SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 5, 1996
Circuit City Stores, Inc.
(Exact name of registrant as specified in its charter)
Virginia
(State or other jurisdiction of incorporation)
1-5767 54-0493875
(Commission file number) (IRS Employer Identification No.)
9950 Mayland Drive, Richmond, Virginia 23233
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (804) 527-4000
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events
Effective March 5, 1996, the Board of Directors of Circuit City
Stores, Inc. (the "Company") amended the Company's Shareholder Rights
Plan, for the first time since it was originally adopted in 1988, in
order to conform the Company's plan to recent trends in shareholder
protection plans. The principal revisions lower to 15% the threshold of
ownership at which the rights become exercisable and add a new "flip-in"
provision triggered after a person or group acquires 15% or more of the
Company's outstanding common stock (otherwise than pursuant to a cash
tender offer for all outstanding shares that the continuing directors of
the Company have found to be fair). The amendments were not adopted in
response to any effort to acquire control of the Company, nor is the
Company aware of any such effort.
Under the revised plan, the rights will become exercisable after a
person or group acquires beneficial ownership of 15% or more of the
Company's outstanding common stock. The rights will also become
exercisable after a person or group commences, or makes a public
announcement of an intention to commence, a tender offer or exchange
offer upon consummation of which such person or group would beneficially
own 15% or more of the Company's outstanding common stock. Prior to the
revision, the plan provided that the rights would become exercisable
after the acquisition by a person or group of 20% or more, or the
commencement or public announcement of a tender or exchange offer for
30% or more, of the Company's outstanding common stock.
In addition, the revised plan provides that after a person or group
acquires 15% or more of the Company's outstanding common stock
(otherwise than pursuant to a cash tender offer for all outstanding
shares that the continuing directors of the Company have found to be
fair), each right will entitle its holder to purchase shares of the
Company's common stock having a market value of two times the exercise
price of the rights. This new "flip-in" provision is in addition to
existing plan provisions that entitle rights holders to purchase the
Company's common stock upon the occurrence of certain self-dealing or
merger transactions.
The Board also approved certain technical clarifications to
existing provisions of the plan and a new provision that enables the
Board of Directors in certain circumstances, with the approval of
continuing directors, to redeem exercisable rights in exchange for
common stock or preferred stock.
<PAGE>
Item 7. Financial Statements and Exhibits
(C) Exhibits
The following exhibits are filed as a part of this report.
4(a) Amended and Restated Rights Agreement dated as of
March 5, 1996 between Circuit City Stores, Inc. and
Norwest Bank Minnesota, N.A., including: Exhibit B --
Form of Rights Certificate.
4(b) Bylaws of the Company, as amended and restated
February 15, 1996.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
CIRCUIT CITY STORES, INC.
By: s/Michael T. Chalifoux
Michael T. Chalifoux
Senior Vice President and
Chief Financial Officer
Execution Copy
AMENDED AND RESTATED
RIGHTS AGREEMENT
between
CIRCUIT CITY STORES, INC.
and
NORWEST BANK MINNESOTA, N.A.
Dated as of March 5, 1996
<PAGE>
Rights Agreement
Table of Contents
Page
Section 1. Certain Definitions 2
Section 2. Appointment of Rights Agent 7
Section 3. Issuance of Rights Certificates 7
Section 4. Form of Rights Certificates 10
Section 5. Countersignature and Registration 12
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost
or Stolen Rights Certificates 13
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights 15
Section 8. Cancellation and Destruction of Rights
Certificates 20
Section 9. Reservation and Availability of Preferred Shares
and Common Shares 21
Section 10. Preferred Shares Record Date 25
Section 11. Adjustment of Purchase Price, Number and Kind
of Shares or Number of Rights 26
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares 47
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power 47
Section 14. Fractional Rights and Fractional Shares 52
Section 15. Rights of Action 54
Section 16. Agreement of Right Holders 55
Section 17. Rights Certificate Holder Not Deemed a Shareholder 56
Section 18. Concerning the Rights Agent 57
<PAGE>
Section 19. Merger or Consolidation or Change of Name
of Rights Agent 58
Section 20. Duties of Rights Agent 59
Section 21. Change of Rights Agent 64
Section 22. Issuance of New Rights Certificates 66
Section 23. Redemption and Termination 67
Section 24. Exchange 69
Section 25. Notice of Certain Events 72
Section 26. Notices 74
Section 27. Supplements and Amendments 74
Section 28. Successors 76
Section 29. Determinations and Actions by the Board of
Directors, etc. 76
Section 30. Benefits of this Agreement 77
Section 31. Severability 78
Section 32. Governing Law 78
Section 33. Counterparts 79
Section 34. Descriptive Headings 79
<PAGE>
RIGHTS AGREEMENT
This Amended and Restated Rights Agreement, dated as of March 5, 1996,
between Circuit City Stores, Inc. a Virginia corporation (the "Company")
and Norwest Bank Minnesota, N.A., a national banking association (the
"Rights Agent") and successor rights agent to Crestar Bank, a Virginia
banking corporation, amends and restates the Rights Agreement, dated as
of April 29, 1988, between the Company, and Crestar Bank, a Virginia
banking corporation, as rights agent.
The Board of Directors of the Company has authorized and declared
a dividend of one preferred share purchase right (a "Right") for each
Common Share (as hereinafter defined) of the Company outstanding on May
9, 1988 (the "Record Date"), each Right representing the right to
purchase one one-hundredth (now one four-hundredths as a result of
adjustments pursuant to Section 11(p) hereof) of a share of Cumulative
Preferred Stock, Series E, par value $20.00 per share, of the Company
having the rights and preferences set forth in the form of Articles of
Amendment attached hereto as Exhibit A to this Agreement before it was
amended and restated, upon the terms and subject to the conditions
herein set forth, and, subject to such terms and conditions, has further
authorized the issuance of one Right with respect to each Common Share
that shall become outstanding (i) between the Record Date and the
earliest of the Distribution Date, the Redemption Date and the Final
Expiration Date (as such terms are defined in Sections 3 and 7 hereof)
or (ii) after the Distribution Date but before the earlier of the
Redemption Date or the Final Expiration Date, if such Common Share
became outstanding (A) upon the exercise of a stock option, (B) pursuant
to any employee plan or arrangement, or (C) upon the conversion or
exchange of a security which option, plan, arrangement or security was
granted, established or issued, as the case may be, by the Company
before the Distribution Date.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person, shall
be the Beneficial Owner (as such term is hereinafter defined) of 15% or
more of the Common Shares then outstanding, but shall not include the
Company, any wholly-owned Subsidiary (as such term is hereinafter
defined) of the Company or any employee benefit plan of the Company or
any Subsidiary of the Company, or any Person or entity holding Common
Shares for or pursuant to the terms of any such plan.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has (A) the right to
acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing), or
upon the exercise of conversion rights, exchange rights,
rights (other than these Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, (1)
securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person or any of such
<PAGE>
Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, (2)
securities issuable upon exercise of Rights at any time prior
to the occurrence of a Triggering Event (as hereinafter
defined), or (3) securities issuable upon exercise of Rights
from and after the occurrence of a Triggering Event which
Rights were acquired by such Person or any of such Person's
Affiliates or Associates prior to the Distribution Date or
pursuant to Section 3(a) or Section 22 hereof (the "Original
Rights") or pursuant to Section 11(i) hereof in connection
with an adjustment made with respect to any Original Rights;
or (B) the right to vote or dispose of or has "beneficial
ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act),
including pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however,
that a Person shall not be deemed the Beneficial Owner of, or
to beneficially own, any security if the agreement,
arrangement or understanding to vote such security (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 of the Exchange Act and (2) is not also then
reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person (or any of such Person's
Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except to the extent contemplated
by the proviso to Section 1(c)(ii)(B)), or disposing of any
securities of the Company; provided, however, that nothing in
this paragraph (iii) shall cause a person engaged in business
as an underwriter of securities to be the "Beneficial Owner"
of, or to "beneficially own," any securities acquired through
such person's participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date
of such acquisition.
(d) "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the
Commonwealth of Virginia or the State of New York are authorized or
obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean
5:00 P.M., Richmond, Virginia time, on such date; provided, however,
that if such date is not a Business Day it shall mean 5:00 P.M.,
Richmond, Virginia time, on the next succeeding Business Day.
(f) "Common Shares" when used with reference to the Company
shall mean shares of Common Stock, par value $.50 per share, of the
Company. "Common Shares" when used with reference to any Person other
than the Company shall mean the capital stock (or equity interest) with
the greatest voting power, or having power to control or direct the
management, of such other Person or, if such other Person is a
Subsidiary of another Person, of the Person or Persons which ultimately
control such first mentioned Person.
(g) "Continuing Director" shall mean a director who was a
member of the Board of Directors of the Company on the Distribution Date
or who subsequently became a director and whose election, or nomination
for election by the Company's shareholders, was approved by a vote of a
majority of Continuing Directors on the Board of Directors of the
Company on the date of such election or nomination.
(h) "Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor (by merger
or otherwise) of such entity.
(i) "Preferred Shares" shall mean shares of Cumulative
Preferred Stock, Series E, par value $20.00 per share, of the Company
and, to the extent there are not sufficient shares of Cumulative
Preferred Stock, Series E, authorized to permit full exercise of the
Rights, any other series of Cumulative Preferred Stock, par value $20.00
per share, of the Company designated for such purpose containing terms
substantially similar to the terms of Cumulative Preferred Stock, Series
E.
<PAGE>
(j) "Section 11(a)(ii) Event" shall mean any event
described in Section 11(a)(ii)(A) or (B) hereof.
(k) "Section 13 Event" shall mean any event described
in clauses (i), (ii) or (iii) of Section 13(a) hereof.
(l) "Share Acquisition Date" shall mean the first date
of public announcement (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section 13(d)
under the Exchange Act) by the Company or an Acquiring Person that an
Acquiring Person has become such.
(m) "Subsidiary" of any Person shall mean any corporation
or other entity of which a majority of the voting power of the voting
equity securities or equity interest is owned, directly or indirectly,
by such Person.
(n) "Triggering Event" shall mean any Section 11(a)(ii)
Event or any Section 13 Event.
Section 2. Appointment of Rights Agent. The Company
hereby confirms the appointment of the Rights Agent to act as agent for
the Company and the holders of the Rights (who, in accordance with
Section 3 hereof, shall prior to the Distribution Date also be the
holders of the Common Shares) in accordance with the terms and
conditions hereof, and the Rights Agent hereby confirms the acceptance
of such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable.
Section 3. Issuance of Rights Certificates. (a) The
Rights in respect of the issued and outstanding Common Shares will be
issued and become effective on the Record Date. A Common Share and the
Right or Rights issued or to be issued hereunder in respect thereof will
not be separately transferable until the date (the "Distribution Date")
which is the earlier of (i) the close of business on the tenth day after
the Share Acquisition Date (or, if the tenth day after the Share
Acquisition Date occurs before the Record Date, the close of business on
the Record Date) or (ii) the close of business on the tenth Business Day
after the date of the commencement of, or first public announcement of
the intent of any Person (other than the Company, any wholly-owned
Subsidiary of the Company or any employee benefit plan of the Company or
of any Subsidiary of the Company or any entity holding Common Shares for
or pursuant to the terms of any such plan) to commence, a tender or
exchange offer the consummation of which would result in beneficial
ownership by a Person of 15% or more of the outstanding Common Shares
(including any such date which is after the date of this Agreement and
prior to the issuance of the Rights). Prior to the Distribution Date,
each holder of Common Shares will be the holder of the Rights associated
with each such share so held, except as otherwise provided in Section
7(e). (A Common Share and its associated Right or Rights before the
Distribution Date shall be collectively referred to as the "Unit".)
Until the Distribution Date, the Rights issued from time to time
hereunder shall be evidenced collectively by one or more certificates
(the "Rights Certificates") delivered to and registered in the name of
the Rights Agent, as Rights Agent under this Agreement; but the issuance
of the Rights hereunder shall not be affected by any failure to deliver
a new or replacement Rights Certificate to the Rights Agent in respect
thereof. The initial Rights Certificate and any additional or
replacement Rights Certificates delivered to the Rights Agent shall,
prior to the Distribution Date, have a legend set forth on the face
thereof to the effect that the Rights represented thereby shall not be
exercisable until the Distribution Date. As soon as practicable after
the Company has notified the Rights Agent of the occurrence of the
Distribution Date, the Rights Agent will send, by first-class, insured,
postage prepaid mail, to each record holder of Common Shares as of the
close of business on the Distribution Date, at the address of such
holder shown on the records of the Company, a Rights Certificate, in
substantially the form of Exhibit B hereto, evidencing one Right for
each Common Share so held. As of the Distribution Date, the Rights will
be evidenced solely by such Rights Certificates. The failure to mail
any such Rights Certificate shall not affect the legality or validity of
the Rights.
<PAGE>
(b) On the Record Date or as soon as practicable thereafter, the
Company sent a copy of a Summary of Rights to Purchase Preferred Shares,
in substantially the form attached as Exhibit C to this Agreement before
it was amended and restated (the "Summary of Rights"), by first-class,
postage prepaid mail, to each record holder of the Units as of the close
of business on the Record Date, at the address of such holder shown on
the records of the Company. The failure to send a copy of a Summary of
Rights shall not affect the legality or validity of the Rights.
