurrence of such event the additional shares of Common Stock of the Company
issuable upon such conversion by reason of the adjustment required by such
event over and above the shares of Common Stock of the Company issuable upon
such conversion before giving effect to such adjustment and (ii) paying to
such Holder any amount in cash in lieu of a fractional share of Common Stock
of the Company pursuant to Section 11.05; provided, however, that the Company
shall deliver to such Holder a due bill or other appropriate instrument
evidencing such Holder's right to receive such additional shares of Common
Stock of the Company, and such cash, upon the occurrence of the event
requiring such adjustment.
(i) No adjustment in the conversion price need be made unless such
adjustment would require an increase or decrease of at least 25 cents in such
price; provided, however, that any such adjustment which is not required to
be made shall be carried forward and taken into account in any subsequent
adjustment.
(j) Whenever the conversion price is adjusted as provided in this Section
11.04, the Company shall promptly file with the Trustee and each Conversion
Agent (i) an Officers; Certificate in the case of an adjustment pursuant to
subsection (a) of this Section 11.04, or (ii) both an Officers' Certificate
and a certificate of a firm of independent public accountants, which shall
conform to the provisions of Section 12.05, in the case of any other
adjustment, in each case setting forth the conversion price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment and the computation thereof, which Officers' Certificate or
certificate of a firm of independent public accountants, as the case may be,
shall be conclusive evidence of the correctness of any such adjustment, and
promptly after such filing the Company shall mail or cause to be mailed a
notice of such adjustment to each Securityholder at his last address as the
same appears on the Security register. Neither the Trustee nor any
Conversion Agent shall be under any duty or responsibility with respect any
such certificate except to exhibit the same to any holder of Securities
desiring inspection thereof.
(k) All calculations under this Article 11 shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may be.
SECTION 11.05 No Fractional Shares.
No fractional shares or scrip representing fractional shares shall
be issued upon the conversion of any Security or Securities. If the
conversion of any Security or securities results in a fraction, an amount
equal to such fraction multiplied by the last report sale price on the
principal national securities exchange on which the Common Stock of the
Company is admitted to trading or listed (or if not listed or admitted to
trading on any national securities exchange, the last quoted bid price as
furnished by the National Quotation Bureau Incorporated or such other
nationally recognized quotation service selected by the Company for the
purpose, if said Bureau is not at the time furnishing quotations) of the
Common Stock of
38
the Company on the day prior to the day of conversion (or if such day is not
a trading day on such exchange, on the next preceding day on which such
exchange was open for business) shall be paid to such holder in cash by the
Company. If more than one certificate evidencing Securities shall be
surrendered for conversion at any one time by the same Holder, then the
number of shares of Common Stock of the Company shall be computed on the
basis of the aggregate principal amount of the Securities so surrendered.
SECTION 11.06 Effect of Reclassification, Consolidation, Merger, Sale,
Lease or Conveyance.
(a) In case of any consolidation with or merger of the Company
into another corporation (other than a merger or consolidation in which the
Company is the continuing corporation), or in case of any sale, lease or
conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirely, such successor, leasing or
purchasing corporation, as the case may be, shall execute with the Trustee a
supplemental indenture providing that the Holder of each Security then
outstanding shall have the right thereafter to convert such Security solely
into the kind and amount of shares of stock and other securities, property,
cash or any combination thereof receivable upon such consolidation, merger,
sale, lease or conveyance by a holder of the number of shares of Common Stock
of the Company into which such Security might have been converted immediately
prior to such consolidation, merger, sale, lease or conveyance.
(b) In case of any reclassification or change of the shares of
Common Stock of the Company issuable upon conversion of the Securities (other
than a change in par value, or from par value to no par value, or as a result
of a subdivision or combination, but including any change in the shares of
Common Stock of the Company into two or more classes or series of shares) or
in case of any consolidation or merger of another corporation into the
Company in which the Company is the continuing corporation and in which there
is a reclassification or change (including a change to the right to receive
cash or other property) of the shares of Common Stock of the Company (other
than a change in par value, or from par value to no par value, or as a result
of a subdivision or combination, but including any change in the shares of
Common Stock of the Company into two or more classes or series of shares),
the Company shall execute with the Trustee a supplemental Indenture providing
that the Holder of each Security then outstanding shall have the right
thereafter to convert such Security solely into the kind and amount of shares
of stock and other securities, property, cash or any combination thereof
receivable upon such reclassification, change, consolidation or merger by a
holder of the number of shares of Common Stock of the Company into which such
Security might have been converted immediately prior to such
reclassification, change, consolidation or merger.
(c) Any supplemental indenture entered into pursuant to this
Section 11.06 shall (i) where appropriate, state the conversion price in
terms of one full share of Common Stock of the Company or one full share of
the common stock of any successor, leasing or purchasing corporation and (ii)
provide for adjustment which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article 11. The Company
shall cause notice of the execution of each such supplemental indenture to be
mailed to each Securityholder at his address as the same appears in the
Security register.
39
(d) Neither the Trustee nor any Conversion Agent shall be under
any responsibility to determine the correctness of any provisions contained
in any such supplemental indenture relating either to the kind of amount of
shares of stock or securities or property or cash receivable by
Securityholders upon the conversion of their Securities after any such
reclassification, change, consolidation, merger, sale or conveyance or to
any adjustment to be made with respect thereto, but, subject to the
provisions of Section 7.01, may accept as conclusive evidence of the
correctness of any such provisions and shall be protected in relying upon an
Officers' Certificate or a certificate of a firm of independent public
accountants which shall conform to the provision of Section 12.05 with
respect thereto.
(e) The above provisions of this Section 11.06 shall similarly
apply to successive reclassifications and changes of shares of Common Stock
of the Company and to successive consolidations, mergers, sales or
conveyances. If this Section 11.06 applies, Section 11.04 does not apply.
SECTION 11.07 Covenant to Reserve Shares.
The Company covenants that it will at all times reserve and keep
available, free from pre-emptive rights, out of its authorized Common
Stock, solely for the purpose of issuance upon conversion of Securities as
herein provided, such number of shares of Common Stock as shall then be
issuable upon the conversion of all outstanding Securities. The Company
covenants that all shares of Common Stock which shall be so issuable shall
be, when issued, duly and validly issued and fully paid and non-assessable.
For purposes of this Section 11.07, the number of shares of Common Stock
which shall be deliverable upon the conversion of all outstanding Securities
shall be computed as if at the time of computation all outstanding
Securities were held by a single holder.
SECTION 11.08 Compliance with Legal and Governmental Requirements.
Before taking any action which would cause an adjustment reducing
the conversion price below the then stated or par value of the shares of
Common Stock issuable upon conversion of the Securities, the Company will
take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid
and non-assessable shares of such Common Stock at such adjusted conversion
price.
Notwithstanding anything to the contrary that may be contained in
this Indenture, in no event shall the conversion price be less than the then
stated or par value of the shares of Common Stock issuable upon conversion
of the Securities.
The Company covenants that if any shares of Common Stock, required
to be reserved for purpose of conversion of Securities hereunder, require
registration with or approval of any governmental authority under any
Federal or State law, or listing upon any national securities exchange,
before such shares may be issued upon conversion, the Company will in good
faith and as expeditiously as possible endeavor to cause such shares to be
duly registered, approved or listed, as the case may be.
40
SECTION 11.09 Payment of Taxes.
The issuance of certificates for shares of Common Stock upon the
conversion of Securities shall be made without charge to the converting
Securityholders for any tax in respect of the issuance of such certificates,
and such certificates shall be issued in the respective names of, or in such
names as may be directed by, the Holders of the Securities converted;
provided, however, that neither the Company nor any Conversion Agent shall
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate in a name
other than that of the Holder of the Security converted, and neither the
Company nor any Conversion Agent shall be required to issue or deliver such
certificate unless or until the person or person requested the issuance
thereof shall have paid to the Company or the Conversion Agent the amount
of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.
SECTION 11.10 Notice of certain Events.
