UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended May 31, 1999
Commission File Number 1-5767
CIRCUIT CITY STORES, INC.
(Exact Name of Registrant as Specified in its Charter)
VIRGINIA 54-0493875
(State of Incorporation) (I.R.S. Employer
Identification No.)
9950 MAYLAND DRIVE, RICHMOND, VIRGINIA 23233
(Address of Principal Executive Offices and Zip Code)
(804) 527-4000
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date.
<TABLE>
<S> <C>
Class Outstanding at June 30, 1999
Circuit City Stores, Inc. - Circuit City Group Common Stock, par value $0.50 202,834,088*
Circuit City Stores, Inc. - CarMax Group Common Stock, par value $0.50 23,576,733
</TABLE>
*Shares issued and outstanding for the Circuit City Group have been adjusted to
reflect a two-for-one stock split with record date June 30, 1999, paid on July
15, 1999.
The registrant hereby amends the following exhibit of its Form 10-Q for the
quarterly period of May 31, 1999.
Exhibits:
Exhibit 3(i)(b), Articles of Amendment to the Company's Amended
and Restated Articles of Incorporation, effective April 28, 1998,
filed herewith, replaces Exhibit 3(ii) previously filed with the
Form 10-Q.
Amended and Restated Articles of Incorporation of the Company,
effective February 3, 1997, re-filed herewith.
Articles of Amendment to the Company's Amended and Restated
Articles of Incorporation, effective June 22, 1999, re-filed
herewith.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(3) Articles of Incorporation and Bylaws
(i)(a) Amended and Restated Articles of
Incorporation of the Company, effective
February 3, 1997, filed herewith.
(i)(b) Articles of Amendment to the Company's
Amended and Restated Articles of
Incorporation, effective April 28, 1998,
filed herewith.
(i)(c) Articles of Amendment to the Company's
Amended and Restated Articles of
Incorporation, effective June 22, 1999,
filed herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
CIRCUIT CITY STORES, INC.
By: s/Richard L. Sharp
Richard L. Sharp
Chairman of the Board and
Chief Executive Officer
By: s/Michael T. Chalifoux
Michael T. Chalifoux
Executive Vice President,
Chief Financial Officer and
Corporate Secretary
By: s/Philip J. Dunn
Philip J. Dunn
Senior Vice President, Treasurer,
Corporate Controller and
Chief Accounting Officer
July 21, 1999
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Exhibit 3(i)(a)
CIRCUIT CITY STORES, INC.
AMENDED AND RESTATED ARTICLES OF INCORPORATION
ARTICLE I
NAME
The name of the Corporation is Circuit City Stores, Inc.
ARTICLE II
PURPOSES
The purpose for which the Corporation is organized is to engage in any
lawful business not required by the Virginia Stock Corporation Act to be stated
in the Articles of Incorporation.
The Corporation shall have all of the corporate powers of any character
which are not prohibited by law or required to be stated in the Articles of
Incorporation.
ARTICLE III
CAPITAL STOCK
A. Authorized Stock. The aggregate number of shares that the
Corporation shall have authority to issue and the par value per share are as
follows:
Class Number of Shares Par Value
Preferred 2,000,000 $20.00
Common 350,000,000 $ .50
B. Preemptive Rights. No holder of outstanding shares of any
class of stock shall have any preemptive right with respect to (i) any shares of
any class of stock of the Corporation or other security that the Corporation may
determine to issue, whether the shares of stock or other security to be issued
is now or hereafter authorized, (ii) any warrants, rights or options to purchase
any such stock or other security, or (iii) any obligations convertible into any
such stock or other security or into warrants, rights or options to purchase any
such stock or other security.
ARTICLE IV
PREFERRED STOCK
A. General. Certain provisions relating to the Preferred Stock
and the relative rights of the Preferred Stock and the holders of the
outstanding shares thereof, regardless of series, are set forth below.
(1) Issuance in Series. The Board of Directors is authorized
to issue the Preferred Stock from time to time in one or more series and to
provide for the relative rights and preferences of each series by the adoption
of a resolution or resolutions fixing:
(a) The maximum number of shares in a series and the
designation of the series, which designation shall distinguish the
shares thereof from the shares of any other series or class;
(b) The rate of dividend, the time of payment, whether
dividends shall be cumulative and if so, the dates from which they
shall be cumulative, and the extent of participation rights, if any;
(c) Any right to vote with holders of shares of any other
series or class and any right to vote as a class, either generally or
as a condition to specified corporate action; provided, however, that
no holder of shares of Preferred Stock shall ever be entitled to more
than one vote for each share held by him;
(d) The price at and the terms and conditions on which
shares may be redeemed;
(e) The amount payable upon shares in the event of
involuntary liquidation;
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(f) The amount payable upon shares in the event of voluntary
liquidation;
(g) Sinking fund provisions for the redemption or purchase of
shares; and
(h) The terms and conditions on which shares may be converted,
if the shares of any series are issued with the privilege of
conversion; and
(i) Any other designations, rights, preferences or limitations
that are now or hereafter permitted by the laws of the Commonwealth of
Virginia and are not inconsistent with the provisions of paragraph
(A)(1) of this Article.
(2) Articles of Amendment. Before the issuance of any shares
of a series of the Preferred Stock (other than shares for which provision is
already made in these Amended and Restated Articles of Incorporation), Articles
of Amendment establishing such series shall be filed with and made effective by
the State Corporation Commission of Virginia, as required by law.
(3) Parity of All Shares. All shares of the Preferred
Stock, regardless of series, shall be identical with each other in all respects
except as is permitted in paragraph (A)(1) of this Article.
(4) Definitions. As used herein the following terms
shall have the following meanings:
(a) "Capital Stock" means any capital stock of any class
or series (however designated) of the Corporation.
(b) "Common Stock" means the Common Stock of the
Corporation.
(c) "Dividends Accrued" means, with respect to the shares of
each series of the Preferred Stock an amount equal to the dividends
thereon at the annual dividend rate for such series computed from the
date of issue to the date to which reference is made, plus any
additional amounts provided by participation rights, whether or not
such amounts or any part thereof shall have been declared or set aside
to be paid and whether there shall be or have been any funds out of
which such amounts might legally be paid, less the amount of dividends
or participation rights declared and paid thereon.
(d) "Junior Stock" means any Capital Stock ranking, as to
dividends and as to rights in liquidation, dissolution or winding up of
the affairs of the Corporation, subordinate to the Preferred Stock.
(e) "Parity Stock" means any Capital Stock ranking, as to
dividends and as to rights in liquidation, dissolution or winding up of
the affairs of the Corporation, equally with the Preferred Stock.
(f) "Preferred Stock" means the Preferred Stock of the
Corporation.
(g) "Redemption" means any purchase or acquisition by the
Corporation, for a consideration, of shares of the Preferred Stock,
whether pursuant to an option of the Corporation or a sinking fund or
otherwise, if the holder of the Preferred Stock being acquired by the
Corporation is required to sell the shares the Corporation is acquiring
or if, as a result of any such purchase or acquisition, the Corporation
takes a credit against a sinking fund obligation.
(h) "Redemption Date" means the date fixed for the Redemption
of any shares of the Preferred Stock in a notice of Redemption given
pursuant to paragraph (A)(7) of this Article.
(i) "Redemption Price" means, with respect to the shares of
each series of the Preferred Stock, the price at which the Corporation
shall or may redeem such shares pursuant to the terms of the Articles
of Serial Designation for such series.
(j) "Subsidiary" means any corporation a majority of the
outstanding Voting Stock of which is owned, directly or indirectly, by
the Corporation or by the Corporation and one or more Subsidiaries.
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(k) "Voting Stock" means stock of any class (however
designated) having voting power for the election of a majority of the
board of directors (or other governing body) of a corporation, other
than stock having such powers only by reason of the happening of a
contingency.
(5) Dividends.
(a) The holders of outstanding shares of each series of the
Preferred Stock shall be entitled to receive, if, when and as declared
by the Board of Directors, out of funds legally available therefor,
cash dividends in accordance with the terms set forth in the amendment
to these Amended and Restated Articles of Incorporation establishing
such series.
(b) No dividends whatsoever shall be declared or paid upon, or
any sums set apart for the payment of dividends upon, any shares of
Preferred Stock or Parity Stock for any dividend period unless a like
proportionate dividend for the same dividend period (ratable in
proportion to the respective annual dividend rates) shall have been
declared and paid upon, or declared and a sufficient sum set apart for
the payment of such dividend upon, all outstanding shares of Preferred
Stock.
(c) Unless Dividends Accrued (to the extent that the amount
thereof shall have been determinable) on all outstanding shares of each
series of the Preferred Stock for all past dividend periods and the
then current period shall have been declared and paid, or declared and
a sum sufficient for the payment thereof set apart, and all mandatory
sinking fund payments required to be made pursuant to the terms of any
series of the Preferred Stock shall have been made in full, then (i) no
dividend whatsoever (other than a dividend payable solely in Junior
Stock) shall be declared or paid upon, or any sum set apart for the
payment of dividends upon, any shares of Junior Stock; (ii) no other
distribution shall be made upon any shares of Junior Stock; (iii) no
shares of Junior Stock shall be purchased, redeemed or otherwise
acquired for value by the Corporation or by any Subsidiary; and (iv) no
monies shall be paid into or set apart or made available for a sinking
or other like fund for the purchase, Redemption or other acquisition
for value of any shares of Junior Stock by the Corporation or any
Subsidiary.
(6) Voting Rights. No holder of outstanding shares of any
series of the Preferred Stock shall be entitled to vote for the election of
directors or upon any other matter, or to receive notice of or to participate in
any meeting of the stockholders of the Corporation, except (i) as hereinafter
provided or as provided in the amendment to these Amended and Restated Articles
of Incorporation establishing such series and (ii) as may be required by law.
(7) Redemption.
(a) Redemptions of outstanding shares of any series of the
Preferred Stock shall be made pursuant to the terms and conditions set
forth in these Amended and Restated Articles of Incorporation or in the
amendment thereto establishing such series and, unless they provide
otherwise, shall be made in the manner hereinbelow set forth.
(b) No less than thirty (30) nor more than sixty (60) days
prior to the Redemption Date notice of Redemption shall be given by
first class mail, postage prepaid, to the holders of record of the
outstanding shares of the Preferred Stock being redeemed at their last
known post office addresses shown in the Corporation's stock transfer
records. The notice of Redemption shall set forth the paragraph or
paragraphs of these Amended and Restated Articles of Incorporation (or
the amendment thereto establishing the series of which such shares are
a part) pursuant to which the shares are being redeemed, the number of
shares to be redeemed, the date fixed for Redemption, the Redemption
Price, and the place or places where certificates representing shares
to be redeemed may be surrendered. In case less than all of the
outstanding shares of a series are to be redeemed (i) the shares to be
redeemed shall be selected by lot or redeemed ratably or in such other
equitable manner as the Board of Directors may determine, and (ii) the
notice of Redemption shall set forth the numbers of the certificates
representing shares to be redeemed and, if less than all of the shares
represented by any such certificate are to be redeemed, the number of
shares to be redeemed which are represented by such certificate.