(c) Certificates for Common Shares issued after the date
which is 60 days after the date hereof but prior to the earliest of the
Distribution Date or the Redemption Date or the Final Expiration Date
shall have impressed on, printed on, written on or otherwise affixed to
them the following legend:
The holder of this certificate is entitled to certain
Rights as set forth in an Amended and Restated Rights
Agreement between Circuit City Stores, Inc. and Norwest Bank
Minnesota, N.A. (the "Rights Agent"), dated as of March 5,
1996 as the same may be amended or supplemented from time to
time hereafter (the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a copy of
which is on file at the principal executive offices of Circuit
City Stores, Inc. One or more certificates evidencing such
Rights have been delivered to and registered in the name of
[INSERT NAME OF RIGHTS AGENT], as Rights Agent under the
Rights Agreement. Circuit City Stores, Inc., will mail to the
holder of this certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor. As
described in the Rights Agreement, Rights issued to any Person
who becomes an Acquiring Person (as defined in the Rights
Agreement) shall become null and void.
Certificates for Common Shares issued after the Record Date but before
the earliest of the date which is 60 days after the date hereof, the
Distribution Date, the Redemption Date or the Final Expiration Date
shall have impressed on, printed on, written on or otherwise affixed to
them the legend provided for in this Agreement before it was amended and
restated as provided for herein.
Section 4. Form of Rights Certificates. (a) The Rights
Certificates (and the forms of election to purchase Preferred Shares and
of assignment to be printed on the reverse thereof) shall be
substantially the same as Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as
are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to time be listed, or
to conform to usage. Subject to the provisions of Section 11 and Section
22 hereof, the Rights Certificates, whenever issued, that are issued in
respect of Common Shares which were issued and outstanding as of the
Distribution Date, shall be dated as of the Distribution Date, and all
Rights Certificates that are issued in respect of other Common Shares
shall be dated as of the respective dates of issuance of such Common
Shares, and in each such case on their face shall entitle the holders
thereof to purchase such number of one four-hundredths of a share of
Preferred Shares as shall be set forth therein at the price per one
four-hundredths of a Preferred Share set forth therein (the "Purchase
Price"), but the amount and type of securities purchasable upon the
exercise of each Right and the Purchase Price thereof shall be subject
to adjustment as provided herein.
<PAGE>
(b) Any Rights Certificate issued pursuant to Section 3(a)
or Section 22 that represents Rights beneficially owned by: (i) an
Acquiring Person or any 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 before 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 to holders of equity interest in such
Acquiring Person or to any Person with whom such Acquiring Person has
any continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors of the
Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of Section 7(e),
and any Rights Certificate issued pursuant to Section 6 or Section 11
upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the extent
feasible) 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).
Accordingly, this Rights Certificate and the Rights
represented hereby may become null and void in the
circumstance specified in Section 7(e) of such Agreement.
Section 5. Countersignature and Registration. The Rights
Certificates shall be executed on behalf of the Company by its Chairman
of the Board, its President, any Executive Vice President, or any Senior
Vice President, and by the Secretary, an Assistant Secretary, Treasurer
or an Assistant Treasurer of the Company, either manually or by
facsimile signature, and have affixed thereto the Company's seal or a
facsimile thereof. The Rights Certificates shall not be valid for any
purpose unless manually countersigned by an authorized signatory of the
Rights Agent. In case any officer of the Company who shall have signed
any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent, and issued and delivered by the
Company with the same force and effect as though the person who signed
such Rights Certificates had not ceased to be such officer of the
Company; and any Rights 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
Rights Agreement any such person was not such an officer.
The Rights Agent will keep or cause to be kept, at its
principal offices, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.
<PAGE>
Section 6. Transfer, Split Up, Combination and Exchange
of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates. Subject to the provisions of Section 4(b), Section 7(e)
and Section 14 hereof, at or prior to the close of business on the
earlier of the Redemption Date or the Final Expiration Date (as such
terms are defined in Section 7 hereof), any Rights Certificate or Rights
Certificates (other than Rights Certificates representing Rights that
have become void pursuant to Section 7(e)) may be transferred, split up,
combined or exchanged for another Rights Certificate or Rights
Certificates, entitling the registered holder to purchase a like number
of one four-hundredths of a share of Preferred Shares (or, following a
Triggering Event, Common Shares, other securities, cash or other assets,
as the case may be) as the Rights Certificate or Rights Certificates
surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split
up, combine or exchange any Rights Certificate shall make such request
in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Rights Certificates to be transferred, split up, combined
or exchanged at the principal office 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 until the registered
holder shall have completed and signed the certificate contained in the
form of assignment on the reverse side of such Rights Certificate and
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 request. Thereupon the Rights
Agent shall, subject to Section 4(b), Section 7(e) and Section 14
hereof, countersign and deliver to the Person entitled thereto a Rights
Certificate or Rights Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Rights Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them,
and, 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 execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for counter-signature and
delivery to the registered owner in lieu of the Rights Certificate so
lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights. (a) Subject to Section 7(e) hereof, the registered
holder of any Rights Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein including, without
limitation, the restrictions on exercisability set forth in Section 9(c)
and Section 11(a)(iii) hereof) in whole or in part at any time after the
Distribution Date upon surrender of the Rights Certificate, with the
form of election to purchase and the 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, together with
payment of the aggregate Purchase Price with respect to the total number
of one four-hundredths of a Preferred Share (or other securities, cash
or other assets, as the case may be) as to which such surrendered Rights
are then exercisable, at or prior to the earlier of (i) the close of
business on April 29, 1998 (the "Final Expiration Date"), or (ii) the
time at which the Rights are redeemed as provided in Section 23 hereof
(the "Redemption Date").
(b) The Purchase Price for each one four-hundredths
of a Preferred Share pursuant to the exercise of a Right shall initially
be $140.00, shall be subject to adjustment from time to time as provided
in Sections 11 and 13 hereof and shall be payable in accordance with
paragraph (c) below.
<PAGE>
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate duly executed, accompanied by payment, with respect to each
Right so exercised, of the Purchase Price per one four-hundredths of a
Preferred Share (or other shares, securities, cash or other assets, as
the case may be) to be purchased as set forth below and an amount equal
to any applicable transfer tax required to be paid by the holder of such
Rights Certificate in accordance with Section 9, the Rights Agent shall,
subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition
from any transfer agent of the Preferred Shares (or make available, if
the Rights Agent is the transfer agent for such shares) certificates for
the total number of one four-hundredths of a Preferred Share 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 total number of Preferred Shares issuable upon
exercise of the Rights hereunder with a depositary agent, requisition
from the depositary agent depositary receipts representing such number
of one four-hundredths of a Preferred Share as are to be purchased (in
which case certificates for the Preferred Shares represented by such
receipts shall be deposited by the transfer agent with the depositary
agent) and the Company hereby directs the depositary agent to comply
with such request, (ii) when appropriate, requisition from the Company
the amount of cash, if any, to be paid in lieu of issuance of fractional
shares in accordance with Section 14, (iii) promptly after receipt of
such certificates or depositary receipts, cause the same to be delivered
to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by
such holder and (iv) when appropriate, after receipt, promptly deliver
such cash, if any, to or upon the order of the registered holder of such
Rights Certificate. The payment of the Purchase Price (as such amount
may be reduced pursuant to Section 11(a)(iii) hereof) shall be made (x)
in cash or by certified bank check or bank draft payable to the order of
the Company, or (y) at the election of the Company with respect to all
exercisable Rights by delivery of a certificate or certificates (with
appropriate stock powers executed in blank attached thereto) evidencing
a number of Common Shares equal to the then Purchase Price divided by
the closing price (as determined pursuant to Section 11(d) hereof) per
Common Share on the Trading Day (as hereinafter defined) immediately
preceding the date of such exercise or (z) in the event the Company
permits payment with Common Shares, a combination thereof. In the event
the Company elects to accept Common Shares in payment of the Purchase
Price, it shall notify the Rights Agent of such election and of the
closing price per Common Share on the Trading Date immediately preceding
the date of exercise to which such election relates. In the event that
the Company is obligated to issue other securities (including Common
Shares) of the Company, pay cash and/or distribute other property
pursuant to Section 11(a) hereof, the Company will make all arrangements
necessary so that such other securities, cash and/or other property are
available for distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate
shall exercise fewer than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder
of such Rights Certificate or to his duly authorized assigns, subject to
the provisions of Section 14 hereof.
<PAGE>
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii)
Event, any Rights beneficially owned 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 before 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 to holders of equity interests in such Acquiring Person
or to any Person with whom the Acquiring Person has any continuing
agreement, arrangement or understanding regarding the transferred Rights
or (B) a transfer that the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as
a primary purpose or effect the avoidance of this Section 7(e), shall be
void without any further action and any holder of such Rights shall
thereafter have no right whatsoever with respect to such Rights
(including, without limitation, the right to exercise such Rights) under
any provision of this Agreement or otherwise. No Rights Certificate
shall be issued pursuant to Section 3 that represents Rights
beneficially owned by an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or Affiliate
thereof; no Rights Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or Affiliate thereof
or to any nominee of such Acquiring Person, Associate or Affiliate; and
any Rights Certificate delivered to the Rights Agent for transfer to an
Acquiring Person whose Rights would be void pursuant to the preceding
sentence shall be cancelled. The Company shall use all reasonable
efforts to insure that the provisions of this Section 7(e) and Section
4(b) are complied with, but shall have no liability to any holder of
Rights Certificates or any other Person as a result of its failure to
make any determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7
unless such registered holder shall have (i) completed and signed the
certificate contained in the form of election to purchase set forth on
the reverse side of the Rights Certificate surrendered for such
exercise, and (ii) 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 Rights
Certificates. All Rights Certificates surrendered for the purpose of
exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to the
Rights Agent for cancellation or in cancelled form, or, if surrendered
to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Rights Agreement. The
Company shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any other
Rights Certificate purchased or acquired by the Company otherwise than
upon the exercise thereof. The Rights Agent shall deliver all cancelled
Rights Certificates to the Company.
Section 9. Reservation and Availability of Preferred
Shares and Common Shares. (a) The Company covenants and agrees that it
will cause to be reserved and kept available out of its authorized and
unissued Preferred Shares (and, following the occurrence of a Triggering
Event, out of its authorized and unissued Common Shares and/or other
securities) the number of Preferred Shares (and, following the
occurrence of a Triggering Event, Common Shares and/or other securities)
that, as provided in this Agreement, will be sufficient to permit the
exercise in full of all outstanding Rights.
<PAGE>
(b) So long as the Preferred Shares (and, following the
occurrence of a Triggering Event, Common Shares and/or other securities)
issuable and deliverable upon the exercise of Rights may be listed on
any national securities exchange, the Company shall use its best efforts
to cause, from and after such time as the Rights become exercisable (but
only to the extent that it is reasonably likely that the Rights will be
exercised), all shares reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file,
as soon as practicable following the earliest date after the first
occurrence of a Section 11(a)(ii) Event on which the consideration to be
delivered by the Company upon exercise of the Rights has been determined
pursuant to this Agreement (including in accordance with Section
11(a)(iii) hereof), a registration statement under the Securities Act of
1933 (the "Act"), with respect to the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after
such filing, (iii) cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the Final Expiration Date, and
(iv) obtain such regulatory approvals as may be necessary for it to
issue securities purchasable upon the exercise of the Rights. 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 clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order to prepare and
file such registration statement and permit it to become effective or to
obtain any other required regulatory approval in connection with the
exercisability of the Rights. Upon any such suspension, the Company
shall issue a public announcement stating, and notify the Rights Agent,
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. In addition, if the Company shall determine that a
registration statement is required following the Distribution Date, the
Company may temporarily suspend the exercisability of the Rights until
such time as a registration statement has been declared effective. In
the event any Right is exercised prior to the occurrence of a Section
11(a)(ii) Event or a Section 13 Event, the Company may defer for up to
90 days the issuance of Preferred Shares upon such exercise in order to
obtain any necessary regulatory approval. If, within 90 days after such
exercise of any Right, the Company is unable to obtain any required
regulatory approval for the issuance of the Preferred Shares, or if the
Company is otherwise unable to issue the Preferred Shares under the
terms of its Articles of Restatement or for any other reason, then the
Company shall substitute for the Preferred Shares otherwise issuable
upon exercise of the Right (1) cash, (2) a reduction in the Purchase
Price, (3) Common Shares or other equity securities of the Company,
except to the extent that the Company has not obtained any necessary
regulatory approval for such issuance, (4) debt securities of the
Company, except to the extent that the Company has not obtained any
necessary regulatory approval for such issuance, (5) other assets, or
(6) any combination of the foregoing, having an aggregate value equal to
the Current Market Price (as defined in Section 11(d)(ii)) of the
Preferred Shares for which such Right is exercisable, where such
aggregate value has been determined by the Board of Directors of the
Company based upon the advice of a nationally recognized investment
banking firm selected by the Board of Directors of the Company.
Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction if the requisite
qualification in such jurisdiction shall not have been obtained or the
exercise thereof shall not be permitted under applicable law.
<PAGE>
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all one four-hundredths
of a Preferred Share (and, following the occurrence of a Triggering
Event, Common Shares and/or other securities) delivered upon exercise of
Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
(e) The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer taxes
and charges which may be payable in respect of the issuance or delivery
of the Rights Certificates and of any certificate for a number of one
four-hundredths of a Preferred Share (or Common Shares and/or other
securities, as the case may be) upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax which
may be payable in respect of any transfer or delivery of Rights
Certificates to a person other than, or the issuance or delivery of a
number of one four-hundredths of a Preferred Share (or Common Shares
and/or other securities, as the case may be) in respect of a name other
than that of, the registered holder of the Rights Certificate evidencing
Rights surrendered for exercise or to issue or deliver any certificates
for a number of one four-hundredths of a Preferred Share (or Common
Shares and/or other securities, as the case may be) upon the exercise of
any Rights until any such tax shall have been paid (any such tax being
payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Preferred Shares Record Date. Each person in
whose name any certificate for a number of one four-hundredths of a
Preferred Share is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the Preferred
Shares (or Common Shares and/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) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Preferred Shares (or
Common Shares and/or other securities, as the case may be) transfer
books of the Company are closed, such person shall be deemed to have
become the record holder of such shares (fractional or otherwise) on,
and such certificate shall be dated, the next succeeding Business Day
on which the Preferred Shares (or Common Shares and/or other
securities, as the case may be) transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a
Rights Certificate shall not be entitled to any rights of a shareholder
of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind
of Shares or Number of Rights. The Purchase Price, the number 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.
<PAGE>
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Shares
payable in Preferred Shares, (B) subdivide the outstanding Preferred
Shares, (C) combine the outstanding Preferred Shares into a smaller
number of Preferred Shares or (D) issue any shares of its capital stock
in a reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital stock
issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to
receive, upon payment of the Purchase Price then in effect, the
aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time
when the Preferred Shares transfer books of the Company were open, he
would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification.
If an event occurs which would require an adjustment under both Section
11(a)(i) and Section 11(a)(ii), the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to,
any adjustment required pursuant to Section 11(a)(ii).
(ii) In the event
(A) 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 with the Company and
the Company shall be the continuing or surviving corporation
of such merger or combination and the Common Shares of the
Company shall remain outstanding and not changed into or
exchanged for stock or other securities of any other Person
or the Company or cash or any other property, (2) shall, in
one or more transactions, transfer any assets to the Company
or any of its Subsidiaries in exchange (in whole or in part)
for shares of any class of capital stock of the Company or
any of its Subsidiaries or for securities exercisable for or
convertible into shares of any class of capital stock of the
Company or any of its Subsidiaries or otherwise obtain from
the Company or any of its Subsidiaries, with or without
consideration, any additional shares of any class of capital
stock of the Company or any of its Subsidiaries or securities
exercisable for or convertible into shares of any class of
capital stock of the Company or any of its Subsidiaries
(other than as part of a pro rata distribution to all holders
of such shares of any class of capital stock of the Company
or any of its Subsidiaries), (3) shall sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise acquire or
dispose (in one or more transactions), to, from, with or of,
as the case may be, the Company or any of its Subsidiaries,
assets (including securities) on terms and conditions less
favorable to the Company than the Company would be able to
obtain in arm's-length negotiation with an unaffiliated third
party (other than pursuant to a transaction set forth in
Section 13(a) hereof), (4) shall sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise acquire or
dispose (in one or more transactions), to, from, with or of,
as the case may be, the Company or any of the Company's
Subsidiaries (other than incidental to the lines of business,
if any, engaged in as of the date hereof between the Company
and such Acquiring Person or Associate or Affiliate) assets
having an aggregate fair market value of more than $2 million
(other than pursuant to a transaction set forth in Section
13(a) hereof), (5) shall receive any compensation from the
Company or any of the Company's Subsidiaries other than
compensation for full-time employment as a regular employee
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, advances,
guarantees, pledges or
<PAGE>
other financial assistance or any tax credits or other tax
advantage provided by the Company or any of its Subsidiaries,
or (B) any Person shall become the Beneficial Owner of 15% or
more of the Common Shares of the Company then outstanding
except pursuant to a tender offer made in the manner
prescribed by Section 14(d) of the Exchange Act and the rules
and regulations promulgated thereunder; provided, however,
that (a) such tender offer shall provide for the acquisition
of all of the outstanding Common Shares held by any Person
other than such Acquiring Person and its Associates or
Affiliates for cash and (b) a majority of the Continuing
Directors shall have determined that such tender offer is
fair, or (C) during such time as there is an Acquiring Person,
there shall be any reclassification of securities (including
any reverse stock split), or 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
Acquiring Person), other than a transaction or transactions
to which the provisions of Section 13(a) apply, which has the
effect, directly or indirectly, of increasing by more than 1%
the proportionate share of the outstanding shares of any
class of equity securities or of securities exercisable for
or convertible into securities of the Company or any of its
Subsidiaries which is directly or indirectly owned by any
Acquiring Person or any Associate or Affiliate of any
Acquiring Person, then, promptly following the occurrence of
any event described in Section 11(a)(ii)(A) or (B) hereof,
proper provision shall be made so that each holder of a
Right, except as provided below and in Section 7(e), shall
thereafter have the right to receive, upon exercise thereof
at the then current Purchase Price, in accordance with the
terms of this Agreement, in lieu of a number of one
four-hundredths of a Preferred Share, such number of Common
Shares as shall equal the result obtained by (x) multiplying
the then current Purchase Price by the then number of one
four-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event, and dividing that product (which
product, following such first occurrence, shall thereafter be
referred to as the "Purchase Price" for each Right and for
all purposes of this Agreement) by (y) 50% of the Current
Market Price per share of the Common Shares (determined
pursuant to Section 11(d)) on the date of such first
occurrence (such number of shares, the "Adjustment Shares");
provided, that the Purchase Price and the number of
Adjustment Shares shall be further adjusted as provided in
this Agreement to reflect any events occurring after the date
of such first occurrence.
(iii) In the event that the number of Common Shares
authorized by the Company's Articles of Restatement but not
outstanding or reserved for issuance for purposes other than
upon exercise of the Rights is not sufficient to permit the
exercise in full of the Rights in accordance with the
foregoing subparagraph (ii) of this Section 11(a), or if any
necessary regulatory approval for such issuance has not been
obtained by the Company, the Company shall: (A) determine the
excess of (1) the value of the Adjustment Shares issuable
upon the exercise of a Right (the "Current Value") over (2)
the Purchase Price (such excess, the "Spread"), and (B) with
respect to each Right, make adequate provision to substitute
for the Adjustment Shares, upon exercise of the Rights, (1)
cash, (2) a reduction in the Purchase Price, (3) Common
Shares or other equity securities of the Company (including,
without limitation, shares or units of shares of preferred
stock which the Board of Directors of the Company has deemed
to have the same value as Common Shares (such shares or units
of shares of preferred stock are herein called "common stock
equivalents")), except to the extent that the Company has not
obtained any necessary regulatory approval for such issuance,
(4) debt securities of the Company, except to the extent that
the Company has not
<PAGE>
obtained any necessary regulatory approval for such issuance,
(5) other assets, or (6) any combination of the foregoing, having an
aggregate value equal to the Current Value, where such aggregate value
has been determined by the Board of Directors of the Company based upon
the advice of a nationally recognized investment banking firm selected
by the Board of Directors of the Company; provided, however, if the
Company shall not have made adequate provision to deliver value pursuant
to clause (B) above within 30 days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the date on which the
Company's right of redemption pursuant to Section 23(a) expires (the
later of (x) and (y) being referred to herein as the "Section 11(a)(ii)
Trigger Date"), then the Company shall be obligated, subject to Section
7(e), to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, Common Shares (to the extent
available), except to the extent that the Company has not obtained any
necessary regulatory approval for such issuance, and then, if necessary,
cash, which shares and/or cash have an aggregate value equal to the
Spread. If the Board of Directors of the Company shall determine in
good faith that it is likely that sufficient additional Common Shares
could be authorized for issuance upon exercise in full of the Rights or
that any necessary regulatory approval for such issuance will be
obtained, the 30-day period set forth above may be extended to the
extent necessary, but not more than 90 days after the Section 11(a)(ii)
Trigger Date, in order that the Company may seek shareholder approval
for the authorization of such additional shares or take action to obtain
such regulatory approval (such period, as it may be extended, the
"Substitution Period"). To the extent that the Company determines that
some action need be taken pursuant to the first and/or second sentences
of this Section 11(a)(iii), the Company (x) shall provide, subject to
Section 7(e) hereof, 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, to take any action to obtain any
required regulatory approval and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine
the value thereof. In the event of any such suspension, the Company
shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, 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 Shares shall be the
Current Market Price (as determined pursuant to Section 11(d) hereof)
per share of the Common Shares on the Section 11(a)(ii) Trigger Date and
the value of any "common stock equivalent" shall be deemed to have the
same value as the Common Shares on such date.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred
Shares entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Preferred Shares
(or shares having the same rights, privileges and preferences as the
Preferred Shares ("equivalent preferred shares")) or securities
convertible into Preferred Shares or equivalent preferred shares at a
price per Common Share or equivalent preferred share (or having a
conversion price per share, if a security convertible into Preferred
Shares or equivalent preferred shares) less than the Current Market
Price per share of the Preferred Shares (as defined in Section 11(d)) on
such record date, the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of
which shall be the number of Preferred Shares outstanding on such record
date plus the number of Preferred Shares which the aggregate offering
price of the
<PAGE>
total number of Preferred Shares or equivalent preferred shares or both
so to be offered (or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such Current
Market Price and the denominator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of
additional Preferred Shares or equivalent preferred shares or both to be
offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid in a consideration part or all of which
may 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 binding on the Rights Agent and the holders of
the Rights. Preferred Shares 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 in the event that such rights or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase
Price which would then be in effect if such record date had not been
fixed.
(c) In case the Company shall fix a record date for the
making of a distribution to all holders of the Preferred Shares
(including any such distribution made in connection with a consolidation
or merger in which the Company is the continuing corporation) of
evidences of indebtedness or assets (other than a regular quarterly cash
dividend or a dividend payable in Preferred Shares) or subscription
rights or warrants (excluding those referred to in Section 11(b)), the
Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior
to such record date by a fraction, the numerator of which shall be the
Current Market Price per share of the Preferred Shares (as defined in
Section 11(d)) on such record date, less the fair market value (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) of the portion of the cash, assets or evidences of indebtedness
so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which shall be
such Current Market Price per share of the Preferred Shares. Such
adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the
Purchase Price shall again be adjusted to be the Purchase Price which
would 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) hereof),
the "Current Market Price" per share of the Common Shares on any date
shall be deemed to be the average of the daily closing prices per share
of such Common Shares for the 30 consecutive Trading Days (as such term
is hereinafter defined) immediately prior to such date, and for purposes
of computations made pursuant to Section 11(a)(iii) hereof, the "Current
Market Price" per share of the Common Shares on any date shall be deemed
to be the average of the daily closing prices per share of such Common
Shares for the ten consecutive Trading Days immediately following such
date; provided, however, that in the event that the Current Market Price
per share of the Common Shares is determined during a period following
the announcement by the issuer of such Common Shares of (A) a dividend
or distribution on such Common Shares payable in such Common Shares or
securities convertible into such Common Shares (other than the Rights),
or (B) any subdivision, combination or reclassification of such Common
Shares, and prior to the expiration of the requisite 30 Trading Days or
ten Trading Days, as set forth above, after the ex-dividend date for
such dividend or distribution or the record date for such subdivision,
combination or reclassification, then, and in each
<PAGE>
such case, the Current Market Price shall be appropriately adjusted to
reflect the Current Market Price per Common Share equivalent. 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 Common Shares are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Common Shares are
listed or admitted to trading or, if the Common Shares 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 National
Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or such other system then in use, or, if on any such date the
Common Shares 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 Shares selected by the Board of
Directors of the Company. If on any such date no market maker is making
a market in the Common Shares, the fair value of such shares on such
date as determined in good faith by the Board of Directors of the
Company shall be used. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which the Common Shares
are listed or admitted to trading is open for the transaction of
business or, if the Common Shares are not listed or admitted to trading
on any national securities exchange, a Business Day. If the Common
Shares are not publicly held or not so listed or traded, "Current Market
Price" per share shall mean the fair value per share 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.
(ii) For the purpose of any computation hereunder, the
"Current Market Price" per share of the Preferred Shares shall be
determined in the same manner as set forth above for Common Shares in
clause (i) of this Section 11(d) (other than the last sentence thereof).
