<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 30, 1997
CHOCK FULL O'NUTS CORPORATION
(Exact Name of Registrant as Specified in Charter)
New York
(State or Other Jurisdiction
of Incorporation)
1-4183 13-0697025
(Commission (IRS Employer
File Number) Identification No.)
370 Lexington Avenue, New York, NY 10017
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 532-0300
N/A
(Former Name or Former Address, if Changed Since Last Report)
Item 5: Other Events
Chock full O'Nuts Corporation (the "Company") has entered into an
Amended and Restated Rights Agreement, dated as of December 30, 1997, with the
American Stock Transfer & Trust Company, as successor Rights Agent, which
amends and restates in its entirety the Rights Agreement, dated as of December
30, 1987 between the Company and IBJ Schroder Bank and Trust Company, as
rights agent (as amended, the "Rights Plan"), which was scheduled to expire in
accordance with its terms on December 30, 1997, to, among other things, extend
the Rights Plan for an additional ten year term expiring December 30, 2007.
The Rights Plan has also been amended to, among other things,(i)
establish a new exercise price of $28 per right, subject to adjustment; (ii)
reduce the redemption price of each right from $.05 to $.01 per right and
permit the redemption price for the rights to be paid in cash, shares of
common stock or such other consideration as may be deemed appropriate by the
Board of Directors of the Company; (iii) add an "exchange provision" which
will give the Board of Directors the option, under certain circumstances, to
exchange each outstanding right for one share of common stock; (iv) provide
<PAGE 1 of 3>
certain exclusions from the operation of the Rights Plan for certain
inadvertent acquisitions; (v) provide that the rights will become
exerciseable and will trade separately from shares of the Company's common
stock on the earlier of (a) the date on which, without the prior consent of
the Company, a person or group (an "Acquiring Person") publicly announces that
it has acquired 20% or more of the outstanding voting power of the Company or
(b) ten business days (versus ten calendar days under the Rights Plan prior to
amendment) after a person or group commences a tender or exchange offer that
would result in such person or group 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 and (vi) name American Stock Transfer & Trust
Company as successor Rights Agent.
The foregoing description of the amendments to the Rights Plan does
not purport to be complete and is qualified in its entirety by reference to
the Amended and Restated Rights Agreement, dated as of December 30, 1997,
between the Company and American Stock Transfer & Trust Company, as Rights
Agent, a copy of which is attached hereto as an exhibit and incorporated
herein by reference.
Item 7: Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
Exhibit A: Amended and Restated Rights Agreement, dated as of
December 30, 1997, between Chock full O'Nuts
Corporation and American Stock Transfer & Trust Company,
as Rights Agent, which includes, as Exhibit A
thereto, the form of Rights Certificate and, as
Exhibit B thereto, the Summary of Rights to
Purchase Common Stock.
Exhibit B: Press Release with respect to the amendments to
the Rights Plan dated December 30, 1997
<PAGE 2 of 3>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Chock full O'Nuts Corporation has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
CHOCK FULL O'NUTS CORPORATION
Dated: December 30, 1997
By: /s/ HOWARD M. LEITNER
Howard M. Leitner
Its Executive Vice President and
Chief Financial Officer
<PAGE 3 of 3>
EXHIBIT A
CHOCK FULL O' NUTS CORPORATION
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY
RIGHTS AGENT
Amended and Restated Rights Agreement
Dated as of December 30, 1997
Table of Contents
Section...................................................................Page
Section 1. Certain Definitions............................................1
Section 2. Appointment of Rights Agent....................................4
Section 3. Issue of Rights Certificates...................................4
Section 4. Form of Rights Certificates....................................6
Section 5. Signature, Countersignature and Registration...................7
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificate; Mutilated, Destroyed, Lost or Stolen Rights
Certificates...................................................7
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights..8
Section 8. Cancellation and Destruction of Rights Certificates...........10
Section 9. Reservation and Availability of Common Stock..................11
Section 10. Common Stock Record Date......................................12
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
.............Number of Rights..............................................12
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares........................................................19
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.................................................19
Section 14. Additional Covenant...........................................21
Section 15. Fractional Rights and Fractional Shares.......................22
Section 16. Rights of Action..............................................23
Section 17. Agreement of Rights Holders...................................23
Section 18. Rights Certificate Holder Not Deemed a Shareholder............24
