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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A 12G
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
National Vision Associates, Ltd.
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(Exact name of registrant as specified in its charter)
Georgia 58-1910859
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(State of incorporation (I.R.S. Employer
or organization) Identification No.)
296 Grayson Highway, Lawrenceville, Georgia 30245
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(Address of principal executive offices) (ZIP Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
N/A N/A
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If this Form relates to the registration of a class of debt
securities and is effective upon filing pursuant to General
Instruction A.(c)(1), please check the following box. ___
If this Form relates to the registration of a class of debt
securities and is to become effective simultaneously with the
effectiveness of concurrent registration statement under the
Securities Act of 1933 pursuant to General Instruction A.(c)(2),
please check the following box. ___
Securities to be registered pursuant to Section 12(g) of the Act:
Series A Participating Cumulative Preferred Stock Purchase Rights
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(Title of Class)
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE
REGISTERED.
One purchase right (a "Right") will be issued in respect of
each outstanding share of the Registrant's Common Stock. Rights
will also attach to shares of Common Stock issued prior to the
Distribution Date (as defined below).
Each Right will entitle the registered holder to purchase
from the Registrant one one-hundredth of a share (a "Unit") of
Series A Preferred Stock or, in certain circumstances, Common
Stock or stock of the Acquiring Person (as defined below). Each
Unit is structured to be the economic equivalent of one share of
Common Stock. The exercise price per Right will be $40.00,
subject to adjustment (the "Purchase Price").
The Rights will attach to the shares of Common Stock and are
evidenced by Common Stock certificates, and no separate
certificates evidencing the Rights (the "Rights Certificates")
will be distributed. The Rights will separate from the Common
Stock and a distribution of the Rights Certificates will occur
(the "Distribution Date") upon the earlier of (i) ten days
following a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire (other than pursuant
to an acquisition approved in advance by a majority of the
Continuing Directors (as defined below)), beneficial ownership of
15% or more of the outstanding shares of Common Stock (the "Share
Acquisition Date"), or (ii) ten business days after the
commencement of a tender offer or exchange offer that would
result in a person or group beneficially becoming an Acquiring
Person. Until the Distribution Date, (i) the Rights will be
evidenced by the Common Stock certificates and will be
transferred with and only with such Common Stock certificates,
(ii) any Common Stock certificates issued will contain a notation
incorporating the Rights Agreement by reference and (iii) the
surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights
associated with the Common Stock represented by such
certificates.
The Rights are not exercisable until the Distribution Date
and will expire at the close of business on January 26, 2007,
unless earlier redeemed or exchanged by the Registrant as
described below. As soon as practicable after the Distribution
Date, Rights Certificates will be mailed to holders of record of
the Common Stock as of the close of business on the Distribution
Date, and thereafter such separate Rights Certificates alone will
represent the Rights.
The Rights Agreement also provides that if (i) any person
becomes an Acquiring Person (other than pursuant to a tender or
exchange offer approved by a majority of the Continuing
Directors), (ii) during such time as there is an Acquiring Person
an event occurs which results in such Acquiring Person's
ownership interest in the Registrant being increased by more than
2%, (iii) the Registrant is the surviving Corporation in a merger
with an Acquiring Person and the Common Stock is not changed or
exchanged or (iv) an Acquiring Person engages in one or more
"self-dealing" transactions as set forth in the Rights Agreement,
then proper provision shall be made so that each holder of a
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Right (except as set forth below) will thereafter have the right
to receive, upon exercise and payment of the Purchase Price,
Common Stock (or, in certain circumstances, cash, property or
other securities of the Registrant) having a value equal to the
Purchase Price.
If, at any time following the Share Acquisition Date, (i)
the Registrant is acquired in a merger, statutory share exchange
or other business combination in which the Registrant is not the
surviving corporation or (ii) the Registrant sells or transfers
assets aggregating more than 50% of its assets or generating more
than 50% of its operating income or cash flow, each holder of a
Right (except as set forth below) shall thereafter have the right
to receive, upon exercise and payment of the Purchase Price,
common stock of the acquiring company having a value equal to
twice the Purchase Price. The events set forth in this paragraph
and in the preceding paragraph are referred to as the "Triggering
Events."
Upon the occurrence of a Triggering Event, Rights that are
or were owned by the Acquiring Person, or any affiliate or
associate of such Acquiring Person, on or after such Acquiring
Person's Share Acquisition Date shall be null and void and may
not thereafter be exercised by any person (including subsequent
transferees).
The Purchase Price payable, and the number of shares of
Series A Preferred Stock, Common Stock or other securities or
property issuable upon exercise of the Rights, are subject to
adjustment from time to time to prevent dilution.
At any time after any person becomes an Acquiring Person,
the Registrant may exchange all or part of the Rights (other than
Rights owned by the Acquiring Person and certain affiliated
persons) for shares of Common Stock (an "Exchange") at an
exchange ratio of one share per Right, as appropriately adjusted
to reflect any stock split or similar transaction.
At any time until the close of business on the Share
Acquisition Date, the Registrant may redeem the Rights in whole,
but not in part, at a price of $0.001 per Right (the "Redemption
Price"'). The Registrant's right of redemption may be reinstated
if an Acquiring Person reduces his beneficial ownership to 10% or
less of the outstanding shares of Common Stock in a transaction
or series of transactions not involving the Registrant.
Immediately upon the action of the Board ordering redemption of
the Rights, with, where required, the concurrence of the
Continuing Directors, the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption
Price.
The term "Continuing Directors" means any member of the
board who was a member of the board immediately before an
Acquiring Person becomes such (other than pursuant to a tender or
exchange offer approved by a majority of the Continuing
Directors), and any person who is subsequently elected to the
Board if such person is recommended or approved by a majority of
the Continuing Directors, but does not include an Acquiring
Person, or an affiliate or associate of an Acquiring Person, or
any representative of the foregoing entities.
Until a Right is exercised, the holder thereof, as such,
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will have no rights as a shareholder of the Registrant,
including, without limitation, the right to vote or to receive
dividends. While the distribution of the Rights will not be
taxable to shareholders or to the Registrant, shareholders may,
depending upon the circumstances, recognize taxable income in the
event that the Rights become exercisable for Series A Preferred
Stock (or other consideration) of the Registrant or for common
stock of the acquiring company as set forth above.
Prior to the Distribution Date, the Rights Agreement may be
amended in any respect, other than to change the Redemption
Price, the Expiration Date, the Purchase Price or the number or
kind of shares for which a Right is exercisable. After the
Distribution Date, the provisions of the Rights Agreement may be
amended by the Board (in certain circumstances, with the
concurrence of the Continuing Directors) in order to cure any
ambiguity, to make changes that do not adversely affect the
interests of the holders of Rights (excluding the interests of an
Acquiring Person), or to shorten or lengthen any time period
under the Rights Agreement; provided, however, no amendment to
lengthen the time period governing redemption may be made at such
time as the Rights are not redeemable.
The Rights may have certain anti-takeover effects. The
Rights will cause substantial dilution to a person or group that
acquires more than 15% of the outstanding shares of Common Stock
or if another Triggering Event occurs without the Rights having
been redeemed or in the event of an Exchange. However, the
Rights should not interfere with any merger or other business
combination approved in advance by the Board or a merger or other
business combination approved by the Board and the shareholders
because the Rights are redeemable under certain circumstances.
The dividend and liquidation rights of the Series A
Preferred Stock are designed so that the value of one one-
hundredth of a share of Series A Preferred Stock issuable upon
exercise of each Right will approximate the same economic value
of one share of Common Stock, including voting rights. Shares of
Series A Preferred Stock issuable upon exercise of each Right
will not be redeemable. Each share of Series A Preferred Stock
will entitle the holder to a minimum preferential dividend of
$1.00 per share, but will entitle the holder to an aggregate
dividend payment of 100 times the dividend declared on each share
of Common Stock. In the event of liquidation, each share of
Series A Preferred Stock will be entitled to a minimum
preferential liquidation payment of $1.00, plus accrued and
unpaid dividends and distributions thereon, but will be entitled
to an aggregate payment of 100 times the payment made per share
of Common Stock. In the event of any merger, consolidation or
other transaction in which Common Stock is exchanged for or
changed into other stock or securities, cash or other property,
each share of Series A Preferred Stock will be entitled to
receive 100 times the amount received per share of Common Stock.
Series A Preferred Stock is not convertible into Common Stock but
Rights may be exercisable for shares of Common Stock in certain
instances.
Each share of Series A Preferred Stock will be entitled to
100 votes on all matters submitted to a vote of the shareholders
of the Registrant, and shares of Series A Preferred Stock will
generally vote together as one class with the Common Stock and
any other voting capital stock of the Registrant on all matters
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submitted to a vote of the Registrant's shareholders. Further,
whenever dividends on the Series A Preferred Stock are in arrears
in an amount equal to six quarterly payments, the Series A
Preferred Stock, together with any other shares of preferred
stock then entitled to elect directors, shall have the right, as
a single class, to elect one director until the default has been
cured.
Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock are in
arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether declared, on the outstanding Series A
Preferred Stock shall have been paid in full, the Registrant
shall not: (i) declare or pay dividends on, or make any
distributions on, any shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock; (ii) declare or pay dividends on,
or make any distributions on, any shares of stock ranking on
parity (either as to dividends or upon liquidation, dissolution
or winding up) with the Series A Preferred Stock, except
dividends paid ratably on the Series A Preferred Stock and all
such other parity stock; (iii) redeem, purchase or otherwise
acquire for consideration shares of any stock ranking junior
(either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock or (iv) redeem,
purchase or otherwise acquire for consideration any Series A
Preferred Stock, or any shares of stock ranking on a parity with
the Series A Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined
by the Board of Directors) to all holders of such shares upon
such terms as the Board of Directors, after consideration of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective
series or classes.
ITEM 2. EXHIBITS.
4.1 Form of Common Stock Certificate of the Registrant.
10.1 Rights Agreement between the Registrant and Wachovia
Bank of North Carolina, N.A. (together with exhibits,
including the Form of Board Resolutions Establishing
and Designating Preferred Stock, Form of Rights
Certificate, and Summary Description of the Shareholder
Rights Plan).
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Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the registrant has duly caused
this Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized.
January 17, 1997 NATIONAL VISION ASSOCIATES, LTD.
(Registrant)
By: /s/ James W. Krause
James W. Krause
President and Chief Executive Officer
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NUMBER INCORPORATED
NV____ UNDER THE LAWS OF
THE STATE OF
GEORGIA
National Vision Associates, Ltd. SHARES
_______
SEE REVERSE FOR
Common Stock CERTAIN
DEFINITIONS
CUSIP 638459 10 7
THIS CERTIFIES THAT
SPECIMEN
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE PAR VALUE OF ONE
CENT ($.01) EACH OF THE COMMON STOCK OF
NATIONAL VISION ASSOCIATES, LTD.
transferable in person or by duly authorized attorney on the
books of the Corporation upon surrender of this certificate
properly endorsed. This certificate and the shares
represented hereby are subject to all the terms, conditions
and limitations of the Certificate of Incorporation and all
amendments thereto. This certificate is not valid unless
countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Corporation and the
facsimile signatures of its duly authorized officers.
Dated:
NATION VISION ASSOCIATES, LTD. /s/ James W. Krause
CORPORATE
SEAL
1990 CHAIRMAN
GEORGIA
COUNTERSIGNED:
WACHOVIA BANK OF NORTH CAROLINA, N.A.
(WINSTON-SALEM, NC) TRANSFER AGENT
BY /s/ Mitchell Goodman
AUTHORIZED SIGNATURE SECRETARY
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NATIONAL VISION ASSOCIATES, LTD.
The following abbreviations, when used in the inscription on
the face of this certificate, shall be construed as though they were
written out in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - ___ Custodian _____
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
JT TEN - as joint tenants with right of
survivorship and not as tenants Act__________________
in common (State)
Additional abbreviations may also be used
though not in the above list.
For value received _____ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
___________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
________________________________________________________Shares
of the capital stock represented by the within Certificate, and do
hereby irrevocably constitute and appoint_____________________________
Attorney to transfer the said stock on the books of the within-named
Corporation with full power of substitution in the premises.
Dated
Signature(s) Guaranteed: ____________________________
Signature(s)
______________________________________ ___________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED NOTICE: THE SIGNATURE(S)ON THIS
BY AN ELIGIBLE GUARANTOR INSTITUTION, ASSIGNMENT MUST CORRESPOND WITH THE
AS DEFINED IN RULE 17Ad-15 NAME(S) AS WRITTEN UPON THE FACE
UNDER THE SECURITIES AND EXCHANGE ACT OF THE CERTIFICATE, IN EVERY
OF 1934, AS AMENDED. PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT, OR ANY CHANGE WHATEVER.
RIGHTS AGREEMENT
dated as of
JANUARY 17, 1997
between
NATIONAL VISION ASSOCIATES, LTD.
and
WACHOVIA BANK OF NORTH CAROLINA, N.A.
as Rights Agent
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TABLE OF CONTENTS (1)
Page
Section 1. Definitions 1
Section 2. Appointment of Rights Agent 5
Section 3. Issue of Rights Certificates 5
Section 4. Form of Rights Certificate 6
Section 5. Countersignature and Registration 7
Section 6. Transfer and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates . . . . . . . . . . . . .8
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights 8
Section 8. Cancellation and Destruction of Right
Certificates 10
Section 9. Reservation and Availability of Capital
Stock 10
Section 10. Preferred Stock Record Date11
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 20
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power 21
Section 14. Fractional Rights and Fractional Shares 23
Section 15. Rights of Action 24
Section 16. Agreement of Right Holders 25
Section 17. Right Certificate Holder Not Deemed a
Shareholder 25
Section 18. Concerning the Rights Agent 26
Section 19. Merger or Consolidation or Change of Name of
Rights Agent 26
Section 20. Duties of Rights Agent 27
Section 21. Change of Rights Agent 29
(1) The Table of Contents is not a part of this Agreement.