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<PAGE>
(c) If notice of Redemption of any outstanding shares of any
series of the Preferred Stock shall have been duly mailed as
hereinabove provided, then on or before the Redemption Date the
Corporation shall deposit cash sufficient to pay the Redemption Price
of such shares in trust for the Benefit of the holders of the shares to
be redeemed in any bank or trust company in the City of Richmond,
Virginia, having capital and surplus aggregating at least $50,000,000
as of the date of its most recent report of financial condition and
named in such notice, with irrevocable instructions and authority to
apply such amount to the Redemption of the shares so called for
Redemption against surrender for cancellation of the certificates
representing such shares. From and after the time of such deposit all
shares for the Redemption of which such deposit shall have been so made
shall, whether or not the certificates therefor shall have been
surrendered for cancellation, be no longer deemed to be outstanding for
any purpose and all rights with respect to such shares shall thereupon
cease and terminate except the right to receive payment of the
Redemption Price, but without interest. Any interest accrued on such
funds shall be paid to the Corporation from time to time. Any fund so
deposited and unclaimed at the end of five years from the Redemption
Date shall be repaid to the Corporation, free of trust, and the holders
of the shares called for Redemption who shall not have surrendered
their certificates representing such shares prior to such repayment
shall be deemed to be unsecured creditors of the Corporation for the
amount of the Redemption Price and shall look only to the Corporation
for payment thereof, without interest, subject to the laws of the
Commonwealth of Virginia.
(d) The Corporation shall also have the right to acquire
outstanding shares of any series of the Preferred Stock otherwise than
by Redemption, from time to time, for such consideration as may be
acceptable to the holders thereof; provided, however, that if all
Dividends Accrued on all outstanding shares of such series shall not
have been declared and paid or declared and a sum sufficient for the
payment thereof set apart, neither the Corporation nor any Subsidiary
shall so acquire any shares of such series except in accordance with a
purchase offer made on the same terms to all the holders of the
outstanding shares of such series.
(e) Shares of any series of the Preferred Stock purchased,
redeemed or otherwise acquired by the Corporation shall constitute
authorized but unissued shares of Preferred Stock but undesignated as
to series, as provided by law, and, unless otherwise provided in these
Amended and Restated Articles of Incorporation or in the amendment
thereto establishing such series of the Preferred Stock, may be
reissued by the Corporation.
(8) Liquidation. In the event of the voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation, the
holders of shares of each series of the Preferred Stock then outstanding shall
be entitled to be paid in cash out of the net assets of the Corporation,
including its capital, an amount equal to the Redemption Price and no more,
before any distribution or payment shall be made to the holders of shares of
Junior Stock and, after payment to the holders of the outstanding shares of each
series of the Preferred Stock of the amounts to which they are respectively
entitled, the balance of such assets, if any, shall be paid to the holders of
Junior Stock according to their respective rights. For the purposes of the
preceding sentence, neither the consolidation of the Corporation with nor the
merger of the Corporation into any other corporation, nor the sale, lease or
other disposition of all or substantially all of the Corporation's properties
and assets shall, without further corporate action, be deemed a liquidation,
dissolution or winding up of the affairs of the Corporation. If the net assets
of the Corporation are insufficient to pay the holders of the outstanding shares
of each series of the Preferred Stock the full amounts to which they are
respectively entitled, the entire net assets of the Corporation remaining shall
be distributed ratably to the holders of the outstanding shares of the Preferred
Stock in proportion to the full amounts to which they are respectively entitled.
(9) Conflicting Provisions. Subsequent to the date these
Amended and Restated Articles of Incorporation become effective the Corporation
may issue one or more series of Preferred Stock. In the event that any of the
foregoing provisions of these Amended and Restated Articles of Incorporation
conflict with the provisions of the amendment thereto establishing a series of
the Preferred Stock, then, as to such series, the
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specific provisions which relate to it, and not the general provisions
hereinabove set forth, shall control.
C. Series E Preferred Stock.
The Board of Directors of the Corporation has heretofore designated
500,000 shares of the Preferred Stock as the Cumulative Participating Preferred
Stock, Series E ("Series E Stock"). Such number may from time to time be
decreased (but not below the number of shares of Series E Stock then
outstanding) by the Board of Directors of the Corporation. In addition to any
relative rights and preferences hereinabove granted, the relative rights and
preferences of such series and the holders of the outstanding shares thereof are
as set forth in paragraphs (C)(1) through (C)(5) of this Article.
(1) Dividends and Distributions.
(a) The holders of shares of the Series E Stock, in preference
to the holders of shares of the Circuit City Stock and the CarMax Stock
and of any other junior stock, shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the
fifteenth day (or, if not a business day, the preceding business day)
of January, April, July and October in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing
on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of the Series E Stock, in an amount
per share (rounded to the nearest cent) equal to the greater of (a)
$1.00 or (b) subject to the provision for adjustment hereinafter set
forth, 400 times the aggregate per share amount of all cash dividends,
and 400 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions, other than a dividend
payable in shares of Circuit City Stock, or a subdivision of the
outstanding shares of Circuit City Stock (by reclassification or
otherwise), declared on the Circuit City Stock since the immediately
preceding Quarterly Dividend Payment Date or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of any share
or fraction of a share of the Series E Stock. In the event the
Corporation shall at any time after January 1, 1997 declare or pay any
dividend on Circuit City Stock payable in shares of Circuit City Stock,
or effect a subdivision or combination or consolidation of the
outstanding shares of Circuit City Stock (by reclassification or
otherwise than by payment of a dividend in shares of Circuit City
Stock) into a greater or lesser number of shares of Circuit City Stock,
then in each such case the amount per share to which holders of shares
of the Series E Stock shall be entitled under clause (b) of the
preceding sentence shall be adjusted by multiplying the amount per
share to which holders of shares of the Series E Stock were entitled
immediately prior to such event under clause (b) of the preceding
sentence by a fraction the numerator of which is the number of shares
of Circuit City Stock outstanding immediately after such event and the
denominator of which is the number of shares of Circuit City Stock that
were outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution
on the Series E Stock as provided in paragraph (C)(1)(a) of this
Article immediately after it declares a dividend or distribution on the
Circuit City Stock (other than a dividend payable in shares of Circuit
City Stock); provided that, in the event no dividend or distribution
shall have been declared on the Circuit City Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on the
Series E Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of the Series E Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of the
Series E Stock, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of shares of the Series E Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to accrue
and be cumulative from such Quarterly Dividend Payment Date. Accrued
but unpaid dividends shall not
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bear interest. Dividends paid on the shares of the Series E Stock in an
amount less than the total amount of such dividends at the time accrued
and payable on such shares shall be allocated pro rata on a
share-byshare basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination of
holders of shares of the Series E Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be
not more than 60 days prior to the date fixed for the payment thereof.
(2) Voting Rights. Except to the extent provided by law, the
holders of shares of the Series E Stock shall not be entitled (i) to vote on any
matter or (ii) to receive notice of, or to participate in, any meeting of
shareholders of the Corporation at which they are not entitled to vote.
(3) Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Series E Stock as provided in paragraph
(C)(1) of this Article are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not declared, on
shares of the Series E Stock outstanding shall have been paid in full,
the Corporation shall not:
(i) declare, set apart or pay dividends on or make
any other distributions on the Common Stock or any shares of
stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series E Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series E Stock, except dividends paid
ratably on the Series E Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then
entitled; or
(iii) redeem or purchase or otherwise acquire for
consideration shares of the Series E Stock, any such parity
stock or any stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) with the Series E
Stock, or set aside for or pay to any sinking fund therefor.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (C)(3)(a) of this Article, purchase or otherwise acquire such
shares at such time and in such manner.
(4) Reacquired Shares. Any shares of the Series E Stock
redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock, par value $20.00 per share, and may be
reissued as a new series or a part of a new series of Preferred Stock to be
created by resolution or resolutions of the Board of Directors or as part of an
existing series of Preferred Stock.
(5) Redemption.
(a) The Corporation may, at its option and at any time and
from time to time after April 29, 2048, redeem all or any portion of
the outstanding shares of Series E Stock.
(b) The redemption price shall be an amount per share equal to
the greater of (i) $14,000 or (ii) subject to the provision for
adjustment hereinafter set forth, 400 times the current market price
per share of Circuit City Stock on the date fixed for redemption, plus
in each such case an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date fixed for
redemption. The current market price per share of Circuit City Stock on
any date shall be deemed to be the average of the daily closing prices
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per share of such Circuit City Stock for the 30 consecutive trading
days immediately prior to such date. 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 ("NYSE")
or, if the Common Stock is not listed or admitted to trading on the
NYSE, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national
securities exchange on which the Circuit City Stock is listed or
admitted to trading or, if the Circuit City Stock is 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
Systems ("NASDAQ") or such other system then in use, or, if on any such
date the Circuit City Stock is 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 Circuit City Stock. If
no professional market maker is then making a market in the Circuit
City Stock, the current market price per share of the Circuit City
Stock shall be deemed to be $1.00. As used herein, the term trading day
shall mean a day on which the principal national securities exchange on
which the Circuit City Stock is listed or admitted to trading is open
for the transaction of business or, if the Circuit City Stock is not
listed or admitted to trading on any national securities exchange, a
business day. In the event the Corporation shall at any time after
January 1, 1997 declare or pay any dividend on Common Stock payable in
shares of Circuit City Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Circuit City Stock) into a greater or lesser number of shares of
Circuit City Stock, then in each such case the aggregate amount per
share to which holders of shares of the Series E Stock shall be
entitled under the provisions of the first sentence of this paragraph
shall be adjusted by multiplying the amount per share to which holders
of shares of the Series E Stock should have been entitled immediately
prior to such event under the provisions of the first sentence of this
paragraph by a fraction the numerator of which is the number of shares
of Circuit City Stock outstanding immediately after such event and the
denominator of which is the number of shares of Circuit City Stock that
were outstanding immediately prior to such event.
(c) In case less than all of the outstanding shares of Series
E Stock are to be redeemed, not more than 60 days prior to the date
fixed for redemption the Corporation shall select the shares to be
redeemed. Such shares shall be selected by lot or designated ratably or
in such other equitable manner as the Corporation may determine. The
Corporation in its discretion may select the particular certificates
(if there are more than one) representing shares registered in the name
of a holder that are to be redeemed.
(d) Not less than 30 nor more than 60 days prior to the date
fixed for redemption, notice of redemption shall be given by first
class mail, postage prepaid, to the holders of record of the
outstanding shares of the Series E Stock to be redeemed at their last
known addresses shown in the Corporation's share transfer records. The
notice of redemption shall set forth the paragraph of this Article
pursuant to which the shares are being redeemed, the number of shares
to be redeemed, the date fixed for redemption, the applicable
redemption price, and the place or places where certificates
representing shares to be redeemed may be surrendered. In case less
than all of the outstanding shares of the Series E Stock are to be
redeemed the notice of redemption shall also set forth the numbers of
the certificates representing shares to be redeemed and, in case less
than all shares represented by any such certificate are to be redeemed,
the number of shares represented by such certificate to be redeemed.