Section 19. Concerning the Rights Agent...................................24
Section 20. Merger or Consolidation or Change of Name of Rights Agent.....24
Section 21. Duties of Rights Agent........................................25
Section...................................................................Page
Section 22. Change of Rights Agent........................................27
Section 23. Issuance of New Rights Certificates...........................28
Section 24. Redemption and Termination....................................28
Section 25. Exchange......................................................30
Section 26. Notice of Certain Events......................................31
Section 27. Notices.......................................................31
Section 28. Supplements and Amendments....................................32
Section 29. Determination and Actions by the Board of Directors, etc......33
Section 30. Successors....................................................33
Section 31. Benefits of this Agreement....................................33
Section 32. Severability..................................................33
Section 33. Governing Law.................................................34
Section 34. Counterparts..................................................34
Section 35. Descriptive Headings..........................................34
Exhibit A -- Form of Rights Certificate...................................A-1
Exhibit B -- Form of Summary of Rights....................................B-1
AMENDED AND RESTATED RIGHTS AGREEMENT
This Amended and Restated Rights Agreement, dated as of December 30,
1997 (this "Agreement"), between Chock full O'Nuts Corporation, a New York
corporation (the "Company") and American Stock Transfer & Trust Company, a New
York corporation, as successor rights agent (the "Rights Agent") amends and
restates in its entirety the Rights Agreement, dated as of December 30, 1987
(the "Original Agreement"), between the Company and IBJ Schroder Bank & Trust
Company, a New York banking corporation, as 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 authorized 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 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"); and
WHEREAS, in connection with the foregoing, the Company entered into
the Original Agreement with IBJ Schroder Bank & Trust Company, a New York
banking corporation, as rights agent, which as of March, 1988, was succeeded
by Bank of New York, a New York banking corporation, as successor rights agent
upon the latter's succession to the former's corporate trust business;
WHEREAS, the Board of Directors of the Company has determined that
it would be desirable to extend and amend, in certain respects, the Original
Agreement as provided herein and to name American Stock Transfer & Trust
Company as successor Rights Agent hereunder; and
WHEREAS, the Board of Directors of the Company has authorized the
amendment and restatement of the Original Agreement as set forth herein;
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 December 30,
1987, 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, (v) any Person who or which, together
with all Affiliates and Associates of such Person, was the Beneficial Owner of
securities representing 20% or more of the Voting Power December 30, 1987
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 December 30, 1987, (vi) any Person who or
which, together with all Affiliates and Associates of such Person, is the
Beneficial Owner of securities representing 20% or more of the Voting Power,
but less than 25% of the Voting Power, and who or which has reported or is
required to report such ownership on Schedule 13G under the Exchange Act (or
any comparable or successor report) or on Schedule 13D under the Exchange Act
(or any comparable or successor report) which Schedule 13D does not state any
intention to or reserve the right to control or influence the management or
policies of the Company or engage in any of the actions specified in Item 4 of
such Schedule (other than the disposition of the Common Stock) and, within 10
Business Days of being requested by the Company to advise it regarding the
same, certifies to the Company that such Person, together with all Affiliates
and Associates of such Person, acquired Voting Power in excess of 19.9%
inadvertently and without knowledge of the terms of the Rights and who or
which, together with all Affiliates and Associates of such Person, thereafter
does not acquire additional Voting Power while the Beneficial Owner of 20% or
more of the Voting Power with respect to the shares of Common Stock then
outstanding; provided, however, that if the Person requested to so certify
fails to do so within 10 Business Days, then such Person shall become an
Acquiring Person immediately after such 10 Business Day period, or (vii) any
Person who or which, together with all Affiliates and Associates of such
Person, becomes an Acquiring Person solely as a result of a reduction in the
number of shares of Common Stock outstanding due to the repurchase of shares
of Common Stock by the Company, unless and until such Person, together with
all Affiliates and Associates of such Person, shall purchase or otherwise
become the Beneficial Owner of additional Voting Power constituting 1% or more
of Voting Power with respect to the then outstanding shares of Common Stock.