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Section 22. Issuance of New Right Certificates 29
Section 23. Redemption 30
Section 24. Exchange 31
Section 25. Notice of Proposed Actions 32
Section 26. Notices 32
Section 27. Supplements and Amendments 32
Section 28. Successors 33
Section 29. Determinations and Actions by the Board of
Directors, etc. 34
Section 30. Benefits of this Agreement 34
Section 31. Severability 34
Section 32. Governing Law 35
Section 33. Counterparts 34
Section 34. Descriptive Headings 34
Exhibit A - Form of Board Resolution Establishing and
Designating Preferred Stock
Exhibit B - Form of Rights Certificate
ii
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RIGHTS AGREEMENT
THIS AGREEMENT is made and entered into as of January 17,
1997 (the "Effective Date"), by and between NATIONAL VISION
ASSOCIATES, LTD., a Georgia corporation (the "Company"), and
WACHOVIA BANK OF NORTH CAROLINA, N.A., a Georgia bank, as Rights
Agent (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company has approved
the execution of this Agreement and has authorized and declared a
dividend distribution of one Right (as defined below) for each
outstanding share of Common Stock, par value $0.01 per share, of
the Company (the "Common Stock") at the close of business on the
Effective Date and has authorized the issuance of one Right for
each share of Common Stock, each Right representing the right to
purchase, one one-hundredth of a share of Series A Participating
Cumulative Preferred Stock of the Company having the rights,
powers and preferences set forth in the Board Resolution
Establishing and Designating Series A Preferred Stock attached
hereto as Exhibit A, upon the terms and subject to the conditions
contained herein (individually, a "Right," and collectively, the
"Rights");
NOW, THEREFORE, for and in consideration of the premises and
the mutual agreements contained herein, the parties hereto agree
as follows:
SECTION 1. DEFINITIONS. The following terms, as used
herein, have the following meanings:
(a) "ACQUIRING PERSON" means any Person who or which,
together with all Affiliates and Associates of such Person, shall
be the Beneficial Owner of 15% or more of the shares of Common
Stock then outstanding; provided, however, that, an "Acquiring
Person" shall not include the following Persons: (i) any
Excluded Person, (ii) any Person who is the Beneficial Owner of
15% or more of the shares of Common Stock outstanding as of the
Effective Date, or (iii) any Person, who alone or together with
its Affiliates or Associates becomes the Beneficial Owner of 15%
or more of the shares of Common Stock then outstanding as a
result of an Approved Acquisition; provided, further, that in the
event that a Person does not become an Acquiring Person by reason
of clause (iii) above, such Person nonetheless shall become an
Acquiring Person if such Person thereafter becomes the Beneficial
Owner of an additional 2% or more of the Common Stock then
outstanding, unless the acquisition of such Common Stock is an
Approved Acquisition. Notwithstanding the foregoing, if the
Board of Directors of the Company determines in good faith (but
only if at the time of such determination by the Board of
Directors there are then in office not less than two Continuing
Directors and such action is approved by a majority of the
Continuing Directors then in office) that a Person who would
otherwise be an "Acquiring Person" as defined pursuant to the
foregoing provisions of this Section 1(a) has become such
inadvertently, and such Person divests as promptly as practicable
a sufficient number of shares of Common Stock so that such Person
would no longer be an "Acquiring Person" as defined pursuant to
the foregoing provisions of this Section 1(a), then such Person
shall not be deemed an Acquiring Person for any purposes of this
Agreement.
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(b) "AFFILIATE" and "ASSOCIATE" have the respective
meanings ascribed to such terms in Rule 12b-2 under the Exchange
Act as in effect on the date hereof.
(c) "APPROVED ACQUISITION" means any acquisition of Common
Stock that (i) causes a Person to become the Beneficial Owner of
(A) 15% or more of the shares of Common Stock then outstanding,
or (B) if already a Beneficial Owner of 15% or more of the shares
of Common Stock then outstanding, an additional 2% or more of the
shares of Common Stock then outstanding, and (ii) is approved in
advance by a majority of the Continuing Directors.
(d) 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 its Affiliates or
Associates beneficially owns (as determined pursuant to Rule
13d-3 under the Exchange Act as in effect on the date
hereof), directly or indirectly;
(ii) which such Person or any of its Affiliates or
Associates, directly or indirectly, has
(A) the right to acquire (whether such right is
exercisable immediately or only upon the occurrence of
certain events or the passage of time or both) pursuant
to any agreement, arrangement or understanding (whether
or not in writing) or upon the exercise of conversion
rights, exchange rights, rights (other than pursuant to
the Rights), warrants, options or otherwise; provided,
however, that a Person shall not be deemed the
"BENEFICIAL OWNER" of, or to "BENEFICIALLY OWN," any
securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of its
Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or
(B) the right to vote or dispose of (whether such
right is exercisable immediately or only upon the
occurrence of certain events or the passage of time or
both) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or otherwise;
provided, however, that a Person shall not be deemed
the "BENEFICIAL OWNER" of, or to "BENEFICIALLY OWN,"
any security under this clause (B) as a result of an
agreement, arrangement or understanding to vote such
security if such agreement, arrangement or
understanding (1) arises solely from a revocable proxy
or consent given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations
promulgated under 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 its
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
2<PAGE>
proxy as described in SUBSECTION (ii)(b) above) or disposing
of any such securities; provided, however, that nothing in
this Section 1(e) shall cause any Person engaged in business
as an underwriter of securities who acquires any securities
of the Company through such Person's participation in good
faith in a firm commitment underwriting to be deemed the
"BENEFICIAL OWNER" of, or to "BENEFICIALLY OWN," such
securities until the expiration of 40 days after the date of
such acquisition.
(e) "BUSINESS DAY" means any day other than a Saturday,
Sunday or a day on which banking institutions in the States of
Georgia are authorized or obligated by law or executive order to
close.
(f) "CLOSE OF BUSINESS" on any given date means 5:00 P.M.,
Atlanta, Georgia time, on such date; provided, however, that if
such date is not a Business Day, then it shall mean 5:00 P.M.,
Atlanta, Georgia time, on the next succeeding Business Day.
(g) "COMMON STOCK" means the Common Stock, par value $0.01
per share, of the Company, except that, when used with respect to
any Person other than the Company, "COMMON STOCK" means the
capital stock (or other equity interests) of such Person with the
greatest voting power, or the equity securities or other equity
interests having the power to control or direct the management of
such Person.
(h) "CONTINUING DIRECTOR" means any member of the Board of
Directors of the Company, while such Person is a member of the
Board, who is not an Acquiring Person or an Affiliate or
Associate of an Acquiring Person or a representative or nominee
of an Acquiring Person or of any such Affiliate or Associate, or
otherwise affiliated with an Acquiring Person or of any such
Affiliate or Associate, and who either (i) was a member of the
Board immediately prior to the time any Person becomes an
Acquiring Person (other than pursuant to a Qualifying Tender
Offer), or (ii) subsequently becomes a member of the Board, if
such Person's nomination for election or election to the Board is
recommended or approved by a majority of the Continuing Directors
serving at the time of such nomination or election.
(i) "DISTRIBUTION DATE" means the earlier of (i) the Close
of Business on the tenth day (or such later day as may be
designated by action of a majority of the Continuing Directors)
after the Share Acquisition Date, and (ii) the Close of Business
on the tenth Business Day (or such later day as may be designated
by action of a majority of the Continuing Directors) after the
date of the commencement by any Person (other than an Excluded
Person) of, or of the first public announcement of the intention
by any Person (other than an Excluded Person) to commence, a
tender or exchange offer if, upon consummation thereof, such
Person, together with all Affiliates and Associates of such
Person, would be the Beneficial Owner of 15% or more of the
shares of Common Stock then outstanding.
(j) "Employee Benefit Plan" means any employee benefit plan
of the Company or any of its Subsidiaries or any Person
organized, appointed or established by the Company or any of its
Subsidiaries for or pursuant to the terms of any such plan.
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(K) "EXCHANGE ACT" means the Securities Eexchange Act of
1934, as amended.
(l) "EXCLUDED PERSON" means the Company, any of its
Subsidiaries or any Employee Benefit Plan.
(m) "EXPIRATION DATE" means the earlier of (i) the Final
Expiration Date, and (ii) the time at which all Rights are
redeemed as provided in Section 23 or exchanged as provided in
Section 24.
(n) "FINAL EXPIRATION DATE" means the Close of Business on
January 26, 2007.
(o) "FLIP-IN EVENT" means any event described in Section
11(a)(ii)(A), (B) or (C), but excluding any event described in
Section 11(a)(ii)(D).
(p) "FLIP-OVER EVENT" means any event described in Section
13(a)(x), (y), or (z).
(q) "PERSON" means an individual, corporation, partnership,
limited liability company, association, trust or any other entity
or organization.
(r) "PREFERRED STOCK" means the Series A Participating
Cumulative Preferred Stock, par value $0.01 per share, of the
Company having the terms set forth in the form of certificate of
designation attached hereto as Exhibit A.
(s) "PURCHASE PRICE" means the price (subject to adjustment
as provided herein) at which a holder of a Right may purchase one
one-hundredth of a share of Preferred Stock (subject to
adjustment as provided herein) upon exercise of a Right, which
price shall initially be $40.00.
(t) "QUALIFYING TENDER OFFER" means a tender or exchange
offer for all outstanding shares of Common Stock of the Company
approved by a majority of Continuing Directors then in office,
after taking into account the potential long-term value of the
Company and all other factors that they consider relevant.
(u) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
(v) "SHARE ACQUISITION DATE" means the date of the first
public announcement (including the filing of a report on Schedule
13D under the Exchange Act (or any comparable or successor
report)) by the Company or an Acquiring Person indicating that an
Acquiring Person has become such.
(w) "SUBSIDIARY" means, with respect to any Person, any
other Person of which securities or other ownership interests
having ordinary voting power, in the absence of contingencies, to
elect a majority of the board of directors or other Persons
performing similar functions are at the time directly or
indirectly owned or controlled by such first Person.
(x) "TRADING DAY" means a day on which the principal
national securities exchange or inter-dealer quotation system on
which the shares of Common Stock are listed, admitted to trading
or quoted is open for the transaction of business or, if the
shares of Common Stock are not listed, admitted to trading or
4<PAGE>
quoted on any national securities exchange or inter-dealer
quotation system, a Business Day.
(y) "TRIGGERING EVENT" means any Flip-in Event or any Flip-
over Event.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby
appoints the Rights Agent to act as agent for the Company and the
holders of the Rights (who, in accordance with SECTION 3, shall
prior to the Distribution Date also be the holders of the Common
Stock) 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. If the Company appoints one or more
co-Rights Agents, then the respective duties of the Rights Agent
and any co-Rights Agents shall be as the Company shall determine.
SECTION 3. ISSUE OF RIGHTS CERTIFICATES. (a) Prior to the
Distribution Date, (i) the Rights will be evidenced (subject to
Section 3(b)) by the certificates for the Common Stock and not by
separate Rights Certificates (as defined below), and the
registered holders of the Common Stock shall be deemed to be the
registered holders of the associated Rights, and (ii) the Rights
will be transferable only in connection with the transfer of the
underlying shares of Common Stock (including a transfer to the
Company). As soon as practicable after the Company has notified
the Rights Agent of the occurrence of a Distribution Date, the
Rights Agent will, subject to SECTION 7(d), 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, one or more Rights Certificates, in substantially the
form of EXHIBIT B attached hereto (the "RIGHTS CERTIFICATES"),
evidencing one Right (subject to adjustment as provided herein)
for each share of Common Stock so held. If an adjustment in the
number of Rights per share of Common Stock has been made pursuant
to SECTION 11(p), then the Company shall, at the time of
distribution of the Rights Certificates to record holders of
Common Stock as of the Close of Business on the Distribution
Date, make the necessary and appropriate rounding adjustments (in
accordance with SECTION 14(a)) so that Rights Certificates
representing only whole numbers of Rights are distributed to such
holders and cash is paid to such holders in lieu of any
fractional Rights. From and after the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
(b) As soon as practicable after the Effective Date, the
Company will send a summary of the Rights substantially in the
form of EXHIBIT C attached hereto, by first-class, postage
prepaid mail, to each record holder of the Common Stock as of the
Close of Business on the Effective Date at the address of such
holder shown on the records of the Company. Until the
Distribution Date, the Rights shall be evidenced by such
certificates evidencing the Common Stock, and the registered
holders of such Common Stock shall also be the registered holders
of the associated Rights.
(c) Rights shall be issued in respect of all shares of
Common Stock that become outstanding (on original issuance or out
of treasury) after the Effective Date but prior to the earlier of
the Distribution Date or the Expiration Date. Certificates for
the Common Stock that become outstanding or shall be transferred
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<PAGE>
or exchanged after the Effective Date but prior to the earlier of
the Distribution Date or the Expiration Date shall also be deemed
to be certificates for Rights and shall have impressed on,
printed on, written on or otherwise affixed to them the following
legend:
This certificate also evidences certain
Rights as set forth in a Rights Agreement
between National Vision Associates, Ltd. and
Wachovia Bank of North Carolina, N.A., dated
as of January 17, 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 office
of the Company. The Company will mail to the
holder of this certificate a copy of the
Rights Agreement without charge promptly
after receipt of a written request therefor.
Under certain circumstances, as set forth in
the Rights Agreement, such Rights may be
evidenced by separate certificates and no
longer be evidenced by this certificate, may
be redeemed or exchanged or may expire. As
set forth in the Rights Agreement, Rights
issued to, or held by, any Person who is, was
or becomes an Acquiring Person or an
Affiliate or Associate thereof (as such terms
are defined in the Rights Agreement), whether
currently held by or on behalf of such Person
or by any subsequent holder, may be null and
void.