(e) If notice of redemption of any outstanding shares of
Series E Stock shall have been duly mailed as herein provided, then on
or before the date fixed for redemption the Corporation shall deposit
cash sufficient to pay the redemption price of such shares in trust for
the benefit of the holders of the shares to be redeemed with any bank
or trust company in the City of Richmond, Commonwealth of Virginia,
having
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capital and surplus aggregating at least $50,000,000 as of the date of
its most recent report of financial condition and named in such notice,
to be applied to the redemption of the shares so called for redemption
against surrender for cancellation of the certificates representing
such shares. From and after the time of such deposit all shares for the
redemption of which such deposit shall have been made shall, whether or
not the certificates therefor shall have been surrendered for
cancellation, no longer be deemed to be outstanding for any purpose,
and all rights with respect to such shares shall thereupon cease and
terminate except the right to receive payment of redemption price but
without interest. Any interest earned on funds so deposited shall be
paid to the Corporation from time to time. Any funds so deposited and
unclaimed at the end of five years from the date fixed for redemption
shall be repaid to the Corporation, free of trust, and the holders of
the shares called for redemption who shall not have surrendered their
certificates representing such shares prior to such repayment shall be
deemed to be unsecured creditors of the Corporation for the amount of
the redemption price and shall look only to the Corporation for payment
thereof, without interest, subject to the laws of the Commonwealth of
Virginia.
(f) The Corporation shall also have the right to acquire
outstanding shares of Series E Stock otherwise than by redemption
pursuant to paragraph (C)(5)(a) of this Article, from time to time for
such consideration as may be acceptable to the holders thereof;
provided, however, that if all dividends accrued on all outstanding
shares of Series E Stock shall not have been declared and paid or
declared and a sum sufficient for the payment thereof set apart,
neither the Corporation nor any subsidiary shall so acquire any shares
of Series E Stock except in accordance with a purchase offer made on
the same terms to all the holders of the outstanding shares of Series E
Stock.
D. Series F Preferred Stock.
The Board of Directors of the Corporation has heretofore designated
500,000 shares of the Preferred Stock as the Cumulative Participating Preferred
Stock, Series F ("Series F Stock"). Such number may from time to time be
decreased (but not below the number of shares of Series F Stock then
outstanding) by the Board of Directors of the Corporation. In addition to any
relative rights and preferences hereinabove granted, the relative rights and
preferences of such series and the holders of the outstanding shares thereof are
as set forth in paragraphs (D)(1) through (D)(5) of this Article.
(1) Dividends and Distributions.
(a) The holders of shares of the Series F Stock, in preference
to the holders of shares of the Circuit City Stock and the CarMax Stock
and of any other junior stock, shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the
fifteenth day (or, if not a business day, the preceding business day)
of January, April, July and October in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing
on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of the Series F Stock, in an amount
per share (rounded to the nearest cent) equal to the greater of (a)
$1.00 or (b) subject to the provision for adjustment hereinafter set
forth, 400 times the aggregate per share amount of all cash dividends,
and 400 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions, other than a dividend
payable in shares of CarMax Stock, or a subdivision of the outstanding
shares of CarMax Stock (by reclassification or otherwise), declared on
the CarMax Stock since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of
the Series F Stock. In the event the Corporation shall at any time
after January 1, 1997 declare or pay any dividend on CarMax Stock
payable in shares of CarMax Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of CarMax Stock
(by reclassification or otherwise than by payment of a dividend in
shares of CarMax Stock) into a greater or lesser number of shares of
CarMax Stock, then in each such case the
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amount per share to which holders of shares of the Series F Stock shall
be entitled under clause (b) of the preceding sentence shall be
adjusted by multiplying the amount per share to which holders of shares
of the Series F Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence by a fraction the numerator
of which is the number of shares of CarMax Stock outstanding
immediately after such event and the denominator of which is the number
of shares of CarMax Stock that were outstanding immediately prior to
such event.
(b) The Corporation shall declare a dividend or distribution
on the Series F Stock as provided in paragraph (D)(1)(a) of this
Article immediately after it declares a dividend or distribution on the
CarMax Stock (other than a dividend payable in shares of CarMax Stock);
provided that, in the event no dividend or distribution shall have been
declared on the CarMax Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $1.00 per share on the Series F Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of the Series F Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of the
Series F Stock, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of shares of the Series F Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to accrue
and be cumulative from such Quarterly Dividend Payment Date. Accrued
but unpaid dividends shall not bear interest. Dividends paid on the
shares of the Series F Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-byshare basis among all such shares at
the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of the Series F Stock entitled
to receive payment of a dividend or distribution declared thereon,
which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
(2) Voting Rights. Except to the extent provided by law, the
holders of shares of the Series F Stock shall not be entitled (i) to vote on any
matter or (ii) to receive notice of, or to participate in, any meeting of
shareholders of the Corporation at which they are not entitled to vote.
(3) Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Series F Stock as provided in paragraph
(C)(1) of this Article are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not declared, on
shares of the Series F Stock outstanding shall have been paid in full,
the Corporation shall not:
(i) declare, set apart or pay dividends on or make
any other distributions on the Common Stock or any shares of
stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series F Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series F Stock, except dividends paid
ratably on the Series F Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then
entitled; or
(iii) redeem or purchase or otherwise acquire for
consideration shares of the Series F Stock, any such parity
stock or any stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) with the Series F
Stock, or set aside for or pay to any sinking fund therefor.
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(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (D)(3)(a) of this Article, purchase or otherwise acquire such
shares at such time and in such manner.
(4) Reacquired Shares. Any shares of the Series F Stock
redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock, par value $20.00 per share, and may be
reissued as a new series or a part of a new series of Preferred Stock to be
created by resolution or resolutions of the Board of Directors or as part of an
existing series of Preferred Stock.
(5) Redemption.
(a) The Corporation may, at its option and at any time and
from time to time after April 29, 2048, redeem all or any portion of
the outstanding shares of Series F Stock.
(b) The redemption price shall be an amount per share equal to
the greater of (i) $8,800 or (ii) subject to the provision for
adjustment hereinafter set forth, 400 times the current market price
per share of CarMax Stock on the date fixed for redemption, plus in
each such case an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date fixed for
redemption. The current market price per share of CarMax Stock on any
date shall be deemed to be the average of the daily closing prices per
share of such CarMax Stock for the 30 consecutive trading days
immediately prior to such date. 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 ("NYSE") or, if the
Common Stock is not listed or admitted to trading on the NYSE, as
reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities
exchange on which the CarMax Stock is listed or admitted to trading or,
if the CarMax Stock is 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 Systems ("NASDAQ") or
such other system then in use, or, if on any such date the CarMax Stock
is 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 CarMax Stock. If no professional market maker is then
making a market in the CarMax Stock, the current market price per share
of the CarMax Stock shall be deemed to be $1.00. As used herein, the
term trading day shall mean a day on which the principal national
securities exchange on which the CarMax Stock is listed or admitted to
trading is open for the transaction of business or, if the CarMax Stock
is not listed or admitted to trading on any national securities
exchange, a business day. In the event the Corporation shall at any
time after January 1, 1997 declare or pay any dividend on Common Stock
payable in shares of CarMax Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a dividend in
shares of CarMax Stock) into a greater or lesser number of shares of
CarMax Stock, then in each such case the aggregate amount per share to
which holders of shares of the Series F Stock shall be entitled under
the provisions of the first sentence of this paragraph shall be
adjusted by multiplying the amount per share to which holders of shares
of the Series F Stock should have been entitled immediately prior to
such event under the provisions of the first sentence of this paragraph
by a fraction the numerator of which is the number of shares of CarMax
Stock outstanding immediately after such event and the denominator of
which is the number of shares of CarMax Stock that were outstanding
immediately prior to such event.
(c) In case less than all of the outstanding shares of Series
F Stock are to be redeemed, not more than 60 days prior to the date
fixed for redemption the Corporation shall select the shares to be
redeemed. Such shares shall be selected by lot or designated ratably or
in such
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other equitable manner as the Corporation may determine. The
Corporation in its discretion may select the particular certificates
(if there are more than one) representing shares registered in the name
of a holder that are to be redeemed.
(d) Not less than 30 nor more than 60 days prior to the date
fixed for redemption, notice of redemption shall be given by first
class mail, postage prepaid, to the holders of record of the
outstanding shares of the Series F Stock to be redeemed at their last
known addresses shown in the Corporation's share transfer records. The
notice of redemption shall set forth the paragraph of this Article
pursuant to which the shares are being redeemed, the number of shares
to be redeemed, the date fixed for redemption, the applicable
redemption price, and the place or places where certificates
representing shares to be redeemed may be surrendered. In case less
than all of the outstanding shares of the Series F Stock are to be
redeemed the notice of redemption shall also set forth the numbers of
the certificates representing shares to be redeemed and, in case less
than all shares represented by any such certificate are to be redeemed,
the number of shares represented by such certificate to be redeemed.
(e) If notice of redemption of any outstanding shares of
Series F Stock shall have been duly mailed as herein provided, then on
or before the date fixed for redemption the Corporation shall deposit
cash sufficient to pay the redemption price of such shares in trust for
the benefit of the holders of the shares to be redeemed with any bank
or trust company in the City of Richmond, Commonwealth of Virginia,
having capital and surplus aggregating at least $50,000,000 as of the
date of its most recent report of financial condition and named in such
notice, to be applied to the redemption of the shares so called for
redemption against surrender for cancellation of the certificates
representing such shares. From and after the time of such deposit all
shares for the redemption of which such deposit shall have been made
shall, whether or not the certificates therefor shall have been
surrendered for cancellation, no longer be deemed to be outstanding for
any purpose, and all rights with respect to such shares shall thereupon
cease and terminate except the right to receive payment of redemption
price but without interest. Any interest earned on funds so deposited
shall be paid to the Corporation from time to time. Any funds so
deposited and unclaimed at the end of five years from the date fixed
for redemption shall be repaid to the Corporation, free of trust, and
the holders of the shares called for redemption who shall not have
surrendered their certificates representing such shares prior to such
repayment shall be deemed to be unsecured creditors of the Corporation
for the amount of the redemption price and shall look only to the
Corporation for payment thereof, without interest, subject to the laws
of the Commonwealth of Virginia.
(f) The Corporation shall also have the right to acquire
outstanding shares of Series F Stock otherwise than by redemption
pursuant to paragraph (D)(5)(a) of this Article, from time to time for
such consideration as may be acceptable to the holders thereof;
provided, however, that if all dividends accrued on all outstanding
shares of Series F Stock shall not have been declared and paid or
declared and a sum sufficient for the payment thereof set apart,
neither the Corporation nor any subsidiary shall so acquire any shares
of Series F Stock except in accordance with a purchase offer made on
the same terms to all the holders of the outstanding shares of Series F
Stock.
ARTICLE V
COMMON STOCK
A. General. Certain provisions relating to the Common Stock and
the relative rights of the Common Stock and the holders of the outstanding
shares thereof, regardless of series, are set forth below.
(1) Issuance in Series. The Board of Directors, by an adoption
of an amendment of these Amended and Restated Articles of Incorporation, may
fix, in whole or part, the preferences, limitations and relative rights, within
the limits set forth in applicable law, of one or more series of Common Stock of
the Corporation before the issuance of any shares of that series.