In case at any time the Company shall propose:
(a) to take any action that would require an adjustment in the
conversion price pursuant to Section 11.04; or
(b) to effect any reclassification or change of outstanding
shares of its Common Stock, or consolidation or merger, or sale, lease or
conveyance of property, requiring the execution of a supplemental indenture
pursuant to Section 11.06; or
(c) to effect any liquidation, dissolution or winding-up of the
Company
then, and in any one or more of such cases, the Company shall cause notice
thereof to be filed with the Trustee and each Conversion Agent and to be
mailed to each Holder of a Security at such Holder's last address as the
same appears on the Security register at least 15 days prior to the date on
which (i) the books of the Company shall close, or a record date be taken,
for such dividend, distribution or issuance of rights or warrants or (ii)
such reclassification, change, consolidation, merger, sale, lease,
conveyance, liquidation, dissolution or winding-up shall be effective, as
the case may be.
SECTION 11.11 Responsibility of Trustee and Conversion Agent.
Neither the Trustee nor any Conversion Agent shall at any time be
under any duty or responsibility to any Securityholder to determine whether
any facts exist which may require any adjustment of the conversion price, or
with respect to the nature or extent of any such adjustment when made, or
with respect to the method employed, or herein or in any supplemental
indenture provided to be employed, in making the same. Neither the Trustee,
nor any Conversion Agent shall be accountable with respect to the validity
or value (or the kind or amount) of any shares of Common Stock or of any
securities of property or cash which may at any time be issued or delivered
upon the conversion of any Security; and neither the Trustee nor any
Conversion Agent makes any representation with respect thereto. Neither the
Trustee or any Conversion Agent shall be responsible for any failure of the
company to make any cash payment or to issue, transfer or deliver any shares
of Common Stock or stock certificates or other securities or property upon
the surrender of any Security for the purpose of conversion, or, subject to
Section 7.01, to comply with any of the covenants of the Company contained
in this Article Eleven.
41
ARTICLE 12
MISCELLANEOUS
SECTION 12.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts
with another provision which is required to be included in this Indenture
by the TIA, the required provisions shall control.
SECTION 12.02 Notices.
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand
delivery, or first class mail, postage prepaid, (except that any notice by
the Trustee to the Company of a default or an Event of Default under this
Indenture shall be by registered or certified mail, postage prepaid, return
receipt requested), addressed as follows:
if to the Company:
Chock full o'Nuts Corporation
370 Lexington Avenue
New York, NY 10017
Attention: Chairman of the Board
if to the Trustee:
Manufacturers Hanover Trust Company
600 Fifth Avenue
New York, NY 10020
Attention: Corporate Trust Department
The Company or the Trustee by notice to the other may designate
additional or different addresses as shall be furnished in writing by either
party. Any notice or communication to the Company or the Trustee shall be
deemed to have been given or made as of the date so delivered if personally
delivered, and five (5) calendar days after mailing if sent by registered or
certified mail (except that a notice of address shall not be deemed to have
been given until actually received by the addressee.)
Any notice or communication mailed to a Securityholder shall be
mailed to the address of such Securityholder as it appears on the
registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect is sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner
provided above, it is duly given, whether or not the addressee receives it.
In case by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail any notice, as
required by this indenture, then such method of notification as shall be
make with the approval of the Trustee shall constitute a mailing of such
notices.
If the Company mails any notice or communication to Securityholders,
it shall mail a copy to the Trustee and all Agents at the same time.
42
SECTION 12.03 Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section, 312(b) with
other Securityholders with respect to their rights under this Indenture or
the Securities. The Company, the Trustee, the Registrar and anyone else
shall have the protection of TIA Section 312(c).
SECTION 12.04 Certificate and Opinion as to Conditions Precendent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate (which shall include the statement
set forth in Section 12.05) stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
(2) an Opinion of Counsel (which shall include the statements set
forth in Section 12.05) stating that, in the opinion of such counsel, all
such conditions precedent have been complied with.
SECTION 12.05 Statements Required in Certificate and Opinion.
Each Officers' Certificate and Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture shall
include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement, as to the nature and scope of the
examination or investigation upon which the statements or opinions contained
in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of such
person, such covenant or condition has been complied with.
SECTION 12.06 When Treasury Securities Disregarded.
In determining whether the Holders of the required principal amount
of Securities have concurred in any direction, waiver or consent, Securities
owned by the Company or any other obligor on the Securities or by any Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company or such obligor shall be
disregarded, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be so disregarded,
except that for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be so disregarded.
Securities so owned which have been pledged in good faith shall not be
disregarded if the pledgee establishes to the satisfaction of the Trustee
the pledgee's right so to act with respect to the Securities and that the
pledgee is not the Company or any other obligor upon the Securities or any
Person directly or indirectly controlling or controlled by or under direct
common control with the Company or such obligor.
43
SECTION 12.07 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting
of Securityholders. The Registrar, Paying Agent or Conversion Agent may make
reasonable rules for its functions.
SECTION 12.08 Legal Holiday.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banks or
trust companies in the city in which the Trustee is located are not required
to be open. If a payment date is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day that is not a
Legal Holiday, and no interest shall accrue for the intervening period.
SECTION 12.09 Governing Law.
The laws of the State of New York shall govern this Indenture and
the Securities without regard to principles of conflicts of law.
SECTION 12.10 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan
or debt agreement of the Company or a Subsidiary. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
SECTION 12.11 No Recourse against Others.
All liability described in Paragraph 19 of the Securities of any
director, officer, employee or stockholder, as such, of the Company is waived
and released.
SECTION 12.12 Successors.
All agreements of the Company in this Indenture and the Securities
shall bind its successor. All agreements of the Trustee in this Indenture
shall bind its successor.
SECTION 12.13 Multiple Counterparts.
The parties may sign multiple counterparts of this Indenture. Each
signed counterpart shall be deemed an original, but all of them together
represent the same counterpart shall be deemed an original, but all of them
together represent the same agreement.
SECTION 12.14 Table of Contents, Headings, etc.
The table of contents, cross-reference sheet and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 12.15 Severability.
In case any provision in this Indenture or in the Securities shall
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall
44
not in any way be affected or impaired thereby, and Holder shall have no
claim therefor against any party hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the date first written above.
CHOCK FULL O'NUTS CORPORATION
Attest: /s/ MARTIN J. CULLEN___ By:___/s/ HOWARD M. LEITNER__
SECRETARY PRESIDENT
MANUFACTURERS HANOVER TRUST COMPANY
Attest:__/s/ KATHY A. MURPHY________ By:___/s/ D. A. URSITTI, JR._____
ASSISTANT SECRETARY VICE PRESIDENT
STATE OF NEW YORK )
SS:
COUNTY OF NEW YORK )
On the 23rd day of September, 1986, before me personally came Howard
M. Leitner, to me known, who, being by me duly sworn, did depose and say
that the is the President of CHOCK FULL O'NUTS CORPORATION (the "Company"),
a New York corporation described in and which executed the foregoing
instrument; that the seal affixed to said instrument is the seal of the
Company; that the seal affixed to said instrument is the seal of the Company;
that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
_______/s/ ROSA DURSO__________________
Notary Public
ROSA DURSO
STATE OF NEW YORK ) NOTARY PUBLIC, STATE OF NEW YORK
SS: NO. 43-4761049
COUNTY OF NEW YORK ) QUALIFIED IN RICHMOND COUNTY
CERTIFICATE FILED IN NEW YORK COUNTY
COMMISSION EXPIRES SEPT. 30, 1988
On the 23rd day of September, 1986, before me personally came D.A.
URSITTI, JR., to me known, who, being by me duly sworn, did depose and say
that he is the VICE PRESIDENT OF MANUFACTURERS HANOVER TRUST COMPANY (the
"Company"), a New York corporation described in and which executed the
foregoing instrument; that the seal affixed to said instrument is the seal
of the Company; that it was so affixed by authority of the Board of Directors
of said corporation, and that he signed his name thereto by like authority.
______/s/ ROSA DURSO___________________
Notary Public
ROSA DURSO
NOTARY PUBLIC, STATE OF NEW YORK
NO. 43-4761049
QUALIFIED IN RICHMOND COUNTY
CERTIFICATE FILED IN NEW YORK COUNTY
COMMISSION EXPIRES SEPT. 30, 1988
EXHIBIT A
[Face of Debenture]
No. $
CHOCK FULL O'NUTS CORPORATION
8% CONVERTIBLE SUBORDINATED DEBENTURES
DUE SEPTEMBER 15, 2006
CHOCK FULL O'NUTS CORPORATION, a New York corporation,
promises to pay to or registered assigns the principal sum of Dollars,
on September 15, 2006.