(d) With respect to the certificates containing the
foregoing legend, until the earlier of the Distribution Date or
the Expiration Date, the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such
certificates alone and registered holders of Common Stock shall
also be the registered holders of the associated Rights, and the
transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock
represented thereby. If the Company purchases or acquires any
shares of Common Stock after the Effective Date but prior to the
Distribution Date, any Rights associated with such Common Stock
shall be deemed canceled and retired so that the Company shall
not be entitled to exercise any Rights associated with the Common
Stock that are no longer outstanding.
SECTION 4. FORM OF RIGHTS CERTIFICATE. (a) The Rights
Certificates (and the forms of assignment, election to purchase
and certificates to be printed on the reverse thereof) shall be
substantially in the form of EXHIBIT B attached 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, rule or regulation or with any rule or
regulation of any stock exchange or inter-dealer quotation system
of a registered national securities association on which the
Rights may from time to time be listed, traded or quoted or to
conform to usage. Subject to Sections 11 and 22, the Rights
Certificates, whenever distributed, shall be dated as of the
Distribution Date, shall entitle the holders thereof to purchase
6
<PAGE>
such number of one one-hundredths of a share of Preferred Stock
as shall be set forth therein at the price set forth therein, but
the number of such one one-hundredths and the Purchase Price
thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificate representing Rights beneficially
owned by any Person referred to in SECTION 7(d)(i), (ii) OR (iii)
shall (to the extent feasible) contain the following legend:
The Rights represented by this Rights
Certificate are or were beneficially owned by
a Person who was or became an Acquiring
Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined
in the Rights Agreement). This Rights
Certificate and the Rights represented hereby
may be or may become null and void in the
circumstances specified in Section 7(d) of
the Rights Agreement.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION. (a) The
Rights Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its 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 or an Assistant 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 whose manual or facsimile
signature is affixed to 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 may, nevertheless, be countersigned by the Rights
Agent and issued and delivered with the same force and effect as
though the individual who signed such Rights Certificates had not
ceased to be such officer of the Company. Any Rights Certificate
may be signed on behalf of the Company by any Person who, at the
actual date of the execution of such Rights Certificate, shall be
a proper officer of the Company to sign such Rights Certificate,
although at the date of the execution of this Agreement any such
Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office or offices
designated as the appropriate place for surrender of Rights
Certificates upon exercise, transfer or exchange, books for
registration and transfer of the Rights Certificates. Such books
shall show with respect to each Rights Certificate the name and
address of the registered holder thereof, the number of Rights
indicated on the certificate, and the certificate number.
SECTION 6. TRANSFER AND EXCHANGE OF RIGHTS CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES. (a)
Subject to Section 4(b), 7(d), and 14, at any time after the
Close of Business on the Distribution Date and prior to the Close
of Business on the Expiration Date, any Rights Certificate(s)
may, upon the terms and subject to the conditions set forth in
this Section 6(a), be transferred or exchanged for another Rights
Certificate(s) evidencing a like number of Rights as the Rights
Certificate(s) surrendered. Any registered holder desiring to
transfer or exchange any Rights Certificate(s) shall make such
7
<PAGE>
request in writing delivered to the Rights Agent, and shall
surrender such Rights Certificate(s) (with, in the case of a
transfer, the form of assignment and certificate on the reverse
side thereof duly executed) to the Rights Agent at the principal
office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate(s) until the
registered holder of the Rights has complied with the
requirements of SECTION 7(e). Upon satisfaction of the foregoing
requirements, the Rights Agent shall, subject to SECTIONS 4(b),
7(d), 14 and 24, countersign and deliver to the Person entitled
thereto a Rights Certificate(s) as so requested. The Company may
require payment of a sum sufficient to cover any transfer tax or
other governmental charge that may be imposed in connection with
any transfer or exchange of any Rights Certificate(s).
(b) 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, at the Company's request,
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 issue and deliver a new Rights
Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered holder in lieu of
the Rights Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; EXPIRATION DATE OF RIGHTS;
RESTRICTIONS ON TRANSFER. (a) Subject to SECTION 7(d), the
registered holder of any Rights Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein,
including, without limitation, SECTIONS 7(e), 9(c), 11(a), 13,
23, and 24), in whole or in part, at any time after the
Distribution Date and prior to the Expiration Date upon surrender
of the Rights Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed
(with signatures guaranteed), to the Rights Agent at the
principal office or offices of the Rights Agent designated for
such purpose, together with payment of the aggregate Purchase
Price (in lawful money of the United States of America by
certified check or bank draft payable to the order of the
Company) with respect to the Rights then to be exercised and an
amount equal to any applicable transfer tax or other governmental
charge.
(b) Upon satisfaction of the requirements of SECTION 7(a)
and subject to SECTION 20(k), the Rights Agent shall thereupon
promptly (i)(A) requisition from any transfer agent of the
Preferred Stock (or make available, if the Rights Agent is the
transfer agent therefor) certificates for the total number of one
one-hundredths of a share of Preferred Stock to be purchased (and
the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests), or (B) if the Company shall have
elected to deposit the shares of Preferred Stock issuable upon
exercise of the Rights with a depository agent, requisition from
the depository agent depository receipts representing such number
of one one-hundredths of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of Preferred
Stock represented by such receipts shall be deposited by the
8
<PAGE>
transfer agent with the depository agent), and the Company will
direct the depository agent to comply with such request, (ii)
requisition from the Company the amount of cash, if any, to be
paid in lieu of issuance of fractional shares in accordance with
SECTION 14, and (iii) after receipt of such certificates or
depository receipts and cash, if any, cause the same to be
delivered to or upon the order of the registered holder of such
Rights Certificate (with such certificates or receipts registered
in such name or names as may be designated by such holder). If
the Company is obligated to deliver Common Stock, other
securities or assets pursuant to this Agreement, the Company will
make all arrangements necessary so that such other securities and
assets are available for distribution by the Rights Agent, if and
when appropriate.
(c) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new
Rights Certificate evidencing the number of Rights remaining
unexercised shall be issued by the Rights Agent and 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, subject to the provisions of SECTION
14.
(d) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Flip-in Event,
any Rights beneficially owed by (i) an Acquiring Person or an
Associate or Affiliate of an Acquiring Person, (ii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate)
who becomes a transferee after the Acquiring Person becomes such,
or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person (or any such Associate
or Affiliate) to holders of equity interests in such Acquiring
Person (or in any such Associate or Affiliate) or to any Person
with whom the Acquiring Person (or any such Associate or
Affiliate) has any continuing agreement, arrangement or
understanding regarding the transferred Rights, or (B) a transfer
which the Continuing Directors have determined is part of a plan,
arrangement or understanding which has as a primary purpose or
effect the avoidance of this SECTION 7(d) shall become null and
void without any further action, and no holder of such Rights
shall have any rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise;
provided, however, that the foregoing provisions of this SECTION
7(d) shall not apply to Rights beneficially owned by an Acquiring
Person (or an Associate or Affiliate) of such Acquiring Person or
a transferee thereof if such Person became an Acquiring Person
pursuant to a Qualifying Tender Offer. The Company shall use all
reasonable efforts to insure that the provisions of SECTION 4(b)
and this section 7(d) and are complied with, but shall have no
liability to any holder of Rights Certificates or other Person as
a result of its failure to make any determinations with respect
to an Acquiring Person or its Affiliates and Associates or any
transferee of any of them hereunder.
(e) 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 of Rights upon the occurrence of any purported transfer
9
<PAGE>
pursuant to SECTION 6 or exercise pursuant to this SECTION 7
unless such registered holder (i) shall have completed and signed
the certificate contained in the form of assignment or election
to purchase, as the case may be, set forth on the reverse side of
the Rights Certificate surrendered for such transfer or exercise,
as the case may be, (ii) shall not have indicated an affirmative
response to clause 1 or 2 thereof, and (iii) shall have provided
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 RIGHT
CERTIFICATES. All Rights Certificates surrendered for exercise,
transfer or exchange shall, if surrendered to the Company or to
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
this Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall
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, or shall, at the written request of the Company,
destroy such canceled Rights Certificates, and in either such
case shall deliver a certificate of cancellation or destruction
thereof, as appropriate, to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) The Company covenants and agrees that it will use reasonable
efforts to cause to be reserved and kept available out of its
authorized and unissued shares of Preferred Stock (and, following
the occurrence of Triggering Event, out of its authorized and
unissued shares of Common Stock) a number of shares of Preferred
Stock (and, following the occurrence of a Triggering Event, out
of its authorized but unissued shares of Common Stock) that will
be, except as provided in SECTION 11(a)(iii), sufficient to
permit the exercise in full of all outstanding Rights as provided
in this Agreement.
(b) So long as the Preferred Stock (and, following the
occurrence of Triggering Event, Common Stock and other
securities) issuable and deliverable upon the exercise of the
Rights may be listed on any national securities exchange or
inter-dealer quotation system of a registered national securities
association, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable, all
securities reserved for such issuance to be listed on any such
exchange or quotation system upon official notice of issuance
upon such exercise.
(c) The Company shall use its best efforts (i) to file, as
soon as practicable following the earliest date after the
occurrence of a Flip-in Event, or as soon as is required by law
following the Distribution Date, as the case may be, a
registration statement under the Securities Act with respect to
the securities issuable upon exercise of the Rights, (ii) to
cause such registration statement to become effective as soon as
practicable after such filing, and (iii) to cause such
registration statement to remain effective (with a prospectus at
all times meeting the requirements of the Securities Act) until
the earlier of (A) the date as of which the Rights are no longer
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<PAGE>
exercisable for such securities, and (B) the Expiration Date.
The Company will also take such action as may be appropriate
under, or to ensure compliance with, the securities or blue sky
laws of the various states in connection with the exercisability
of the Rights. The Company may temporarily suspend, for a period
of time not to exceed 90 days after the date set forth in this
Section 9(c)(i), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to
become effective. Upon any such suspension, the Company shall
notify the Rights Agent and issue a public announcement stating
that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the
suspension is no longer in effect that the rights are currently
exercisable. Notwithstanding any such provision of this
Agreement to the contrary, the Rights shall not be exercisable
for securities in any jurisdiction if the requisite qualification
in such jurisdiction shall not have been obtained, such exercise
therefor shall not be permitted under applicable law or a
registration statement in respect of such securities shall not
have been declared effective.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all one one-
hundredths of a share of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock or other
securities) issuable upon exercise of the Rights shall, at the
time of delivery of the certificates for such securities (subject
to payment of the Purchase Price), be duly authorized, validly
issued, fully paid, and nonassessable.
(e) The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer
taxes and other governmental charges which may be payable in
respect of the issuance or delivery of the Rights Certificates
and of any certificates for Preferred Stock (or 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 or other governmental charge which may be payable in
respect of any transfer involved in the issuance or delivery of
any Rights Certificates or of any certificates for Preferred
Stock (or Common Stock or other securities, as the case may be)
to a Person other than the registered holder of the applicable
Rights Certificate, and prior to any such transfer, issuance or
delivery any such tax or other governmental charge shall have
been paid by the holder of such Rights Certificate or it shall
have been established to the Company's satisfaction that no such
tax or other governmental charge is due.