(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.
Page 2 of 34
(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 or understanding
(whether or not in writing) or upon the exercise of conversion 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 Associates 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 beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof) with which such
Person or any of such 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; provided, however, that nothing in this paragraph
(c) shall cause or be deemed to cause a Person engaged in business as an
underwriter of securities to be the "Beneficial Owner" of, or to "beneficially
own," any securities acquired through such Person's participation in good
faith in a firm commitment underwriting of securities until the expiration of
forty days after the date of such acquisition.
(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
Page 3 of 34
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 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.
(j) "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.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the Stock Acquisition Date or (ii)
the tenth Business 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
Page 4 of 34
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 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, exchange,
expiration or termination of the Rights), the Rights will be evidenced by such
certificates for the Common Stock with or without 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, exchange, 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.
(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 an Amended and Restated
Rights Agreement between Chock full O'Nuts Corporation and American
Stock Transfer & Trust Company (the "Rights Agent"), dated as of
December 30, 1997 (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 or exchanged, may
expire or may be evidenced by separate certificates and will no
Page 5 of 34
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 11 (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 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 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:
Page 6 of 34
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. Signature, Countersignature and Registration.
The Rights Certificates shall be executed on behalf of the Company 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 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, is an officer of the Company although at the date
of the execution of this Rights Agreement any such person was not such an
officer of the Company.
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 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 Rights Certificates (other than
Rights Certificates representing Rights that have been exchanged pursuant to
Section 25 hereof) may be transferred, split up, combined or exchanged for
Page 7 of 34
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 (other than Rights Certificates representing
Rights that have been exchanged pursuant to Section 25 hereof) 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 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, at or prior to the earliest of (i) the close of business
on December 30, 2007 (the "Final Expiration Date"), (ii) the consummation of a
transaction contemplated by Section 13(d) hereof, (iii) the time at which the
Rights are redeemed as provided in Section 24 hereof or (iv) the time at which
the Rights are exchanged by the Company as provided in Section 25 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
Page 8 of 34
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 a 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 be $28.00, 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.
(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, 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 Rights Agent shall indicate on the Rights
Certificate the number of Rights represented thereby which continue to include
Page 9 of 34
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 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 of an Acquiring Person 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 the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
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.
Page 10 of 34
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 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 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
Page 11 of 34
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 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.
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
Page 12 of 34
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
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
of 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, 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 to
Section 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 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 therefor; or (B) issue debt or equity securities
Page 13 of 34
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 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 described 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.
(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 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;
Page 14 of 34
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
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 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
Page 15 of 34
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 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 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
Page 16 of 34
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 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 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 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
Page 17 of 34
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.
(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 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 extent so
exercised and shall not otherwise affect the rights represented by the Rights
Page 18 of 34
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 27 hereof.
The Rights Agent shall be fully protected in relying on any such certificate
and on any adjustment therein contained.
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 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
Page 19 of 34
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
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 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
Page 20 of 34
set forth in paragraph (a) and (b) of this Section 13 and further providing
that, as soon as practicable after the date of any 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 of the Rights historical financial
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 transfers. The rights
under this Section 13 shall be in addition to the rights to exercise Rights
and adjustments under Section 11 (a)(ii) 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 or which 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 consideration 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 Covenant.
(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 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
Page 21 of 34
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 28
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. 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 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.
Page 22 of 34
(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 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 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.
Page 23 of 34
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 26
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 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 may be consolidated, or any corporation resulting
Page 24 of 34
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 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 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
Page 25 of 34
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
covenant or condition contained by this Agreement or in any Rights
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11, 13 or 25 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 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
Page 26 of 34
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 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.
(1) 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' 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
Page 27 of 34
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 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
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 $.01 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").
Page 28 of 34
(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 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. The Company may, at its
option, pay the Redemption Price in cash, common stock (based on the "current
market price", as defined in Section 11(d) hereof, of the Common Stock at the
time of redemption) or any other form of consideration deemed appropriate by
the Board of Directors.
(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 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
Page 29 of 34
upon such action, all outstanding Rights Certificate shall be null and void
without any further action by the Company.
Section 25. Exchange.