If the Current Market Price per share of the Preferred Shares cannot be
determined in the manner provided above or if the Preferred Shares are
not publicly held or listed or traded in a manner described in clause
(i) of this Section 11(d), the "Current Market Price" per share of the
Preferred Shares shall be conclusively deemed to be the Current Market
Price per share of the Common Shares (appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after
the date hereof), multiplied by 400. If neither the Common Shares nor
the Preferred Shares are publicly held or so listed or traded, "Current
Market Price" per share shall mean the fair value per share 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. For all purposes of
this Agreement, the "Current Market Price" of one four-hundredths of a
Preferred Share shall be equal to the "Current Market Price" of one
Preferred Share divided by 400.
(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 l% 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 Common Share or other share or one-
millionth of a Preferred Share, as the case may be. Notwithstanding the
first sentence of this Section 11(e), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three years
from the date of the transaction which requires such adjustment or (ii)
the date of the expiration of the right to exercise any Rights.
<PAGE>
(f) If, as a result of an adjustment made pursuant to
Section 11(a)(ii) or Section 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any shares of
capital stock of the Company other than Preferred Shares, 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 Shares contained in Section
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
Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent
to any adjustment made to the Purchase Price hereunder shall evidence
the right to purchase, at the adjusted Purchase Price, the number of one
four-hundredths of a Preferred Share purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment
as provided herein.
(h) Unless the Company shall have exercised its election
as provided in Section 11(i), upon each adjustment of the Purchase Price
as a result of the calculations made in Section 11(b) and (c), each
Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Purchase Price per one four-hundredths of a Preferred Share, that number
of one four-hundredths of a Preferred Share (calculated to the nearest
one one-millionth of a Preferred Share) obtained by (i) multiplying (x)
the number of one four-hundredths of a share covered by a Right
immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii)
dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of one four-hundredths of
a Preferred Share purchasable upon the exercise of a Right. Each of the
Rights outstanding after such adjustment in the number of Rights shall
be exercisable for the number of one four-hundredths of a Preferred
Share for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the
nearest one 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, and notify the
Rights Agent, 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 ten days
later than the date of the public announcement. If Rights Certificates
have been issued, upon each adjustment of the number of Rights pursuant
to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Rights Certificates on
such record date Rights Certificates evidencing, subject to Section 14
hereof, the additional Rights to which such holders shall be entitled as
a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders prior to
the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such
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.
<PAGE>
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one four-hundredths of a Preferred Share
issuable upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the Purchase
Price per one four-hundredths of a share and the number of
four-hundredths of a share 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 one four-hundredths of the then par
value, if any, of the number of one four-hundredths of a Preferred
Share 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 Preferred Shares 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 of the number of one four-hundredths of
a Preferred Share and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the number of one
four-hundredths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due
bill or other appropriate instrument evidencing such holder's right to
receive such additional shares (fractional or otherwise) or securities
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 in their good
faith judgment the Board of Directors of the Company shall determine to
be advisable in order that any consolidation or subdivision of the
Preferred Shares, issuance wholly for cash of any of the Preferred
Shares at less than the Current Market Price, issuance wholly for cash
of Preferred Shares or securities which by their terms are convertible
into or exchangeable for Preferred Shares, dividends on Preferred Shares
payable in Preferred Shares or issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the Company to holders
of its Preferred Shares shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at
any time after the Distribution Date, (i) consolidate with any other
Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), (ii) merge with or into any other
Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or (iii) sell or transfer (or
permit any Subsidiary to sell or transfer), in one transaction, or a
series of related transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x)
at the time of or immediately after such consolidation, merger or sale
there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which 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 or sale, the stockholders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes of
Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and Associates.
<PAGE>
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or
Section 27 hereof, 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 diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.
(p) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i)
declare or pay any dividend on the outstanding Common Shares payable in
Common Shares or (ii) effect a subdivision, combination or consolidation
of the Common Shares (by reclassification or otherwise than by payment
of dividends in Common Shares) into a greater or lesser number of Common
Shares, then in any such case (i) the number of one four-hundredths of a
Preferred Share purchasable after such event upon proper exercise of
each Right shall be determined by multiplying the number of one
four-hundredths of a Preferred Share so purchasable immediately prior to
such event by a fraction, the numerator of which is the number of Common
Shares outstanding immediately before such event and the denominator of
which is the number of Common Shares outstanding immediately after such
event and (ii) each Common Share outstanding immediately after such
event shall have issued with respect to it that number of Rights which
each Common Share outstanding immediately prior to such event had issued
with respect to it. The adjustments provided for in this Section 11(p)
shall be made successively whenever such a dividend is declared or paid
or such a subdivision, combination or consolidation is effected. If an
event occurs which would require an adjustment under Section 11(a)(ii)
and this Section 11(p), the adjustments provided for in this Section
11(p) shall be in addition and prior to any adjustment required pursuant
to Section 11(a)(ii).
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided in
Sections 11 and 13 hereof, the Company shall (a) promptly prepare a
certificate setting forth such adjustment, and a brief statement of the
facts accounting for such adjustment, (b) promptly file with the Rights
Agent and with the transfer agent for the Common Shares and Preferred
Shares a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Rights Certificate in accordance with Section 25
hereof.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power. (a) In the event that, following the Share
Acquisition Date, directly or indirectly, (i) the Company shall
consolidate with, or merge with and into, any other Person (other than a
subsidiary of the Company in a transaction which complies with Section
11(o) hereof or any employee benefit plan of the Company, or any entity
holding Common Shares for or pursuant to the terms of any such plan) and
the Company shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) any Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) hereof or any
employee benefit plan of the Company, or any entity holding Common
Shares for or pursuant to the terms of any such plan) shall consolidate
with the Company, or merge with and into the Company, and the Company
shall be the continuing or surviving corporation of such consolidation
or merger and, in connection with such merger, all or part of the
outstanding Common Shares shall be changed into or exchanged for stock
or other securities of any other Person (or the Company) or cash or any
other property, or (iii) the Company shall sell or otherwise transfer
(or one or more of its Subsidiaries shall sell or otherwise transfer),
in one or more transactions, assets or earning power aggregating 50% or
more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any Person or Persons (other than the Company or
any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), then, and in each such case, proper
provision shall be made so that (A) each holder of a
<PAGE>
Right (except as otherwise provided in Section 7(e) hereof) shall
thereafter have the right to receive, upon the exercise thereof at the
then current Purchase Price, in accordance with the terms of this
Agreement, such number of validly authorized and issued, fully paid,
nonassessable and freely tradeable shares of Common Shares of the
Principal Party (as such term is hereinafter defined), not subject to
any liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by (1) multiplying the
then current Purchase Price by the number of one four-hundredths of a
Preferred Share for which a Right is then exercisable (without taking
into account any adjustment previously made pursuant to Section
11(a)(ii)) and dividing that product (which, following the first
occurrence of a Section 13 Event, shall be referred to as the "Purchase
Price" for each Right and for all purposes of this Agreement) by (2) 50%
of the Current Market Price per share of the Common Shares of such
Principal Party on the date of consummation of such Section 13 Event;
(B) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations and
duties of the Company pursuant to this Agreement; (C) the term "Company"
shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof shall
apply only to such Principal Party following the first occurrence of a
Section 13 Event; (D) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number
of shares of its Common Shares in accordance with Section 9) 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 its Common
Shares thereafter deliverable upon the exercise of the Rights; and (E)
the provisions of Section 11(a)(ii) hereof shall be of no effect
following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in
clause (i) or (ii) of the first sentence of Section 13(a), the
Person that is the issuer of any securities into which Common
Shares of the Company are converted in such merger or
consolidation, and if no securities are so issued, the Person that
is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in
clause (iii) of the first sentence of Section 13(a), the Person
that is the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or
transactions; provided, however, that in any such case, (1) if the
Common Shares of such Person are not at such time and have 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 Shares of which is
and has been so registered, "Principal Party" shall refer to such
other Person; and (2) in case such Person is a Subsidiary, directly
or indirectly, of more than one Person, the Common Shares 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 Shares having the greatest aggregate market value.
(c) The Company shall not consummate any Section 13 Event
unless the Principal Party shall have a sufficient number of authorized
shares of its Common Shares which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with
this Section 13 and unless prior thereto the Company and such Principal
Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs
(a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any Section 13 Event, the Principal Party
will
(i) prepare and file a registration statement under
the Act, with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, and will use
its best efforts to cause such
<PAGE>
registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act) until
the Final Expiration Date; and
(ii) will 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.
The foregoing provisions set forth in this Section 13 shall similarly
apply to successive mergers or consolidations or sales or other
transfers. In the event that a Section 13 Event shall occur at any time
after the occurrence of a Section 11(a)(ii) 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 or
to distribute Rights Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered
holders of the Rights Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For the purposes
of this Section 14(a), the current market value of a whole Right shall
be the closing price of the Rights for the Trading Day immediately prior
to the date on which such fractional Rights would have been otherwise
issuable. The closing price 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 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 Rights are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the 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 NASDAQ or such
other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the Company. If on
any such date no such market maker is making a market in the Rights the
fair value of the Rights on such date as determined in good faith by the
Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions
of Preferred Shares (other than fractions which are integral multiples
of one four-hundredths of a Preferred Share) upon exercise of the Rights
or to distribute certificates which evidence fractional Preferred Shares
(other than fractions which are integral multiples of one
four-hundredths of a Preferred Share). Fractions of Preferred Shares in
integral multiples of one four-hundredths of a Preferred Share may, at
the election of the Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a
depositary selected by it, provided that such agreement shall provide
that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as Beneficial
Owners of the Preferred Shares. In lieu of fractional Preferred Shares
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 value of one
Preferred Share. For purposes of this Section 14(b), the current market
value of a Preferred Share shall be the closing price of a Preferred
Share (as determined pursuant to the second sentence of Section 11(d))
for the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise of a Right.
<PAGE>
Section 15. Rights of Action. All rights of action in
respect to this Agreement, excepting the rights of action given to the
Rights Agent under Section 18 hereof, are vested in the respective
registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Shares); and any
registered holder of any Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Rights Certificate (or, prior
to the Distribution Date, of the Common Shares), may, on 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:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(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 Section 6 and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in whose name
the Rights Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Rights Certificates or the
associated Common Shares certificate 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(e) hereof, shall be required to 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, 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 Preferred Shares or any other securities of the Company
which may at any time be issuable upon 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.
<PAGE>
Section 18. Concerning the Rights Agent. The Company
agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration and execution of this
Agreement and the acceptance, exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for,
and to hold it harmless against, any loss, liability, or expense,
incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done, suffered or omitted by
the Rights Agent in connection with the acceptance and administration of
this Agreement, including the costs and expenses of defending against
any claim of liability in the premises (including reasonable counsel
fees and expenses).
The Rights Agent shall be protected and shall incur
no liability for, or in respect of any action taken, suffered or omitted
by it in connection with, its administration of this Agreement in
reliance upon any Rights Certificate or certificate for the Preferred
Shares or Common Shares or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement,
or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the
proper person or persons, or otherwise upon the advice of its counsel as
set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any corporation succeeding to the corporate trust
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution
or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section
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 the predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, a
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.
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
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, suffered or omitted in good faith by it
under the provisions of this Agreement in reliance upon such opinion.
<PAGE>
(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 any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed
by any one of the Chairman of the Board, the President, any Executive
Vice President, any Senior Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full and complete 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 to the
Company and any other Person only for its own gross negligence, bad
faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this
Agreement, the Summary of Rights 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 or any adjustment in the
terms of the Rights (including the manner, method or amount thereof)
provided for in Section 3, 11, 13 or 23, or the ascertaining of the
existence of facts that would require any such change or adjustment
(except with respect to the exercise of Rights evidenced by Rights
Certificates after actual notice that such change or adjustment is
required); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
Preferred Shares or other securities to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any Preferred
Shares or other securities will, when issued, be validly authorized and
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
accept instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, the President, any
Executive Vice President, any Senior Vice President, the Secretary or
the Treasurer 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 in good
faith by it under the provisions of this Agreement in reliance upon
instructions of any such officer. At any time the Rights Agent may
apply to the Company for written instructions with respect to any matter
arising in connection with the Rights Agent's duties and obligations
arising under this Agreement. Such application by the Rights Agent for
written instructions from the Company may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken or omitted
by the Rights Agent with respect to its duties or obligations under this
Agreement and the date on and/or after which such action
<PAGE>
shall be taken and the Rights Agent shall not be liable for any action
taken or omitted in accordance with a proposal included in any such
application on or after the date specified therein (which date shall not
be less than three Business Days after the Company receives such
application, without the Company's consent) unless, prior to taking or
initiating such action, the Rights Agent has received written
instructions in response to such application specifying the action to be
taken or omitted.
(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 Rights Agent under this Agreement. Nothing
herein shall preclude the Rights Agent from acting in any other capacity
for the Company or for any other legal entity.
(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 resulting from any such act, default, neglect or misconduct,
provided 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 and/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 notice in writing mailed to the
Company and to the transfer agent of the Common Shares and Preferred
Shares by registered or certified mail, and 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 notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to the transfer agent of the Common Shares and Preferred Shares
by registered or certified mail, and to the holders of the Rights
Certificates by first-class mail. If the Rights Agent shall resign or
be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after giving
notice of such removal or after it has been 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 corporation organized and doing business under the
laws of the United States or of the States of New York or Virginia (or
of any other state of the United States so long as such corporation is
authorized to do business as a banking institution in the States of New
York or Virginia), in good standing, having a principal office in the
States of New York or Virginia, which is authorized under such laws to
exercise 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
<PAGE>
Rights Agent a combined capital and surplus of at least $50 million.