Interest Payment Dates: March 15, and September 15
Record Dates: March 1 and September 1
Additional provisions of this Security are set forth on
other side of this Security.
Dated:
CHOCK FULL O'NUTS CORPORATION
By:_____________________________________
By:_____________________________________
Certificate of Authentication:
Manufacturers Hanover Trust Company as
Trustee, certifies that this is one of the
Securities referred to in the within mentioned
Indenture.
By:____________________________________
Authorized Officer
[Back of Debenture]
CHOCK FULL O'NUTS CORPORATION
8% CONVERTIBLE SUBORDINATED DEBENTURES
DUE SEPTEMBER 15, 2006
1. INTEREST.
CHOCK FULL O'NUTS CORPORATION, a New York corporation (the
"Company"), promises to pay interest on the principal amount of this Security
at the rate per annum shown above. The Company will pay interest
semiannually on March 15 and September 15 of each year beginning
March 15, 1987. Interest on the Securities will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from
September 15, 1986; provided that, if there is no existing Default in the
payment of interest, and if this Security is authenticated between a record
date referred to on the face hereof and the next succeeding interest payment
date, interest shall accrue from such interest payment date. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT.
The Company will pay interest on the Securities (except
defaulted interest) to the persons who are the registered Holders of the
Securities at the close of business on the March 1 or September 1 next
preceding the interest payment date. Holders must surrender Securities to a
Paying Agent to collect principal payments. The Company will pay principal
and interest in money of the United States that at the time of payment is
legal tender for payment of public and private debts. The Company, however,
may pay principal and interest by its check payable in such money. It may
mail an interest check to a Holder's registered address.
3. REGISTRAR AND AGENTS.
Initially, Manufacturers Hanover Trust Company
(the "Trustee") will act as Registrar, Paying Agent, Conversion Agent and
agent for service of notices and demands. The Company may change any
Registrar, co-registrar, Paying Agent, Conversion Agent and agent for
service of notices and demands without notice. The Company or any of its
Subsidiaries may act as Registrar, co-registrar, Paying Agent or Conversion
Agent.
4. INDENTURE; LIMITATIONS.
The Company issued the Securities under an Indenture dated
as of September 15, 1986 (the "Indenture"), between the Company and the
Trustee. Capitalized terms herein are used as defined in the Indenture
unless otherwise defined herein. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to
the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as in
effect on the date of the Indenture. The Securities are subject to all
terms, and the Holders of the Securities are referred to the Indenture and
said Act for a statement of them.
A-2
The Securities are general unsecured obligations of the
Company limited to 57,500,000 principal amount. The Indenture does not limit
in any manner the incurrence by the Company of other debt, secured or
unsecured. The Indenture imposes certain limitations on the ability of the
Company to, among other things, make payments in respect of its Capital
Stock, merge or consolidate with any other Person and sell, lease, transfer
or otherwise dispose of its properties or assets.
5. OPTIONAL REDEMPTION.
The Company may, at its option, redeem the Securities, in
whole or from time to time in part (except that the Securities may not be so
redeemed prior to September 15, 1988 unless the closing price per share of
Common Stock of the Company on each of any 20 trading days within a period
of 30 consecutive trading days ending not more 5 days prior to the date upon
which notice of redemption is first mailed is at least 150% of the conversion
price in effect on such day) at the following redemption prices, expressed as
percentages of the principal amount, if redeemed during the 12 months
beginning September 15 of the years indicated below, plus accrued interest to
the Redemption Date.
Year Percentage Year Percentage
1986 108.000% 1991 104.000%
1987 107.200% 1992 103.200%
1988 106.400% 1993 102.400%
1989 105.600% 1994 101.600%
1990 104.800% 1995 100.800%
1996 and
thereafter 100.000%
6. MANDATORY REDEMPTION.
The Company will redeem, on September 15, 1996 and on each
September 15 thereafter through and including September 15, 2005, 7.5% of
the principal amount of Securities originally issued, at a redemption price
of 100% of principal amount, plus accrued interest to the Redemption Date.
The Company may reduce the principal amount of Securities to be redeemed
pursuant to this paragraph 6 by subtracting 100% of the principal amount of
any Securities that the Company had delivered to the Trustee for cancellation
or redeemed otherwise than pursuant to this paragraph 6. The Company may so
subtract the same Security only once.
7. NOTICE OF REDEMPTION.
Notice of redemption will be mailed at least 15 days but not
more than 60 days before the Redemption Date to each Holder of Securities to
be redeemed at his registered address. Securities in denominations larger
than $1000 may be redeemed in part, but only in whole multiples of $1000. On
and after the Redemption Date interest ceases to accrue on Securities or
portions of them called for redemption.
8. CONVERSION.
A Holder of a Security may convert such Security into Common
Stock of the Company at any time before the close of business on
September 15, 2006. If the Security is called for redemption, the Holder
may convert it at any time before the close of business on the Business Day
prior to the date fixed for such redemption. The initial conversion price is
$10.20 per share, subject to adjustment in certain events. To determine the
number of shares issuable upon conversion of a Security, divide the principal
A-3
amount to be converted by the conversion price in effect on the conversion
date. The Company will deliver a check for any fractional share.
To convert a Security, a Holder must (1) complete and sign
the conversion notice on the back of the Security, (2) surrender the Security
to a Conversion Agent, (3) furnish appropriate endorsements and transfer
documents if required by the Registrar or Conversion Agent and (4) pay any
transfer or similar tax if required. No adjustment is to be made on
conversion for interest accrued hereon or for dividends on shares of Common
Stock issued on conversion, provided, however, that if a Security is
surrendered for conversion after the record date for a payment of interest
and on or before the interest payment date, then, notwithstanding such
conversion, the interest falling due on such interest payment date will be
paid to the Person in whose name the Security is registered at the close of
business on such record date. A Holder may convert a portion of a Security
if the portion is $1,000 or an integral multiple of $1,000.
If the Company is a party to a consolidation or merger or a
transfer or lease of all or substantially all of its assets, the right to
convert a Security into Common Stock may be changed into a right to convert
it into securities, cash or other assets of the Company or another.
9. SUBORDINATION.
This Security is subordinated to all Senior Indebtedness of
the Company. To the extent and in the manner provided in the Indenture,
Senior Indebtedness must be paid before any payment may be made to any
Holders of Securities. Any Securityholder by accepting this Security agrees
to the subordination and authorized the Trustee to give it effect.
In addition to all other rights of Senior Indebtedness
described in the Indenture, the Senior Indebtedness shall continue to be
Senior Indebtedness and entitled to the benefits of the subordination
provisions irrespective of any amendment, modification or waiver of any term
of any instrument relating to the Senior Indebtedness or extension or renewal
of the Senior Indebtedness.
10. DENOMINATIONS, TRANSFER, EXCHANGE.
The Securities are in registered form without coupons in
denominations of $1000 and integral multiples of $1000. A Holder may
register the transfer of or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes
and fees required by law or permitted by the Indenture. The Registrar need
not register the transfer of or exchange any Securities selected for
redemption or register the transfer of or exchange any Securities for a
period of 15 days before a selection of Securities to be redeemed.
11. PERSONS DEEMED OWNERS.
The registered Holder of a Security may be treated as the
owner of it for all purposes.
12. UNCLAIMED MONEY.
If money for the payment of principal or interest on any
Securities remains unclaimed for two years, the Trustee and the Paying Agent
will pay the money back to the Company at its request. After that, Holders
must look to the Company for payment.
A-4
13. DISCHARGE PRIOR TO REDEMPTION OR MATURITY.
The Indenture will be discharged and canceled except for
certain sections thereof upon payment of all the Securities, or upon the
irrevocable deposit with the Trustee of funds or U.S. Government Obligations
maturing on or before such payment date or Redemption Date, sufficient to
pay principal, premium, if any, and interest on such payment or redemption.
14. AMENDMENT AND WAIVER.
Subject to certain exceptions, the Indenture or the
Securities may be amended with the consent of the Holders of at least a
majority in principal amount of the Securities then outstanding and any
existing default or compliance with any provision may be waived with the
consent of the Holders of a majority in principal amount of the Securities
then outstanding. Without the consent of or notice of any Securityholder,
the Company may amend the Indenture or the Securities to, among other things,
provide for uncertificated Securities, to cure any ambiguity, defect or
inconsistency or make any other change that does not adversely affect the
rights of any Securityholder.