(a) The Board of Directors of the Company may, at its option, at
any time after any Person, who or which together with all Affiliates and
Associates of such Person, becomes an Acquiring Person, exchange all or part
of the then outstanding and exercisable Rights (which shall not include Rights
that have become void pursuant to the provisions of Section 7(e) hereof) for
Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors of the Company shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any
subsidiary of the Company, any employee benefit plan of the Company or any
such subsidiary, or any entity holding Common Stock for or pursuant to the
terms of any such plan), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of fifty percent (50%) or more of the
Voting Power.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of this
Section 25 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company promptly shall
mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Company.
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
exchange will state the method by which the exchange of the Common Stock for
Rights will be effected and, in the event of any partial exchange, the number
of Rights which will be exchanged. Any partial exchange shall be effected pro
rata based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 7(e) hereof) held by each holder of
Rights.
(c) In the event that there shall not be sufficient Common Stock
issued but not outstanding or authorized but unissued to permit any exchange
of Rights as contemplated in accordance with this Section 25, the Company
shall take all such action as may be necessary to authorize additional shares
of Common Stock for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock,
Page 30 of 34
there shall be paid to the registered holders of the Right Certificates with
respect to which such fractional shares of Common Stock would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole share of Common Stock. For the purposes of this subsection
(d), the current market value of a whole share of Common Stock shall be the
closing price of a share of Common Stock (as determined pursuant to Section
11(d) hereof) for the Trading Day immediately prior to the date of exchange
pursuant to this Section 25.
Section 26. 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 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 27 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 (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 27 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 27. 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
Page 31 of 34
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 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:
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
Attention: Corporate Trust 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 28. 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 holders of Rights 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 28, 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.
Page 32 of 34
Section 29. 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 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 the Rights or to amend this 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 30. Successors.
All the covenants 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 31. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any Person 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).
Section 32. 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.
Page 33 of 34
Section 33. 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 34. 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 35. 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.
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: Marvin I. Haas
Title: Vice President, Treasurer Title: President and
and Secretary Chief Executive Officer
Attest: AMERICAN STOCK TRANSFER & TRUST
COMPANY
[Seal]
- ---------------------------- By: ---------------------------
Name: Name: Herbert J. Lemmer
Title: Assistant Secretary Title: Corporate Trust
Officer
Page 34 of 34
Exhibit A
[Form of Rights Certificate]
Certificate No. R- ------------------- Rights
NOT EXERCISABLE AFTER DECEMBER 30, 2007, OR EARLIER UNDER CERTAIN
CIRCUMSTANCES AS SET FORTH IN THE RIGHTS AGREEMENT OR IF NOTICE OF
REDEMPTION OR EXCHANGE BY THE COMPANY IS GIVEN. THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY AT $.01 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, as amended and restated as
of December 30, 1997 (the "Rights Agreement") between Chock Full O'Nuts
Corporation, a New York corporation (the "Company"), and American Stock
Transfer & Trust Company as successor rights agent (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, 2007 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 $28.00 per share, subject to
adjustment (the "Purchase Price"), upon presentation and surrender of this
Rights Certificate with the appropriate Form of Election to Purchase duly
executed. As provided in the Rights Agreement, the number of Rights evidenced
by this Rights Certificate, the number of Common Shares or other securities
which may be purchased upon the exercise of the Rights evidenced by this
Rights Certificate and the Purchase Price set forth above are subject to
modification and adjustment upon the happening of certain events.
This Rights 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 hereunder of
the Rights Agent, the Company and the holders of the Rights Certificates.
Copies of the Rights Agreement are on file at the principal office of the
Company and are also available upon written request to the Company.
- -----------------------
* The portion of the legend in brackets shall be inserted only if applicable.
A-
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office of the Rights Agent, may be exchanged
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 redemption price of $.01 per Right. Subject to the provisions of the Rights
Agreement, the Company, 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 will become void without any
further action by the Company.
No fractional shares of Common Stock may 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 the 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.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
A-
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: --------------------------
Name: Name:
Title: Title:
Countersigned
AMERICAN STOCK TRANSFER & TRUST COMPANY
- -----------------------------
Authorized Signature
A-
[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 sells, 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: --------------------------
-------------------------
Signature
Signature Guaranteed:
[Signatures must be guaranteed by an eligible quarantor institution (a bank,
stock broker, savings and loan association or credit union with membeship in
an approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of
the Securities Exchange Act of 1934.]
