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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
JULY 27, 2000
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
NEW VISUAL ENTERTAINMENT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
UTAH 0-21785 95-4543704
(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation) Identification No.)
5920 FRIARS ROAD, SUITE 104
SAN DIEGO, CALIFORNIA 92108
(Address of Principal Executive Offices) (Zip Code)
(619) 692-0333
(Registrant's Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
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Total number of pages included in this filing 5.
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ITEM 5. OTHER EVENTS.
On July 27, 2000, the Board of Directors of New Visual Entertainment,
Inc., a Utah corporation (the "Company"), declared a dividend of one Right for
each outstanding share of Common Stock, par value $.01 per share, of the Company
(the "Common Stock"). The dividend is payable to holders of record of Common
Stock at the close of business on August 21, 2000. Each Right entitles the
registered holder to purchase from the Company one one-thousandth (1/1,000) of a
share of Series A Junior Participating Preferred Stock, par value $.01 per share
(the "Series A Preferred Stock"), at a purchase price of $200 (the "Purchase
Price"). The terms and conditions of the Rights are contained in a Rights
Agreement dated as of August 9, 2000 between New Visual Entertainment, Inc. and
First Union National Bank, as Rights Agent (the "Rights Agreement").
As discussed below, initially the Rights will not be exercisable,
certificates for the Rights will not be issued and the Rights will automatically
trade with the Common Stock.
Until the close of business on the Distribution Date, that will occur
on the earlier of (i) the tenth day following the public announcement that a
person or group of affiliated or associated persons ("Acquiring Person") other
than the Company, any subsidiary of the Company or any employee benefit plan or
employee stock plan of the Company or of any subsidiary of the Company ("Exempt
Person") has acquired, or obtained the right to acquire, beneficial ownership of
20% or more of the outstanding Common Stock (the "Stock Acquisition Date") or
(ii) the tenth business day following the commencement by any person (other than
an Exempt Person) of, or the announcement of the intention to commence, a tender
or exchange offer that would result in the ownership of 20% or more of the
outstanding Common Stock (the earlier of such dates in clauses (i) and (ii)
being called the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Common Stock certificates outstanding as of August 21,
2000, by such Common Stock certificate, together with a copy of a Summary of
Rights (the "Summary of Rights"). The Rights Agreement provides that, until the
Distribution Date (or the earlier redemption or expiration of the Rights), the
Rights will be represented by and transferred with, and only with, the Common
Stock. Until the Distribution Date (or the earlier redemption or expiration of
the Rights), new Common Stock certificates issued after the Record Date upon
transfer or new issuance of shares of Common Stock will contain a legend
incorporating the Rights Agreement by reference. Until the Distribution Date (or
the earlier redemption or expiration of the Rights), the surrender for transfer
of any of the Company's Common Stock certificates, with or without such legend
or a copy of the Summary of Rights, will also constitute the surrender for
transfer of the Rights associated with the Common Stock evidenced by such
certificates. As soon as practicable following the Distribution Date, separate
right certificates ("Right Certificates") will be mailed to holders of record of
Common Stock at the close of business on the Distribution Date, and thereafter
the Right Certificates alone will evidence the Rights, which will be
transferable separate and apart from the Common Stock.
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on August 21, 2004, unless redeemed or
exchanged earlier as described below.
The Purchase Price payable and the number of shares of Series A
Preferred 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 Series A Preferred Stock, (ii) upon the grant to
holders of the Series A Preferred Stock of certain rights or warrants to
subscribe for Series A Preferred Stock or convertible securities at less than
the current market price of the Series A Preferred Stock or (iii) upon the
distribution to holders of the Series A Preferred Stock of evidences of
indebtedness or assets (excluding regular cash dividends and dividends payable
in Series A Preferred Stock) or of subscription rights or warrants.
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If any Person (other than an Exempt Person) becomes the beneficial
owner of 20% or more of the then outstanding shares of Common Stock, each holder
of a Right, other than the Acquiring Person and/or its affiliates, associates
and transferees, will have the right to receive, upon payment of the Purchase
Price, in lieu of Series A Preferred Stock, a number of shares of Common Stock
having a market value equal to twice the Purchase Price. In the event that
insufficient shares of Common Stock are available for the exercise in full of
the Rights, the Company shall, in lieu of issuing shares of Common Stock upon
exercise of Rights, to the extent permitted by applicable law and any material
agreements then in effect to which the Company is a party, issue shares of
Series A Preferred Stock, cash, property or other securities of the Company
(which may be accompanied by a reduction in the Purchase Price), in proportions
determined by the Company, so that the aggregate value of such cash, property or
other securities received is equal to twice the Purchase Price. After the
acquisition of shares of Common Stock by an Acquiring Person as described in
this paragraph, Rights that are (or, under certain circumstances, Rights that
were) beneficially owned by an Acquiring Person and/or its affiliates,
associates and transferees will be void.