15. SUCCESSORS.
When a successor assumes all the obligations of its
predecessor under the Securities and the Indenture, the predecessor will be
released from those obligations.
16. DEFAULTS AND REMEDIES.
If an Event of Default, as defined in the Indenture, occurs
and is continuing, the Trustee or the Holders of at least 25% in principal
amount of Securities may declare all the Securities to be due and payable
immediately in the manner and with the effect provided in the Indenture.
Holders of Securities may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may require indemnity satisfactory
to it before it enforces the Indenture or the Securities. Subject to certain
limitations, Holders of a majority in principal amount of the Securities then
outstanding may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of Securities notice of any continuing
default (except a default in payment of principal or interest) if it
determines that withholding notice is in their interests. The Company is
required to file periodic reports with the Trustee as to the absence of
Default.
17. OFFER TO PURCHASE.
If the Company's Consolidated Net Worth at the end of each
of any two consecutive fiscal quarters is less than 50% of the Consolidated
Net Worth of the Company on July 31, 1986, then the Company will be required
to make an offer to acquire on the last day of the fiscal quarter next
following such second fiscal quarter 7.5% of the aggregate principal amount
of Securities originally issued (or such lesser amount as may be outstanding
at that time), at a purchase price of 100% of their principal amount plus
accrued interest to the date of payment. The failure to meet the minimum
required Consolidated Net Worth at the end of any fiscal quarter may only be
counted once toward the Company's requirement to make such an offer.
18. TRUSTEE DEALINGS WITH THE COMPANY.
Manufacturers Hanover Trust Company, the Trustee under the
Indenture, in its individual or any other capacity, may make loans to,
accept deposits from, and perform services for the Company or its affiliates,
and may otherwise deal with the Company or its affiliates, as if it were not
Trustee.
A-5
19. NO RECOURSE AGAINST OTHERS.
No stockholder, director, officer or incorporator, as such,
past, present or future, of the Company or any successor corporation shall
have any liability for any obligation of the Company under the Securities or
the Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Holder of a Security by accepting a
Security waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
20. AUTHENTICATION.
This Security shall not be valid until the Trustee signs the
certificate of authentication on the other side of this Security.
21. ABBREVIATIONS.
Customary abbreviations may be used in the name of a
Securityholder or any assignee, such as: TEN COM (= tenants in common),
TEN ENT (= tenant by the entireties), JT TEN (= joint tenants with rights of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A/
(= Uniform Gifts to Minors Act).
The Company will furnish to any Securityholder upon written
request and without charge a copy of the Indenture. It also will furnish
the text of this Security in larger type. Requests may be made to:
CHOCK FULL O'NUTS CORPORATION,
370 Lexington Avenue,
New York, New York 10017,
Attention: Secretary
A-6
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.08 of the Indenture, check the box: ___
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.08 of the Indenture, state
the amount (which must be a minimum of $1,000 or any multiple of $1,000):
$__________________.
DATE:_______________________ Your Signature:__________________________
(Sign exactly as your name appears on
the other side of this Security)
Signature Guarantee:___________________________________________________
CONVERSION NOTICE
To convert this Security into Common Stock of the Company,
check the box:___
To convert only part of this Security, state the amount
(which must be a minimum of $1,000 or any multiple of $1,000):
$___________________________________________.
If you want the stock certificate made out in another
person's name, fill in the form below:
_____________________________________________________________________
(Insert other person's social security or tax I.D. no.)
_____________________________________________________________________
(Print or type other person's name, address and zip code)
_____________________________________________________________________
_____________________________________________________________________
Date:________________________ Your Signature:________________________
(Sign exactly as your name appears on
the other side of this Security)
A-7
ASSIGNMENT FORM
If you the Holder want to assign this Security, fill in the form below and
have your signature guaranteed:
I or we assign and transfer this Security to
- - --------------------------------------------------------------------------
- - --------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)
- - --------------------------------------------------------------------------
- - -------------------------------------------------------------------------
- - -------------------------------------------------------------------------
- - -------------------------------------------------------------------------
- - -------------------------------------------------------------------------
- - -------------------------------------------------------------------------
- - -------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
- - -------------------------------------------------------------------------
and irrevocably appoint
- - -------------------------------------------------------------------------
- - -------------------------------------------------------------------------
- - -------------------------------------------------------------------------
agent to transfer this Security on the books of the Company. The agent
may substitute another to act for him.
- - -------------------------------------------------------------------------
Date:__________________________ Your signature:_________________________
(Sign exactly as your name appears
on the other side of this Security)
Signature Guarantee:______________________________________________________
INSTRUMENT OF RESIGNATION, APPOINTMENT AND ACCEPTANCE,
dated as of August 9, 1993, among Chock full O'Nuts Corporation, a
corporation duly organized and existing under the laws of the State of New
York, having its principal office at 370 Lexington Avenue, New York,
New York, 10017 (the "Company"), Chemical Bank, successor by merger to
Manufacturers Hanover Trust Company, a banking corporation duly organized
and existing under the laws of the State of New York, having its principal
corporate trust office at 450 West 33rd Street, New York, New York 10001
(the "Resigning Trustee"), and Liberty Bank and Trust Company of Oklahoma
City, National Association, a national banking association duly organized
and existing under the laws of the United States of America having its
principal corporate trust office at 100 N. Broadway, Oklahoma City,
OK 73102 (the "Successor Trustee");
RECITALS
There are presently issued and outstanding
$43,268,000.00 in aggregate principal amount of the Company's 8%
Convertible Subordinated Debentures due September 15, 2006 (the
"Securities") under an Indenture, dated as of September 15, 1986
(the "Indenture"), between the Company and the Resigning Trustee.
The Resigning Trustee wishes to resign as Trustee,
Registrar, Paying Agent, Conversion Agent and agent for service of
notices and demands under the Indenture; the Company wishes to appoint
the Successor Trustee to succeed the Resigning Trustee as Trustee,
Registrar, Paying Agent, Conversion Agent and agent for service of notices
and demands under the Indenture; and the Successor Trustee wishes to
accept such appointment as Trustee, Registrar, Paying Agent, Conversion
Agent and agent for service of otices and demands under the Indenture.
NOW THEREFORE, the Company, the Resigning Trustee and
the Successor Trustee agree as follows:
ARTICLE ONE
THE RESIGNING TRUSTEE
Section 101. Pursuant to Section 7.08 of the Indenture,
the Resigning Trustee hereby confirms previous notification to the Company
that the Resigning Trustee is hereby resigning as Trustee under the
Indenture.
- - -2-
Section 102. The Resigning Trustee hereby represents and
warrants to the Successor Trustee that:
(a) To the best of the knowledge of the Responsible Officers of
the Resigning Trustee assigned to its Corporate Trust Department, no Event of
Default and no event which, after notice or lapse of time or both, would
become an Event of Default, has occurred and is continuing under the
Indenture.
(b) No covenant or condition contained in the Indenture has been
waived by the Resigning Trustee or by the Holders of the percentage in
aggregate principal amount of the Securities required by the Indenture to
effect any such waiver.
(c) There is no action, suit or proceeding pending or, to the
best of the knowledge of the Responsible Officers of the Resigning Trustee
assigned to its Corporate Trust Department, threatened against the Resigning
Trustee before any court or governmental authority arising out of any action
or omission by the Resigning Trustee as Trustee under the Indenture.
Section 103. The Resigning Trustee hereby assigns,
transfers, delivers and confirms to the Successor Trustee all right, title
and interest of the Resigning Trustee in and to the trust under the Indenture
and all the rights, powers and trusts of the Trustee under the Indenture.
The Resigning Trustee shall execute and deliver such further instruments and
shall do such other things as the Successor Trustee may reasonably require so
as to more fully and certainly vest and confirm in the Successor Trustee all
the rights, trusts and powers hereby assigned, transferred, delivered and
confirmed to the Successor Trustee.
Section 104. The Resigning Trustee hereby resigns as Paying
Agent, Registrar, Conversion Agent, agent for service of notices and demands
and as the Office or agency maintained by the Company pursuant to the terms
of the Indenture.