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 the transfer agent of the Common Shares and Preferred
Shares, and mail a notice thereof in writing to the registered holders
of the Rights Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent
or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by its
Board of Directors to reflect any adjustment or change in the Purchase
Price and the number or kind or class of shares or other securities or
property purchasable under the Rights Certificates made in accordance
with the provisions of this Agreement. In addition, in connection with
the issuance or sale of Common Shares following the Distribution Date
and prior to the redemption or expiration of the Rights, the Company (a)
shall, with respect to Common Shares so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement (so
long as such options, plan or arrangement were granted or established,
as the case may be, prior to the Distribution Date), or upon the
exercise, conversion or exchange of securities issued by the Company
after the date hereof and prior to the Distribution Date, and (b) may,
in any other case, if deemed necessary or appropriate by the Board of
Directors of the Company, issue Rights Certificates representing the
appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Rights Certificate shall be issued
if, and to the extent that, the Company shall be advised by counsel that
such issuance would create a significant risk of material adverse tax
consequences to the Company or the Persons to whom such Rights
Certificate would be issued, and (ii) no such Rights Certificate shall
be issued if, and to the extent that, appropriate adjustment shall
otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination. (a) The Board
of Directors of the Company may, at its option, at any time prior to the
earlier of (i) the close of business on the tenth day following the
Share Acquisition Date (or, if the Share Acquisition Date shall have
occurred prior to the Record Date, the close of business on the
fifteenth day following the Record Date), or (ii) the Final Expiration
Date, redeem all but not less than all the then outstanding Rights at a
redemption price of $.0025 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 hereinafter referred to as the "Redemption Price") and the
Company may, at its option, pay the Redemption Price either in Common
Shares (based on the "Current Market Price," as defined in Section
11(d)(i) hereof, of the Common Shares at the time of redemption) or
cash; provided, however, if the Board of Directors of the Company
authorizes redemption of the Rights in either of the circumstances set
forth in clauses (i) and (ii) below, then there must be Continuing
Directors then in office and such authorization shall require the
concurrence of a majority of such Continuing Directors: (i) such
authorization occurs on or after the time a Person becomes an Acquiring
Person, or (ii) such authorization occurs on or after the date of a
change (resulting from a proxy or consent solicitation) in a majority of
the directors in office at the commencement of such solicitation if any
Person who is a participant in such solicitation has stated (or, if upon
the commencement of such solicitation, a majority of the Board of
Directors of the
<PAGE>
Company has determined in good faith) that such Person (or any of its
Affiliates or Associates) intends to take, or may consider taking, any
action which would result in such Person becoming an Acquiring Person or
which would cause the occurrence of a Triggering Event.
(b) Immediately upon the action of the Board of Directors
of the Company ordering the redemption of the Rights (such action being
adopted in the manner required by paragraph (a) above), evidence of
which shall have been filed with the Rights Agent and without any
further action and without any notice, the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. Promptly after the action of
the Board of Directors ordering the redemption of the Rights, the
Company shall give notice of such redemption to the Rights Agent and the
holders of the then outstanding Rights by mailing such notice to all
such holders at each holder's last address as it appears upon the
registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Shares. Any
notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the
Redemption Price will be made.
Section 24. Exchange. (a) With the affirmative vote of
a majority of the Continuing Directors, the Company may at any time
after any Person becomes an Acquiring Person, exchange all or part of
the then outstanding and exercisable Rights for Common Shares at an
exchange ratio of one Common Share per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such exchange ratio being hereinafter referred to
as the "Exchange Ratio"). Notwithstanding the foregoing, the Company
shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any such Subsidiary, or any
entity holding Common Shares for or pursuant to the terms of any such
plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Shares then
outstanding.
(b) Immediately upon the action of the Board of Directors
of the Company ordering the exchange of any Rights pursuant to
subsection (a) of this Section 24 and without any further action and
without any notice, the right to exercise such Rights shall terminate
and the only right thereafter of a holder of such Rights shall be to
receive that number of Common Shares equal to the number of such Rights
held by such holder multiplied by the Exchange Ratio. The Company shall
promptly give public notice of any such exchange; provided, however,
that the failure to give, or any defect in, such notice shall not affect
the validity of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of the Common
Shares for Rights will be effected and, in the event of any partial
exchange, the number of Rights will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights held by each
holder of Rights.
(c) In any exchange pursuant to this Section 24, the
Company, at its option, may substitute Preferred Shares (or equivalent
preferred shares, as such term is defined in Section 11(b) hereof) for
Common Shares exchangeable for Rights, at the initial rate of one
four-hundredths of a Preferred Share (or equivalent preferred share) for
each Common Share, as appropriately adjusted to reflect adjustments in
the voting rights of the Preferred Shares pursuant to the terms thereof,
so that the fraction of a Preferred Share delivered in lieu of each
Common Share shall have the same voting rights as one Common Share.
(d) In the event that there shall not be sufficient Common
Shares or Preferred Shares authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24,
the Company shall take all such action as may be necessary to authorize
additional Common Shares or Preferred Shares for issuance upon exchange
of the Rights.
<PAGE>
(e) The Company shall not be required to issue fractions
of Common Shares or to distribute certificates which evidence fractional
Common Shares. In lieu of such fractional Common Shares, the Company
shall pay to the registered holders of the Rights Certificates with
regard to which such fractional Common Shares would otherwise be
issuable an amount in cash equal to the same fraction of the current
market value of a whole Common Share. For the purposes of this
subsection (e), the current market value of a whole Common Share shall
be the closing price of a Common Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately after the public announcement by the Company that an
exchange is to be effected pursuant to this Section 24.
Section 25. Notice of Certain Events. In case the Company
shall propose (a) to pay any dividend payable in stock of any class to
the holders of its Preferred Shares or to make any other distribution to
the holders of its Preferred Shares (other than a regular quarterly cash
dividend) or (b) to offer to the holders of its Preferred Shares rights
or warrants to subscribe for or to purchase any additional Preferred
Shares or shares of stock of any class or any other securities, rights
or options, or (c) to effect any reclassification of its Preferred
Shares (other than a reclassification involving only the subdivision of
outstanding Preferred Shares), or (d) to effect any consolidation or
merger into or with any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) hereof), or
to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more
transactions, of 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to, any other Person
(other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), or (e)
to effect the liquidation, dissolution or winding up of the Company,
then, in each such case, the Company shall give to each holder of a
Rights Certificate, in accordance with Section 26 hereof, a notice of
such proposed action, which shall specify the record date for the
purposes of such stock dividend, or distribution of rights or warrants,
or the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and
the date of participation therein by the holders of the Common Shares
and/or Preferred Shares, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by clause (a)
or (b) above at least 20 days prior to the record date for determining
holders of the Preferred Shares for purposes of such action, and in the
case of any such other action, at least 20 days prior to the date of the
taking of such proposed action or the date of participation therein by
the holders of the Common Shares and/or Preferred Shares, whichever
shall be the earlier.
In case any Section 11(a)(ii) Event shall occur, then,
in any such case, the Company shall as soon as practicable thereafter
give to each holder of a Rights Certificate, in accordance with Section
26 hereof, a notice of the occurrence of such event, which shall specify
the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof, and all references in the preceding paragraph
to Preferred Shares shall be deemed thereafter references to Common
Shares and/or, if appropriate, other securities.
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 Rights Certificate to or on the Company shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Rights Agent) as follows:
Circuit City Stores, Inc.
9950 Mayland Drive
Richmond, VA 23233
Attention: Secretary
<PAGE>
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by
the holder of any Rights Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company)
as follows:
Norwest Bank Minnesota, N.A.
161 North Concord Exchange
South St. Paul, Minnesota 55075
Attention: Shareowner Services
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights Certificate
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.
Section 27. Supplements and Amendments. Prior to the
Distribution Date and subject to the penultimate sentence of this
Section 27, the Company may 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 Common Shares.
From and after the Distribution Date and subject to the penultimate
sentence of this Section 27, the Company may and the Rights Agent shall,
if the Company so directs, supplement or amend this Agreement without
the approval of any holders of Rights Certificates in order (i) to cure
any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions
herein, (iii) shorten or lengthen any time period hereunder (which
lengthening or shortening, following the first occurrence of an event
set forth in clauses (i) and (ii) of the proviso to Section 23(a)
hereof, shall be effective only if there are Continuing Directors and
shall require the concurrence of a majority of such Continuing
Directors), or (iv) to change or supplement the provisions hereunder in
any manner which the Company may deem necessary or desirable and which
shall not adversely affect the interests of the holders of Rights
Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person); provided, this Agreement may not be
supplemented or amended to lengthen, pursuant to clause (iii) of this
sentence, (A) a time period relating to when the Rights may be redeemed
at such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the
holders of Rights (other than any Acquiring Person and its Affiliates
and Associates). 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 27, 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 four-hundredths
of a Preferred Share 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 Shares
(other than an Acquiring Person).
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, etc. For all purposes of this Agreement, any calculation of
the number of Common Shares outstanding at any particular time,
including for purposes of determining the particular percentage of such
outstanding Common Shares of which any Person is the Beneficial Owner,
shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange
Act.
<PAGE>
The Board of Directors of the Company (with, where specifically
provided for herein, the consent of 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 (with, where specifically provided for herein, the
consent of a majority of the Continuing Directors) 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 (i)
interpret the provisions of this Agreement, (ii) make all determinations
deemed necessary or advisable for the administration of this Agreement
(including a determination to redeem or not redeem the Rights or to
amend the Agreement) and (iii) make all factual determinations deemed
necessary or advisable for the administration of this Agreement. All
such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect
to the foregoing) which are done or made by the Board in good faith,
shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties, and (y) not
subject the Board 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 or corporation other
than the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, the Common
Shares) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of
the Rights Certificates (and, prior to the Distribution Date, the Common
Shares).
Section 31. Severability. If any term, provision, covenant
or restriction of this Agreement, or any portion thereof, 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, including any portions of any thereof
which are not held to be invalid, void or unenforceable, 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, with the
consent of a majority of the Continuing Directors after the Distribution
Date, determines in its good faith business 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.
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 Commonwealth of Virginia and for all
purposes shall be governed by and construed in accordance with the laws
of such Commonwealth applicable to contracts to be made and performed
entirely within such Commonwealth.
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 but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of
the several Sections of this Agreement are inserted for convenience only
and shall not control or affect the meaning or construction of any of
the provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above
written.
CIRCUIT CITY STORES, INC.
Attest:
By s/Keith D. Browning By s/Michael T. Chalifoux
Senior Vice President and
Title Assistant Secretary Title Chief Financial Officer
NORWEST BANK MINNESOTA, N.A.
Attest:
By s/Kenneth P. Swanson By s/Barbara M. Novak
Title Assistant Secretary Title Assistant Vice President
<PAGE>
Exhibit B
[Form of Rights Certificate]
Certificate No. R-__________ Rights
NOT EXERCISABLE [BEFORE THE DISTRIBUTION DATE (AS SUCH TERM IS DEFINED
IN THE RIGHTS AGREEMENT) OR]* AFTER April 29, 1998 OR EARLIER IF NOTICE
OF REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01
PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME 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 ASSOCIATE OF AN ACQUIRING PERSON
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND
VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH
AGREEMENT.]**
Rights Certificate
This certifies that _______________ , or registered assigns, is
the registered owner of the number of Rights set forth above, each of
which entitles the owner thereof, subject to the terms, provisions and
conditions of the Amended and Restated Rights Agreement dated as of
March 5, 1996 (the "Rights
____________________
* This portion of the legend in brackets shall be inserted
only upon the Rights Certificates delivered to the Rights Agent
prior to the Distribution Date.
** This portion of the legend in brackets shall be inserted
only if applicable and shall replace the immediately preceding
sentence.
<PAGE>
Agreement") between Circuit City Stores,
Inc., a Virginia corporation (the "Company"), and Norwest Bank
Minnesota, N.A., a national banking association (Norwest Bank Minnesota,
N.A. or its successor as rights agent under the Rights Agreement, the
"Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and
prior to 5:00 P.M. (Richmond, Virginia time) on April 29, 1998 (the
"Final Expiration Date") at the principal office or offices of the
Rights Agent designated for such purpose, or at its successor as Rights
Agent, one four-hundredths of a fully paid nonassessable share of
Cumulative Participating Preferred Stock, Series E, par value $20.00 per
share (the "Preferred Shares"), of the Company, at a purchase price of
<PAGE>
$140.00 per one four-hundredths of a Preferred Share (the "Purchase
Price"), upon presentation and surrender of this Rights Certificate with
the Form of Election to Purchase duly executed. The Purchase Price
shall be paid in cash or, if the Company so permits, Common Shares
having an equivalent value or, if the Company has permitted payment with
Common Shares, a combination of cash and Common Shares. The number of
Rights evidenced by this Rights Certificate (and the number of shares
which may be purchased upon exercise thereof) set forth above, and the
Purchase Price per share set forth above, are the number and Purchase
Price as of March 5, 1996, based on the Preferred Shares as constituted
at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such
term is defined in the Rights Agreement), if the Rights evidenced by
this Right Certificate are beneficially owned by (i) an Acquiring Person
or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined in the Rights Agreement), (ii) a transferee of any such
Acquiring Person, Associate or Affiliate, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of a
person who, concurrently with or after such transfer, became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person,
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 Section 11(a)(ii) Event.