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(2) Parity of All Shares. All shares of Common Stock,
regardless of series, shall be identical with each other in all respects except
as is permitted in paragraph (A)(1) of this Article.
B. Circuit City Stock and Carmax Stock.
(1) Designation of Series; Number of Shares of Each Series.
One series of Common Stock is hereby designated as "Circuit City Stores, Inc.
- - -Circuit City Group Common Stock" ("Circuit City Stock") consisting of
175,000,000 shares and a second series of Common Stock is hereby designated as
"Circuit City Stores, Inc. -- CarMax Group Common Stock" ("CarMax Stock")
consisting of 175,000,000 shares. The number of shares of each such series may
from time to time be increased (but not above the total number of authorized
shares of the class of Common Stock) or decreased (but not below the number of
shares of such series then outstanding) by the Board of Directors of the
Corporation.
(2) Dividends Subject to any preferences, limitations and
relative rights of any outstanding series of the Preferred Stock and any
qualifications or restrictions on the Common Stock created thereby, dividends
may be declared and paid upon the Circuit City Stock and the CarMax Stock, upon
the terms with respect to each such series, and subject to the limitations
provided for below in this paragraph B(2) of this Article, as the Board of
Directors may determine.
(a) Dividends on Circuit City Stock. Dividends on Circuit
City Stock may be declared and paid only out of the lesser of (i) the
assets legally available therefor and (ii) the Circuit City Group
Available Dividend Amount.
(b) Dividends on Carmax Stock. Dividends on CarMax Stock may
be declared and paid only out of the lesser of (i) the assets legally
available therefor and (ii) the CarMax Group Available Dividend Amount.
(c) Discrimination in Dividends Between Series of Common
Stock. The Board of Directors, subject to the provisions of paragraphs
B(2)(a) and B(2)(b) of this Article, may at any time declare and pay
dividends exclusively on Circuit City Stock, exclusively on CarMax
Stock or on both such series, in equal or unequal amounts,
notwithstanding the relative amounts of the Circuit City Group
Available Dividend Amount and the CarMax Group Available Dividend
Amount, the amount of dividends previously declared on each series, the
respective voting or liquidation rights of each series or any other
factor.
(d) Share Distributions. Subject to paragraphs B(2)(a) and
B(2)(b) of this Article, as the case may be, and except as permitted by
paragraphs B(5)(a) and B(5)(b)(ii)(2) of this Article, the Board of
Directors may declare and pay dividends or distributions of shares of
the Common Stock (or Convertible Securities convertible into or
exchangeable or exercisable for shares of the Common Stock) on shares
of the Common Stock or shares of the Preferred Stock only as follows:
(i) dividends or distributions of shares of Circuit
City Stock (or Convertible Securities convertible into or
exchangeable or exercisable for shares of Circuit City Stock)
on shares of Circuit City Stock or shares of the Preferred
Stock attributed to the Circuit City Group;
(ii) dividends or distributions of shares of CarMax
Stock (or Convertible Securities convertible into or
exchangeable or exercisable for shares of CarMax Stock) on
shares of CarMax Stock or shares of the Preferred Stock
attributed to the CarMax Group; and
(iii) dividends or distributions of shares of CarMax
Stock (or Convertible Securities convertible into or
exchangeable or exercisable for shares of CarMax Stock) on
shares of Circuit City Stock or shares of the Preferred Stock
attributed to the Circuit City Group, but only if the sum of
(1) the number of shares of CarMax Stock to be so issued (or
the number of such shares which would be issuable upon
conversion, exchange or exercise of any Convertible Securities
to be so issued) and (2) the number of shares of CarMax Stock
which are issuable upon conversion, exchange or exercise of
any Convertible Securities then outstanding that are
attributed in accordance with this Article to
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the Circuit City Group is less than or equal to the Number of
Shares Issuable with Respect to the Inter-Group Interest.
For purposes of this paragraph B(2)(d) of this Article, any
outstanding Convertible Securities that are convertible into or
exchangeable or exercisable for any other Convertible Securities which
are themselves convertible into or exchangeable or exercisable for
Circuit City Stock or CarMax Stock (or other Convertible Securities
that are so convertible, exchangeable or exercisable) shall be deemed
to have been converted, exchanged or exercised in full for such
Convertible Securities.
(3) Voting Rights. Except as otherwise provided by law or by the terms
of any outstanding series of Preferred Stock or any provision of these Amended
and Restated Articles of Incorporation restricting the power to vote on a
specified matter to other shareholders, the entire voting power of the
shareholders of the Corporation shall be vested in the holders of the Common
Stock, who shall be entitled to vote on any matter on which the holders of stock
of the Corporation shall, by law or by the provisions of these Amended and
Restated Articles of Incorporation or Bylaws of the Corporation, be entitled to
vote, and both series of the Common Stock shall vote thereon together as a
single voting group. On each matter to be voted on by the holders of both series
of the Common Stock voting together as a single voting group, (i) each
outstanding share of Circuit City Stock shall have one vote and (ii) each
outstanding share of CarMax Stock shall have a number of votes (including a
fraction of one vote) equal to the number of votes determined by the ratio of
the weighted average during the 20 Trading Days ending on the tenth Trading Day
prior to the record date for determining the shareholders entitled to vote of
the Market Value of the CarMax Stock to the weighted average over the same 20
Trading Days of the Market Value of the Circuit City Stock, expressed as a
decimal fraction rounded to the nearest three decimal places, determined as
follows: (A) the numerator of such fraction shall be the sum of (1) four times
the average Market Value of the CarMax Stock over the period of five Trading
Days ending on such tenth Trading Day prior to such record date, (2) three times
the average Market Value of the CarMax Stock over the period of five Trading
Days ending on the 15th Trading Day prior to such record date, (3) two times the
average Market Value of the CarMax Stock over the period of five Trading Days
ending on the 20th Trading Day prior to such record date and (4) the average
Market Value of the CarMax Stock over the period of five Trading Days ending on
the 25th Trading Day prior to such record date and (B) the denominator of such
fraction shall be the sum of (1) four times the average Market Value of the
Circuit City Stock over the period of five Trading Days ending on such tenth
Trading Day prior to such record date, (2) three times the average Market Value
of the Circuit City Stock over the period of five Trading Days ending on the
15th Trading Day prior to such record date, (3) two times the average Market
Value of the Circuit City Stock over the period of five Trading Days ending on
the 20th Trading Day prior to such record date and (4) the average Market Value
of the Circuit City Stock over the period of five Trading Days ending on the
25th Trading Day prior to such record date.
Notwithstanding the foregoing provisions of this paragraph B(3) of this
Article, if shares of only one series of the Common Stock are outstanding on the
record date for determining the common shareholders entitled to vote on any
matter, then each share of that series shall be entitled to one vote and, if
either series of the Common Stock is entitled to vote as a separate voting group
with respect to any matter, each share of that series shall, for purpose of such
vote, be entitled to one vote on such matter.
In addition to any provision of law or any provision of these Amended
and Restated Articles of Incorporation entitling the holders of outstanding
shares of Circuit City Stock or CarMax Stock to vote as a separate voting group,
the Board of Directors may condition the approval of any matter submitted to
shareholders on receipt of a separate vote of the holders of outstanding shares
of Circuit City Stock or CarMax Stock.
(4) Liquidation Rights. In the event of any voluntary or involuntary
liquidation, dissolution or termination of the Corporation, after payment or
provision for payment of the debts and other liabilities of the Corporation and
the full preferential amounts (including any accumulated and unpaid dividends)
to which the holders of any outstanding shares of the Preferred Stock are
entitled (regardless of the Group to which such shares of the Preferred Stock
were attributed), the holders of the Circuit City Stock and CarMax Stock shall
be entitled to receive the assets, if any, of the Corporation remaining for
distribution to holders of the Common Stock on a per
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share basis in proportion to the respective liquidation units per share of such
series. Each share of Circuit City Stock shall have one liquidation unit and
each share of CarMax Stock shall have .5 of a liquidation unit. Neither a merger
nor share exchange of the Corporation into or with any other company, nor a
merger or share exchange of any other company into or with the Corporation, nor
a sale, lease, exchange or other disposition of all or any part of the assets of
the Corporation, shall, alone, be deemed a liquidation of the Corporation, or
cause the dissolution of the Corporation, for purposes of this paragraph (B)(4)
of this Article.
If the Corporation shall in any manner subdivide (by stock split,
reclassification or otherwise) or combine (by reverse stock split,
reclassification or otherwise) the outstanding shares of Circuit City Stock or
CarMax Stock, or declare a dividend or other distribution in shares of either
series to holders of such series, the per share liquidation units of either
series of the Common Stock specified in the preceding paragraph of this
paragraph B(4) of this Article, as adjusted from time to time, shall be
appropriately adjusted, as determined by the Board of Directors, so as to avoid
dilution in the aggregate, relative liquidation rights of the shares of any
series of the Common Stock.
(5) Conversion or Redemption of the Common Stock. The Circuit City
Stock is subject to conversion or redemption and the CarMax Stock is subject to
conversion or redemption upon the terms provided below in this paragraph B(5) of
this Article; provided, however, that neither series of the Common Stock may be
converted or redeemed if the other series has been converted or redeemed in its
entirety or notice thereof shall have been given as required by this paragraph
B(5) of this Article.