SECTION 10. PREFERRED STOCK RECORD DATE. Each Person
(other than the Company) in whose name any certificate for
Preferred Stock (or 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 such
Preferred Stock (or 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 surrendered and payment of the Purchase Price
(and any applicable transfer taxes or other governmental charges)
was made; provided, however, that if the date of such surrender
and payment is a date upon which the transfer books of the
Company relating to the Preferred Stock (or Common Stock or other
securities, as the case may be) are closed, such Person shall be
11
<PAGE>
deemed to have become the record holder of such shares on, and
such certificate shall be dated, the next succeeding Business Day
on which the applicable transfer books of the Company are open.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND
OF SHARES OR NUMBER OF RIGHTS. The Purchase Price, the number
and kind 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) If the Company shall at any time after the date of
this Agreement (A) declare or pay a dividend on the Preferred
Stock payable in shares of Preferred Stock (or other capital
stock), (B) subdivide the outstanding Preferred Stock into a
greater number of shares, (C) combine the outstanding Preferred
Stock into a smaller number of shares, or (D) issue any shares of
its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a
consolidation or merger involving the Company in which the
Company is the surviving or continuing corporation), except as
otherwise provided in SECTION 7(d) and this SECTION 11(a), then
the Purchase Price in effect immediately prior to 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 Preferred Stock or other capital stock issuable on such
date shall be proportionately adjusted so that each holder of a
Right shall thereafter be entitled to receive, upon exercise
thereof at the Purchase Price in effect immediately prior to such
date, the aggregate number and kind of shares of Preferred Stock
or other capital stock, as the case may be, which, if such Right
had been exercised immediately prior to such date and at a time
when the applicable transfer books of the Company were open, such
holder would have been entitled to receive upon such exercise and
by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which requires an
adjustment under both this 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) Subject to SECTIONS 23 AND 24, if:
(A) any Person, alone or together with its
Affiliates and Associates, shall, at any time after the
date of this Agreement become an Acquiring Person
(other than pursuant to a Qualifying Tender Offer), or
(B) during such time as there is an Acquiring
Person, there shall be a reclassification of securities
(including any reverse stock split), recapitalization
of the Company, or any merger or consolidation of the
Company with any of its Subsidiaries or any other
transaction or series of transactions involving the
Company or any of its Subsidiaries (whether or not with
or into or otherwise involving an Acquired Person),
other than a Flip-over Event(s), which has the effect,
directly or indirectly, of increasing by more than 2%
the proportionate share of the outstanding shares of
any class of equity or convertible securities of the
Company or any of its Subsidiaries which is directly or
indirectly beneficially owned by any Acquiring Person
or any Associate or Affiliate of any Acquiring Person,
12
<PAGE>
or
(C) any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, at any time after
the date of this Agreement, directly or indirectly, (1)
shall merge into the Company or otherwise combine or
consolidate with the Company and the Company shall be
the continuing or surviving corporation of such merger,
combination or consolidation and, in connection with
such merger, combination or consolidation, none of the
outstanding shares of the Common Stock of the Company
shall be changed into or exchanged for stock or other
securities of the Company or of any other Person or
cash or any other property, (2) shall, in one
transaction or a series of transactions, other than in
connection with the exercise of a Right or Rights and
other than in connection with the exercise or
conversion of securities exercisable for or convertible
into securities of the Company which securities were
outstanding prior to the time such Acquiring Person
became such, transfer any assets to the Company or to
any of its Subsidiaries in exchange (in whole or in
part) for shares of Common Stock, for other equity
securities of the Company, or for securities
exercisable for or convertible into shares of equity
securities of the Company (Common Stock or otherwise)
or otherwise obtain from the Company, with or without
consideration, any additional shares of such equity
securities or securities exercisable for or convertible
into shares of such equity securities (other than
pursuant to a pro rata offer or distribution to all
holders of Common Stock), (3) shall sell, purchase,
lease, exchange, mortgage, pledge, transfer or
otherwise dispose of assets (in one or more
transactions), to, from, with or of, as the case may
be, the Company or any of its Subsidiaries (including,
in the case of Subsidiaries, by way of a merger,
combination or consolidation of any Subsidiary), on
terms and conditions less favorable to the Company than
the Company would be able to obtain in arm's-length
negotiations with an unaffiliated third party, other
than pursuant to a Flip-over Event, (4) shall sell,
purchase, lease, exchange, mortgage, pledge, transfer
or otherwise acquire or dispose of in one transaction
or a series of transactions, to, from or with (as the
case may be) the Company or any of its Subsidiaries
(other than incidental to the lines of business, if
any, engaged in as of such date between the Company and
such Acquiring Person or Associates or Affiliate)
assets having an aggregate fair market value of more
than $4,000,000, other than pursuant to a transaction
set forth in Section 13(a), (5) shall receive any
compensation from the Company or any of its
Subsidiaries other than compensation for full-time
employment as a regular employee, or fees for serving
as a director, at rates in accordance with the
Company's (or its Subsidiaries') past practices, or (6)
shall receive the benefit, directly or indirectly
(except proportionately as a shareholder and except if
resulting from a requirement of law or governmental
regulation), of any loans, assumptions of loans,
advances, guarantees, pledges or other financial
13
<PAGE>
assistance, or any tax credits or other tax advantage,
provided by the Company or any of its Subsidiaries,
(D) provided that the events described in
SECTIONS 11(a)(ii)(a), (b) and (c) shall not include a
repurchase by the Company of Common Stock that is
approved by a majority of Continuing Directors,
promptly following five days after the date of the
occurrence of the event described in SECTION
11(a)(ii)(a) hereof and promptly following the
occurrence of any event described in SECTION 11(a)(b)
or (c) hereof,
then proper provision shall promptly be made so that each
holder of a Right shall (except as otherwise provided
herein, including, without limitation, SECTION 7(d))
thereafter be entitled to receive, upon exercise of the
Right, without payment of the Purchase Price and in lieu of
Preferred Stock, such number of duly authorized, validly
issued, fully paid and nonassessable shares of Common Stock
of the Company (such shares being referred to herein as the
"ADJUSTMENT SHARES") as shall be equal to the result
obtained by (x) multiplying the then current Purchase Price
by the number of one one-hundredths of a share of Preferred
Stock for which a Right is then exercisable (such product
being thereafter referred to as the "PURCHASE PRICE" for
each Right and for all purposes of this Agreement), and
dividing that product by (y) the current market price
(determined pursuant to SECTION 11(d)(i)) per share of
Common Stock on the date of such first occurrence; provided,
however, that if the transaction that would otherwise give
rise to the foregoing adjustment is also subject to the
provisions of Section 13, then only the provisions of
Section 13 shall apply and no adjustment shall be made
pursuant to this Section 11(a)(ii).
(iii) If the number of shares of Common Stock which
are authorized by the Company's articles of incorporation
but not outstanding or reserved for issuance other than upon
exercise of the Rights is insufficient to permit the
exercise in full of the Rights in accordance with SECTION
11(a)(ii), the Company shall (A) determine the excess of (1)
the value of the Adjustment Shares issuable upon the
exercise of a Right (computed using the "CURRENT MARKET
PRICE" used to determine the number of Adjustment Shares),
over (2) the Purchase Price (such excess being referred to
herein as the "SPREAD"), and (B) with respect to each Right,
make adequate provision to substitute for the Adjustment
Shares, (1) (to the extent available) Common Stock and then,
(2) (to the extent available) other equity securities of the
Company which a majority of the Continuing Directors has
determined to be essentially equivalent to shares of Common
Stock in respect to dividend, liquidation and voting rights
(such securities being referred to herein as "common stock
equivalents"), and then, if necessary, (3) other equity or
debt securities of the Company, cash or other assets, a
reduction in the Purchase Price or any combination of the
foregoing, having an aggregate value (as determined by the
Continuing Directors based upon the advice of a nationally
recognized investment banking firm selected by the
Continuing Directors) equal to the value of the Adjustment
Shares; provided, however, if the Company shall not have
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made adequate provision to deliver value pursuant to clause
(B) above within thirty (30) days following the latter of
(x) the first occurrence of a Flip-in Event and (y) the date
on which the Company's right of redemption pursuant to
SECTION 23 expires, then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, shares of
Common Stock (to the extent available), shares of Preferred
Stock of the Company, and then, if necessary, cash, which
shares and cash have an aggregate value equal to the Spread.
If the Continuing Directors of the Company shall determine
in good faith that it is likely that sufficient additional
shares of Common Stock could be authorized for issuance upon
exercise in full of the Rights, the 30 day period set forth
above (such period, as it may be extended, being referred to
herein as the "SUBSTITUTION PERIOD") may be extended to the
extent necessary, but not more than 90 days following the
first occurrence of a Flip-In Event, in order that the
Company may seek shareholder approval for the authorization
of such additional shares. If the Company determines that
some action is to be taken pursuant to the first or second
sentence of this SECTION 11(a)(iii), then the Company (x)
shall provide, subject to SECTION 7(d), that such action
shall apply uniformly to all outstanding Rights, and (y) may
suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any
authorization of additional shares or to decide the
appropriate form and value of any consideration to be
delivered as referred to in such first or second sentence.
If any such suspension occurs, the Company shall issue a
public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in
effect. For purposes of this SECTION 11(a)(iii), the value
of the Common Stock shall be the current market price per
share of Common Stock (as determined pursuant to SECTION
11(d)) on the later of the date of the first occurrence of a
Flip-in Event and the first date that the right to redeem
the Rights pursuant to SECTION 23 shall expire; any common
stock equivalent shall be deemed to have the same value as
the Common Stock on such date; and the value of other
securities or assets shall be determined pursuant to SECTION
11(d)(iii).
(b) If the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Stock
entitling them to subscribe for or purchase (for a period
expiring within 45 calendar days after such record date)
Preferred Stock (or securities having the same rights, privileges
and preferences as the shares of Preferred Stock ("EQUIVALENT
PREFERRED STOCK")) or securities convertible into or exercisable
for Preferred Stock (or equivalent preferred stock) at a price
per share of Preferred Stock (or equivalent preferred stock) (in
each case, taking account of any conversion or exercise price)
less than the current market price (as determined pursuant to
SECTION 11(d)) per share of Preferred 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 date by a fraction, the numerator of
which shall be the number of shares of Preferred Stock
outstanding on such record date, plus the number of shares of
Preferred Stock which the aggregate price (taking account of any
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conversion or exercise price) of the total number of shares of
Preferred Stock (and/or equivalent preferred stock) so to be
offered would purchase at such current market price, and the
denominator of which shall be the number of shares of Preferred
Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock (and/or equivalent preferred
stock) so to be offered. In case such subscription price may be
paid by delivery of consideration part or all of which shall be
in a form other than cash, the value of such consideration shall
be as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all
purposes. Shares of Preferred Stock owned by or held for the
account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed, and if such
rights, options 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) In case the Company shall fix a record date for the
making of a distribution to all holders of Preferred Stock
(including any such distribution made in connection with a
consolidation or merger involving the Company in which the
Company is the surviving entity) of evidences of indebtedness,
equity securities other than Preferred Stock, cash or assets
(other than a regular periodic cash dividend out of the earnings
or retained earnings of the Company) or rights, options 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
determined pursuant to SECTION 11(d)) per share of Preferred
Stock on such record date, less the value (as determined pursuant
to SECTION 11(d)(iii)) of such evidences of indebtedness, equity
securities, assets, rights, options or warrants so to be
distributed with respect to one share of Preferred Stock, and the
denominator of which shall be such current market price per share
of Preferred Stock (as determined by SECTION 11(d)). Such
adjustment shall be made successively whenever such a record date
is fixed, and if such distribution is not so made, 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.
(d)(i) For the purpose of any computation hereunder other
than computations made pursuant to SECTION 11(a)(iii) or 14, 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
immediately prior to such date; for purposes of computations made
pursuant to SECTION 11(a)(iii), 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 10 consecutive Trading Days immediately following
such date; and for purposes of computations made pursuant to
SECTION 14, the "CURRENT MARKET PRICE" per share of Common Stock
for any Trading Day shall be deemed to be the closing price per
share of Common Stock for such Trading Day; provided, however,
that if the current market price per share 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
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such Common Stock payable in shares of such Common Stock or
securities exercisable for or convertible into shares of such
Common Stock (other than the Rights), or (B) any subdivision,
combination or reclassification of such Common Stock, and prior
to the expiration of the requisite 30 Trading Day or 10 Trading
Day period 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, on the
principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if the shares
of Common Stock are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by The Nasdaq Stock Market
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, or, if at the
time of such selection there is an Acquiring Person, by a
majority of the Continuing Directors. If on any such date no
market maker is making a market in the Common Stock, then the
fair value of such shares on such date as determined in good
faith by the Board of Directors of the Company (or, if at the
time of such determination there is an Acquiring Person, then by
a majority of the Continuing Directors) shall be used. If the
Common Stock is not publicly held or not so listed or traded, the
"CURRENT MARKET PRICE" per share means the fair value per share
as determined in good faith by the Board of Directors of the
Company, or, if at the time of such determination there is an
Acquiring Person, by a majority of the Continuing Directors, or
if there are no Continuing Directors, by a nationally recognized
investment banking firm selected by the Board of Directors, which
determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
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(ii) For the purpose of any computation hereunder, the
"CURRENT MARKET PRICE" per share of Preferred Stock shall be
determined in the same manner set forth above for the Common
Stock in SECTION 11(d)(i) (other than the last sentence
thereof). If the current market price per share of
Preferred Stock cannot be determined in such manner, or if
the Preferred Stock is not publicly held or listed or traded
in a manner described in SECTION 11(d)(i), then the "CURRENT
MARKET PRICE" per share of Preferred Stock shall be
conclusively deemed to be an amount equal to 100 (as such
number may be appropriately adjusted for such events as
stock splits, stock dividends and recapitalizations with
respect to the Common Stock occurring after the date of this
Agreement) multiplied by the current market price per share
of Common Stock (as determined pursuant to SECTION 11(d)(i)
(other than the last sentence thereof)). If neither the
Common Stock nor the Preferred Stock is publicly held or so
listed or traded, the "current market price" per share of
the Preferred Stock shall be determined in the same manner
as set forth in the last sentence of SECTION 11(d)(i). For
all purposes of this Agreement, the "current market price"
of one one-hundredth of a share of Preferred Stock shall be
equal to the "current market price" of one share of
Preferred Stock divided by 100.
(iii) For the purpose of any computation hereunder,
the value of any securities or assets other than Common
Stock or Preferred Stock shall be the fair value as
determined in good faith by the Board of Directors of the
Company, or, if at the time of such determination there is
an Acquiring Person, by a majority of the Continuing
Directors then in office, or, if there are no Continuing
Directors, by a nationally recognized investment banking
firm selected by the Board of Directors, which determination
shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(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 2%
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 ten-thousandth of a share
of Common Stock or other share or one-millionth of a share of
Preferred Stock, as the case may be.
(f) If at any time, as a result of an adjustment made
pursuant to SECTION 11(a)(ii) or SECTION 13(a), the holder of any
Right shall be entitled to receive upon exercise of such Right
any shares of capital stock other than Preferred Stock,
thereafter the number of such other shares so receivable upon
exercise of any Right and the Purchase Price thereof 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 Preferred Stock contained in SECTIONS 11(a), (b),
(c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of
SECTIONS 7, 9, 10, 13 and 14 with respect to the Preferred Stock
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent
18
<PAGE>
to any adjustment made hereunder shall evidence the right to
purchase, at the Purchase Price then in effect, the then
applicable number of one one-hundredths of a share of Preferred
Stock and other capital stock of the Company issuable from time
to time hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in SECTION 11(i), upon each adjustment of the Purchase
Price as a result of the calculations made in SECTIONS 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 one one-hundredths
of a share of Preferred Stock (calculated to the nearest one-
millionth) obtained by (i) multiplying (x) the number of one one-
hundredths of a share for which a Right was exercisable
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 lieu of any adjustment in the number of one one-hundredths of
a share of Preferred Stock issuable upon the exercise of a Right.
Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of one one-
hundredths of a share of Preferred Stock for which such 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
ten-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 Right Certificates evidencing, subject to SECTION 14,
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 holders 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
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<PAGE>
Purchase Price or the number of one one-hundredths of a share of
Preferred Stock issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per one one-hundredth of a
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 par value, if any, of the
number of one one-hundredths of a share of Preferred Stock
issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue
fully paid and nonassessable such number of one one-hundredths of
a share of Preferred 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 issuance to the holder of
any Right exercised after such record date the number of one one-
hundredths of a share of Preferred Stock or other capital stock
of the Company, if any, issuable upon such exercise over and
above the number of one one-hundredths of a share of Preferred
Stock or other capital stock 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 in this SECTION 11 to the contrary
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 it, in its sole discretion, shall determine to be
advisable in order that any (i) consolidation or subdivision of
the Preferred Stock, (ii) issuance wholly for cash of any
Preferred Stock at less than the current market price, (iii)
issuance wholly for cash of Preferred Stock or securities which
by their terms are convertible into or exercisable for Preferred
Stock, (iv) stock dividends, or (v) issuance of rights, options
or warrants referred to in this SECTION 11, hereafter made by the
Company to the holders of its Preferred Stock, shall not be
taxable to such shareholders.
(n) The Company covenants and agrees that it will not at
any time after the Distribution Date, (i) consolidate with any
other Person, (ii) merge with or into any other Person, (iii)
effect a statutory share exchange with any Person, or (iv) sell,
lease or otherwise transfer (and/or permit any of its
Subsidiaries to sell, lease or otherwise transfer), in one
transaction or a series of related transactions, assets
aggregating more than 50% of the assets (measured by either book
value or fair market value) or generating more than 50% of
operating income or cash flow of the Company and its
Subsidiaries, taken as a whole, to any other Person or Persons if
(x) at the time of or immediately after such consolidation,
merger, statutory share exchange, sale, lease or transfer there
are any rights, warrants or other instruments or securities
outstanding or any agreements or arrangements in effect which
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<PAGE>
would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights, or (y) prior to,
simultaneously with or immediately after such consolidation,
merger, statutory share exchange, sale, lease or transfer, the
shareholders of a Person who constitutes, or would constitute,
the "PRINCIPAL PARTY" for the purposes of SECTION 13 shall have
received a distribution of Rights previously owned by such Person
or any of its Affiliates and Associates.
(o) The Company covenants and agrees that after the
Distribution Date, it will not, except as permitted by SECTIONS
23, 24 or 27, take (or permit any Subsidiary to take) any action
if at the time such action is taken it is reasonably foreseeable
that such action will substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights,
unless such action is approved by a majority of the Continuing
Directors.
(p) Notwithstanding anything in this Agreement to the
contrary, if at any time after the Effective Date and prior to
the Distribution Date the Company shall (i) pay a dividend on the
outstanding shares of Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock into a larger
number of shares, or (iii) combine the outstanding Common Stock
into a smaller number of shares, the number of Rights associated
with each share of Common Stock then outstanding, or issued or
delivered thereafter 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.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR
NUMBER OF SHARES. Whenever an adjustment is made as provided in
SECTIONS 11 and 13, 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
Preferred Stock and the Common Stock a copy of such certificate,
and (c) mail a brief summary thereof to each holder of a Rights
Certificate (or, if prior to the Distribution Date, to each
holder of a certificate representing shares of Common Stock) in
the manner set forth in SECTION 26. The Rights Agent shall be
fully protected in relying on any such certificate and on any
adjustment contained therein.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER. (a) Except for any transaction with a
Person who has consummated a Qualifying Tender Offer which
transaction is approved by a majority of the Continuing
Directors, if following the Share Acquisition Date, directly or
indirectly,
(w) the Company shall consolidate with, merge
with or into, or otherwise combine with, any other
Person, and the Company shall not be the continuing or
surviving corporation of such consolidation, merger or
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combination, or
(x) any Person shall consolidate with, merge with
or into, or otherwise combine with, the Company, and
the Company shall be the continuing or surviving
corporation of such consolidation, merger or
combination and, in connection with such consolidation,
merger or combination, all or part of the outstanding
shares of Common Stock shall be changed into or
exchanged for other stock or securities of the Company
or any other Person or cash or any other property, or
(y) the Company shall be a party to any statutory
share exchange with any other Person after which the
Company is a subsidiary of any other Person, or
(z) the Company and/or one or more of its
Subsidiaries shall sell, lease or otherwise transfer,
in one transaction or a series of related transactions,
assets aggregating more than 50% of the assets
(measured by either book value or fair market value) or
generating more than 50% of the operating income or
cash flow of the Company and its Subsidiaries, taken as
a whole, to any other Person or Persons,
then, and in each such case, proper provision shall promptly be
made so that (i) each holder of a Right, except as provided in
SECTION 7(d), shall thereafter be entitled to receive, upon
exercise thereof at the then current Purchase Price, such number
of duly authorized, validly issued, fully paid and nonassessable
shares of freely tradable Common Stock of the Principal Party (as
defined below), not subject to any rights of call or first
refusal, liens, encumbrances or other claims, as shall be equal
to the result obtained by (A) multiplying the then current
Purchase Price by the number of one one-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately
prior to the first occurrence of a Flip-over Event (or, if a
Flip-in Event has previously occurred, multiplying the number of
such one one-hundredths of a share of Preferred Stock for which a
Right was exercisable immediately prior to the first occurrence
of a Flip-in Event by the Purchase Price in effect immediately
prior to such first occurrence) (such product being thereafter
referred to as the "PURCHASE PRICE" for each Right and for all
purposes of this Agreement), and dividing that product by (B)
50% of the current market price (determined pursuant to SECTION
11(d)(i)) per share of the Common Stock or other securities of
such Principal Party) on the date of consummation of such
consolidation, merger, combination, statutory share exchange,
sale, lease or transfer;
(ii) the Principal Party shall thereafter be liable
for, and shall assume, by virtue of such consolidation,
merger, combination, statutory share exchange, sale, lease
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 shall apply only
to such Principal Party following the first occurrence of a
Flip-over Event;
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(iv) such Principal Party shall take such steps
(including, without limitation, the authorization and
reservation of a sufficient number of shares of its Common
Stock to permit exercise of all outstanding Rights in
accordance with this SECTION 13(a)) in connection with the
consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to
the shares of its Common Stock thereafter deliverable upon
the exercise of the Rights; and
(v) the provisions of SECTION 11(a)(ii) shall be of no
effect following the first occurrence of a Flip-over Event.
(b) "PRINCIPAL PARTY" means:
(i) in the case of any transaction described in
SECTIONS 13(a) (w), (x) or (y), (A) the Person that is the
issuer of any securities into which shares of Common Stock
of the Company are converted in such merger, consolidation,
or combination or for which shares of Common Stock of the
Company are exchanged in such statutory share exchange, or,
if there is more than one such issuer, the issuer of the
Common Stock of which has the greatest aggregate market
value, or (B) if no securities are issued, (x) the person
that survives such consolidation or is the other party to
the merger, combination or statutory share exchange, or, if
there is more than one such Person, the Person the Common
Stock of which has the greatest aggregate market value, or
(y) if the Person that is the other party to the merger does
not survive the merger, the Person that does survive the
merger (including the Company if it survives); and
(ii) in the case of any transactions described in
SECTIONS 13(a)(z), the Person that is the party receiving
the greatest portion of the assets, operating income or cash
flow transferred pursuant to such transaction or
transactions, or, if each person that is a party to such
transaction or transactions receives the same portion of the
assets, operating income or cash flow so transferred, or, if
the Person receiving the greatest portion of the assets,
operating income or cash flow cannot be determined, the
person the Common Stock of which has the greatest aggregate
market value;
provided, however, that in any such case, (A) 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 another Person the Common Stock of which is and has
been so registered, "PRINCIPAL PARTY" shall refer to such other
Person; and (B) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the 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.
(c) The Company shall not consummate any such
consolidation, merger, combination, statutory share exchange,
sale, lease or transfer unless the Principal Party shall have a
sufficient number of authorized shares of its Common Stock which
are not outstanding or otherwise reserved for issuance to permit
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the exercise in full of the Rights in accordance with this
SECTION 13 and unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights
Agent a supplemental agreement providing for the terms set forth
in SECTIONS 13(a) and (b) and further providing that, as soon as
practicable after the date of any consolidation, merger,
combination, statutory share exchange, sale, lease or transfer
mentioned in SECTION 13(a), the Principal Party will (i) prepare
and file a registration statement under the Securities Act with
respect to the Rights and the securities issuable upon exercise
of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement (A) to become
effective as soon as practicable after such filing, and (B) to
remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date;
and (ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates
which comply in all respects with the requirements for
registration on Form 10 under the Exchange Act.
(d) The provisions of this SECTION 13 shall similarly apply
to successive mergers, consolidations, combinations, statutory
share exchanges, sales, leases or other transfers. If any Flip-
over Event shall occur at any time after the occurrence of a
Flip-in Event, the Rights which have not theretofore been
exercised shall thereafter become exercisable in the manner
described in SECTION 13(a).
SECTION 14. 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(p), or to distribute Rights Certificates which evidence
fractional Rights. In lieu of any such fractional Rights, the
Company shall pay 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 price of a whole Right. For
purposes of this SECTION 14(a), the current market price of a
whole Right shall be the closing price of a Right for the Trading
Day immediately prior to the date on which such fractional Rights
would otherwise have been issuable. The closing price of a Right
for any 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 on the principal national securities exchange on which
the Rights are listed or admitted to trading or, if the Rights
are not listed or admitted to trading on any national securities
exchange, the last quoted price, or, if not so quoted, the
average of the high bid and low asked prices in the over-the-
counter market, as reported by The Nasdaq Stock Market 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, or, if at the time of such selection there is an
Acquiring Person, by a majority of the Continuing Directors. If
on any such date no such market maker is making a market in the
Rights, the current market price of the Rights on such date shall
be as determined in good faith by the Board of Directors of the
Company, or, if at the time of such determination there is an
Acquiring Person, by a majority of the Continuing Directors.
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(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are
multiples of one one-hundredth of a share of Preferred Stock)
upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Preferred Stock (other than
fractions which are multiples of one one-hundredth of a share of
Preferred Stock). In lieu of any such fractional shares of
Preferred Stock, the Company shall pay to the registered holders
of Rights Certificates at the time such Rights are exercised as
herein provided an amount in cash equal to the same fraction of
the current market price of one one-hundredth of a share of
Preferred Stock. For purposes this SECTION 14(b), the current
market price of one one-hundredth of a share of Preferred Stock
shall be one one-hundredth of the closing price of a share of
Preferred Stock (as determined pursuant to SECTION 11(d)) for the
Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of any Triggering Event or
upon any exchange pursuant to SECTION 24, 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 shall pay to the
registered holders of Rights Certificates at the time such Rights
are exercised or exchanged as provided herein an amount in cash
equal to the same fraction of the current market price of a share
of Common Stock. For purposes of this SECTION 14(c), the current
market price of a share of Common Stock shall be the closing
price of a share of Common Stock (as determined pursuant to
SECTION 11(d)(i)) for the Trading Day immediately prior to the
date of such exercise or exchange.
(d) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or
any fractional shares upon exercise of a Right except as
permitted by this SECTION 14.
SECTION 15. RIGHTS OF ACTION. All rights of action in
respect of this Agreement are vested in the respective registered
holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of Common Stock), and
any registered holder of any Rights Certificate (or, prior to the
Distribution Date, of any 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 any 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 and 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 at law for
any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief
against actual or threatened violations of the obligations of,
any Person subject to this Agreement.
SECTION 16. AGREEMENT OF RIGHT 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:
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(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 or offices of the Rights
Agent designated for such purposes, duly endorsed or accompanied
by a proper instrument of transfer and with the appropriate forms
and certificates fully executed;
(c) subject to SECTIONS 6(a) and 7(e), the Company and the
Rights Agent may deem and treat the Person in whose name a Rights
Certificate (or, prior to the Distribution Date, a certificate
representing Common Stock) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Rights Certificate or
the certificate representing shares of Common Stock made by
anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of SECTION 7(d), shall be
affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or other Person as a result of
its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental
authority prohibiting or otherwise restraining performance of
such obligation; provided, however, that the Company must use its
best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
SECTION 17. 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 capital stock which may at
any time be issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting
shareholders (except as provided in SECTION 25), 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 hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT. (a) 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 expenses and counsel
fees and other disbursements incurred in the execution or
administration 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,
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liability, or expense, incurred without 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 or the exercise
or performance of its duties hereunder, including the costs and
expenses of defending against any claim of liability.
(b) 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 the administration of this
Agreement or the exercise or performance of its duties hereunder
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, instruction, 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 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
RIGHTS AGENT. (a) 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 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 or stock transfer 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, however, that such corporation would be
eligible for appointment as a successor Rights Agent under the
provisions of SECTION 21. 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 a 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, any successor Rights Agent may countersign such
Rights Certificates either in the name of the predecessor Rights
Agent 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 and in this Agreement.
(b) In case at 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 prior 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 20. DUTIES OF RIGHTS AGENT. 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 (who
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<PAGE>
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" and the determination of
"CURRENT MARKET PRICE") be proved or established by the Company
prior to taking, suffering or omitting to take any action
hereunder, such fact or matter (unless other evidence in respect
thereof is specifically prescribed herein) may be deemed to be
conclusively proved and established by a certificate signed by
the Chairman of the Board, the President, any Vice President, the
Secretary or any Assistant Secretary of the Company and delivered
to the Rights Agent. Any such certificate shall be full
authorization to the Rights Agent for any action taken, suffered
or omitted 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 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 its
countersignature thereof) 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 or 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 in this Agreement or in any Rights
Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void
pursuant to SECTION 7(d)) or any adjustment in the terms of the
Rights (including the manner, method or amount thereof) provided
for in SECTIONS 3, 11, 13, 23 or 24, 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 by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation
of any shares of Common Stock or Preferred Stock to be issued
pursuant to this Agreement or any Rights Certificate or as to
whether any shares of Common Stock or Preferred Stock will, when
issued, be duly authorized, validly issued, fully paid and
nonassessable.
(f) 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.
