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From: Robert A., Spira, Chapman Spira and Carson LLC
Time: 8:07:22 PM
This action involving a very senior officer of Chock Full O'Nuts Corporation shows very little regard for shareholders, morality and the security's laws of the United States. This is a classic.
Robert A. Spira, Chapman Spira and Carson LLC
Chock Full O'Nuts Corporation (NYSE:CHF)
Shareholders have served a Demand Letter on Chock Full O'Nuts Corporation (NYSE:CHF) ("CHF" or the "Company") pursuant to the New York Business Corporation Law. The Demand Letter, reproduced below, requests that CHF's Board of Directors, within twenty (20) days of today, initiate legal action against Norman Alexander, CHF's Chairman of the Board. The Demand Letter states, in pertinent part:
Board of Directors Chock Full O'Nuts Corporation 370 Lexington Avenue New York, N.Y. 10017
Re: Chock Full O'Nuts Trading Claims
My firm represents Josh and Rose Staniloff, shareholders of Chock Full O'Nuts Corporation ("CHF"). On behalf of Mr. and Mrs. Staniloff, we demand that you take action to recover for CHF damages caused through the misconduct of Norman Alexander ("Alexander"), Chairman of the Board of CHF.
The circumstances set forth in this demand are based solely on public information which has recently appeared in the press. Undoubtedly, this information is familiar to you. In addition, however, as members of the Board of Directors of CHF, you possess sources of internal data which are unavailable to me and my clients.
It has been recently reported in the press, including the Wall Street Journal, that Alexander purchased nearly half of a million CHF shares without disclosing that CHF was the recipient of reported buyout overtures from SaraLee Corp. ("SLC").
Specifically, according to an April 26, 1999, Wall Street Journal report, SLC submitted a $9.50 per share buyout proposal for CHF in July 1998. SLC and CHF executed a confidentiality agreement and SLC eventually raised its bid for CHF to $10.50 per share.
The Wall Street Journal further reported that, based on disclosures made to the Securities Exchange Commission, on or about February 24, 1999, Alexander acquired 533,000 shares of CHF common stock at $5 per share. Within days of Alexander's purchase, SLC renewed its offer, which culminated on or about April 21, 1999, in SLC offering to pay $10.50 per share for all the outstanding shares of CHF common stock. Accordingly, SLC's proposal has nearly doubled the value of Alexander's holdings.
In light of these facts, we demand that action be instituted against Alexander to recoup any profits he has realized or stands to realize as a result of his improper purchase of over 500,000 shares of CHF common stock while in possession of material, non-public information concerning the status of acquisition discussions between SLC and CHF. ===================