As provided in the Rights Agreement, the
Purchase Price and the number and kind of Preferred Shares or other
securities which may be purchased upon the exercise of the Rights
evidenced by this Rights Certificate are subject to modification and
adjustment upon the happening of certain events, including Triggering
Events (as such term is defined in the Rights Agreement).
This Rights
Certificate is subject to all of the terms, provisions and conditions of
the Rights Agreement, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the Rights
Certificates 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 principal offices of the Company and are
also available upon written request to the Company.
<PAGE>
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Rights Certificate or
Rights Certificates of like tenor and date evidencing Rights entitling
the holder to purchase a like aggregate number of one four- hundredths
of a Preferred Share as the Rights evidenced by the Rights Certificate
or Rights Certificates surrendered shall have entitled such holder to
purchase. If this Rights Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Rights
Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its
option, with the approval of a majority of the Continuing Directors (as
such term is defined in the Rights Agreement), at a redemption price of
$.0025 per Right, payable, at the option of the Company, in cash or
Common Shares, at any time prior to the earlier of the close of business
on (i) the tenth day (as such time period may be extended or shortened
pursuant to the Rights Agreement) following the Share Acquisition Date
(as such term is defined in the Rights Agreement) and (ii) the Final
Expiration Date.
No fractional Preferred Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions
which are integral multiples of one four- hundredths of a Preferred
Share, which may, at the election of the Company, be evidenced by
depositary 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 or receive dividends or be deemed
for any purpose the holder of the Preferred Shares or of any other
securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of
the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at
any meeting thereof, or to give or withhold consent to any corporate
action, or, to receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.
This Rights Certificate shall not be
valid or obligatory for any purpose until it shall have been
countersigned by the Rights Agent.
<PAGE>
WITNESS the facsimile signatures of the proper officers of the
Company and its corporate seal. Dated as of:
ATTEST: CIRCUIT CITY STORES, INC.
______________________________ By: _________________________
Title: Title:
Countersigned:
[INSERT NAME OF RIGHTS AGENT]
By__________________________________
Authorized Signature
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Rights Certificates.)
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-named Rights
Certificate on the books of the within-named Company, with full power of
substitution.
Dated:___________ 19 ______________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions
with membership in an approved signature guarantee Medallion program),
pursuant to SEC Rule 17Ad-15.
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that: (i) this Rights Certificate [ ] is [ ] is not being sold,
assigned or transferred 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 pursuant to the Rights Agreement); and
(ii) 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 subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated: ______________, 19 _____________________________
Signature
<PAGE>
Notices
The signature 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.
<PAGE>
[Form of Reverse Side of Rights Certificate -- continued]
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Rights
Certificate.)
To: Circuit City Stores, Inc.
The undersigned hereby irrevocably elects to exercise
__________________________ Rights represented by this Rights Certificate
to purchase the Preferred Shares 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 shares 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 remaining
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:_______________, 19 ______________________________
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Rights Certificate in every
particular, without alteration or
enlargement or any change whatsoever)
<PAGE>
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions
with membership in an approved signature guarantee Medallion program),
pursuant to SEC Rule 17Ad-15.
Dated: ____________ , 19 _____________________________
Signature
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
1. the Rights evidenced by this Rights Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined pursuant to the Rights Agreement);
2. after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person.
Dated: _____________, 19 _____________________________
Signature
Notice
The signature to the foregoing Election 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.
CIRCUIT CITY STORES, INC.
BYLAWS
AS AMENDED AND RESTATED
February 15, 1996
TABLE OF CONTENTS
ARTICLE I
MEETINGS OF SHAREHOLDERS
1.1 Place and Time of Meetings 1
1.2 Organization and Order of Business 1
1.3 Annual Meeting 1
1.4 Special Meetings 3
1.5 Record Dates 3
1.6 Notice of Meetings 3
1.7 Waiver of Notice; Attendance at Meeting 4
1.8 Quorum and Voting Requirements 4
1.9 Proxies 5
1.10 Voting List 5
ARTICLE II
DIRECTORS
2.1 General Powers 6
2.2 Number and Term 6
2.3 Nomination of Directors 6
2.4 Election 7
2.5 Removal; Vacancies 7
2.6 Annual and Regular Meetings 8
2.7 Special Meetings 8
2.8 Notice of Meetings 8
2.9 Waiver of Notice; Attendance at Meeting 9
2.10 Quorum; Voting 9
2.11 Telephonic Meetings 9
2.12 Action Without Meeting 9
2.13 Compensation 10
2.14 Director Emeritus 10
2.15 Chairman and Vice Chairman 10
ARTICLE III
COMMITTEES OF DIRECTORS
3.1 Committees 10
3.2 Authority of Committees 10
3.3 Executive Committee 11
3.4 Audit Committee 11
3.5 Nominating and Structure Committee 11
3.6 Compensation and Personnel Committee 12
3.7 Committee Meetings; Miscellaneous 13
<PAGE>
ARTICLE IV
OFFICERS
4.1 Officers 13
4.2 Election; Term 13
4.3 Removal of Officers 13
4.4 Duties of the President 13
4.5 Duties of the Vice President 14
4.6 Duties of the Secretary 14
4.7 Duties of the Chief Financial Officer 14
4.8 Duties of the Assistant Secretary 14
4.9 Duties of Other Officers 14
4.10 Voting Securities of Other Corporations 15
4.11 Compensation 15
4.12 Bonds 15
ARTICLE V
EVIDENCE OF SHARES
5.1 Form 15
5.2 Transfer 16
5.3 Restrictions on Transfer 16
5.4 Lost or Destroyed Share Certificates 16
5.5 Registered Shareholders 16
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.1 Certain Definitions 17
6.2 Corporate Seal 17
6.3 Fiscal Year 17
6.4 Amendments 17
6.5 General 17
<PAGE>
CIRCUIT CITY STORES, INC.
BYLAWS
ARTICLE I
MEETINGS OF SHAREHOLDERS
1.1 Place and Time of Meetings. Meetings of shareholders shall be held
at the principal office of the Corporation or at such place, either
within or without the Commonwealth of Virginia, and at such time as may
be provided in the notice of the meeting and approved by the Board of
Directors.
1.2 Organization and Order of Business. The Chairman or, in the Chairman's
absence, the President shall serve as chairman at all meetings of the
shareholders. In the absence of both of the foregoing persons or if
both of them decline to serve, a majority of the shares entitled to vote
at a meeting may appoint any person entitled to vote at the meeting to
act as chairman. The Secretary or, in the Secretary's absence, an
Assistant Secretary shall act as secretary at all meetings of the
shareholders. In the event that neither the Secretary nor an Assistant
Secretary is present, the chairman of the meeting may appoint any person
to act as secretary of the meeting.
The Chairman shall have the authority to make such rules and
regulations, to establish such procedures and to take such steps as he
or she may deem necessary or desirable for the proper conduct of each
meeting of the shareholders, including, without limitation, the
authority to make the agenda and to establish procedures for (i)
dismissing of business not properly presented, (ii) maintaining of order
and safety, (iii) placing limitations on the time allotted to questions
or comments on the affairs of the Corporation, (iv) placing restrictions
on attendance at a meeting by persons or classes of persons who are not
shareholders or their proxies, (v) restricting entry to a meeting after
the time prescribed for the commencement thereof and (vi) commencing,
conducting and closing voting on any matter.
Any business which might properly have been conducted on an
original meeting date may come before an adjourned meeting when
reconvened.
1.3 Annual Meeting. The annual meeting of shareholders shall be held
on the Tuesday in June of each year which is closest to June 16. If
such day is a legal holiday, then the annual meeting of shareholders
shall be held on the next succeeding business day. Alternatively, the
annual meeting may be held at such other time as may be provided in the
notice of the meeting and approved by the Board of Directors.
At each annual meeting of shareholders, only such business shall
be conducted as is proper to consider and has been brought before the
meeting (i) pursuant to the Corporation's notice of the meeting, (ii) by
or at the direction of the Board of Directors or (iii) by a shareholder
who is a shareholder of record of a class of shares entitled to vote on
the business such shareholder is proposing and who is such a shareholder
of record, both at the time of the giving of the shareholder's notice
hereinafter described in this Section 1.3 and on the record date for such
annual meeting, and who complies with the notice procedures set forth in
this Section 1.3.
<PAGE>
In order to bring before an annual meeting of shareholders any
business which may properly be considered and which a shareholder has
not sought to have included in the Corporation's proxy statement for the
meeting, a shareholder who meets the requirements set forth in the
preceding paragraph must give the Corporation timely written notice. To
be timely, a shareholder's notice must be given, either by personal
delivery to the Secretary or an Assistant Secretary at the principal
office of the Corporation or by first class United States mail, with
postage thereon prepaid, addressed to the Secretary at the principal
office of the Corporation. Any such notice must be received (i) on or
after March 1st and before April 1st of the year in which the meeting
will be held, if clause (ii) is not applicable, or (ii) not less than 60
days before the date of the meeting if the date of such meeting, as
prescribed in these bylaws, has been changed by more than 30 days.
Each such shareholder's notice shall set forth as to each matter
the shareholder proposes to bring before the annual meeting (i) the name
and address, as they appear on the Corporation's stock transfer books,
of the shareholder proposing business, (ii) the class and number of
shares of stock of the Corporation beneficially owned by such
shareholder, (iii) a representation that such shareholder is a
shareholder of record at the time of the giving of the notice and
intends to appear in person or by proxy at the meeting to present the
business specified in the notice, (iv) a brief description of the
business desired to be brought before the meeting, including the
complete text of any resolutions to be presented and the reasons for
wanting to conduct such business and (v) any interest which the
shareholder may have in such business.
The Secretary or Assistant Secretary shall deliver each
shareholder's notice that has been timely received to the Chairman for
review.
Notwithstanding the foregoing provisions of this Section 1.3, a
shareholder seeking to have a proposal included in the Corporation's
proxy statement for an annual meeting of shareholders shall comply with
the requirements of Regulation 14A under the Securities Exchange Act of
1934, as amended from time to time, or with any successor regulation.
1.4 Special Meetings. Special meetings of the shareholders may
be called only by the Chairman, the President or the Board of Directors.
Only business within the purpose or purposes described in the notice for
a special meeting of shareholders may be conducted at the meeting.
1.5 Record Dates. The Board of Directors shall fix, in advance,
a record date to make a determination of shareholders entitled to notice
of or to vote at any meeting of shareholders or to receive any dividend
or for any purpose, such date to be not more than 70 days before the
meeting or action requiring a determination of shareholders.
When a determination of shareholders entitled to notice of or to
vote at any meeting of shareholders has been made, such determination
shall be effective for any adjournment of the meeting unless the Board
of Directors fixes a new record date, which it shall do if the meeting
is adjourned to a date more than 120 days after the date fixed for the
original meeting.
1.6 Notice of Meetings. Written notice stating the place, day and
hour of each meeting of shareholders and, in the case of a special
meeting, the purpose or purposes for which the meeting is called, shall
be given by mail not less than 10 nor more than 60 days before the date
of the meeting (except when a different time is required in these Bylaws
or by law) to each shareholder of record entitled to vote at such
meeting. Such notice shall be deemed to be effective when deposited in
first class United States mail with postage thereon prepaid and
addressed to the shareholder at his or her address as it appears on the
share transfer books of the Corporation.
<PAGE>
Notice of a shareholder's meeting to act on (i) an amendment of
the Articles of Incorporation, (ii) a plan of merger or share exchange,
(iii) the sale, lease, exchange or other disposition of all or
substantially all the property of the Corporation otherwise than in the
usual and regular course of business or (iv) the dissolution of the
Corporation, shall be given, in the manner provided above, not less than
25 nor more than 60 days before the date of the meeting. Any notice
given pursuant to this section shall state that the purpose, or one of
the purposes, of the meeting is to consider such action and shall be
accompanied by (x) a copy of the proposed amendment, (y) a copy of the
proposed plan of merger or share exchange or (z) a summary of the
agreement pursuant to which the proposed transaction will be effected.
If only a summary of the agreement is sent to the shareholders, the
Corporation shall also send a copy of the agreement to any shareholder
who requests it.
If a meeting is adjourned to a different date, time or place, notice
need not be given if the new date, time or place is announced at the
meeting before adjournment. However, if a new record date for an
adjourned meeting is fixed, notice of the adjourned meeting shall be
given to shareholders as of the new record date unless a court provides
otherwise.
