Chock
Misc.#1
RestrSt.ltr
(CHOCK FULL O'NUTS CORPORATION LETTERHEAD)
January 2, 1988
Dear _____________:
Reference is made to the Incentive Compensation Plan adopted by the
shareholders of Chock Full O'Nuts Corporation ("Chock") on March 1, 1984, as
amended on December 18, 1987 (the "Plan"). This letter agreement sets forth
the terms of an award by Chock in the form of shares of Chock's Common Stock
pursuant to the Restricted Stock Plan described in Article VI of the Plan.
In consideration of the services to Chock Full O'Nuts Corporation
("Chock") which you have rendered, Chock hereby awards to you 60,000 shares
of its Common Stock, $.25 par value per share (the "Shares") pursuant to the
terms and conditions of this letter. Chock represents that the Shares are
fully paid and non-assessable. The Shares are subject to certain
restrictions as provided below.
You are entitled to all the rights and privileges of a holder of the
Shares (including the right to receive and retain all cash dividends declared
thereon). As used herein the term "Shares" shall mean and include, in
addition to the above referenced number of shares, any new shares or other
securities convertible into shares resulting from any merger or
reorganization of Chock, or the recapitalization, reclassification or split
of the Shares, or any stock dividend paid on the Shares.
By accepting the Shares you agree as follows:
1. No Shares shall be sold, conveyed, transferred, pledged,
encumbered or otherwise disposed of (any such disposition being herein called
a "Transfer") prior to March 31, 2001 (the period beginning on the date
hereof and ending on March 31, 2001 being hereinafter called the "Risk
Period"), except that this Transfer restriction shall lapse (a) with respect
to one-seventh (1/7) of the Shares on every other March 31 during the Risk
Period, beginning on March 31, 1989 (i.e. the Transfer restriction shall
lapse with respect to 1/7 of the Shares on March 31, 1989, with respect to an
additional 1/7 of the Shares on March 31, 1991, etc.); (b) with respect to
all of the Shares on the date on which your employment is terminated by Chock
for any reason other than for Cause (as defined below); (c) with respect to
all of the Shares on the date on which you elect to terminate your employment
with Chock for a Good Reason (as defined below) after a Change in Control (as
defined below); and (d) with respect to all of the Shares if your employment
is terminated on account of (i) your death or (ii) your disability (which in
the opinion of your personal physician prevents you from being employed by
Chock full time).
2. If at any time prior to March 31, 2001, either (a) Chock
terminates your employment for Cause or (b) you terminate your employment
with Chock for any reason other than a reason described in subsections (c) or
(d) in paragraph 1 above (each such termination being herein called an "Event
of Retransfer") then, upon such Event of Retransfer, you shall transfer to
Chock that number of the Shares as to which the Transfer restriction shall
still apply on the day following such termination as provided in paragraph 1
above. Upon an Event of Retransfer, you shall deliver to Chock all stock
certificates representing such Shares, duly endorsed with your signature
guaranteed thereon by a New York City bank and with all necessary transfer
stamps affixed, and Chock shall deliver to you a receipt therefor.
Immediately upon such Event of Retransfer, such Shares shall be deemed to
have been transferred to Chock and you shall have no further rights or
privileges as a holder of the Shares so retransferred.
The following terms in this paragraph 2 shall have the meanings
specified below:
(a) A "Change in Control" will be deemed to have occurred if
following
(i) a tender or exchange offer for voting securities of
Chock,
(ii) a proxy contest for the election of directors of
Chock, or
(iii) a merger or consolidation or sale of all or
substantially all of the business or assets of Chock,
the persons constituting the Board of Directors of Chock
immediately prior to the initiation of such event cease to
constitute a majority of the Board of Directors of Chock
upon the occurrence of such event or within one year after
such event.