- - -3-
ARTICLE TWO
THE COMPANY
Section 201. The Secretary or Assistant Secretary or the
Company attesting to the execution of this Instrument by the Company hereby
certifies that annexed hereto marked Exhibit A is a copy of Board Resolutions
duly adopted by the Board of Directors of the Company, and in full force and
effect on the date hereof authorizing certain officers of the Company to: (a)
accept the Resigning Trustee's resignation as Trustee, Registrar, Paying
Agent, Conversion Agent, agent for service of notices and demands and as the
Company's office or agency; (b) appoint the Successor Trustee as Trustee,
Registrar, Paying Agent, Conversion Agent, agent for service of notices and
demands and as the Company's office or agency; and (c) execute and deliver
such agreements and other instruments as may be necessary or desirable to
effectuate the succession of the Successor Trustee under the Indenture.
Section 202. The Company hereby appoints the Successor
Trustee as Trustee under the Indenture and confirms to the Successor Trustee
all the rights, powers and trusts of the Trustee under the indenture. The
Company shall execute and deliver such further instruments and shall do such
other things as the Successor Trustee may reasonably require so as to more
fully and certainly vest and confirm in the Successor Trustee all the rights,
trusts and powers hereby assigned, transferred, delivered and confirmed to
the Successor Trustee.
Section 203. The Company hereby appoints the Successor
Trustee as Registrar, Paying Agent, Conversion Agent, agent for service of
notices and demands and as the Company's office or agency maintained pursuant
to the terms of the Indenture.
- - -4-
ARTICLE THREE
THE SUCCESSOR TRUSTEE
Section 301. The Successor Trustee hereby represents and
warrants to the Resigning Trustee and to the Company that the Successor
Trustee is qualified and eligible under the provisions of Section 7.10 of
the Indenture to act as Trustee under the Indenture.
Section 302. The Successor Trustee hereby accepts its
appointment as Trustee under the Indenture and shall hereby be vested with
all the rights, powers, trusts and duties of the Trustee under the Indenture.
Section 303. The Successor Trustee hereby accepts its
appointment as Registrar, Paying Agent, Conversion Agent, agent for service
of notices and demands and as Company's office or agency maintained pursuant
to the terms of the Indenture.
ARTICLE FOUR
MISCELLANEOUS
Section 401. Except as otherwise expressly provided or
unless the context otherwise requires, all terms used herein which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture.
Section 402. This instrument and the resignation,
appointment and acceptance effected hereby shall be effective as of the
opening of business on the date first above written upon the execution and
delivery hereof by each of the parties hereto.
Section 403. Notwithstanding the resignation of the
Resigning Trustee effected hereby, the Company shall remain obligated under
Section 7.07 of the Indenture to compensate, reimburse and indemnify the
Resigning Trustee in connection with its trusteeship under the Indenture.
Section 404. This Instrument shall be governed by and
construed in accordance with the laws of the jurisdiction which govern the
Indenture and its construction.
Section 405. This Instrument may be executed in any number
of counterparts each of which shall be an original, but such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereby have caused this
Instrument of Resignation, Appointment and Acceptance to be duly executed
and their respective seals to be affixed hereunto and duly attested all as
of the day and year first above written.
- - -5-
[Corporate Seal]
CHOCK FULL O'NUTS CORPORATION
By_____________________________
Name: Howard Leitner
Title: President
Attest:
___________________________
Secretary
CHEMICAL BANK
[Corporate Seal]
By_____________________________
Name: G.K. Burke
Title: Vice President
Attest:
______________________________
Assistant Trust Officer
LIBERTY BANK AND TRUST COMPANY
OF OKLAHOMA CITY, NATIONAL
ASSOCIATION
[Corporate Seal]
By_______________________________
Name: Jake Riley
Title: Senior Vice President
Attest:
_______________________
Assistant Secretary
- - -6-
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
On the 11th day of June, 1993, before me personally came
Howard Leitner, to me known, who, being by me duly sworn, did depose and say
that he resides at Chappaqua, NY; that he is a president of Chock Full O'Nuts
Corporation, corporation described in and which executed the above
instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed
pursuant to the authority of the Board of Directors of said corporation; and
that he signed his name thereto pursuant to like authority.
____________________________
Notary Public
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
On the 13th day of April, 1993, before me personally came G.K.
Burke, to me known who, being by me duly sworn, did depose and say that he
resides at 489 Hoyt Street, Darien, CT 06820; that he is a Vice President of
Chemical Bank, a corporation described in and which executed the above
instrument; that he knows the seal of said corporation; that the seal affixe
d to said instrument is such corporate seal; that it was so affixed pursuant
to the authority of the Board of Directors of said corporation; and that he
signed his name thereto pursuant to like authority.
____________________________
Notary Public
- - -7-
STATE OF OKLAHOMA )
) SS:
COUNTY OF OKLAHOMA )
On the 16th day of July, 1993, before me personally came
Jake L. Riley, to me known, who, being by me duly sworn, did depose and say
that he is a Senior Vice President of Liberty Bank and Trust Company of
Oklahoma City, National Association, a national banking association described
in and which executed the above instrument; that he knows the seal of said
association; that the seal affixed to said instrument is such seal; that it
was so affixed pursuant to the authority of the Board of Directors of said
association; and that he signed his name thereto pursuant to like authority.
____________________________
Notary Public
- - -8-
EXHIBIT A
BOARD RESOLUTIONS
The following is a true copy of resolutions duly adopted on April 29, 1993,
by the Board of Directors of Chock Full O'Nuts Corporation.
"RESOLVED, that any officer of this Company is hereby authorized to
accept the resignation of Chemical Bank, successor by merger to
Manufacturers Hanover Trust Company, as Trustee, Registrar, Paying
Agent, Conversion Agent, agent for service of notices and demands
and as Company's office or agency under the Company's Indenture,
dated as of September 15, 1986, and to appoint Liberty Bank and
Trust Company of Oklahoma City as Successor Trustee under said
Indenture and as this Company's agent for the service of notices and
demands in connection with the securities issued under said
Indenture; and
FURTHER RESOLVED, that any officer of this Company is hereby
authorized to enter into such agreements and other instruments as
may be necessary or desirable to effectuate the appointment of said
Successor Trustee under said Indenture."
Chock
Misc.#1
RestrSt.ltr
(CHOCK FULL O'NUTS CORPORATION LETTERHEAD)
January 2, 1988
Dear _____________:
Reference is made to the Incentive Compensation Plan adopted by the
shareholders of Chock Full O'Nuts Corporation ("Chock") on March 1, 1984, as
amended on December 18, 1987 (the "Plan"). This letter agreement sets forth
the terms of an award by Chock in the form of shares of Chock's Common Stock
pursuant to the Restricted Stock Plan described in Article VI of the Plan.
In consideration of the services to Chock Full O'Nuts Corporation
("Chock") which you have rendered, Chock hereby awards to you 60,000 shares
of its Common Stock, $.25 par value per share (the "Shares") pursuant to the
terms and conditions of this letter. Chock represents that the Shares are
fully paid and non-assessable. The Shares are subject to certain
restrictions as provided below.
You are entitled to all the rights and privileges of a holder of the
Shares (including the right to receive and retain all cash dividends declared
thereon). As used herein the term "Shares" shall mean and include, in
addition to the above referenced number of shares, any new shares or other
securities convertible into shares resulting from any merger or
reorganization of Chock, or the recapitalization, reclassification or split
of the Shares, or any stock dividend paid on the Shares.
By accepting the Shares you agree as follows:
1. No Shares shall be sold, conveyed, transferred, pledged,
encumbered or otherwise disposed of (any such disposition being herein called
a "Transfer") prior to March 31, 2001 (the period beginning on the date
hereof and ending on March 31, 2001 being hereinafter called the "Risk
Period"), except that this Transfer restriction shall lapse (a) with respect
to one-seventh (1/7) of the Shares on every other March 31 during the Risk
Period, beginning on March 31, 1989 (i.e. the Transfer restriction shall
lapse with respect to 1/7 of the Shares on March 31, 1989, with respect to an
additional 1/7 of the Shares on March 31, 1991, etc.); (b) with respect to
all of the Shares on the date on which your employment is terminated by Chock
for any reason other than for Cause (as defined below); (c) with respect to
all of the Shares on the date on which you elect to terminate your employment
with Chock for a Good Reason (as defined below) after a Change in Control (as
defined below); and (d) with respect to all of the Shares if your employment
is terminated on account of (i) your death or (ii) your disability (which in
the opinion of your personal physician prevents you from being employed by
Chock full time).