Notwithstanding the foregoing, no notice of a meeting of shareholders
need be given to a shareholder if (i) an annual report and proxy
statements for two consecutive annual meetings of shareholders or (ii)
all, and at least two, checks in payment of dividends or interest on
securities during a 12-month period, have been sent by first-class
United States mail, with postage thereon prepaid, addressed to the
shareholder at his or her address as it appears on the share transfer
books of the Corporation, and returned undeliverable. The obligation of
the Corporation to give notice of meetings of shareholders to any such
shareholder shall be reinstated once the Corporation has received a new
address for such shareholder for entry on its share transfer books.
1.7 Waiver of Notice; Attendance at Meeting. A shareholder may
waive any notice required by law, the Articles of Incorporation or these
Bylaws before or after the date and time of the meeting that is the
subject of such notice. The waiver shall be in writing, be signed by
the shareholder entitled to the notice and be delivered to the Secretary
for inclusion in the minutes or filing with the corporate records.
A shareholder's attendance at a meeting (i) waives objection to
lack of notice or defective notice of the meeting unless the
shareholder, at the beginning of the meeting, objects to holding the
meeting or transacting business at the meeting and (ii) waives objection
to consideration of a particular matter at the meeting that is not
within the purpose or purposes described in the meeting notice unless
the shareholder objects to considering the matter when it is presented.
1.8 Quorum and Voting Requirements. Unless otherwise required
by law, a majority of the votes entitled to be cast on a matter
constitutes a quorum for action on that matter. Once a share is
represented for any purpose at a meeting, it is deemed present for
quorum purposes for the remainder of the meeting and for any adjournment
of that meeting unless a new record date is or shall be set for that
adjourned meeting. If a quorum exists, action on a matter, other than
the election of directors, is approved if the votes cast favoring the
action exceed the votes cast opposing the action unless a greater number
of affirmative votes is required by law. Directors shall be elected by
a plurality of the votes cast by the shares entitled to vote in the
election at a meeting at which a quorum is present. Less than a quorum
may adjourn a meeting.
1.9 Proxies. A shareholder may vote his or her shares in person
or by proxy. A shareholder may appoint a proxy to vote or otherwise act
for such shareholder by signing an appointment form, either personally
or by his or her attorney-in-fact. An appointment of a proxy is
effective when received by the Secretary or other officer or agent
authorized to tabulate votes and is valid for eleven (11) months unless
a longer period is expressly provided in the appointment form. An
appointment of a proxy is revocable by the shareholder unless the
appointment form conspicuously states that it is irrevocable and the
appointment is coupled with an interest.
<PAGE>
The death or incapacity of the shareholder appointing a proxy
does not affect the right of the Corporation to accept the proxy's
authority unless notice of the death or incapacity is received by the
Secretary or other officer or agent authorized to tabulate votes before
the proxy exercises his or her authority under the appointment. An
irrevocable appointment is revoked when the interest with which it is
coupled is extin- guished. A transferee for value of shares subject to
an irrevocable appointment may revoke the appointment if the transferee
did not know of its existence when the shares were acquired and the
existence of the irrevocable appointment was not noted conspicuously on
the certificate representing the shares or on the information statement
for shares without certificates. Subject to any legal limitations on
the right of the Corporation to accept the vote or other action of a
proxy and to any express limitation on the proxy's authority appearing
on the face of the appointment form, the Corporation is entitled to
accept the proxy's vote or other action as that of the shareholder
making the appointment. Any fiduciary who is entitled to vote any shares
may vote such shares by proxy.
1.10 Voting List. The officer or agent having charge of the
share transfer books of the Corporation shall make, at least ten days
before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting or any adjournment thereof, with the
address of and the number of shares held by each. For a period of ten
days prior to the meeting, such list shall be kept on file at the
registered office of the Corporation or at its principal office or at
the office of its transfer agent or registrar and shall be subject to
inspection by any shareholder at any time during usual business hours.
Such list shall also be produced and kept open at the time and place of
the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting for the purpose thereof. The
original share transfer books shall be prima facie evidence as to which
shareholders are entitled to examine such list or transfer books or to
vote at any meeting of the shareholders. The right of a shareholder to
inspect such list prior to the meeting shall be subject to the
conditions and limitations set forth by law. If the requirements of
this section have not been substantially complied with, the meeting
shall, on the demand of any shareholder in person or by proxy, be
adjourned until such requirements are met. Refusal or failure to
prepare or make available the shareholders' list does not affect the
validity of action taken at the meeting prior to the making of any such
demand, but any action taken by the shareholders after the making of any
such demand shall be invalid and of no effect.
ARTICLE II
DIRECTORS
2.1 General Powers. The Corporation shall have a Board of Directors.
All corporate powers shall be exercised by or under the authority of,
and the business and affairs of the Corporation managed under the
direction of, its Board of Directors, and such officers and agents as
the Board of Directors may elect to employ, subject to any limitation
set forth in the Articles of Incorporation.
2.2 Number and Term. The number of directors shall be ten (10). This
number may be increased or decreased from time to time by amendment to
these Bylaws to the extent permitted by law and by the Corporation's
Articles of Incorporation. Except as provided in Section 2.5, directors
shall be elected for terms of three (3) years in the manner set forth in
the Articles of Incorporation and shall serve until the election of
their successors. No decrease in the number of directors shall have the
effect of changing the term of any incumbent director. Unless a
director resigns or is removed by the majority vote of the shareholders,
every director shall hold office for the term elected or until a
successor to such director shall have been elected.
<PAGE>
2.3 Nomination of Directors. Nominations for the election of directors
may be made by the Board of Directors or by any shareholder entitled to
vote in the election of directors generally. However, any shareholder
entitled to vote in the election of directors generally may nominate one
or more persons for election as directors at a meeting only if written
notice of such shareholder's intent to make such nomination or
nominations has been given, either by personal delivery or by United
States mail, postage prepaid, to the Secretary of the Corporation not
later than (i) with respect to an election to be held at an annual
meeting of shareholders 120 days in advance of such meeting or (ii) with
respect to a special meeting of shareholders for the election of
directors, the close of business on the seventh day following the date
on which notice of such meeting is first given to shareholders.
Each such notice shall set forth: (a) the name and address of
the shareholder who intends to make the nomination and of the person or
persons to be nominated; (b) a representation that the shareholder is a
holder of record of stock of the Corporation entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (c) a
description of all arrangements or understandings between the
shareholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination or nominations
are to be made by the shareholder; (d) such other information
regarding each nominee proposed by such shareholder as would be required
to be included in a proxy statement filed pursuant to the proxy rules of
the Securities and Exchange Commission, had the nominee been nominated,
or intended to be nominated, by the Board of Directors; and (e) the
consent of each nominee to serve as a director of the Corporation if so
elected. The Chairman may refuse to acknowledge the nomination of any
person not made in compliance with the foregoing procedure.
2.4 Election. Except as provided in Section 2.5, the directors shall
be elected by the holders of the common shares at each annual meeting of
shareholders or at a special meeting called for such purpose. Those
persons who receive the greatest number of votes shall be deemed elected
even though they do not receive a majority of the votes cast. No
individual shall be named or elected as a director without such
individual's prior consent.
2.5 Removal; Vacancies. The shareholders may remove one or more
directors with or without cause. If a director is elected by a voting
group, only the shareholders of that voting group may elect to remove
the director. Unless the Articles of Incorporation require a greater
vote, a director may be removed if the number of votes cast to remove
the director constitutes a majority of the votes entitled to be cast at
an election of directors of the voting group or voting groups by which
such director was elected. A director may be removed by the
shareholders only at a meeting called for the purpose of removing such
director and the meeting notice must state that the purpose, or one of
the purposes of the meeting, is removal of the director.
A vacancy on the Board of Directors, including a vacancy resulting
from the removal of a director or an increase in the number of
directors, may be filled by (i) the shareholders, (ii) the Board of
Directors or (iii) the affirmative vote of a majority of the remaining
directors though less than a quorum of the Board of Directors and may,
in the case of a resignation that will become effective at a specified
later date, be filled before the vacancy occurs but the new director may
not take office until the vacancy occurs. The foregoing
notwithstanding, the aggregate number of vacancies resulting from
increases in the number of directors which may be created and filled by
action of the Board of Directors between annual meetings of shareholders
shall be limited to two. Any director elected by the Board of Directors
shall serve until the next annual meeting of shareholders or until the
election of a successor to such director.
<PAGE>
2.6 Annual and Regular Meetings. An annual meeting of the Board of
Directors, which shall be considered a regular meeting, shall be held
immediately following each annual meeting of shareholders for the
purpose of electing officers and carrying on such other business as may
properly come before the meeting. The Board of Directors may also adopt
a schedule of additional meetings which shall be considered regular
meetings. Regular meetings shall be held at such times and at such
places, within or without the Commonwealth of Virginia, as the Chairman,
the President or the Board of Directors shall designate from time to
time. If no place is designated, regular meetings shall be held at the
principal office of the Corporation.
2.7 Special Meetings. Special meetings of the Board of Directors may
be called by the President, the Board of Directors or any two Directors
of the Corporation and shall be held at such times and at such places,
within or without the Commonwealth of Virginia, as the person or persons
calling the meetings shall designate. If no such place is designated in
the notice of a meeting, it shall be held at the principal office of the
Corporation.
2.8 Notice of Meetings. No notice need be given of regular meetings of
the Board of Directors.
Notices of special meetings of the Board of Directors shall be given
to each director in person or delivered to his or her residence or
business address (or such other place as the director may have directed
in writing) not less than twenty-four (24) hours before the meeting by
mail, messenger, telecopy, telegraph or other means of written
communication or by telephoning such notice to the director. Any such
notice shall set forth the time and place of the meeting.
2.9 Waiver of Notice; Attendance at Meeting. A director may waive
any notice required by law, the Articles of Incorporation or these
Bylaws before or after the date and time stated in the notice and such
waiver shall be equivalent to the giving of such notice. Except as
provided in the next paragraph of this section, the waiver shall be in
writing, signed by the director entitled to the notice and filed with
the minutes or corporate records.
A director's attendance at or participation in a meeting waives any
required notice to such director of the meeting unless the director, at
the beginning of the meeting or promptly upon arrival, objects to
holding the meeting or transacting business at the meeting and does not
thereafter vote for or assent to action taken at the meeting.
2.10 Quorum; Voting. A majority of the number of directors fixed in
these Bylaws shall constitute a quorum for the transaction of business
at a meeting of the Board of Directors. If a quorum is present when a
vote is taken, the affirmative vote of a majority of the directors
present is the act of the Board of Directors. A director who is present
at a meeting of the Board of Directors or a committee of the Board of
Directors when corporate action is taken is deemed to have assented to
the action taken unless (i) the director objects, at the beginning of
the meeting or promptly upon arrival, to holding it or transacting
specified business at the meeting or (ii) the director votes against or
abstains from the action taken.
2.11 Telephonic Meetings. The Board of Directors may permit any or
all directors to participate in a regular or special meeting by, or
conduct the meeting through the use of, any means of communication by
which all directors participating may simultaneously hear each other
during the meeting. A director participating in a meeting by this means
is deemed to be present in person at the meeting.
<PAGE>
2.12 Action Without Meeting. Action required or permitted to be taken
at a meeting of the Board of Directors may be taken without a meeting if
the action is taken by all members of the Board. The action shall be
evidenced by one or more written consents stating the action taken,
signed by each director either before or after the action is taken and
included in the minutes or filed with the corporate records. Action
taken under this section shall be effective when the last director signs
the consent unless the consent specifies a different effective date in
which event the action taken is effective as of the date specified
therein provided the consent states the date of execution by each
director.
2.13 Compensation. Directors shall not receive a stated salary for
their services, but directors may be paid a fixed sum and expenses for
attendance at any regular or special meeting of the Board of Directors
or any meeting of any Committee and such other compensation as the Board
of Directors shall determine. A director may serve or be employed by
the Corporation in any other capacity and receive compensation
thereafter.
2.14 Director Emeritus. The Board may appoint to the position of
Director Emeritus any retiring director who has served not less than
three years as a director of the Corporation. Such person so appointed
shall have the title of "Director Emeritus" and shall be entitled to
receive notice of, and to attend all meetings of the Board, but shall
not in fact be a director, shall not be entitled to vote, shall not be
counted in determining a quorum of the Board and shall not have any of
the duties or liabilities of a director under law.
2.15 Chairman and Vice Chairman. The Chairman of the Board, if one is
designated by the Board of Directors, shall preside at all meetings of
the Board and of shareholders and perform such other duties as the Board
shall assign from time to time. The Vice Chairman of the Board, if one
is designated by the Board of Directors, shall at the request of or in
the absence of the Chairman of the Board, preside at meetings of the
Board and of shareholders and, when requested to do so by the Board,
shall perform all of the functions of the Chairman of the Board during
the absence or incapacity of the latter.
ARTICLE III COMMITTEES OF
DIRECTORS
3.1 Committees. The Board of Directors may create one or more
committees and appoint members of the Board of Directors to serve on
them. Unless otherwise provided in these Bylaws, each committee shall
have two or more members who serve at the pleasure of the Board of
Directors. The creation of a committee and appointment of members to it
shall be approved by a majority of all of the directors in office when
the action is taken.