(a) Mandatory and Optional Conversion and Redemption of Common
Stock Other than for Subsidiary Stock. (i) In the event of the
Disposition, in one transaction or a series of related transactions, by
the Corporation and/or its subsidiaries of all or substantially all of
the properties and assets attributed to either Group to one or more
persons or entities (other than (1) the Disposition by the Corporation
of all or substantially all its properties and assets in one
transaction or a series of related transactions in connection with the
liquidation, dissolution or termination of the Corporation and the
distribution of assets to shareholders as referred to in paragraph B(4)
of this Article, (2) the Disposition of the properties and assets of
either Group as contemplated by paragraph B(5)(b) of this Article or
otherwise to all holders of shares of such Group divided among such
holders on a pro rata basis in accordance with the number of shares of
stock issued in respect of such Group outstanding and, in the case of a
Disposition of the properties and assets attributed to the CarMax
Group, to the Corporation or subsidiaries thereof, divided among such
holders and the Corporation or subsidiaries thereof on a pro rata basis
in accordance with the number of shares of stock issued in respect of
such Group outstanding and the Number of Shares Issuable with Respect
to the Inter-Group Interest, (3) to any person or entity controlled (as
determined by the Board of Directors) by the Corporation or (4) in
connection with a Related Business Transaction), the Corporation shall,
on or prior to the 85th Trading Day after the date of consummation of
such Disposition (the "Disposition Date"), pay a dividend on the series
of the Common Stock relating to the Group subject to such Disposition
or redeem some or all of such Common Stock or convert such Common Stock
into Common Stock relating to the other Group (or another class or
series of common stock of the Corporation), all as provided by the
following paragraphs B(5)(a)(i)(1) and B(5)(a)(i)(2) of this Article
and, to the extent applicable, by paragraph B(5)(d) of this Article, as
the Board of Directors shall have selected among such alternatives:
(1) provided that there are assets legally available therefor:
(a) pay to the holders of the shares of the series of
the Common Stock relating to the Group subject to such
disposition a dividend, as the Board of Directors shall have
declared subject to compliance with paragraph B(2) of this
Article, in cash and/or in securities (other than a dividend
of the Common Stock) or other property having a Fair Value as
of the Disposition Date in the aggregate equal to (I) in the
case of a Disposition of the properties and assets attributed
to the Circuit City Group, the Fair Value of the Net Proceeds
of such Disposition and (II) in the case of a Disposition of
the properties and assets attributed to the CarMax Group, the
product of the Outstanding CarMax Fraction
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as of the record date for determining holders entitled to
receive such dividend multiplied by the Fair Value of the Net
Proceeds of such Disposition; or
(b)(I) subject to the last sentence of this paragraph
B(5)(a)(i) of this Article, if such Disposition involves all
(not merely substantially all) of the properties and assets
attributed to such Group, redeem as of the Redemption Date
provided by paragraph B(5)(d)(iii), all outstanding shares of
the Common Stock relating to the Group subject to such
Disposition in exchange for cash and/or for securities (other
than the Common Stock) or other property having a Fair Value
as of the Disposition Date in the aggregate equal to (A) in
the case of a Disposition of the properties and assets
attributed to the Circuit City Group, the Fair Value of the
Net Proceeds of such Disposition and (B) in the case of a
Disposition of the properties and assets attributed to the
CarMax Group, the product of the Outstanding CarMax Fraction
as of such Redemption Date multiplied by the Fair Value of the
Net Proceeds of such Disposition; or
(II) subject to the last sentence of this paragraph
B(5)(a)(i) of this Article, if such Disposition involves
substantially all (but not all) of the properties and assets
attributed to such Group, redeem as of the Redemption Date
provided by paragraph B(5)(d)(iv) of this Article such number
of whole shares of the series of the Common Stock relating to
the Group subject to such Disposition (which may be all of,
but not more than, such shares outstanding) as have in the
aggregate an average Market Value during the period of ten
consecutive Trading Days beginning on the 16th Trading Day
immediately succeeding the Disposition Date closest to (A) in
the case of a Disposition of the properties and assets
attributed to the Circuit City Group, the Fair Value as of the
Disposition Date of the Net Proceeds of such Disposition, in
consideration for cash and/or securities (other than the
Common Stock) or other property having a Fair Value in the
aggregate equal to such Fair Value of the Net Proceeds or (B)
in the case of a Disposition of the properties and assets
attributed to the CarMax Group, the product of the Outstanding
CarMax Fraction as of the date such shares are selected for
redemption multiplied by the Fair Value as of the Disposition
Date of the Net Proceeds of such Disposition in consideration
for cash and/or securities (other than the Common Stock) or
other property having a Fair Value in the aggregate equal to
such product; or
(2) declare that each outstanding share of the series of the
Common Stock relating to the Group subject to such Disposition shall be
converted as of the Conversion Date provided by paragraph B(5)(d)(v) of
this Article into a number of fully paid and nonassessable shares of
the series of the Common Stock relating to the other Group (or, if the
series of the Common Stock relating to the other Group is not Publicly
Traded at such time and shares of another class or series of the Common
Stock of the Corporation (other than the series of the Common Stock
relating to the Group subject to such Disposition) are then Publicly
Traded, of such other class or series of the common stock as has the
largest Market Capitalization as of the close of business on the
Trading Day immediately preceding the date of the notice of such
conversion required by paragraph B(5)(d)(v) of this Article), equal to
110% of the ratio, expressed as a decimal fraction rounded to the
nearest five decimal places, of the average Market Value of one share
of the Common Stock relating to the Group subject to such Disposition
over the period of 10 consecutive Trading Days beginning on the 16th
Trading Day following the Disposition Date to the average Market Value
of one share of the Common Stock relating to the other Group (or such
other class or series of common stock) over the same 10 Trading Day
period.
Notwithstanding the foregoing provisions of this paragraph B(5)(a)(i)
of this Article, the Corporation shall redeem shares of a series of the
Common Stock as provided by paragraphs B(5)(a)(i)(1)(b)(I) or (II) of
this Article only if the amount to be paid in redemption of such stock
is less than or equal to the Available Dividend Amount with respect to
the Group subject to such Disposition as of the Redemption Date.
(ii) For purposes of this paragraph B(5)(a) of this
Article:
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(1) as of any date, "substantially all of the
properties and assets" attributed to either Group shall mean a
portion of such properties and assets (x) that represents at
least 80% of the Fair Value of the properties and assets
attributed to such Group as of such date or (y) from which
were derived at least 80% of the aggregate revenues for the
immediately preceding twelve fiscal quarterly periods of the
Company (calculated on a pro forma basis to include revenues
derived from any of such properties and assets acquired during
such period) derived from the properties and assets of such
Group as of such date;
(2) in the case of a Disposition of the properties
and assets attributed to either Group in a series of related
transactions, such Disposition shall not be deemed to have
been consummated until the consummation of the last of such
transactions; and
(3) the Board of Directors may pay any dividend or
redemption price referred to in paragraph B(5)(a) (i) of this
Article in cash, securities (other than the Common Stock) or
other property, regardless of the form or nature of the
proceeds of the Disposition.
(iii) After the payment of the dividend or the redemption
price with respect to the series of the Common Stock relating to the
Group subject to a Disposition as provided for by paragraph
B(5)(a)(i)(1) of this Article, the Board of Directors may declare that
each share of such series of the Common Stock remaining outstanding
shall be converted, but only as of a Conversion Date (determined as
provided by paragraph B(5)(d)(v) of this Article) prior to the first
anniversary of the payment of such dividend or redemption price, into a
number of fully paid and nonassessable shares of the series of the
Common Stock relating to the other Group (or, if the series of the
Common Stock relating to the other Group is not Publicly Traded at such
time and shares of any other class or series of common stock of the
Corporation (other than the series of the Common Stock relating to the
Group subject to such Disposition) are then Publicly Traded, of such
other class or series of common stock of the Corporation as has the
largest Market Capitalization as of the close of business on the
Trading Day immediately preceding the date of the notice of such
conversion required by paragraph B(5)(d)(v) of this Article) equal to
110% of (i) in the case of conversion of the Circuit City Stock, the
Market Value Ratio of the Circuit City Stock to the CarMax Stock or
(ii) in the case of conversion of the CarMax Stock, the Market Value
Ratio of the CarMax Stock to the Circuit City Stock, in each case, as
of the fifth Trading Day prior to the date of the notice of such
conversion required by paragraph B(5)(d)(v) of this Article.
(iv) The Board of Directors may at any time declare that each
outstanding share of either Circuit City Stock or CarMax Stock shall be
converted, as of the Conversion Date provided by paragraph B(5)(d)(v)
of this Article, into the number of fully paid and nonassessable shares
of CarMax Stock or Circuit City Stock, respectively (or, if such latter
series of Common Stock of the Corporation is not Publicly Traded at
such time and shares of any other class or series of common stock of
the Corporation (other than the series of the Common Stock subject to
such conversion) are then Publicly Traded, of such other class or
series of common stock of the Corporation as has the largest Market
Capitalization as of the close of business on the Trading Day
immediately preceding the date of the notice of conversion required by
paragraph B(5)(d)(v) of this Article) equal to 115% of (i) in the case
of conversion of the Circuit City Stock, the Market Value Ratio of the
Circuit City Stock to the CarMax Stock or (ii) in the case of
conversion of the CarMax Stock, the Market Value Ratio of the CarMax
Stock to the Circuit City Stock, in each case, as of the fifth Trading
Day prior to the date of the notice of such conversion required by
paragraph B(5)(d)(v) of this Article.
(b) Redemption of Common Stock for Subsidiary Stock. (i) At
any time at which all of the assets and liabilities attributed to the
CarMax Group (and no other assets or liabilities of the Corporation or
any subsidiary thereof) are held directly or indirectly by one or more
wholly-owned subsidiaries of the Corporation (each, a "CarMax Group
Subsidiary"), the Board of Directors may, provided that there are
assets legally available therefor, redeem all of the outstanding shares
of CarMax Stock, on a Redemption Date of which notice is delivered in
accordance with paragraph B(5)(d)(vi) of this Article, in exchange for
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the number of shares of common stock of each CarMax Group Subsidiary
equal to the product of the Outstanding CarMax Fraction multiplied by
the number of shares of common stock of such CarMax Group Subsidiary to
be outstanding immediately following such exchange of shares, such
CarMax Group Subsidiary shares to be delivered to the holders of shares
of CarMax Stock on the Redemption Date either directly or indirectly
through another CarMax Group Subsidiary (as a wholly-owned subsidiary
thereof) and to be divided among the holders of CarMax Stock pro rata
in accordance with the number of shares of CarMax Stock held by each on
such Redemption Date, each of which shares of common stock of such
CarMax Group Subsidiary shall be, upon such delivery, fully paid and
nonassessable.
(ii) At any time at which all of the assets and liabilities
attributed to the Circuit City Group (and no other assets or
liabilities of the Corporation or any subsidiary thereof) are held
directly or indirectly by one or more wholly-owned subsidiaries of the
Corporation (each, a "Circuit City Group Subsidiary"), the Board of
Directors may, provided that there are assets legally available
therefor,
(1) if the Number of Shares Issuable with Respect to
the Inter-Group Interest is zero, redeem all of the
outstanding shares of Circuit City Stock, on a Redemption Date
of which notice is delivered in accordance with paragraph
B(5)(d)(vi) of this Article, in exchange for all of the shares
of common stock of each Circuit City Group Subsidiary as will
be outstanding immediately following such exchange of shares,
such shares of common stock of each Circuit City Group
Subsidiary to be delivered to the holders of shares of Circuit
City Stock on the Redemption Date either directly or
indirectly through another Circuit City Group Subsidiary (as a
wholly-owned subsidiary thereof) and to be divided among the
holders of Circuit City Stock pro rata in accordance with the
number of shares of Circuit City Stock held by each on such
Redemption Date, each of which shares of common stock of such
Circuit City Group Subsidiary shall be, upon such delivery,
fully paid and nonassessable; or
(2) if the Number of Shares Issuable with Respect to
the Inter-Group Interest is greater than zero, either
(x) redeem all of the outstanding shares of
Circuit City Stock, on such a Redemption Date, in
exchange for (1) all of the shares of common stock of
each Circuit City Group Subsidiary as will be
outstanding immediately following such exchange of
shares and (2) a number of shares of CarMax Stock
equal to the Number of Shares Issuable with Respect
to the Inter-Group Interest, such shares of common
stock of each Circuit City Group Subsidiary to be
delivered to the holders of shares of Circuit City
Stock on the Redemption Date either directly or
indirectly through another Circuit City Group
Subsidiary (as a wholly-owned subsidiary thereof) and
the shares of common stock of each Circuit City Group
Subsidiary and the shares of CarMax Stock to be
divided among the holders of Circuit City Stock pro
rata in accordance with the number of shares of
Circuit City Stock held by each on such Redemption
Date, each of which shares of common stock of each
Circuit City Group Subsidiary and shares of CarMax
Stock shall be, upon such delivery, fully paid and
nonassessable; or
(y) (1) redeem all of the outstanding shares
of Circuit City Stock as contemplated by clause (x)
(1) above and (2) issue to one or more of the Circuit
City Group Subsidiaries a number of shares of CarMax
Stock equal to the Number of Shares Issuable with
Respect to the Inter-Group Interest.