A-
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
or which 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 or which is, was or subsequently became
an Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated: ------------------- ------------------------
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-
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 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)
________________________________________________________________________
Date: _________________ _______________________
Signature
Signature Guaranteed:
[Signatures must be guaranteed by an eligible quarantor institution (a bank,
stock broker, savings and loan association or credit union with membeship in
an approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of
the Securities Exchange Act of 1934.]
A-
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 or which 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 or which 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 or which is, was or subsequently became
an Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Date: _________________ _____________________
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-
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 irrevocably 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)
________________________________________________________________________
Date: _________________ ______________________
Signature
Signature Guaranteed:
[Signatures must be guaranteed by an eligible quarantor institution (a bank,
stock broker, savings and loan association or credit union with membeship in
an approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of
the Securities Exchange Act of 1934.]
A-
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
or which 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 or which is, was or subsequently became
an Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Date: _________________ _________________
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-
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 $28 per share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth
in an Amended and Restated Rights Agreement, dated as of December 30, 1997
(the "Rights Agreement"), between the Company and American Stock Transfer &
Trust Company, as successor 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 20% or more of the Company's voting power (any such 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 business 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 of
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 with or
without 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, exchange or expiration
of the Rights), new Common Stock certificates issued after the Record Date
(including Common Stock certificates 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, exchange 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
B-
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, 2007, (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 or exchange 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 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 thereof 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").
B-
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 $.01 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 that such redemption is incidental to a merger or other business
combination transaction or series of transactions involving the Company but
not involving an 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.
At any time after the acquisition by a person or group of affiliated
or associated persons of beneficial ownership of 20% or more of the Company's
voting power and prior to the acquisition by any such person or group of 50%
or more of the Company's voting power, the Board of Directors may, at its
option, exchange all or part of the then outstanding and existing Rights
(other than Rights owned by such person or group which shall become void) for
Common Stock at an exchange ratio of one share of Common Stock per Right
(subject to adjustment).
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, as amended, has been filed with the
Securities and Exchange Commission as an Exhibit to the Company's Registration
Statement on Form 8-A, as amended. 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-3
EXHIBIT B
AT THE COMPANY: AT THE FINANCIAL RELATIONS BOARD:
- -------------- --------------------------------
Howard Leitner General Information: Media Contact:
Chief Financial Officer Jerry Meyer Alicia Nieva-Woodgate
(212) 532-0300 (212) 661-8030 (212) 661-8030
FOR IMMEDIATE RELEASE
December 30, 1997
CHOCK FULL O'NUTS EXTENDS SHAREHOLDER RIGHTS PLAN
New York, NY, December 30, 1997 -- Chock full o'Nuts Corporation today
announced that its Board of Directors has extended the Company's shareholder
rights plan through December 30, 2007. Without Board action, the plan would
have expired on December 30, 1997.
The Board also approved amendments to the plan which, among other
things, establish a new exercise price of $28 per right and a new redemption
price of $.01 per right and give the Board the option of exchanging each right
for one share of the company's common stock under certain circumstances.
While Chock full o'Nuts, as a matter of policy, does not comment on
matters relating to control, it said the extension and amendment of the
shareholder rights plan were not done in response to any effort to acquire
control of the Company.
A copy of the Amended and Restated Rights Agreement will be filed as an
exhibit to an amendment to the Company's Registration Statement on Form 8-A
with the Securities and Exchange Commission and may be obtained from the
Company.
Chock full o'Nuts roasts, packs and markets regular, instant and
decaffeinated coffees under the Chock full o'Nuts label. Its best known
coffee product is its premium, vacuum-packed, all-method grind coffee. The
Company is also one of the largest marketers of food service and private label
coffee, tea and related products. Chock is also developing a double drive-
thru coffee chain, Quikava, in the northeast.
# # #
To receive additional information on Chock full o'Nuts, via fax at no
charge, dial 1-800-PRO-INFO and enter code CHF.