(g) The Rights Agent is hereby authorized and directed to
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accept instructions with respect to the performance of its duties
hereunder from the Chairman of the Board, the President any Vice
President, the Secretary or any Assistant Secretary of the
Company, and to apply to such officers for advice or instructions
in connection with its duties, and it shall not be liable for any
action taken, suffered or omitted to be taken by it in good faith
in accordance with instructions of any such officer.
(h) 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
pecuniarily 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 the
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 Person.
(i) 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, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company or to any holders of Rights
resulting from any such act, default, neglect or misconduct;
provided, however, that reasonable care was exercised in the
selection and continued employment thereof.
(j) 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.
(k) 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 or 2 thereof, the
Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first consulting with
the Company.
SECTION 21. 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' written notice mailed
to the Company and to each transfer agent of the Common Stock and
Preferred Stock by registered or certified mail, and, subsequent
to the Distribution Date, to the holders of the Rights
Certificates by first-class mail. The Company may remove the
Rights Agent or any successor Rights Agent upon 30 days' written
notice, mailed to the Rights Agent or successor Rights Agent, as
the case may be, and to each transfer agent of the Common Stock
and Preferred Stock by registered or certified mail, and
subsequent to the Distribution Date, 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 of giving notice of such removal or after it
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has been notified in writing of such resignation or incapacity by
the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then the
registered holder of any Rights Certificate may apply to any
court of competent jurisdiction for the appointment of a 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 States of Georgia (or any other state of the United
States so long as such corporation is authorized to do business
as a banking institution in the States of Georgia), in good
standing, having a principal office in the State of Georgia,
which is authorized under such laws to exercise stock transfer or
corporate trust powers and is subject to supervision or
examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000 or (b) an Affiliate of a
corporation described in SECTION 21(a). 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 the
Preferred Stock, and, subsequent to the Distribution Date, mail a
notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this
SECTION 21, 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 22. ISSUANCE OF NEW RIGHT 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 and the number or kind or class of
shares or other securities issuable or property purchasable upon
exercise of the Rights made in accordance with the provisions of
this Agreement.
SECTION 23. REDEMPTION AND TERMINATION. (a) The Company
may, at its option, but only upon the vote of a majority of the
Board of Directors then in office, at any time prior to the
earlier of (i) the Close of Business on the Share Acquisition
Date, or (ii) the Final Expiration Date, redeem all but not less
than all of the then outstanding Rights at a redemption price of
$0.001 per Right, as such amount may be appropriately adjusted to
reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being
referred to herein as the "REDEMPTION PRICE"), and the Company
may, at its option, pay the Redemption Price in shares of Common
Stock (based on the "CURRENT MARKET VALUE," as defined in SECTION
11(d), of the shares of Common Stock at the time of redemption),
cash or any other form of consideration deemed appropriate by the
Board of Directors; provided, however, that any redemption of
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Rights shall also be subject to any additional approval
procedures required by the articles of incorporation or bylaws of
the Company. Notwithstanding anything in this Agreement to the
contrary, the Rights shall not be exercisable after the first
occurrence of a Flip-in Event until such time as the Company's
right of redemption hereunder has expired.
(b) If, following the occurrence of a Share Acquisition
Date (i) a Person who is an Acquiring Person shall have
transferred or otherwise disposed of a number of shares of Common
Stock in one transaction or series of transactions, not directly
or indirectly involving the Company or any of its Subsidiaries,
which did not result in the occurrence of a Triggering Event such
that such Person is thereafter the Beneficial Owner of 10% or
less of the outstanding Common Stock, and (ii) there are no other
Persons immediately following the occurrence of the event
described in clause (i) who are Acquiring Persons, then the right
of redemption shall be reinstated and thereafter be subject to
the provisions of this SECTION 23.
(c) Immediately upon the action of the Board of Directors
of the Company electing to redeem the Rights and without any
further action and without any notice, the right to exercise the
Rights will terminate and thereafter the only right of the
holders of Rights shall be to receive the Redemption Price for
each Right so held. The Company shall promptly thereafter give
notice of such redemption to the Rights Agent and the holders of
the Rights in the manner set forth in SECTION 26; provided,
however, that the failure to give, or any defect in, such notice
shall not affect the validity of such redemption. Any notice
which is mailed in the manner provided herein 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.
SECTION 24. EXCHANGE. (a) At any time after any Person
becomes an Acquiring Person, a majority of the Continuing
Directors may, at their option, exchange all or part of the then
outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to SECTION 7(d)) for shares
of 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").
(b) Immediately upon the action of the Continuing Directors
electing to exchange any Rights pursuant to SECTION 24(a) and
without any further action and without any notice, the right to
exercise such Rights will terminate and thereafter the only right
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 thereafter give notice of such exchange to the Rights
Agent and the holders of the Rights to be exchanged in the manner
set forth in SECTION 26; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity
of such exchange. Any notice which is mailed in the manner
provided herein 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 shares of Common Stock for
Rights will be effected and, in the event of any partial
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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
SECTION 7(d)) held by each holder of Rights.
(c) If there shall not be sufficient Common Stock issued
but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated by this SECTION 24, the
Company shall take all such action as may be necessary to
authorize additional Common Stock for issuance upon exchange of
the Rights. In the event the Company shall, after a good faith
effort, be unable to take all such action as may be necessary to
authorize such additional Common Stock, the Company may
substitute common stock equivalents (as defined in SECTION
11(a)(iii)) for shares of Common Stock exchangeable for Rights,
at the initial rate of one common stock equivalent for each share
of Common Stock, as appropriately adjusted to reflect adjustments
in dividend, liquidation and voting rights of common stock
equivalents pursuant to the terms thereof, so that each common
stock equivalent delivered in lieu of each share of Common Stock
shall have essentially the same dividend, liquidation and voting
rights as one share of Common Stock.
(d) The Company shall not be required to issue fractional
shares of Common Stock or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of such
fractional shares of Common Stock, the Company shall pay to the
registered holders of Rights Certificates with regard 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
purposes of this SECTION 24(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)) for
the Trading Day immediately prior to the date of the exchange.
SECTION 25. NOTICE OF PROPOSED ACTIONS. (a) If the Company
shall propose, at any time after the Distribution Date, (i) to
pay any dividend payable in stock of any class to the holders of
Preferred Stock or to make any other distribution to the holders
of Preferred Stock (other than a regular quarterly cash dividend
out of earnings or retained earnings of the Company), (ii) to
offer to the holders of its Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of Preferred
Stock or shares of stock of any class or any other securities,
rights or options, (iii) to effect any reclassification of its
Preferred Stock (other than a reclassification involving only the
subdivision or combination of outstanding shares of Preferred
Stock), (iv) to effect any consolidation or merger with or into
any other Person, or to effect a statutory share exchange with
any Person, or to effect and/or to permit one or more of its
Subsidiaries to effect any sale, lease or other transfer, in one
transaction or a series of related transactions, of assets
aggregating more than 50% of the assets (measured by either book
value or fair market value) or generating more than 50% of the
operating income or cash flow of the Company and its
Subsidiaries, taken as a whole, to any other Person or Persons,
or (v) 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 Right, to the extent feasible and in accordance
with SECTION 26, a notice of such proposed action, which shall
specify the record date for the purposes of any such dividend,
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distribution or offering of rights or warrants, or the date on
which any such reclassification, consolidation, merger, statutory
share exchange, sale, lease, transfer, liquidation, dissolution
or winding up is to take place and the date of participation
therein by the holders of Preferred 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 (i) or (ii) above at least 20 days prior
to the record date for determining holders of the Preferred Stock
entitled to participate in such dividend, distribution or
offering, 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 Preferred
Stock, whichever shall be the earlier. The failure to give
notice required by this SECTION or any defect therein shall not
affect the legality or validity of the action taken by the
Company or the vote upon any such action.
(b) Notwithstanding anything in this Agreement to the
contrary, prior to the Distribution Date a public filling by the
Company with the Securities and Exchange Commission shall
constitute sufficient notice to the holders of securities of the
Company, including the Rights, for purposes of this Agreement and
no other notice need be given to such holders.
(c) If a Triggering Event shall occur, then, in any such
case, (i) the Company shall as soon as practicable thereafter
give to each holder of a Right, in accordance with SECTION 26, 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) or 13, as the case may be, and (ii) all
references in SECTION 25(a) to Preferred Stock shall be deemed
thereafter to refer to Common Stock or other capital stock, as
the case may be.
SECTION 26. NOTICES. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the
holder of any Right to or on the Company shall be sufficiently
given or made if sent by first-class, postage prepaid mail to the
address of the Company indicated on the signature page hereof or
such other address as the Company shall specify in writing to the
Rights Agent. Subject to the provisions of SECTION 21, any
notice or demand authorized by this Agreement to be given or made
by the Company or by the holder of any Right to or on the Rights
Agent shall be sufficiently given or made if sent by first-class,
postage prepaid mail to the address of the Rights Agent indicated
on the signature page hereof or such other address as the Rights
Agent shall specify in writing to the Company. 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 (or, prior to the Distribution Date, to the holder of
any certificate representing shares of Common Stock) shall be
sufficiently given or made if sent by first-class, postage
prepaid mail to the address of such holder shown on the registry
books of the Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS. Prior to the
Distribution Date and subject to the penultimate sentence of this
SECTION 27, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of this
Agreement without the approval of any holders of certificates
representing shares of Common Stock. From and after the
Distribution Date, and subject to the penultimate sentence of
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this SECTION 27, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement without
the approval of any holders of Right Certificates in order (a) to
cure any ambiguity, (b) to correct or supplement any provision
contained herein which may be defective or inconsistent with any
other provisions herein, (c) to shorten or lengthen any time
period hereunder (which shortening or lengthening shall be
effective only if there are Continuing Directors in office and
shall require the concurrence of a majority of such Continuing
Directors), or (d) to change or supplement the provisions hereof
in any manner which the Company may deem necessary or desirable
and which shall not adversely affect the interests of the holders
of Rights (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person); provided, however, that this
Agreement may not be supplemented or amended pursuant to SECTION
27(c) to lengthen (i) a time period relating to when the Rights
may be redeemed at such time as the Rights are not then
redeemable, or (ii) any other time period, unless lengthening
such other time period is for the purpose of protecting,
enhancing, or clarifying the rights of, or benefits to the
holders of, the Rights. Notwithstanding the foregoing, after any
Person has become an Acquiring Person, any supplement or
amendment shall be effective only if there are Continuing
Directors then in office, and such supplement or amendment shall
have been approved by a majority of such Continuing Directors.
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, the
Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the
contrary, no supplement or amendment shall be made which changes
the Redemption Price, the Final Expiration Date, the Purchase
Price or the number of one one-hundredths of a share of
Preferred Stock for which a Right is exercisable. 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.
SECTION 28. 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 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF
DIRECTORS. 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
of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) under
the Exchange Act as in effect on the date of this Agreement. The
Board of Directors of the Company (or, after any Person has
become an Acquiring Person, a majority of the Continuing
Directors) shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers
specifically granted to the Board or to the Company, or as may be
necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (a)
interpret the provisions of this Agreement, and (b) make all
determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to
redeem or exchange or not to redeem or exchange the Rights or to
34
<PAGE>
amend this Agreement); provided, however, that any redemption of
Rights shall also be subject to any additional approval
procedures required by the articles of incorporation or bylaws of
the Company. 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 (or, after any Person has become an Acquiring
Person, by the Continuing Directors) in good faith, shall (x) be
final, conclusive and binding on the Company (subject to any
additional redemption approval procedures referred to in the
proviso to the immediately preceding sentence), the Rights Agent,
the holders of the Rights and all other parties, and (y) not
subject the Board of Directors of the Company or the Continuing
Directors to any liability to the holders of the Rights.
SECTION 30. 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
certificates representing the shares of 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
certificates representing the shares of Common Stock).
SECTION 31. SEVERABILITY. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated;
provided, however, that, notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant
or restriction is held by such court or authority to be invalid,
void or unenforceable and the Board of Directors of the Company
(or, after any Person has become an Acquiring Person, a majority
of the Continuing Directors) determines in its good faith
judgment that severing the invalid language from this Agreement
would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in SECTION 23 hereof shall be
reinstated and shall not expire until the close of business on
the tenth day following the date of such determination by the
Board of Directors or Continuing Directors, as the case may be.
SECTION 32. GOVERNING LAW. This Agreement, each Right and
each Rights Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Georgia and for all
purposes shall be governed by and construed in accordance with
the laws of such State (other than its conflicts of laws rules)
applicable to contracts to be made and performed entirely within
such State.
SECTION 33. COUNTERPARTS. This Agreement may be executed
in any number of counterparts and each of such counterparts shall
for all purposes be deemed to be an original, and all such
counterparts shall together constitute one and the same
instrument.
SECTION 34. DESCRIPTIVE HEADINGS. The captions herein are
included for convenience of reference only, do not constitute a
part of this Agreement and shall be ignored in the construction
and interpretation hereof.
35<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
NATIONAL VISION ASSOCIATES, LTD.
By /s/ James W. Krause
Name: James W. Krause
Title: President and Chief Executive Officer
296 Grayson Highway
Lawrenceville, Georgia 30245
Attention: President
WACHOVIA BANK OF NORTH CAROLINA,
N.A.
By: /s/ John P. Modica
Name: John P. Modica
Title: Vice President
301 North Church Street
2nd Floor
Winston Salem, North Carolina 27101
Attention: John P. Modica, Vice
President
36
<PAGE>
Exhibit A
FORM OF
BOARD RESOLUTION ESTABLISHING AND DESIGNATING
SERIES A PARTICIPATING CUMULATIVE
PREFERRED STOCK
OF
NATIONAL VISION ASSOCIATES, LTD.