(c) Treatment of Convertible Securities. After any Conversion
Date or Redemption Date on which all outstanding shares of either
series of the Common Stock are converted or redeemed, any share of such
series of the Common Stock that is to be issued on conversion, exchange
or exercise of any Convertible Securities shall, immediately upon such
conversion, exchange or exercise and without any notice from or to, or
any other action on the part of, the Corporation or its Board of
Directors or the holder of such Convertible Security:
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<PAGE>
(i) in the event the shares of such series of the
Common Stock outstanding on such Conversion Date were
converted into shares of the other series of the Common Stock
(or another class or series of common stock of the
Corporation) pursuant to paragraph B(5)(a)(i)(2) or paragraph
B(5)(a)(iii) or (iv) of this Article, be converted into the
amount of cash and/or the number of shares of the kind of
capital stock and/or other securities or property of the
Corporation that the number of shares of such series of the
Common Stock that were to be issued upon such conversion,
exchange or exercise would have received had such shares been
outstanding on such Conversion Date; or
(ii) in the event the shares of such series of the
Common Stock outstanding on such Redemption Date were redeemed
pursuant to paragraph B(5)(a)(i)(1)(b) or paragraph B(5)(b) of
this Article, be redeemed, to the extent of funds of the
Corporation legally available therefor, for $.01 per share in
cash for each share of such series of the Common Stock that
otherwise would be issued upon such conversion, exchange or
exercise.
The provisions of the immediately preceding sentence shall not apply to
the extent that other adjustments in respect of such conversion,
exchange or redemption of a series of the Common Stock are otherwise
made pursuant to the provisions of such Convertible Securities.
(d) Notice and Other Provisions. (i) Not later than the tenth
Trading Day following the consummation of a Disposition referred to in
paragraph B(5)(a)(i) of this Article, the Corporation shall announce
publicly by press release (1) the Net Proceeds of such Disposition, (2)
the number of shares outstanding of the series of the Common Stock
relating to the Group subject to such Disposition, (3) the number of
shares of such series of Common Stock into or for which Convertible
Securities are then convertible, exchangeable or exercisable and the
conversion, exchange or exercise price thereof and (4) in the case of a
Disposition of the properties and assets attributable to the CarMax
Group, the Outstanding CarMax Fraction on the date of such notice. Not
earlier than the 26th Trading Day and not later than the 30th Trading
Day following the consummation of such Disposition, the Corporation
shall announce publicly by press release which of the actions specified
in paragraph B(5)(a)(i) of this Article, it has irrevocably determined
to take in respect of such Disposition.
(ii) If the Corporation determines to pay a dividend pursuant
to paragraph B(5)(a)(i)(1)(a) of this Article, the Corporation shall,
not later than the 30th Trading Day following the consummation of the
Disposition referred to in such paragraph, cause notice to be given to
each holder of shares of the series of the Common Stock relating to the
Group subject to such Disposition and to each holder of Convertible
Securities that are convertible into or exchangeable or exercisable for
shares of such series of Common Stock (unless alternate provision for
such notice to the holders of such Convertible Securities is made
pursuant to the terms of such Convertible Securities), setting forth
(1) the record date for determining holders entitled to receive such
dividend, which shall be not earlier than the 40th Trading Day and not
later than the 50th Trading Day following the consummation of such
Disposition, (2) the anticipated payment date of such dividend (which
shall not be more than 85 Trading Days following the consummation of
such Disposition), (3) the type of property to be paid as such dividend
in respect of the outstanding shares of such series of Common Stock,
(4) the Net Proceeds of such Disposition, (5) in the case of a
Disposition of the properties and assets attributable to the CarMax
Group, the Outstanding CarMax Fraction on the date of such notice, (6)
the number of outstanding shares of such series of Common Stock and the
number of shares of such series of Common Stock into or for which
outstanding Convertible Securities are then convertible, exchangeable
or exercisable and the conversion, exchange or exercise price thereof
and (7) in the case of notice to be given to holders of Convertible
Securities, a statement to the effect that a holder of such Convertible
Securities shall be entitled to receive such dividend only if such
holder properly converts, exchanges or exercises such Convertible
Securities on or prior to the record date referred to in clause (1) of
this sentence. Such notice shall be sent by first-class mail, postage
prepaid, to each such holder at such holder's address as the same
appears on the transfer books of the Corporation.
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(iii) If the Corporation determines to undertake a redemption
pursuant to paragraph B(5)(a)(i)(1)(b)(I) of this Article, the
Corporation shall, not less than 35 Trading Days and not more than 45
Trading Days prior to the Redemption Date, cause notice to be given to
each holder of shares of the series of the Common Stock relating to the
Group subject to the Disposition referred to in such paragraph and to
each holder of Convertible Securities convertible into or exchangeable
or exercisable for shares of such series of Common Stock (unless
alternate provision for such notice to the holders of such Convertible
Securities is made pursuant to the terms of such Convertible
Securities), setting forth (1) a statement that all shares of such
series of Common Stock outstanding on the Redemption Date shall be
redeemed, (2) the Redemption Date (which shall not be more than 85
Trading Days following the consummation of such Disposition), (3) the
type of property in which the redemption price for the shares of such
series of Common Stock to be redeemed is to be paid, (4) the Net
Proceeds of such Disposition, (5) in the case of a Disposition of the
properties and assets attributed to the CarMax Group, the Outstanding
CarMax Fraction on the date of such notice, (6) the place or places
where certificates for shares of such series of Common Stock, properly
endorsed or assigned for transfer (unless the Corporation waives such
requirement), are to be surrendered for delivery of cash and/or
securities or other property, (7) the number of outstanding shares of
such series of Common Stock and the number of shares of such series of
the Common Stock into or for which such outstanding Convertible
Securities are then convertible, exchangeable or exercisable and the
conversion, exchange or exercise price thereof, (8) in the case of
notice to be given to holders of Convertible Securities, a statement to
the effect that a holder of such Convertible Securities shall be
entitled to participate in such redemption only if such holder properly
converts, exchanges or exercises such Convertible Securities on or
prior to the Redemption Date referred to in clause (2) of this sentence
and a statement as to what, if anything, such holder will be entitled
to receive pursuant to the terms of such Convertible Securities or, if
applicable, this paragraph B(5) of this Article if such holder
thereafter converts, exchanges or exercises such Convertible Securities
and (9) a statement to the effect that, except as otherwise provided by
paragraph B(5)(d)(ix) of this Article, dividends on such shares of the
Common Stock shall cease to be paid as of such Redemption Date. Such
notice shall be sent by first-class mail, postage prepaid, to each such
holder at such holder's address as the same appears on the transfer
books of the Corporation.
(iv) If the Corporation determines to undertake a redemption
pursuant to paragraph B(5)(a)(i)(1)(b)(II) of this Article, the
Corporation shall, not later than the 30th Trading Day following the
consummation of the Disposition referred to in such paragraph, cause
notice to be given to each holder of shares of the series of the Common
Stock relating to the Group subject to such Disposition and to each
holder of Convertible Securities that are convertible into or
exchangeable or exercisable for shares of such series of Common Stock
(unless alternate provision for such notice to the holders of such
Convertible Securities is made pursuant to the terms of such
Convertible Securities) setting forth (1) a date not earlier than the
40th Trading Day and not later than the 50th Trading Day following the
consummation of the Disposition in respect of which such redemption is
to be made on which shares of such series of the Common Stock shall be
selected for redemption, (2) the anticipated Redemption Date (which
shall not be more than 85 Trading Days following the consummation of
such Disposition), (3) the type of property in which the redemption
price for the shares to be redeemed is to be paid, (4) the Net Proceeds
of such Disposition, (5) in the case of a Disposition of the properties
and assets attributed to the CarMax Group, the Outstanding CarMax
Fraction, (6) the number of shares of such series of Common Stock
outstanding and the number of shares of such series of Common Stock
into or for which outstanding Convertible Securities are then
convertible, exchangeable or exercisable and the conversion, exchange
or exercise price thereof, (7) in the case of notice to be given to
holders of Convertible Securities, a statement to the effect that a
holder of such Convertible Securities shall be eligible to participate
in such selection for redemption only if such holder properly converts,
exchanges or exercises such Convertible Securities on or prior to the
record date referred to in clause (1) of this sentence, and a statement
as to what, if anything, such holder will be entitled to receive
pursuant to the terms of such Convertible Securities or, if applicable,
this paragraph B(5) of this Article if
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<PAGE>
such holder thereafter converts, exchanges or exercises such
Convertible Securities and (8) a statement that the Corporation will
not be required to register a transfer of any shares of such series of
the Common Stock for a period of 15 Trading Days next preceding the
date referred to in clause (1) of this sentence. Promptly following the
date referred to in clause (1) of the preceding sentence, but not
earlier than 40 Trading Days nor later than 50 Trading Days following
the consummation of such Disposition, the Corporation shall cause a
notice to be given to each holder of record of shares of such series of
Common Stock to be redeemed setting forth (1) the number of shares of
such series of Common Stock held by such holder to be redeemed, (2) a
statement that such shares of such series of Common Stock shall be
redeemed, (3) the Redemption Date, (4) the kind and per share amount of
cash and/or securities or other property to be received by such holder
with respect to each share of such series of Common Stock to be
redeemed, including details as to the calculation thereof, (5) the
place or places where certificates for shares of such series of Common
Stock, properly endorsed or assigned for transfer (unless the
Corporation shall waive such requirement), are to be surrendered for
delivery of such cash and/or securities or other property, (6) if
applicable, a statement to the effect that the shares being redeemed
may no longer be transferred on the transfer books of the Corporation
after the Redemption Date and (7) a statement to the effect that,
subject to paragraph B(5)(d)(ix) of this Article, dividends on such
shares of such series of Common Stock shall cease to be paid as of the
Redemption Date. Such notices shall be sent by first-class mail,
postage prepaid, to each such holder at such holder's address as the
same appears on the transfer books of the Corporation.