2. If at any time prior to March 31, 2001, either (a) Chock
terminates your employment for Cause or (b) you terminate your employment
with Chock for any reason other than a reason described in subsections (c) or
(d) in paragraph 1 above (each such termination being herein called an "Event
of Retransfer") then, upon such Event of Retransfer, you shall transfer to
Chock that number of the Shares as to which the Transfer restriction shall
still apply on the day following such termination as provided in paragraph 1
above. Upon an Event of Retransfer, you shall deliver to Chock all stock
certificates representing such Shares, duly endorsed with your signature
guaranteed thereon by a New York City bank and with all necessary transfer
stamps affixed, and Chock shall deliver to you a receipt therefor.
Immediately upon such Event of Retransfer, such Shares shall be deemed to
have been transferred to Chock and you shall have no further rights or
privileges as a holder of the Shares so retransferred.
The following terms in this paragraph 2 shall have the meanings
specified below:
(a) A "Change in Control" will be deemed to have occurred if
following
(i) a tender or exchange offer for voting securities of
Chock,
(ii) a proxy contest for the election of directors of
Chock, or
(iii) a merger or consolidation or sale of all or
substantially all of the business or assets of Chock,
the persons constituting the Board of Directors of Chock
immediately prior to the initiation of such event cease to
constitute a majority of the Board of Directors of Chock
upon the occurrence of such event or within one year after
such event.
(b) Termination of your employment with Chock for "Good Reason"
shall mean termination by you of your employment, subsequent to a
Change in Control, because of:
(i) the assignment to you, without your express written
consent, of any duties inconsistent with your positions,
duties, responsibilities, authority and status with Chock and
its subsidiaries immediately prior to such Change in Control,
or a change in your reporting responsibilities, titles or
offices as in effect immediately prior to the Change in
Control, or any removal of you from or any failure to reelect
you to any of such positions, except in connection with the
termination of your employment by you without Good Reason;
(ii) a reduction by Chock in your salary as in effect at
the time of such Change in Control;
(iii) Chock's requiring you to maintain your principal
office or conduct your principal activities anywhere other
than at Chock's principal executive offices in New York City
or at such other place of business where you maintained your
principal office or conducted your principal activities at
the time of such Change in Control;
(iv) the failure by Chock to continue in effect (or to
replace with equivalent plans) any life insurance plan,
hospital-medical plan, dental plan, or disability plan in
which you are participating or eligible to participate at the
time of such Change in Control, or the taking of any action
by Chock which would adversely affect your participation in
or materially reduce your benefits under any such plans (or
equivalent plans) or deprive you of any material fringe
benefit enjoyed or to be enjoyed by you at the time of such
Change in Control; or
(v) a determination made by you in good faith, whether
before or after the date you are eligible for early
retirement under Chock's policy in effect immediately prior
to the Change in Control, that as a result of such Change in
Control you are not able to discharge your duties effectively.
(c) Termination of your employment for "Cause" shall mean
termination by Chock of your employment because of:
(i) your having engaged in any activity in competition
with Chock without Chock's consent;
(ii) your having divulged any secret or confidential
information belonging to Chock without Chock's consent; or
(iii) your dishonesty, misconduct or action that is
damaging or detrimental to Chock or any of its affiliates in
any material respect.
3. You represent and agree that you will only sell, transfer,
pledge or hypothecate any of the Shares pursuant to an effective registration
statement under the Securities Act of 1933 or in a transaction wherein
registration under the Securities Act of 1933 is not required.
4. All certificates for Shares shall be endorsed as follows:
"The shares of stock represented by this certificate are
subject to certain restrictions and obligations stated in
and are transferable only upon compliance with the provisions
of an Agreement dated January 2, 1988 between this
Corporation and the registered holder, a copy of which
Agreement is on file in the office of the Secretary of this
Corporation."
"The shares represented by this certificate have not been
registered under the Securities Act of 1933. The shares
have been acquired for investment and must be held unless
they are subsequently registered under the Securities Act of
1933 or, in the opinion of counsel to Chock, an exemption
from registration under said Act is available. Any routine
sales of the securities which may be made in reliance upon
Rule 144 under said Act, if available, can be made only in
limited amounts in accordance with all of the terms and
conditions of that Rule."
5. In order to facilities compliance with the transactions
described herein, the certificates representing the Shares are being
deposited in escrow with Howard L. Morse, Esq., as Escrowee, together with
stock powers duly endorsed by you, in blank, with your signature guaranteed
thereon by a New York City bank, and shall be held and disposed of by the
Escrowee in accordance with all of the terms hereof. Provided an Event of
Retransfer has not then occurred, the Escrowee, on March 31, 2001 or upon
such earlier date when the Transfer restrictions to which any of the Shares
are subject lapse (or as soon thereafter as is reasonably practicable), shall
return to you such certificates and powers as shall represent the number of
Shares to which the Transfer restrictions shall have lapsed. Such deposit
shall not affect your rights as holder of the Shares. The Escrowee shall be
under no duty except to receive the certificates and dispose of same in
accordance with the terms hereof. The Company may redesignate an Escrowee at
any time on notice to you; provided, however, that if a Change of Control has
occurred and the Escrowee immediately prior to such Change of Control shall
at any time thereafter cease to act as Escrowee, a new Escrowee shall be
designated only by mutual agreement between you and Chock. Your agreement to
any such designation may be withheld by you in your sole discretion. Should
you and Chock fail to designate a new Escrowee within five business days
after notice to you that the original Escrowee has ceased or will cease to
act as Escrowee, the certificates and stock powers for the shares deposited
with the Escrowee shall be delivered to you.
6. This agreement shall be binding upon and inure to the benefit
of you and Chock and your and its respective successors and legal
representatives.
Very truly yours,
CHOCK FULL O'NUTS CORPORATION
By: _________________________
Acceptance by Purchaser:
I hereby purchase the Shares and agree to all of the terms and conditions
described herein.
Dated: As of January 2, 1988
____________________________
Acceptance by Escrowee:
__________________________
Howard L. Morse, Esq.
Dated: As of January 2, 1988
EXHIBIT 3(b)
CK-BYLAW.DOC
10/12/94
AMENDED AND RESTATED
BY-LAWS
of
CHOCK FULL O'NUTS CORPORATION
(a New York Corporation)
CHOCK FULL O'NUTS CORPORATION
BY-LAWS
ARTICLE I - STOCKHOLDERS
1.01 Meetings. Annual and Special Meetings of Stockholders shall
be called and held at such time and place within or without the State of New
York as shall be determined from time to time by the Chairman of the Board,
the Chief Executive Officer or a majority of the members of the Board of
Directors then in office.
1.02 Notice of Meetings. Except as otherwise expressly provided
by statute, written notice of the time, place and purpose or purposes of the
annual and each special meeting of stockholders shall be given by mailing a
copy thereof, not less than ten nor more than fifty days before the meeting,
to each stockholder of record entitled to vote at such meeting and to each
stockholder of record who, by reason of any action proposed at such meeting,
would be entitled to have his stock appraised if such action were taken.
Such copy shall be directed to each such stockholder at his address as it
appears on the stock book unless he shall have filed with the Secretary of
the Corporation a written request that notices intended for him be mailed to
some other address, in which case it shall be mailed to the address
designated in such request.
1.03 Quorum. The presence, in person or by proxy, of the holders
of record of forty percent of the stock outstanding and entitled to vote is
requisite for and shall constitute a quorum for the transaction of business
at all meetings of the stockholders, except as otherwise provided by law or
by the Certificate of Incorporation or by these By-Laws. In the absence of
a quorum, the stockholders present in person or by proxy and entitled to vote
shall have power to adjourn the meeting from time to time, to a designated
time and place, without notice other than announcement at the meeting, until
the requisite amount of stock shall be present, whereupon any business may be
transacted which might have been transacted at the meeting as originally
noticed.
1.04 Voting. At each meeting of stockholders, except as otherwise
provided by statute, by the Certificate of Incorporation, or by these
By-Laws, every holder of record of stock entitled to vote shall be entitled
to one vote in person or by proxy for each share of such stock standing in
his name on the books of the Corporation. Each proxy to vote shall be in
writing and signed by the stockholder or by his duly authorized attorney.
Any stockholder entitled to vote may, on any question, demand a vote by
ballot.