PURSUANT TO SECTION 14-2-602 OF THE GEORGIA
BUSINESS CORPORATION CODE
SECTION 1. Designation and Number of Shares. The
shares of such series shall be designated as "SERIES A
PARTICIPATING CUMULATIVE PREFERRED STOCK" (the "SERIES A
PREFERRED STOCK"), and the number of shares constituting such
series shall be 500,000. Such number of shares of the Series A
Preferred Stock may be increased or decreased by resolution of
the Board of Directors; provided, however, that no decrease shall
reduce the number of shares of Series A Preferred Stock to a
number less than the number of shares then outstanding plus the
number of shares issuable upon exercise or conversion of
outstanding rights, options or other securities issued by the
Corporation.
SECTION 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the
holders of any shares of any series of Preferred Stock ranking
prior and superior to the shares of Series A Preferred Stock with
respect to dividends, if any, the holders of shares of Series A
Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available
for the purpose, quarterly dividends payable on the last day of
March, June, September and December of each year (each such date
being referred to herein as a "QUARTERLY DIVIDEND PAYMENT DATE"),
commencing on the first Quarterly Dividend Payment Date after the
first issuance of any share or fraction of a share of Series A
Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $1.00 and (b) subject to the
provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount (payable in kind) of all cash
dividends or other distributions and 100 times the aggregate per
share amount of all non-cash dividends or other distributions
(other than (i) a dividend payable in shares of Common Stock, par
value $.01 per share, of the Corporation (the "COMMON STOCK") or
(ii) a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise)), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date,
or, with respect to the first Quarterly Dividend Payment Date,
A-1
<PAGE>
since the first issuance of any share or fraction of a share of
Series A Preferred Stock. If the Corporation shall at any time
after January 27, 1997 (the "RIGHTS DECLARATION DATE") declare or
pay any dividend on Common Stock payable in shares of Common
Stock or effect a subdivision or combination or consolidation of
the outstanding shares of Common Stock (by reclassification or
otherwise) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of
shares of Series A Preferred Stock were entitled immediately
prior to such event under clause (b) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided in
SECTION 2(A) immediately after it declares a dividend or
distribution on the Common Stock (other than as described in
clauses (i) and (ii) of the first sentence of SECTION 2(A));
provided, however, that if no dividend or distribution shall have
been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date (or, with respect to the first Quarterly
Dividend Payment Date, the period between the first issuance of
any share or fraction of a share of Series A Preferred Stock and
such first Quarterly Dividend Payment Date), a dividend of $1.00
per share on the Series A Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative
on outstanding shares of Series A Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue
of such shares of Series A Preferred Stock, unless the date of
issue of such shares is on or before the record date for the
first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue and be cumulative from the date
of issue of such shares, or unless the date of issue is a date
after the record date for the determination of holders of shares
of Series A Preferred Stock entitled to receive a quarterly
dividend and on or before such Quarterly Dividend Payment Date,
in which case dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on shares of
Series A Preferred Stock in an amount less than the total amount
of such dividends at the time accrued and payable on such shares
shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may
fix a record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date
shall not be more than 60 days prior to the date fixed for the
payment thereof.
SECTION 3. Voting Rights. In addition to any other
voting rights required by law, the holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment
hereinafter set forth, each share of Series A Preferred Stock
A-2
<PAGE>
shall entitle the holder thereof to 100 votes on all matters
submitted to a vote of shareholders of the Corporation. If the
Corporation shall at any time after the Rights Declaration Date
declare or pay any dividend on Common Stock payable in shares of
Common Stock or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the number of
votes per share to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction, the numerator
of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein or by law, the
holders of shares of Series A Preferred Stock and the holders of
shares of Common Stock shall vote together as a single class on
all matters submitted to a vote of shareholders of the
Corporation.
(C) (i) If at any time dividends on any Series A
Preferred Stock shall be in arrears in an amount equal to six
quarterly dividends thereon (whether or not consecutive), the
occurrence of such contingency shall mark the beginning of a
period (herein called a "DEFAULT PERIOD") which shall extend
until such time when all accrued and unpaid dividends for all
previous quarterly dividend periods and for the current quarterly
dividend period on all shares of Series A Preferred Stock then
outstanding shall have been declared and paid or set apart for
payment. During each default period, all holders of Series A
Preferred Stock and any other series of Preferred Stock then
entitled as a class to elect directors, voting together as a
single class, irrespective of series, shall have the right to
elect one Director.
(ii) During any default period, such voting right of
the holders of Series A Preferred Stock may be exercised
initially at a special meeting called pursuant to SECTION
3(C)(iii) or at any annual meeting of shareholders, and
thereafter at annual meetings of shareholders; provided, however,
that neither such voting right nor the right of the holders of
any other series of Preferred Stock, if any, to increase, in
certain cases, the authorized number of Directors shall be
exercised unless the holders of 10% in number of shares of
Preferred Stock outstanding shall be present in person or by
proxy. The absence of a quorum of holders of Common Stock shall
not affect the exercise by holders of Preferred Stock of such
voting right. At any meeting at which holders of Preferred Stock
shall exercise such voting right initially during an existing
default period, they shall have the right, voting as a class, to
elect Directors to fill such vacancy, if any, in the Board of
Directors as may then exist up to one Director or, if such right
is exercised at an annual meeting, to elect one Director. If the
number which may be so elected at any special meeting does not
amount to the required number, the holders of the Preferred Stock
shall have the right to make such increase in the number of
Directors as shall be necessary to permit the election by them of
the required number. After the holders of the Preferred Stock
shall have exercised their right to elect Directors in any
A-3
<PAGE>
default period and during the continuance of such period, the
number of Directors shall not be increased or decreased except by
vote of the holders of Preferred Stock as herein provided or
pursuant to the rights of any equity securities ranking senior to
or pari passu with the Series A Preferred Stock.
(iii) Notwithstanding anything to the contrary
contained in the Corporation's Articles of Incorporation or
Bylaws, unless the holders of Preferred Stock shall, during an
existing default period, have previously exercised their right to
elect Directors, the Board of Directors may order, or any
shareholder(s) owning in the aggregate not less than ten percent
(10%) of the total number of shares of Preferred Stock
outstanding, irrespective of series, may request, the calling of
a special meeting of holders of Preferred Stock, which meeting
shall thereupon be called by the President, a Vice President or
the Secretary of the Corporation. Notice of such meeting and of
any annual meeting at which holders of Preferred Stock are
entitled to vote pursuant to this SECTION 3(C)(iii) shall be
given to each holder of record of Preferred Stock by mailing a
copy of such notice to him at his last address as the same
appears on the books of the Corporation. Such meeting shall be
called for a time not earlier than 20 days and not later than 60
days after such order or request or in default of the calling of
such meeting within 60 days after such order or request, such
meeting may be called on similar notice by any shareholder(s)
owning in the aggregate not less than ten percent (10%) of the
total number of shares of Preferred Stock outstanding,
irrespective of series. Notwithstanding the provisions of this
SECTION 3(C)(iii), no such special meeting shall be called during
the period within 60 days immediately preceding the date fixed
for the next annual meeting of shareholders.
(iv) In any default period, the holders of Common
Stock, and other classes of stock of the Corporation if
applicable, shall continue to be entitled to elect the whole
number of Directors until the holders of Preferred Stock shall
have exercised their right to elect one Director voting as a
class, after the exercise of which right (x) the Directors so
elected by the holders of Preferred Stock shall continue in
office until their successors shall have been elected by such
holders or until the expiration of the default period, and (y)
any vacancy in the Board of Directors may (except as provided in
SECTION 3(C)(ii) be filled by vote of a majority of the remaining
Directors theretofore elected by the holders of the class of
stock which elected the Director whose office shall have become
vacant. References in this SECTION 3(C) to Directors elected by
the holders of a particular class of stock shall include
Directors elected by such Directors to fill vacancies as provided
in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default
period, (x) the right of the holders of Preferred Stock as a
class to elect Directors shall cease, (y) the term of any
Directors elected by the holders of Preferred Stock as a class
shall terminate, and (z) the number of Directors shall be such
number as may be provided for in the Articles of Incorporation or
Bylaws irrespective of any increase made pursuant to the
provisions of SECTION 3(C)(ii) (such number being subject,
however, to change thereafter in any manner provided by law or in
the Articles of Incorporation or Bylaws). Any vacancies in the
A-4
<PAGE>
Board of Directors effected by the provisions of clauses (y) and
(z) in the preceding sentence may be filled by a majority of the
remaining Directors.
(D) Except as otherwise provided herein, holders of
Series A Preferred Stock shall have no special voting rights, and
their consent shall not be required (except to the extent they
are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
SECTION 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided
in SECTION 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on
outstanding shares of Series A Preferred Stock shall have been
paid in full, the Corporation shall not:
(i) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Stock;
(ii) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except
dividends paid ratably on the Series A Preferred Stock and
all such other parity stock on which dividends are payable
or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled;
(iii) redeem, purchase or otherwise acquire for
value any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock; provided, however, that the
Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for
shares of stock of the Corporation ranking junior (as to
dividends and upon dissolution, liquidation or winding up)
to the Series A Preferred Stock; or
(iv) redeem, purchase or otherwise acquire for value
any shares of Series A Preferred Stock, or any shares of
stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A
Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the
Board of Directors) to all holders of Series A Preferred
Stock and all such other parity stock upon such terms as the
Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and
preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of
the Corporation to purchase or otherwise acquire for value any
shares of stock of the Corporation unless the Corporation could,
under SECTION 4(A), purchase or otherwise acquire such shares at
A-5
<PAGE>
such time and in such manner.
SECTION 5. Reacquired Shares. Any shares of Series A
Preferred Stock redeemed, purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and
canceled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued
shares of Preferred Stock without designation as to series and
may be reissued as part of a new series of Preferred Stock to be
created by resolution or resolutions of the Board of Directors as
permitted by the Articles of Incorporation or as otherwise
permitted under Georgia law.
SECTION 6. Liquidation, Dissolution or Winding Up.
Upon any liquidation, dissolution or winding up of the
Corporation, no distribution shall be made (1) to the holders of
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $1.00 per share, plus an
amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment;
provided, however, that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount
per share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of Common Stock, or (2) to the
holders of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except distributions made ratably on the Series
A Preferred Stock and all such other parity stock in proportion
to the total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up. If
the Corporation shall at any time after the Rights Declaration
Date pay any dividend on Common Stock payable in shares of Common
Stock or effect a subdivision or combination or consolidation of
the outstanding shares of Common Stock (by reclassification or
otherwise) into a greater or lesser number of shares of Common
Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1)
of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
SECTION 7. Consolidation or Merger. If the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or
securities, cash or any other property, then in any such case the
shares of Series A Preferred Stock shall at the same time be
similarly exchanged for or changed into an amount per share,
subject to the provision for adjustment hereinafter set forth,
equal to 100 times the aggregate amount of stock, securities,
cash or any other property, as the case may be, into which or for
which each share of Common Stock is exchanged or changed. If the
Corporation shall at any time after the Rights Declaration Date
pay any dividend on Common Stock payable in shares of Common
Stock or effect a subdivision or combination or consolidation of
A-6
<PAGE>
the outstanding shares of Common Stock (by reclassification or
otherwise) into a greater or lesser number of shares of Common
Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of
shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to
such event.
SECTION 8. No Redemption. The Series A Preferred
Stock shall not be redeemable.
SECTION 9. Rank. The Series A Preferred Stock shall
rank junior (as to dividends and upon liquidation, dissolution
and winding up) to all other series of the Corporation's
preferred stock, except any series that specifically provides
that such series shall rank junior to the Series A Preferred
Stock.
SECTION 10. Fractional Shares. Series A Preferred
Stock may be issued in fractions of a share which shall entitle
the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
SECTION 11. Amendment. The Articles of Incorporation
of the Corporation shall not be further amended in any manner
which would materially alter or change the powers, preferences or
special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of a
majority or more of the outstanding shares of Series A Preferred
Stock, voting separately as a class.
A-7
<PAGE>
Exhibit B
Form of Rights Certificate
Certificate No. R- ______________ Rights
NOT EXERCISABLE AFTER THE EARLIER OF JANUARY 26, 2007, AND THE
DATE ON WHICH THE RIGHTS EVIDENCED HEREBY ARE REDEEMED OR
EXCHANGED BY THE COMPANY AS SET FORTH IN THE RIGHTS AGREEMENT.
THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.001 PER RIGHT AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. AS SET
FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY
PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN AFFILIATE
OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON
OR BY ANY SUBSEQUENT HOLDER, MAY BE NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT). THIS RIGHTS CERTIFICATE
AND THE RIGHTS REPRESENTED HEREBY MAY BE OR MAY BECOME NULL AND
VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(d) OF THE RIGHTS
AGREEMENT.)]<F1>
RIGHTS CERTIFICATE
NATIONAL VISION ASSOCIATES, LTD.
This Rights Certificate certifies that
, or registered assigns, is the registered holder of the number
of Rights set forth above, each of which entitles the holder
(upon the terms and subject to the conditions set forth in the
Rights Agreement, dated as of January 17, 1997 (the "RIGHTS
AGREEMENT"), between National Vision Associates, Ltd., a Georgia
corporation (the "COMPANY"), and Wachovia Bank of North Carolina,
N.A. (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 the Expiration Date (as such term
is defined in the Rights Agreement), one one-hundredth{s} of a
fully paid, non-assessable share of Series A Participating
Cumulative Preferred Stock (the "PREFERRED STOCK") of the
Company, at a purchase price of $40.00 per one one-hundredth of
a share (the "PURCHASE PRICE"), payable in lawful money of the
United States of America, upon surrender of this Rights
Certificate, with the form of election to purchase and related
certificate duly executed, and payment of the Purchase Price at
an office of the Rights Agent designated for such purpose.
Terms used herein and not otherwise defined herein have
the meanings assigned to them in the Rights Agreement.
The number of Rights evidenced by this Rights
Certificate (and the number and kind of shares issuable upon
exercise of each Right) and the Purchase Price set forth above
are as of January 27, 1997, and may have been or in the future
_____________________
[FN]
<F1> If applicable, insert this portion of the legent and
delete the precedingssentence.