(v) If the Corporation determines to convert either series of
the Common Stock into the other series (or another class or series of
common stock of the Corporation) pursuant to paragraph B(5)(a)(i)(2) or
paragraph B(5)(a)(iii) or (iv) of this Article, the Corporation shall,
not less than 35 Trading Days and not more than 45 Trading Days prior
to the Conversion Date, cause notice to be given to each holder of
shares of the series of the Common Stock to be so converted and to each
holder of Convertible Securities that are convertible into or
exchangeable or exercisable for shares of such series of Common Stock
(unless alternate provision for such notice to the holders of such
Convertible Securities is made pursuant to the terms of such
Convertible Securities) setting forth (1) a statement that all
outstanding shares of such series of Common Stock shall be converted,
(2) the Conversion Date (which, in the case of a conversion after a
Disposition, shall not be more than 85 Trading Days following the
consummation of such Disposition), (3) the per share number of shares
of Circuit City Stock or CarMax Stock or another class or series of
common stock of the Corporation, as the case may be, to be received
with respect to each share of such series of Common Stock, including
details as to the calculation thereof, (4) the place or places where
certificates for shares of such series of Common Stock, properly
endorsed or assigned for transfer (unless the Corporation shall waive
such requirement), are to be surrendered for delivery of certificates
for shares of such series of Common Stock, (5) the number of
outstanding shares of such series of Common Stock and the number of
shares of such series of Common Stock into or for which outstanding
Convertible Securities are then convertible, exchangeable or
exercisable and the conversion, exchange or exercise price thereof, (6)
a statement to the effect that, subject to paragraph B(5)(d)(ix) of
this Article, dividends on such shares of CarMax Stock shall cease to
be paid as of such Conversion Date and (7) in the case of notice to
holders of such Convertible Securities, a statement to the effect that
a holder of such Convertible Securities shall be entitled to receive
shares of such series of Common Stock upon such conversion only if such
holder properly converts, exchanges or exercises such Convertible
Securities on or prior to such Conversion Date and a statement as to
what, if anything, such holder will be entitled to receive pursuant to
the terms of such Convertible Securities or, if applicable, this
paragraph B(5) of this Article if such holder thereafter converts,
exchanges or exercises such Convertible Securities. Such notice shall
be sent by first-class mail, postage prepaid, to each such holder at
such holder's address as the same appears on the transfer books of the
Corporation.
(vi) If the Corporation determines to redeem shares of either
series of the Common Stock pursuant to paragraph B(5)(b) of this
Article, the Corporation shall cause notice to be given to each holder
of shares of such series of the Common Stock to be redeemed and to each
holder of Convertible Securities that are convertible into or
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<PAGE>
exchangeable or exercisable for shares of such series of the Common
Stock (unless alternate provision for such notice to the holders of
such Convertible Securities is made pursuant to the terms of such
Convertible Securities), setting forth (1) a statement that all shares
of such series of the Common Stock outstanding on the Redemption Date
shall be redeemed in exchange for shares of common stock of each
Circuit City Group Subsidiary (and, if such redemption is pursuant to
paragraph B(5)(b)(ii)(2)(x) of this Article, CarMax Stock) or common
stock of each CarMax Group Subsidiary, as the case may be, (2) the
Redemption Date, (3) in the case of a redemption of the CarMax Stock,
the Outstanding CarMax Fraction on the date of such notice, (4) the
place or places where certificates for shares of the series of the
Common Stock to be redeemed, properly endorsed or assigned for transfer
(unless the Corporation shall waive such requirement), are to be
surrendered for delivery of certificates for shares of the common stock
of each Circuit City Group Subsidiary (and, if such redemption is
pursuant to paragraph B(5)(b)(ii)(2)(x) of this Article, CarMax Stock)
or common stock of each CarMax Group Subsidiary, as the case may be,
(5) a statement to the effect that, subject to paragraph B(5)(d)(ix) of
this Article, dividends on such shares of the Common Stock shall cease
to be paid as of such Redemption Date, (6) the number of shares of such
series of the Common Stock outstanding and the number of shares of such
series of Common Stock into or for which outstanding Convertible
Securities are then convertible, exchangeable or exercisable and the
conversion, exchange or exercise price thereof and (7) in the case of
notice to holders of Convertible Securities, a statement to the effect
that a holder of Convertible Securities shall be entitled to receive
shares of common stock of each Circuit City Group Subsidiary (and, if
such redemption is pursuant to paragraph B(5)(b)(ii)(2)(x) of this
Article, CarMax Stock) or common stock of each CarMax Group Subsidiary,
as the case may be, upon redemption only if such holder properly
converts, exchanges or exercises such Convertible Securities on or
prior to the Redemption Date and a statement as to what, if anything,
such holder will be entitled to receive pursuant to the terms of such
Convertible Securities or, if applicable, this paragraph B(5) of this
Article, if such holder thereafter converts, exchanges or exercises
such Convertible Securities. Such notice shall be sent by first-class
mail, postage prepaid, not less than 30 Trading Days nor more than 45
Trading Days prior to the Redemption Date to each such holder at such
holder's address as the same appears on the transfer books of the
Corporation.
(vii) If less than all of the outstanding shares of the Common
Stock of a series are to be redeemed pursuant to paragraph
B(5)(a)(i)(1) of this Article, the shares to be redeemed by the
Corporation shall be selected from among the holders of shares of such
series of the Common Stock outstanding at the close of business on the
record date for such redemption on a pro rata basis among all such
holders or by lot or by such other method as may be determined by the
Board of Directors of the Corporation to be equitable.
(viii) The Corporation shall not be required to issue or
deliver fractional shares of any capital stock or of any other
securities to any holder of either series of the Common Stock upon any
conversion, redemption, dividend or other distribution pursuant to this
paragraph B(5) of this Article. If more than one share of either series
of the Common Stock shall be held at the same time by the same holder,
the Corporation may aggregate the number of shares of any capital stock
that shall be issuable or any other securities or property that shall
be distributable to such holder upon any conversion, redemption,
dividend or other distribution (including any fractional shares). If
there are fractional shares of any capital stock or of any other
securities remaining to be issued or distributed to the holders of
either series of the Common Stock, the Corporation shall, if such
fractional shares are not issued or distributed to the holder, pay cash
in respect of such fractional shares in an amount equal to the Fair
Value thereof on the fifth Trading Day prior to the date such payment
is to be made (without interest).
(ix) No adjustments in respect of dividends shall be made upon
the conversion or redemption of any shares of either series of the
Common Stock; provided, however, that if the Conversion Date or
Redemption Date, as the case may be, with respect to any shares of
either series of the Common Stock shall be subsequent to the record
date for the payment of a dividend or other distribution thereon or
with respect thereto, the holders of such series of the Common Stock at
the
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<PAGE>
close of business on such record date shall be entitled to receive the
dividend or other distribution payable on or with respect to such
shares on the date set for payment of such dividend or other
distribution, in each case without interest, notwithstanding the
subsequent conversion or redemption of such shares.
(x) Before any holder of either series of the Common Stock
shall be entitled to receive any cash payment and/or certificates or
instruments representing shares of any capital stock and/or other
securities or property to be distributed to such holder with respect to
such series of the Common Stock pursuant to this paragraph B(5) of this
Article, such holder shall surrender at such place as the Corporation
shall specify certificates for such shares of the Common Stock,
properly endorsed or assigned for transfer (unless the Corporation
shall waive such requirement). The Corporation shall as soon as
practicable after receipt of certificates representing such shares of
the Common Stock deliver to the person for whose account such shares of
the Common Stock were so surrendered, or to such person's nominee or
nominees, the cash and/or the certificates or instruments representing
the number of whole shares of the kind of capital stock and/or other
securities or property to which such person shall be entitled as
aforesaid, together with any payment in respect of fractional shares
contemplated by paragraph B(5)(d)(viii) of this Article, in each case
without interest. If less than all of the shares of either series of
the Common Stock represented by any one certificate are to be redeemed,
the Corporation shall issue and deliver a new certificate for the
shares of such series of Common Stock not redeemed.
(xi) From and after any applicable Conversion Date or
Redemption Date, as the case may be, all rights of a holder of shares
of either series of the Common Stock that were converted or redeemed
shall cease except for the right, upon surrender of the certificates
representing such shares of the Common Stock as required by paragraph
B(5)(d)(x) of this Article, to receive the cash and/or the certificates
or instruments representing shares of the kind and amount of capital
stock and/or other securities or property for which such shares were
converted or redeemed, together with any payment in respect of
fractional shares contemplated by paragraph B(5)(d)(viii) of this
Article and rights to dividends as provided in paragraph B(5)(d)(ix) of
this Article, in each case without interest. No holder of a certificate
that immediately prior to the applicable Conversion Date represented
shares of a series of the Common Stock shall be entitled to receive any
dividend or other distribution or interest payment with respect to
shares of any kind of capital stock or other security or instrument for
which such series of the Common Stock was converted until the surrender
as required by this paragraph B(5) of this Article of such certificate
in exchange for a certificate or certificates or instrument or
instruments representing such capital stock or other security. Subject
to applicable escheat and similar laws, upon such surrender, there
shall be paid to the holder the amount of any dividends or other
distributions (without interest) which theretofore became payable on
any class or series of capital stock of the Corporation as of a record
date after the Conversion Date, but that were not paid by reason of the
foregoing, with respect to the number of whole shares of the kind of
capital stock represented by the certificate or certificates issued
upon such surrender. From and after a Conversion Date, the Corporation
shall, however, be entitled to treat the certificates for a series of
the Common Stock that have not yet been surrendered for conversion as
evidencing the ownership of the number of whole shares of the kind or
kinds of capital stock of the Corporation for which the shares of such
series of the Common Stock represented by such certificates shall have
been converted, notwithstanding the failure to surrender such
certificates.
(xii) The Corporation shall pay any and all documentary, stamp
or similar issue or transfer taxes that may be payable in respect of
the issuance or delivery of any shares of capital stock and/or other
securities upon conversion or redemption of shares of either series of
the Common Stock pursuant to this paragraph B(5) of this Article. The
Corporation shall not, however, be required to pay any tax that may be
payable in respect of any transfer involved in the issuance or delivery
of any shares of capital stock and/or other securities in a name other
than that in which the shares of such series of the Common Stock so
converted or redeemed were registered, and no such issuance or delivery
shall be made unless and until the person requesting such issuance or
delivery has paid to the Corporation the amount of any such tax or has
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established to the satisfaction of the Corporation that such tax has
been paid.
(xiii) Neither the failure to mail any notice required by this
paragraph B(5)(d) of this Article to any particular holder of the
Common Stock or of Convertible Securities nor any defect therein shall
affect the sufficiency thereof with respect to any other holder of
outstanding shares of the Common Stock or of Convertible Securities or
the validity of any such conversion or redemption.
(xiv) The Board of Directors may establish such rules and
requirements to facilitate the effectuation of the transactions
contemplated by this paragraph B(5) of this Article as the Board of
Directors shall determine to be appropriate.
(6) Application of the Provisions of this Certificate of Designations.
(a) Certain Determinations by the Board of Directors. The
Board of Directors shall make such determinations with respect to the
assets and liabilities to be attributed to the Groups, the application
of the provisions of this paragraph B of this Article to transactions
to be engaged in by the Corporation and the preferences, limitations
and relative rights of the holders of either series of the Common
Stock, and the qualifications and restrictions thereon, provided by
these Amended and Restated Articles of Incorporation as may be or
become necessary or appropriate to the exercise of such preferences,
limitations and relative rights, including, without limiting the
foregoing, the determinations referred to in the following paragraphs
B(6)(a)(i), (ii), (iii), (iv) and (v) of this Article. A record of any
such determination shall be filed with the records of the actions of
the Board of Directors.
(i) Upon any acquisition by the Corporation or its
subsidiaries of any assets or business, or any assumption of
liabilities, outside of the ordinary course of business of the
Circuit City Group or the CarMax Group, as the case may be,
the Board of Directors shall determine whether such assets,
business and liabilities (or an interest therein) shall be for
the benefit of the Circuit City Group or the CarMax Group or
that an interest therein shall be partly for the benefit of
the Circuit City Group and partly for the benefit of the
CarMax Group and, accordingly, shall be attributed to the
Circuit City Group or the CarMax Group, or partly to each, in
accordance with paragraph B(7)(a) or (d) of this Article, as
the case may be.