ARTICLE II - BOARD OF DIRECTORS
2.01 Number. The business and affairs of the Corporation shall
be managed by its Board of Directors, consisting of not fewer than nine or
more than twenty-seven directors, the exact number of directors to be
determined from time to time by resolution adopted by the affirmative vote of
a majority of the entire Board of Directors. The directors shall be divided
into there classes, designated Class I, Class II and Class III. Each class
shall consist, as nearly as may be possible, of one-third of the total number
of directors constituting the entire Board of Directors. If the number of
directors is changed, any increase or decrease shall be apportioned among the
classes so as to maintain the number of directors in each class as nearly
equal as possible.
2.02 Election. At each annual meeting of stockholders, successors
to the class of directors whose term expires at the annual meeting shall be
elected by a plurality of the votes cast at such election to serve for a
three-year term. A director shall hold office until the annual meeting for
the year in which his term expires and until his successor shall be elected
and shall qualify, subject however, to prior death, resignation, retirement,
disqualification or removal from office. Each director shall be at least
twenty-one years of age. A director need not be a stockholder, a citizen of
the United States or a resident of the State of New York.
2.03 Vacancies. New created directorships resulting from any
increase in the authorized number of directors or vacancies on the Board of
Directors resulting from death, resignation, retirement, disqualification,
removal from office or any other cause shall be filled only by a majority of
the remaining directors then in office, even if less than a quorum or by the
sole remaining director.
2.04 First Meeting. The newly elected Board of Directors may hold
its first meeting for the purpose of organization and the transaction of
business, if a quorum be present, immediately after each annual meeting of
the stockholders and at the same place, and notice of such meeting need not
be given. Such first meeting may be held at any other time and place which
may be specified in a notice given as hereinafter provided for special
meetings of the Board of Directors or in a consent and waiver of notice
thereof signed by all the directors.
2.05 Chairman of the Board of Directors. The Board of Directors
shall at its first meeting after each annual meeting of stockholders elect
from among its members a Chairman of the Board of Directors who may, but need
not, also be an officer of the Corporation. The Chairman of the Board shall
preside at all meetings of the Board of Directors, unless he delegates this
power to another director.
2.06 Vice Chairmen of the Board of Directors. The Board of
Directors may elect from among its members one or more Vice Chairmen of the
Board of Directors who may, but need not, be officers of the Corporation. In
the absence or inability of the Chairman of the Board a Vice Chairman (in the
order of their election) shall preside at all meetings of the Board of
Directors, unless the Chairman of the Board shall have delegated this power
to another director.
2.07 Regular Meetings. Regular meetings of the Board of Directors
may be held at such places and times as may be fixed from time to time by
resolution of the Board of Directors. Notice of the time and place of
holding of regular meetings shall be given to each director at his residence
or usual place of business by mail at least three days before the meeting or
by telegram, cable, radiogram or personal service at least three days before
the meeting.
2.08 Special Meetings. Special meetings of the Board of Directors
may be called at any time either (a) by the Chairman of the Board of
Directors, (b) by the Chief Executive Officer or (c) upon the written request
of a majority of the directors, in which event the Secretary shall call such
meeting. Notice of the time and place of the holding of special meetings
shall be given to each director at his residence or usual place of business
at least three hours before the meeting by telegram, cable, radiogram,
personal service or telephone. Notice of a special meeting need not be given
to any director who may waive such notice either in writing or by telegram,
cable or radiogram. Except as otherwise provided by these By-Laws or unless
otherwise stated in the notice thereof, any and all business may be
transacted at any meeting without specification of such business in the
notice.
2.09 Place of Meeting. The directors may hold their meetings,
have one or more offices, and keep the books of the Corporation (except as
may otherwise be provided by law), at any place as they may from time to time
determine.
2.10 Participation by Conference Telephone. Any one or more
members of the Board of Directors may participate in a meeting of such Board
of Directors by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear each
other at the same time. Participation by such means shall constitute
presence in person at a meeting.
2.11 Quorum. At all meetings of the Board of Directors the
presence of a majority of the directors shall be necessary and sufficient t
o constitute a quorum for the transaction of business, and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors.
2.12 Removal. Directors of any class of directors may be removed
at any time for cause at any special meeting of stockholders by the
affirmative vote of the holders of at least a majority of the shares entitled
to vote at such meeting. The Board of Directors may, at any time, with
cause, remove any director.
2.13 Powers of Directors. The Board of Directors shall exercise
all the powers of the Corporation, subject to the restrictions imposed by
law, by the Certificate of Incorporation, or by these By-Laws.
2.14 Compensation of Directors. The Board of Directors may
determine, from time to time, the amount of compensation which shall be paid
to its outside (non-employee) members. The Board of Directors shall also
have power, in its discretion, to allow a fixed sum for attendance at each
regular or special meeting of the Board of Directors, or of any Committee of
the Board of Directors; in addition, the Board of Directors shall also have
power, in its discretion, to provide for and pay to directors rendering
services to the Corporation not ordinarily rendered by directors, as such,
special compensation appropriate to the value of such services, as determined
by the Board of Directors from time to time.
2.15 Nominations of Board Members. Only persons who are nominated
in accordance with the procedures set forth in this Section 2.15 shall be
eligible for election as directors. Nominations of persons for election to
the Board of Directors of the Corporation may be made at a meeting of
stockholders (i) by or at the direction of the Board of Directors, or (ii) by
any nominating committee or person appointed by the Board of Directors, or
(iii) by any stockholder of the Corporation entitled to vote for the election
of directors at the meeting who complies with the notice procedures set forth
in this Section 2.15. Such nominations, other than those made by or at the
direction of the Board of Directors, shall be made pursuant to notice in
writing to the Secretary of the Corporation, which notice shall be delivered
to or mailed and received at the principal executive offices of the
Corporation not less than 30 days nor more than 60 days prior to the meeting;
provided, however, that in the event that less than 40 days' notice or prior
public disclosure of the date of the meeting is given or made to
stockholders, any notice of nomination by the stockholder must be so
received not later than the close of business on the 10th day following the
earlier of (i) the day on which such notice of the date of the meeting was
mailed or (ii) the day on which such public disclosure was made.
A stockholder's notice of nomination shall set forth (a) as to each
person whom the stockholder proposes to nominate for election or reelection
as a director, (i) the name, age, business address and residence address of
such person, (ii) the principal occupation or employment of such person,
(iii) the class and number of shares that are entitled to vote of the
Corporation which are beneficially owned by such person and (iv) any other
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required,
in each case pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (including, without limitation, such person's written
consent to being named in the proxy statement as a nominee and to serving as
a director, if elected); and (b) as to the stockholder giving the notice (i)
the name and address, as they appear on the Corporation's books, of such
stockholder and (ii) the class and number of shares that are entitled to vote
of the Corporation which are beneficially owned by such stockholder. At the
request of the Board of Directors any person nominated by the Board of
Directors for election as a director shall furnish to the Secretary of the
Corporation that information required to be set forth in a stockholder's
notice of nomination which pertains to the nominee. The Corporation may
require any proposed nominee to furnish such other information as may
reasonably be required by the Corporation to determine the eligibility of
such proposed nominee to serve as director of the Corporation.
No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth in
this Section 2.15. The Chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed by the By-Laws, and if he should so
determine, he shall so declare to the meeting and the defective nomination
shall be disregarded.
ARTICLE III - COMMITTEES
3.01 Designation of Committees. The Board of Directors, by
resolution adopted by a majority of the whole Board of Directors, may
designate one or more Committees consisting of three or more directors, as
the Board of Directors by like resolution from time to time may determine.
The Board of Directors shall have power at any time to fill vacancies in
these Committees and to remove any member or members thereof either for or
without cause.
3.02 Powers of Committees. All Committees established by the
Board shall have only such power and authority as specifically delegated to
it by the Board of Directors.
3.03 Procedure; Meetings; Quorum. All Committees shall keep
regular minutes of their acts and proceedings and report the same to the
Board of Directors and each Committee may meet at stated times without notice
or on notice to all by one of their number. A majority of each Committee
shall constitute a quorum for the transaction of business, and the act of a
majority of those present at a meeting at which a quorum is present shall be
the act of the Committee.