</FN >
B-1
<PAGE>
may be adjusted as a result of the occurrence of certain events,
as more fully provided in the Rights Agreement.
Upon the occurrence of a Flip-in Event, if the Rights
evidenced by this Rights Certificate are beneficially owned by
(a) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (b) a transferee of an Acquiring Person (or any
such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such, or (c) under certain circumstances
specified in the Rights Agreement, a transferee of an Acquiring
Person (or any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person
becoming such, such Rights shall become null and void, and no
holder hereof shall have any right with respect to such Rights
from and after the occurrence of such Flip-in Event.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the
Rights Certificates, which limitations of rights include the
temporary suspension of the exercisability of such Rights under
the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the office of the
Company and are also available upon written request to the
Company.
Upon surrender at the principal office or offices of
the Rights Agent designated for such purpose and subject to the
terms and conditions set forth in the Rights Agreement, any
Rights Certificate(s) may be transferred or exchanged for another
Rights Certificate(s) evidencing a like number of Rights as the
Rights Certificate(s) surrendered. If this Rights Certificate
shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Rights Certificate(s) for
the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Board of Directors of the Company may, at its option,
(a) at any time prior to the earlier of (i) the
Close of Business on the Share Acquisition Date and
(ii) the Final Expiration Date, redeem all but not less
than all the then outstanding Rights at a redemption
price of $0.001 per Right; or
(b) at any time after any Person becomes an
Acquiring Person, exchange all or part of the then
outstanding Rights (other than Rights held by the
Acquiring Person and certain related Persons) for
shares of Common Stock at an exchange ratio of one
share of Common Stock per Right. If the Rights shall be
exchanged in part, the holder of this Rights
Certificate shall be entitled to receive upon surrender
hereof another Rights Certificate(s) for the number of
whole Rights not exchanged.
B-2
<PAGE>
After the expiration of the redemption period, the
Companies right of redemption may be reinstated if an Acquiring
Person reduces his beneficial ownership to ten percent (10%) or
less of the outstanding shares of Common Stock in a transaction
or series of transactions not involving the Company and there is
no other Acquiring Person.
No fractional shares of Preferred Stock are required to
be issued upon the exercise of any Right(s) evidenced hereby
(other than fractions which are multiples of one one-hundredth of
a share of Preferred Stock, which may, at the election of the
Company, be evidenced by depository receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose the
holder of the shares of capital stock 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), or to
receive dividends or subscription rights, or otherwise, until the
Right(s) 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.
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal by its
authorized officers.
Dated as of _____________,____
NATIONAL VISION ASSOCIATES, LTD.
By:____________________________
Title:
(SEAL)
Attest:
________________________________________
Secretary
Countersigned:
__________________________________________,
as Rights Agent
By:____________________________________
Authorized Signature
B-3
<PAGE>
Form of Reverse Side of Rights Certificate
FORM OF ASSIGNMENT
(To be executed if the registered 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:
B-4
<PAGE>
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate
___ are ___ are not being assigned by or on behalf of a Person
who is or was an Acquiring Person or an Affiliate or Associate of
any such Acquiring Person (as such terms are defined in the
Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it ___ did ___ did not acquire the Rights evidenced
by this Rights Certificate from any Person who is, was or became
an Acquiring Person or an Affiliate or Associate of an Acquiring
person.
Dated:_____________________________ __________________________
Signature
NOTICE
The signatures to the foregoing Assignment and
Certificate 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.
B-5
<PAGE>
___________________
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to exercise
Rights represented by the Rights Certificate.)
To: National Vision Associates, Ltd.
The undersigned hereby irrevocably elects to exercise
______________ Rights represented by this Rights Certificate to
purchase shares of Preferred Stock issuable upon the exercise of
the Rights (or such other securities of the Company or of any
other Person which may be issuable upon the exercise of the
Rights) and requests that certificates for such securities be
issued in the name of and delivered to:
Please insert social security
or other identifying number
_______________________________________________________________
(Please print name and address)
_______________________________________________________________
If such number of Rights shall not be all the Rights
evidenced by this Rights Certificate, a new Rights Certificate
for the balance of such Rights shall be registered in the name of
and delivered to:
Please insert social security
or other identifying number
_____________________________________________
(Please print name and address)
_____________________________________________
Dated: ____________________, _______
______________________________
Signature
Signature Guaranteed:
B-6
<PAGE>
Exhibit C
____________
NATIONAL VISION ASSOCIATES, LTD.
SHAREHOLDER RIGHTS PLAN
Summary of Terms
Form of Security: The Board of Directors has declared a
dividend of one preferred stock purchase
right for each outstanding share of the
Company's Common Stock, payable to
holders of record as of the close of
business on January 27, 1997 (the
"Effective Date") (each a "Right," and
collectively, the "Rights").
Distribution Date: The earlier of:
(1) the 10th day after public
announcement that (a) any person or
group has become the beneficial
owner of 15% or more of the
Company's Common Stock, or (b) if
any such person or group has
acquired such an interest, the
acquisition of an additional 2% or
more of the Common Stock then
outstanding (other than pursuant to
an Approved Acquisition (as defined
below)); and
(2) the 10th business day after the
date of the commencement of a tender
or exchange offer by any person
which would, if consummated, result
in such person becoming the
beneficial owner of 15% or more of
the Company's Common Stock, in each
case, subject to extension by a
majority of the Continuing
Directors.
Approved Acquisition: An acquisition of 15% or more of the
Common Stock then outstanding by any
person, or, if any person has acquired
such an interest, the acquisition of an
additional 2% or more of the Common Stock
then outstanding, in either event if such
acquisition is approved in advance by a
majority of the Continuing Directors.
Qualifying Tender A tender or exchange offer for all the
Offer: Common Stock which is approved by a
majority of the Continuing Directors.
C-1
<PAGE>
Transfer: Prior to the Distribution Date, the
Rights will be evidenced by the
certificates for and will be transferred
with the Common Stock, and the registered
holders of the Common Stock will be
deemed to be the registered holders of
the Rights.
After the Distribution Date, the Rights
Agent will mail separate certificates
evidencing the Rights to each record
holder of the Common Stock as of the
close of business of the Distribution
Date, and thereafter the Rights will be
transferable separately from the Common
Stock.
Exercise: Prior to the Distribution Date, the
Rights will not be exercisable.
After the Distribution Date, each Right
will be exercisable to purchase, for
$40.00 (the "Purchase Price"), one one-
hundredth of a share of Series A
Participating Cumulative Preferred Stock,
par value $0.01 per share, of the
Company.
C-2
<PAGE>
Flip-In: If (1) any person or group (an "Acquiring
Person") becomes the beneficial owner of
15% or more of the Company's Common Stock
(other than pursuant to a Qualifying
Tender Offer), (2) during such time as
there is an Acquiring Person, an event
occurs which results in such Acquiring
Person's ownership interest in the
Company being increased by more than 2%,
(3) the Company is the surviving
corporation in a merger with an Acquiring
Person and its Common Stock is not
changed or exchanged, or (4) an Acquiring
Person engages in one or more "self-
dealing" transactions as set forth in the
Rights Agreement, then each Right (other
than Rights beneficially owned by the
Acquiring Person and certain affiliated
persons) will entitle the holder to elect
to receive a number of shares of the
Company's Common Stock (or in certain
circumstances, cash, property or other
securities of the Company) having a
market value equal to the Purchase Price.
Notwithstanding the foregoing, in most
instances following the occurrence of the
events set forth in this paragraph, all
Rights that are, or (under certain
circumstances specified in the Rights
Agreement) were, beneficially owned by
any Acquiring Person will be null and
void. However, Rights are not
exercisable following the occurrence of
the events set forth above until such
time as the Rights are no longer
redeemable by the Company as set forth
below.
C-3
<PAGE>
Flip-Over: If, after any person has become an
Acquiring Person (other than pursuant to
a Qualifying Tender Offer), (1) the
Company is involved in a merger or other
business combination in which the Company
is not the surviving corporation or its
Common Stock is exchanged for other
securities or assets, or (2) the Company
and/or one or more of its subsidiaries
sell or otherwise transfer assets
aggregating more than 50% of the assets
or generating more than 50% of the
operating income or cash flow of the
Company and its subsidiaries, taken as a
whole, then each Right will entitle the
holder to purchase, for the Purchase
Price, a number of shares of common stock
of the other party to such business
combination or sale (or in certain
circumstances, an affiliate) having a
market value of twice the Purchase Price.
Exchange: At any time after any person has become
an Acquiring Person a majority of the
Continuing Directors may exchange all or
part of the Rights (other than the Rights
beneficially owned by the Acquiring
Person and certain affiliated persons)
for shares of Common Stock at an exchange
ratio of one share of Common Stock per
Right.
Redemption: Subject to the applicable provisions in
the Company's articles of incorporation
and bylaws, the Board of Directors may
redeem all of the Rights at a price of
$0.001 per Right at any time prior to the
close of business on the date of the
public announcement that any person has
become an Acquiring Person. After any
person has become an Acquiring Person,
the Rights may not be redeemed. The
Company's right of redemption may be
reinstated if an Acquiring Person reduces
his beneficial ownership to 10% or less
of the outstanding shares of Common Stock
in a transaction or series of
transactions not involving the Company.
Immediately upon the action of the Board
of Directors ordering redemption of the
Rights, the Rights will terminate and the
only right of the holders of the Rights
will be to receive the redemption price
thereof.
C-4
<PAGE>
Continuing Director: Means any member of the Board of
Directors who was a member of the Board
prior to the time an Acquiring Person
becomes such (other than pursuant to a
Qualifying Tender Offer) or any person
who is subsequently elected to the Board
if such person is recommended or approved
by a majority of the Continuing
Directors. Continuing Directors do not
include an Acquiring Person, an affiliate
or associate of an Acquiring Person or
any representative or nominee of the
foregoing.
Expiration: The Rights will expire on January 26,
2007, unless earlier exchanged or
redeemed.
Amendments: Prior to the Distribution Date, the
Rights Agreement may be amended in any
respect, other than to change the
Redemption Price, the Expiration Date,
the Purchase Price or the number of
shares of Preferred Stock for which a
Right is exercisable.
After the Distribution Date, the Rights
Agreement may be amended in any respect
that does not adversely affect the Rights
holders (other than any Acquiring Person
and certain affiliated persons).
After any person has become an Acquiring
Person, the Rights Agreement may be
amended only with the approval of a
majority of the Continuing Directors.
Voting Rights: Rights holders have no rights as a
shareholder of the Company, including the
right to vote and to receive dividends.
C-5
<PAGE>
Antidilution The Purchase Price payable, and the
Provisions: number of shares of Preferred Stock or
other securities or property issuable
upon exercise of the Rights are subject
to adjustment from time to time to
prevent dilution (1) in the event of a
stock dividend on, or a subdivision,
combination or reclassification of, the
Preferred Stock, (2) upon the grant to
holders of the Preferred Stock of certain
rights or warrants to subscribe for or
purchase Preferred Stock at a price, or
securities convertible into Preferred
Stock with a conversion price, less than
the then-current market price of the
Preferred Stock, or (3) upon the
distribution to holders of the Preferred
Stock of evidences of indebtedness or
assets (excluding regular periodic cash
dividends paid out of earnings or
retained earnings) or of subscription
rights or warrants.
The number of outstanding Rights and the
number of 1/100ths of a share of
Preferred Stock issuable upon exercise of
each Right are also subject to adjustment
in the event of a stock split of the
Common Stock or a stock dividend on the
Common Stock payable in Common Stock or
subdivisions, consolidations or
combinations of the Common Stock
occurring prior to the Distribution Date.
With certain exceptions, no adjustment in
the Purchase Price will be required until
cumulative adjustments amount to at least
2% of the Purchase Price. No fractional
shares of Preferred Stock will be issued
(other than fractions which are integral
multiples of 1/100th of a share of a
Preferred Stock), and in lieu thereof, an
adjustment in cash will be made based on
the market price of the Preferred Stock
on the last trading date prior to the
date of exercise.
C-6
<PAGE>
Preferred Stock: The dividend and liquidation rights of
the Preferred Stock are designed so that
the value of one one-hundredth of a share
of Preferred Stock issuable upon exercise
of each Right will approximate the same
economic value of one share of Common
Stock, including voting rights. Shares
of Preferred Stock issuable upon exercise
of the Rights will not be redeemable.
Each share of Preferred Stock will
entitle the holder to a minimum
preferential dividend of $1.00 per share,
but will entitle the holder to an
aggregate dividend payment of 100 times
the dividend declared on each share of
Common Stock. In the event of
liquidation, each share of Preferred
Stock will be entitled to a minimum
preferential liquidation payment of
$1.00, plus accrued and unpaid dividends
and distributions thereon, but will be
entitled to an aggregate payment of 100
times the payment made per share of
Common Stock. In the event of any
merger, consolidation or other
transaction in which Common Stock is
exchanged for or changed into other stock
or securities, cash or other property,
each share of Preferred Stock will be
entitled to receive 100 times the amount
received per share of Common Stock.
Each share of Preferred Stock will be
entitled to 100 votes on all matters
submitted to a vote of the shareholders
of the Company, and shares of Preferred
Stock will generally vote together as one
class with the Common Stock and any other
voting capital stock of the Company on
all matters submitted to a vote of the
Company's shareholders. Further,
whenever dividends on the Preferred Stock
are in arrears in an amount equal to six
quarterly payments, the Preferred Stock,
together with any other shares of
preferred stock then entitled to elect
directors, shall have the right, as a
single class, to elect one director until
the default has been cured.
Taxes: While the dividend of the Rights will not
be taxable to shareholders or to the
Company, shareholders or the Company may,
depending upon the circumstances,
recognize taxable income in the event
that the Rights become exercisable as set
forth above.
C-7