(b) Termination of your employment with Chock for "Good Reason"
shall mean termination by you of your employment, subsequent to a
Change in Control, because of:
(i) the assignment to you, without your express written
consent, of any duties inconsistent with your positions,
duties, responsibilities, authority and status with Chock and
its subsidiaries immediately prior to such Change in Control,
or a change in your reporting responsibilities, titles or
offices as in effect immediately prior to the Change in
Control, or any removal of you from or any failure to reelect
you to any of such positions, except in connection with the
termination of your employment by you without Good Reason;
(ii) a reduction by Chock in your salary as in effect at
the time of such Change in Control;
(iii) Chock's requiring you to maintain your principal
office or conduct your principal activities anywhere other
than at Chock's principal executive offices in New York City
or at such other place of business where you maintained your
principal office or conducted your principal activities at
the time of such Change in Control;
(iv) the failure by Chock to continue in effect (or to
replace with equivalent plans) any life insurance plan,
hospital-medical plan, dental plan, or disability plan in
which you are participating or eligible to participate at the
time of such Change in Control, or the taking of any action
by Chock which would adversely affect your participation in
or materially reduce your benefits under any such plans (or
equivalent plans) or deprive you of any material fringe
benefit enjoyed or to be enjoyed by you at the time of such
Change in Control; or
(v) a determination made by you in good faith, whether
before or after the date you are eligible for early
retirement under Chock's policy in effect immediately prior
to the Change in Control, that as a result of such Change in
Control you are not able to discharge your duties effectively.
(c) Termination of your employment for "Cause" shall mean
termination by Chock of your employment because of:
(i) your having engaged in any activity in competition
with Chock without Chock's consent;
(ii) your having divulged any secret or confidential
information belonging to Chock without Chock's consent; or
(iii) your dishonesty, misconduct or action that is
damaging or detrimental to Chock or any of its affiliates in
any material respect.
3. You represent and agree that you will only sell, transfer,
pledge or hypothecate any of the Shares pursuant to an effective registration
statement under the Securities Act of 1933 or in a transaction wherein
registration under the Securities Act of 1933 is not required.
4. All certificates for Shares shall be endorsed as follows:
"The shares of stock represented by this certificate are
subject to certain restrictions and obligations stated in
and are transferable only upon compliance with the provisions
of an Agreement dated January 2, 1988 between this
Corporation and the registered holder, a copy of which
Agreement is on file in the office of the Secretary of this
Corporation."
"The shares represented by this certificate have not been
registered under the Securities Act of 1933. The shares
have been acquired for investment and must be held unless
they are subsequently registered under the Securities Act of
1933 or, in the opinion of counsel to Chock, an exemption
from registration under said Act is available. Any routine
sales of the securities which may be made in reliance upon
Rule 144 under said Act, if available, can be made only in
limited amounts in accordance with all of the terms and
conditions of that Rule."
5. In order to facilities compliance with the transactions
described herein, the certificates representing the Shares are being
deposited in escrow with Howard L. Morse, Esq., as Escrowee, together with
stock powers duly endorsed by you, in blank, with your signature guaranteed
thereon by a New York City bank, and shall be held and disposed of by the
Escrowee in accordance with all of the terms hereof. Provided an Event of
Retransfer has not then occurred, the Escrowee, on March 31, 2001 or upon
such earlier date when the Transfer restrictions to which any of the Shares
are subject lapse (or as soon thereafter as is reasonably practicable), shall
return to you such certificates and powers as shall represent the number of
Shares to which the Transfer restrictions shall have lapsed. Such deposit
shall not affect your rights as holder of the Shares. The Escrowee shall be
under no duty except to receive the certificates and dispose of same in
accordance with the terms hereof. The Company may redesignate an Escrowee at
any time on notice to you; provided, however, that if a Change of Control has
occurred and the Escrowee immediately prior to such Change of Control shall
at any time thereafter cease to act as Escrowee, a new Escrowee shall be
designated only by mutual agreement between you and Chock. Your agreement to
any such designation may be withheld by you in your sole discretion. Should
you and Chock fail to designate a new Escrowee within five business days
after notice to you that the original Escrowee has ceased or will cease to
act as Escrowee, the certificates and stock powers for the shares deposited
with the Escrowee shall be delivered to you.
6. This agreement shall be binding upon and inure to the benefit
of you and Chock and your and its respective successors and legal
representatives.
Very truly yours,
CHOCK FULL O'NUTS CORPORATION
By: _________________________
Acceptance by Purchaser:
I hereby purchase the Shares and agree to all of the terms and conditions
described herein.
Dated: As of January 2, 1988
____________________________
Acceptance by Escrowee:
__________________________
Howard L. Morse, Esq.
Dated: As of January 2, 1988