The Board of Directors may, at its option, at any time after a person
becomes an Acquiring Person, authorize the Company to exchange all or part of
the then outstanding and exercisable Rights for shares of Common Stock or Series
A Preferred Stock at an exchange ratio of one share of Common Stock for one
one-thousandth of a share of Series A Preferred Stock per Right, provided that
the Board of Directors may not effect such an exchange after the time that any
Person (other than an Exempt Person) becomes the beneficial owner of 50% or more
of the Common Stock then outstanding. In the event that insufficient shares of
Common Stock are available for such exchange, the Board of Directors may
substitute, in lieu thereof, shares of Series A Preferred Stock or equivalent
preferred stock of equal value.
Unless the Rights are earlier redeemed, if, after the Stock Acquisition
Date, the Company is acquired in a merger or other business combination (in
which any shares of the Common Stock are changed into or exchanged for other
securities or assets) or more than 50% of the assets or earning power of the
Company and its subsidiaries (taken as a whole) is sold or transferred in one or
more transactions, other than a transfer to a lender (or an assignee of a
lender) of the Company pursuant to material agreements then in effect to which
the Company is a party, the Rights Agreement provides that proper provision
shall be made so that each holder of record of a Right will from and after that
time have the right to receive, upon payment of the Purchase Price, that number
of shares of Common Stock of the acquiring company that has a current market
price at the time of such transaction equal to twice the Purchase Price.
At any time until a person becomes an Acquiring Person, the Board of
Directors may cause the Company to redeem the Rights in whole, but not in part,
at a price of $0.001 per Right, subject to adjustment. Immediately upon the
effective time of the redemption authorized by the Board of Directors the right
to exercise the Rights will terminate, and the holders of the Rights will only
be entitled to receive the redemption price without any interest thereon.
As long as the Rights are redeemable, the Company may, except with
respect to the redemption price or the number of shares of Series A Preferred
Stock for which a Right is exercisable, amend the Rights in any manner. At any
time when the Rights are not redeemable, the Company may amend the Rights in any
manner that does not adversely affect the interests of holders of the Rights as
such.
Until a Right is exercised, the holder, as such, will have no rights as
a stockholder of the Company, including without limitation the right to vote or
to receive dividends.
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The Series A Preferred Stock will not be redeemable and, unless
otherwise provided in connection with the creation of a subsequent series of
preferred stock, will be subordinate to all other series of the Company's
preferred stock. Each share of Series A Preferred Stock will represent the right
to receive, when, as and if declared, a quarterly dividend at an annual rate
equal to the greater of $1.00 per share or 1,000 times the quarterly per share
cash dividends declared on the Company's Common Stock during the immediately
preceding fiscal year. In addition, each share of Series A Preferred Stock will
represent the right to receive 1,000 times any noncash dividends (other than
dividends payable in Common Stock) declared on the Common Stock, in like kind.
In the event of the liquidation, dissolution or winding up of the Company, each
share of Series A Preferred Stock will represent the right to receive a
liquidation payment in an amount equal to the greater of $1.00 per share or
1,000 times the liquidation payment made per share of Common Stock. Each share
of Series A Preferred Stock will have 1,000 votes, voting together with the
Common Stock. In the event of any merger, consolidation or other transaction in
which common shares are exchanged, each share of Series A Preferred Stock will
be entitled to receive 1,000 times the amount received per share of Common
Stock. The rights of the Series A Preferred Stock as to dividends, liquidation,
voting rights and merger participation are protected by anti-dilution
provisions.
Interests in fractions of shares of Series A Preferred Stock may, at
the election of the Company, be evidenced by depository receipts. The Company
may also issue cash in lieu of fractional shares of Series A Preferred Stock
that are not integral multiples of one one-thousandth of a share.
The Board of Directors shall have the exclusive power and authority to
administer the Rights Plan and to exercise the rights and powers specifically
granted to the Board of Directors or the Company, or as may be necessary or
advisable in the administration of the Rights Plan.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A, filed
with the Commission on August 10, 2000. A copy of the Rights Agreement is
available free of charge from the Company by written request sent to New Visual
Entertainment, Inc., 5920 Friars Road, Suite 104, San Diego, California 92108,
Attention: Secretary. This summary description of the Rights does not purport to
be complete and is qualified in its entirety by reference to the Rights
Agreement, as amended from time to time, which is incorporated in this summary
description by reference. In the event of a conflict between this summary
description and the Rights Agreement, the Rights Agreement will prevail.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Pursuant to the instructions to Item 7 of Form 8-K, the following
documents are provided as Exhibits to this Form 8-K:
(a) EXHIBITS.
EXHIBIT NO. DOCUMENT DESCRIPTION
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4.1 Rights Agreement by and between New Visual Entertainment, Inc.
and First Union National Bank, dated August 9, 2000
(incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form 8-A, filed on August 10, 2000).
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
NEW VISUAL ENTERTAINMENT, INC.
August 10, 2000
By: /s/ Ray Willenberg, Jr.
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Ray Willenberg, Jr., Chairman of the Board
and Chief Executive Officer
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INDEX TO EXHIBITS
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PAGE NO. IN
EXHIBIT NO. DOCUMENT DESCRIPTION EXHIBIT VOLUME
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4.1 Rights Agreement by and between New Visual Entertainment, Inc. N/A
and First Union National Bank, dated August 9, 2000
(incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form 8-A, filed on August 10, 2000).
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