3.2 Authority of Committees. To the extent specified by the Board of
Directors, each committee may exercise the authority of the Board of
Directors, except that a committee may not (i) approve or recommend to
shareholders action that is required by law to be approved by
shareholders, (ii) fill vacancies on the Board of Directors or on any of
its committees, (iii) amend the Articles of Incorporation, (iv) adopt,
amend, or repeal these Bylaws, (v) approve a plan of merger not
requiring shareholder approval, (vi) authorize or approve a
distribution, except according to a general formula or method prescribed
by the Board of Directors or (vii) authorize or approve the issuance or
sale or contract for sale of shares, or determine the designation and
relative rights, preferences, and limitations of a class or series of
shares; provided, however, that the Board of Directors may authorize a
committee, or a senior executive officer of the Corporation, to do so
within limits specifically prescribed by the Board of Directors.
<PAGE>
3.3 Executive Committee. The Board of Directors may appoint an
Executive Committee consisting of not less than two directors which
committee shall have all of the authority of the Board of Directors
except to the extent such authority is limited by the provisions of
Section 3.2.
3.4 Audit Committee. The Board of Directors shall appoint each year
an Audit Committee, all of whose members shall be independent directors
(as defined in Section 6.1) and which shall perform such duties as its
members consider necessary and desirable properly to evaluate and
generally to supervise the Corporation's accounting procedures including
but not limited to the following:
1. Recommend independent public accountants for the
Corporation to the Board.
2. Determine that the scope of the audit is adequate and
approve the audit fee.
3. Review audit results with the Corporation's independent
public accountants.
4. Review and approve the retention of the outside auditors
to perform non-audit services and approve the fee therefor.
5. Recommend policy for the scope, frequency, and method of
internal audit reports and review the results thereof.
Develop a direct line of communication with internal
auditors, if and when such are employed.
6. Review pending lawsuits.
7. Review insurance coverage.
The Audit Committee shall have complete access to the Corporation's
independent public accountants, internal auditors, if any, and inside
and outside general counsel.
3.5 Nominating and Structure Committee. The Board of Directors shall
appoint each year a Nominating and Structure Committee, which shall be
composed of at least three members of the Board, a majority of whom
shall be independent directors (as defined in Section 6.1). The
functions of this Committee shall include the following:
1. Review the performance and contributions of existing
directors for the purpose of recommending whether
they be nominated for a successive term.
2. Recommend policies with regard to the size, composition
and function of the Board.
3. Suggest persons to fill vacancies on the Board and
maintain files on names submitted.
4. Assist the Chairman of the Board in carrying out an
orientation program for new directors.
5. Review and recommend to the Board changes and improvements
in the functioning of the Board.
6. Review and recommend compensation levels for non-management
directors.
3.6 Compensation and Personnel Committee. The Board of Directors shall
appoint each year a Compensation and Personnel Committee, which shall be
composed of at least three members of the Board, all of whom shall be
independent directors (as defined in Section 6.1), and which shall have
the following duties:
1. Review and recommend to the Board current management
compensation programs including salaries, bonuses and fringe
benefits and the creation of new officerships.
<PAGE>
2. Review and report to the Board on the funding and adequacy
of existing retirement programs, and recommend new programs,
if appropriate. (This responsibility does not include
investment policy and other responsibilities of the Trustees
of the Retirement Plan.)
3. Award and administer pursuant to existing authority, the
Corporation's stock incentive programs and review and
recommend similar future programs, if any.
4. Review top management organization, assist the CEO in
determining that the Corporation has adequate depth and
breadth of management to carry out its expansion programs
and to provide for succession in the event of retirement or
the unanticipated departure of a key executive.
5. Review the Corporation's programs for attracting, developing
and compensating management personnel at lower and middle
levels.
3.7 Committee Meetings; Miscellaneous. The provisions of these Bylaws
which govern meetings, action without meetings, notice and waiver of
notice, and quorum and voting requirements of the Board of Directors
shall apply to committees of directors and their members as well.
ARTICLE IV
OFFICERS
4.1 Officers. The officers of the Corporation shall be a President,
a Secretary, a Chief Financial Officer, and, in the discretion of the
Board of Directors or the President, one or more Vice-Presidents and
such other officers as may be deemed necessary or advisable to carry on
the business of the Corporation. Any two or more offices may be held by
the same person.
4.2 Election; Term. Officers shall be elected by the Board of
Directors. The President may, from time to time, appoint other
officers. Officers elected by the Board of Directors shall hold office,
unless sooner removed, until the next annual meeting of the Board of
Directors or until their successors are elected. Officers appointed by
the President shall hold office, unless sooner removed, until their
successors are appointed. The action of the President in appointing
officers shall be reported to the next regular meeting of the Board of
Directors after it is taken. Any officer may resign at any time upon
written notice to the Board of Directors or the President and such
resignation shall be effective when notice is delivered unless the
notice specifies a later effective date.
4.3 Removal of Officers. The Board of Directors may remove any officer
at any time, with or without cause. The President may remove any
officer he appointed by the President at any time, with or without
cause. Such action shall be reported to the next regular meeting of the
Board of Directors after it is taken.
4.4 Duties of the President. The President shall be the Chief
Executive Officer of the Corporation and a member of the Board of
Directors. The President, in the absence of the Chairman of the Board
and the Vice Chairman of the Board, shall preside at all meetings of the
Board of Directors and shareholders, shall have power to call special
meetings of the shareholders and directors for any purpose; may hire,
appoint and discharge employees and agents of the Corporation and fix
their compensation; may make and sign deeds, mortgages, deeds of trust,
notes, leases, powers of attorney, contracts and agreements in the name
and on behalf of the Corporation; shall have power to carry into effect
all directions of the Board of Directors; and shall have general
supervision of the business of the Corporation, except as may be limited
by the Board of Directors, the Articles of Incorporation, or these
bylaws.
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4.5 Duties of the Vice President. Such Vice Presidents, in the order
designated by the Board of Directors from time to time, shall exercise
all of the functions of the President during the absence or incapacity
of the latter and shall perform such other duties as may be assigned to
them by the Board of Directors or the President.
4.6 Duties of the Secretary. The Secretary shall be the ex-officio
clerk of the Board of Directors and shall give, or cause to be given,
notices of all meetings of shareholders and directors, and all other
notices required by law or by these Bylaws. The Secretary shall record
the proceedings of the meetings of the shareholders, Board of Directors
and committees of the Board of Directors, in books kept for that purpose
and shall keep the seal of the Corporation and attach it to all
documents requiring such impression unless some other officer is
designated to do so by the Board of Directors. The Secretary shall also
perform such other duties as may be assigned by the Board of Directors
or the President.
4.7 Duties of the Chief Financial Officer. The Chief Financial
Officer shall keep or cause to be kept full and accurate books of
account, and may make and sign deeds, mortgages, deeds of trust, notes,
leases, contracts and agreements in the name and on behalf of the
Corporation. Whenever required by the Board of Directors or the
President, the Chief Financial Officer shall render a financial
statement showing all transactions of the Corporation and the financial
condition of the Corporation.
4.8 Duties of the Assistant Secretary. There may be one or more
Assistant Secretaries who shall exercise all of the functions of the
Secretary during the absence or incapacity of the latter and such other
duties as may be assigned from time to time by the Board of Directors or
the President.
4.9 Duties of Other Officers. The other officers of the Corporation,
which may include Assistant Vice Presidents, a Treasurer, Assistant
Treasurers, a Controller or Assistant Controllers, shall have such
authority and perform such duties as shall be prescribed by the Board of
Directors or by officers authorized by the Board of Directors to appoint
them to their respective offices. To the extent that such duties are
not so stated, such officers shall have such authority and perform the
duties which generally pertain to their respective offices, subject to
the control of the President or the Board of Directors.
4.10 Voting Securities of Other Corporations. Unless otherwise
provided by the Board of Directors, each of the President or the Chief
Financial Officer, in the name and on behalf of the Corporation, may
appoint from time to time himself or herself or any other person (or
persons) proxy, attorney or agent for the Corporation to cast the votes
which the Corporation may be entitled to cast as a shareholder, member
or otherwise in any other corporation, partnership or other legal
entity, domestic or foreign, whose stock, interests or other securities
are held by the Corporation, or to consent in writing to any action by
such other entity, or to exercise any or all other powers of this
Corporation as the holder of the stock, interests or other securities of
such other entity. Each of the President or the Chief Financial Officer
may instruct the person or persons so appointed as to the manner of
casting such votes or giving such consent and may execute or cause to be
executed on behalf of the Corporation and under its corporate seal such
written proxies, consents, waivers, or other instruments as may be
deemed necessary or proper. Each of the President or the Chief Financial
Officer may attend any meeting of the holders of stock, interests or
other securities of any such other entity and vote or exercise any or
all other powers of this Corporation as the holder of the stock,
interest or other securities of such other entity.
4.11 Compensation. The compensation of all officers of the
Corporation shall be fixed by the Board of Directors or the Compensation
and Personnel Committee.
<PAGE>
4.12 Bonds. The Board of Directors may require that any or all
officers, employees and agents of the Corporation give bond to the
Corporation, with sufficient sureties, conditioned upon the faithful
performance of the duties of their respective offices or positions.
ARTICLE V EVIDENCE OF SHARES
5.1 Form. Shares of the Corporation shall, when fully paid, be
evidenced by certificates containing such information as is required by
law and approved by the Board of Directors. Alternatively, the Board of
Directors may authorize the issuance of some or all shares without
certificates. In such event, within a reasonable time after issuance,
the Corporation shall mail to the shareholder a written confirmation of
its records with respect to such shares containing the information
required by law. When issued, certifi- cates shall be signed by the
Chairman of the Board, the President or a Vice President designated by
the Board and the Secretary or an Assistant Secretary and may (but need
not) be sealed with the seal of the Corporation. The seal of the
Corporation and any or all of the signatures on a share certificate may
be facsimile. If any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before
such certificate is issued, it may be issued by the Corporation with the
same effect as if such individual were such officer, transfer agent or
registrar on the date of issue.
5.2 Transfer. The Board of Directors may make rules and regulations
concerning the issue, registration and transfer of shares and/or
certificates representing the shares of the Corporation. Transfers of
shares and/or of the certificates representing such shares shall be made
upon the books of the Corporation by surrender of the certificates
representing such shares, if any, accompanied by written assignments
given by the record owners thereof or their attorneys-in-fact.
5.3 Restrictions on Transfer. A lawful restriction on the transfer
or registration of transfer of shares is valid and enforceable against
the holder or a transferee of the holder if the restriction complies
with the requirements of law and its existence is noted conspicuously on
the front or back of any certificate representing the shares or has been
otherwise communicated in accordance with the requirements of law.
Unless so noted or communicated, a restriction is not enforceable
against a person without knowledge of the restriction.
5.4 Lost or Destroyed Share Certificates. The Corporation may issue
a new share certificate or a written confirmation of its records with
respect to shares in the place of any certificate theretofore issued
which is alleged to have been lost or destroyed and may require the
owner of such certificate, or such owner's legal representative, to give
the Corporation a bond, with or without surety, or such other agreement,
undertaking or security as the Board of Directors shall determine is
appropriate, to indemnify the Corporation against any claim that may be
made against it on account of the alleged loss or destruction or the
issuance of any such new certificate.
5.5 Registered Shareholders. The Corporation shall be entitled to
treat the holder of record of any share or shares of stock as the owner
thereof and, accordingly, shall not be bound to recognize any equitable
or other claim to or interest in such share or shares on the part of any
other person. The Corporation shall not be liable for registering any
transfer of shares which are registered in the name of a fiduciary
unless done with actual knowledge of facts which would cause the
Corporation's action in registering the transfer to amount to bad faith.
<PAGE>
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.1 Certain Definitions. As used in these Bylaws, the term
"independent" has the following meaning: A director is considered to be
independent if the individual (i) is not currently a member of
management, (ii) has not been a member of management for at least five
years, (iii) is not employed on a part time or consulting basis by the
Company, (iv) has no direct, personal transaction in excess of $60,000
with the Company and (v) is not an owner of more than 10% of an entity
engaged in transactions with the Company exceeding 5% of the lesser of
the entity's or the Company's revenues.
6.2 Corporate Seal. The corporate seal of the Corporation shall be
circular and shall have inscribed thereon, within and around the
circumference, the name of the Corporation. In the center shall be the
word "SEAL".
6.3 Fiscal Year. The fiscal year of the Corporation shall begin on
the first day of March of each year and end on the last day of February
in the next succeeding year.
6.4 Amendments. The power to alter, amend or repeal the Bylaws or
adopt new bylaws shall be vested in the Board of Directors unless
otherwise provided in the Articles of Incorporation. Bylaws adopted by
the Board of Directors may be repealed or changed or new bylaws adopted
by the shareholders, and the shareholders may prescribe that any bylaw
adopted by them may not be altered, amended or repealed by the Board of
Directors.
6.5 General. Any matters not specifically covered by these Bylaws
shall be governed by the applicable provisions of the Code of Virginia
in force at the time.