ARTICLE IV - OFFICERS
4.01 Titles and Election. The officers of the Corporation, who
shall be chosen by the Board of Directors at its first meeting after each
annual meeting of stockholders, shall not be limited in number, but shall
include a Chief Executive Officer, a President, one or more Vice-Presidents,
a Secretary and a Treasurer. The Board of Directors may choose additional
officers and agents as it shall deem necessary, and may define their powers
and duties. One person may hold any two offices except those of President
and Secretary. The Chief Executive Officer and the President shall be chosen
from among the directors; the other officers need not be directors.
4.02 Terms of Office. The officers shall hold office until their
successors are chosen and qualify.
4.03 Removal. Any officer may be removed, either with or without
cause, at any time, by the affirmative vote of a majority of the Board of
Directors.
4.04 Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors or to the Chief Executive Officer or
to the Secretary. Such resignation shall take effect at the time specified
therein and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
4.05 Vacancies. If the office of any officer becomes vacant by
reason of death, resignation, retirement, disqualification, removal from
office, or otherwise, the directors may choose a successor, who shall hold
office for the unexpired term in respect of which such vacancy occurred.
4.06 Chief Executive Officer. The Chief Executive Officer of the
Corporation shall preside at all meetings of the stockholders, unless he
delegates this power to another officer or director. He shall exercise the
powers and perform the duties usual to the chief executive officer and shall
have general management and control of the affairs and business of the
Corporation; he shall appoint and discharge employees and agents of the
Corporation and fix their compensation; he shall see that all orders and
resolutions of the Board of Directors are carried into effect; and shall do
and perform such other duties as from time to time may be assigned to him by
the Board of Directors. He shall have the power to execute bonds, mortgages
and other contracts, agreements and instruments of the Corporation. Unless
otherwise ordered by the Board of Directors, the Chief Executive Officer or
another officer of the Corporation designated by the Chief Executive Officer,
shall have full power and authority on behalf of the Corporation to attend
and to act and to vote at any meetings of security holders of corporations in
which the Corporation may hold securities, and at such meetings shall possess
and may exercise any and all rights and powers incident to the ownership of
such securities, and which, as the owner thereof, the Corporation might have
possessed and exercised, if present. The Board of Directors by resolution
from time to time may confer like powers upon any other person or persons.
4.07 President. The President shall do and perform such duties as
from time to time may be assigned to him by the Board of Directors and the
Chief Executive Officer and, in the absence or inability of the Chief
Executive Officer, the President shall preside at all meetings of the
stockholders unless the Chief Executive Officer shall have designated this
power to another officer or director. He shall have the power to execute
bonds, mortgages and other contracts, agreements and instruments of the
Corporation.
4.08 Vice-Presidents. The Board of Directors may elect one or
more Vice-Presidents who shall perform such duties as the Chief Executive
Officer or the President shall direct and as are incident to the office of
Vice-President.
4.09 Secretary. The Secretary shall attend all sessions of the
Board of Directors and all meetings of the stockholders and record all votes
and the minutes of proceedings in a book to be kept for that purpose. He
shall give, or cause to be given, notice of all meetings of the stockholders
and of the Board of Directors, and shall perform such other duties as may be
prescribed by the Board of Directors. The Secretary shall, when authorized
by the Board of Directors, affix the corporate seal to any instrument
requiring it, and when so affixed, it shall be attested by the signature of
the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer any one of whom may affix the seal to any such instrument in the
event of the absence or disability of the Secretary.
4.10 Treasurer. The Treasurer shall be responsible for disbursing
the corporate funds as may be ordered by the Board of Directors, taking
proper vouchers for such disbursements, and shall render to the Chief
Executive Officer and directors, at the regular meetings of the Board of
Directors, or whenever they may require it, an account of all his
transactions as Treasurer.
4.11 Duties of Officers May Be Delegated. In case of the absence
of any officer of the Corporation, or for any other reason that the Board of
Directors may deem sufficient, the Board of Directors may delegate, for the
time being, the powers or duties, or any of them, of such officer to any
other officer, or to any director.
4.12 Authorized Signatures. Other than routine purchases and
sales of products used in the normal operation of business of the
Corporation, no one may sign any agreement obligating the Corporation, or
any of its subsidiaries, except the Chief Executive Officer or the President
or any of them may give such authority in writing to their designee or
designees.
ARTICLE V - SEAL
5.01 Corporate Seal. The seal of the Corporation shall be in
such form as shall be approved by the Board of Directors and may be altered
from time to time at the discretion of the Board of Directors.
ARTICLE VI - CHECKS, DRAFTS, NOTES, ETC.
6.01 Execution of Checks, Drafts, Notes, etc. All checks, drafts,
notes and other instruments or orders for the payment of money shall be
signed by such officer or officers as the Board of Directors from time to
time may designate.
ARTICLE VII - CERTIFICATES OF STOCK AND TRANSFER OF STOCK
7.01 Certificates of Stock. Certificates of stock shall be in
such form as shall be approved by the Board of Directors, shall be entered
in the books of the Corporation as they are issued and shall exhibit the
holder's name. Each certificate shall be signed by the Chairman of the
Board, Chief Executive Officer, President or a Vice-President and by a
Secretary or the Treasurer and sealed with the seal of the Corporation.
Such seal may be a facsimile, engraved or printed. Where any such
certificate is signed by a transfer agent or transfer clerk and by a
registrar, the signature of any such officers upon such certificate may be
facsimiles, engraved or printed. In case any such officer who has signed or
whose facsimile signature has been placed upon such certificate shall have
ceased to be such before such certificate is issued, it may be issued by the
Corporation with the same effect as if such officer had not ceased to be such
at the date of issue.
7.02 Transfers of Stock. Transfers of shares of stock shall be
made only upon the books of the Corporation by the registered holder in
person or by attorney, duly authorized and upon surrender of the certificate
or certificates for such shares, properly assigned for transfer.
7.03 Lost or Destroyed Stock Certificates. Any person claiming a
certificate of stock to be lost or destroyed shall make an affidavit or
affirmation of the fact and shall give the Corporation a bond of indemnity in
form and with one or more sureties satisfactory to the Board of Directors,
sufficient to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss of any such certificate, whereupon
a new certificate may be issued of the same tenor and for the same number of
shares as the one alleged to be lost or destroyed. In the issuing of said
new certificate, the Corporation shall be entitled to treat the holder of
record of any share or shares of stock as the holder in fact thereof, and
accordingly, shall not be bound to recognize any equitable or other claim to
or interest in such shares on the part of any other person, whether or not
it shall have express or other notice thereof, save as expressly provided by
the laws of the State of New York.
ARTICLE VIII - CLOSING TRANSFER BOOKS OR SETTING RECORD DATE
8.01 Meetings of Stockholders. The Board of Directors may
prescribe a period not exceeding fifty days prior to the date of meetings of
the stockholders during which no transfer of stock on the books of the
Corporation may be made or, in lieu of prohibiting the transfer of stock, the
Board of Directors may fix a time not more than fifty days prior to the date
of any meeting of stockholders as the time as of which stockholders entitled
to notice of and to vote at such meeting shall be determined, and all persons
who are holders of record of voting stock at such time and no others shall be
entitled to notice of and to vote at such meeting.
8.02 Distributions. The Board of Directors may fix a time not
exceeding forty days preceding the date fixed for the payment of any dividend
or the making of any distribution, or for the delivery of evidences of rights
or evidences of interests arising out of any change or conversion or exchange
of capital stock, as a record time for the determination of the stockholders
entitled to receive any such dividend, distribution, right or interest, and
in such case only stockholders of record at the time so fixed shall be
entitled to receive such dividend, distribution, right or interest. The
Board of Directors at its option in lieu of so fixing a record time, may
prescribe a period not exceeding forty days prior to the date for such
payment, distribution or delivery during which no transfer of stock on the
books of the Corporation may be made.
ARTICLE IX - AMENDMENT
9.01 Amendment of By-Laws. These By-Laws may be altered, amended
or repealed at any regular or special meeting of the Board of Directors, by
the affirmative vote of a majority of the whole Board of Directors, or at any
regular or special meeting of the stockholders by the affirmative vote of
the holders of a majority of the stock outstanding and entitled to vote
thereon; provided that, in either case, notice of the proposed alteration,
amendment or repeal shall have been stated in the notice of such meeting.
Any By-Law made or amended by the Board of Directors may be altered or
repealed by the stockholders.