(ii) Upon any issuance of any shares of CarMax Stock
at a time when the Number of Shares Issuable with Respect to
the InterGroup Interest is greater than zero, the Board of
Directors shall determine, based on the use of the proceeds of
such issuance and any other relevant factors, whether all or
any part of the shares of CarMax Stock so issued shall reduce
the Number of Shares Issuable with Respect to the Inter-Group
Interest, and the Number of Shares Issuable with Respect to
the Inter-Group Interest shall be adjusted accordingly.
(iii) Upon any issuance by the Corporation or any
subsidiary thereof of any Convertible Securities that are
convertible into or exchangeable or exercisable for shares of
CarMax Stock, if at the time such Convertible Securities are
issued the Number of Shares Issuable with Respect to the
Inter-Group Interest is greater than zero, the Board of
Directors shall determine, based on the use of the proceeds of
such issuance of Convertible Securities in the business of the
Circuit City Group or the CarMax Group and any other relevant
factors, whether, upon conversion, exchange or exercise
thereof, the issuance of shares of CarMax Stock pursuant
thereto shall, in whole or in part, reduce the Number of
Shares Issuable with Respect to the Inter-Group Interest.
(iv) Upon any issuance of any shares of the Preferred
Stock of any series, the Board of Directors shall attribute,
based on the use of proceeds of such issuance of shares of the
Preferred Stock in the business of the Circuit City Group or
the CarMax Group and any other relevant factors, the shares so
issued entirely to the Circuit City Group or entirely to the
CarMax Group
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or partly to the Circuit City Group and partly to the CarMax
Group in such proportion as the Board of Directors shall
determine.
(v) Upon any redemption or repurchase by the
Corporation or any subsidiary thereof of shares of the
Preferred Stock of any class or series or of other securities
or debt obligations of the Corporation, the Board of Directors
shall determine, based on the property used to redeem or
purchase such shares, other securities or debt obligations,
which, if any, of such shares, other securities or debt
obligations redeemed or repurchased shall be attributed to the
Circuit City Group and which, if any, of such shares, other
securities or debt obligations shall be attributed to the
CarMax Group and, accordingly, how many of the shares of such
series of the Preferred Stock or of such other securities, or
how much of such debt obligations, that remain outstanding, if
any, are thereafter attributed to the Circuit City Group or to
the CarMax Group.
(b) Certain Determinations Not Required. Notwithstanding the
foregoing provisions of this paragraph B(6) of this Article, the
provisions of paragraphs B(7)(a), (c), (d) or (f) of this Article or
any other provision of this Article, at any time when there are not
outstanding both (i) one or more shares of Circuit City Stock or
Convertible Securities convertible into or exchangeable or exercisable
for Circuit City Stock and (ii) one or more shares of CarMax Stock or
Convertible Securities convertible into or exchangeable or exercisable
for CarMax Stock, the Corporation need not (A) attribute any of the
assets or liabilities of the Corporation or any of its subsidiaries to
the Circuit City Group or the CarMax Group or (B) make any
determination required in connection therewith, nor shall the Board of
Directors be required to make any of the determinations otherwise
required by this Article, and in such circumstances the holders of the
shares of Circuit City Stock or CarMax Stock outstanding, as the case
may be, shall (unless otherwise specifically provided by these Amended
and Restated Articles of Incorporation) be entitled to all the
preferences or other relative rights of both series of the Common Stock
without differentiation between the Circuit City Stock and the CarMax
Stock.
(c) Board Determinations Binding. Subject to applicable law,
any determinations made in good faith by the Board of Directors of the
Corporation under any provision of this paragraph B(6) of this Article
or otherwise in furtherance of the application of this Article shall be
final and binding on all shareholders.
(7) Certain Definitions. As used in this Article, the following terms
shall have the following meanings (with terms defined in the singular having
comparable meaning when used in the plural and vice versa), unless the context
otherwise requires. As used in this paragraph B(7) of this Article, a
"contribution" or "transfer" of assets or properties from one Group to another
shall refer to the reattribution of such assets or properties from the
contributing or transferring Group to the other Group and correlative phrases
shall have correlative meanings.
(a) "Carmax Group" shall mean, as of any date:
(i) all businesses, assets and liabilities of each of
CarMax Auto Superstores, Inc., a Virginia corporation, CarMax,
Inc., a Virginia corporation, and C-Max Auto Superstores,
Inc., a California corporation (the "CarMax Group Companies"),
as of the date of the first issuance of CarMax Stock;
(ii) all assets and liabilities of the Corporation
and its subsidiaries attributed by the Board of Directors to
the CarMax Group, whether or not such assets or liabilities
are or were also assets and liabilities of any of the CarMax
Group Companies;
(iii) all properties and assets transferred to the
CarMax Group from the Circuit City Group (other than a
transaction pursuant to paragraph B(7)(a)(iv) of this Article)
pursuant to transactions in the ordinary course of business of
both the Circuit City Group and the CarMax Group or otherwise
as the Board of Directors may have directed as permitted by
this Article;
(iv) all properties and assets transferred to the
CarMax Group from the Circuit City Group in connection with an
increase
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in the Number of Shares Issuable with respect to the
Inter-Group Interest; and
(v) the interest of the Corporation or any of its
subsidiaries in any business or asset acquired and any
liabilities assumed by the Corporation or any of its
subsidiaries outside of the ordinary course of business and
attributed to the CarMax Group, as determined by the Board of
Directors as contemplated by paragraph B(6)(a)(i) of this
Article;
provided that (1) from and after the payment date of any dividend or
other distribution with respect to shares of CarMax Stock (other than a
dividend or other distribution payable in shares of CarMax Stock, with
respect to which adjustment shall be made as provided in paragraph
B(7)(s)(i) of this Article, or in securities of the Corporation
attributed to the CarMax Group, for which provision shall be made as
set forth in clause (2) of this proviso), the CarMax Group shall no
longer include an amount of assets or properties previously attributed
to the CarMax Group of the same kind as so paid in such dividend or
other distribution with respect of shares of CarMax Stock as have a
Fair Value on the record date for such dividend or distribution equal
to the product of (a) the Fair Value on such record date of the
aggregate of such dividend or distribution to holders of shares of
CarMax Stock declared multiplied by (b) a fraction the numerator of
which is equal to the Inter-Group Interest Fraction in effect on the
record date for such dividend or distribution and the denominator of
which is equal to the Outstanding CarMax Fraction in effect on the
record date for such dividend or distribution, (2) if the Corporation
shall pay a dividend or make some other distribution with respect to
shares of CarMax Stock payable in securities of the Corporation that
are attributed to the CarMax Group for purposes of this Article (other
than CarMax Stock), there shall be excluded from the CarMax Group an
interest in the CarMax Group equivalent to the number or amount of such
securities that is equal to the product of the number or amount of
securities so distributed to holders of CarMax Stock multiplied by the
fraction specified in clause 1(b) of this proviso (determined as of the
record date for such distribution) (and such interest in the CarMax
Group shall be attributed to the Circuit City Group) and, to the extent
interest is or dividends are paid on the securities so distributed, the
CarMax Group shall no longer include a corresponding ratable amount of
the kind of assets paid as such interest or dividends as would have
been paid in respect of the securities equivalent to such interest in
the CarMax Group deemed held by the Circuit City Group if the
securities equivalent to such interest were outstanding (and in such
eventuality such assets as are no longer included in the CarMax Group
shall be attributed to the Circuit City Group) and (3) from and after
any transfer of any assets or properties from the CarMax Group to the
Circuit City Group, the CarMax Group shall no longer include such
assets or properties so contributed or transferred. The Corporation may
also, to the extent a dividend or distribution on the CarMax Stock has
been paid in Convertible Securities that are convertible into or
exchangeable or exercisable for CarMax Stock, cause such Convertible
Securities as are deemed to be held by the Circuit City Group in
accordance with the third to last sentence of paragraph B(7)(d) of this
Article and clause (2) of the proviso to the immediately preceding
sentence to be deemed to be converted, exchanged or exercised as
provided in the penultimate sentence of paragraph B(7)(d) of this
Article, in which case such Convertible Securities shall no longer be
deemed to be held by the Circuit City Group.
(b) "Carmax Group Available Dividend Amount", on any
date, shall mean the excess, if any, of
(i) the product of (x) the Outstanding CarMax
Fraction and (y) an amount equal to the total assets of the
CarMax Group less its total liabilities as of such date
determined in accordance with generally accepted accounting
principles as in effect at such time applied on a basis
consistent with that applied in determining the CarMax Group
Net Earnings (Loss), over
(ii) except to the extent that these Amended and
Restated Articles of Incorporation permit otherwise, the
amount that would be needed to satisfy the preferential rights
to which holders of any Preferred Stock attributed to the
CarMax Group are entitled upon dissolution of the Corporation;
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<PAGE>
provided, that such excess shall be reduced by an amount sufficient to
ensure that the CarMax Group would be able to pay its debts as they
become due in the usual course of business.
(c) "Carmax Group Net Earnings (Loss)", for any period through
any date, shall mean the net earnings or loss of the CarMax Group for
such period (or in respect of fiscal periods of the Corporation
commencing prior to the date of the first issuance of CarMax Stock, the
pro forma net earnings or loss of the CarMax Group for such period as
if such date had been the first day of such period) determined in
accordance with generally accepted accounting principles in effect at
such time, reflecting income and expense of the Corporation attributed
to the CarMax Group on a basis substantially consistent with
attributions of income and expense made in the calculation of the
Circuit City Group Net Earnings (Loss), including, without limitation,
corporate administrative costs, net interest and other financial costs
and income taxes.
(d) "Circuit City Group" shall mean, as of any date:
(i) the interest of the Corporation or any of its
subsidiaries on such date in all of the assets, liabilities
and businesses of the Corporation or any of its subsidiaries
(and any successor companies), other than any assets,
liabilities and businesses attributed in accordance with this
Article to the CarMax Group;
(ii) a proportionate undivided interest in each and
every business, asset and liability attributed to the CarMax
Group equal to the Inter-Group Interest Fraction as of such
date;
(iii) all properties and assets transferred to the
Circuit City Group from the CarMax Group (other than pursuant
to paragraph B(7)(d)(iv) or (vi) of this Article) pursuant to
transactions in the ordinary course of business of both the
Circuit City Group and the CarMax Group or otherwise as the
Board of Directors may have directed as permitted by this
Article;
(iv) all properties and assets transferred to the
Circuit City Group from the CarMax Group in connection with a
reduction of the Number of Shares Issuable with Respect to the
Inter-Group Interest;
(v) the interest of the Corporation or any of its
subsidiaries in any business or asset acquired and any
liabilities assumed by the Corporation or any of its
subsidiaries outside the ordinary course of business and
attributed to the Circuit City Group, as determined by the
Board of Directors as contemplated by paragraph B(6)(a)(i) of
this Article; and
(vi) from and after the payment date of any dividend,
redemption or other distribution with respect to shares of
CarMax Stock (other than a dividend or other distribution
payable in shares of CarMax Stock, with respect to which
adjustment shall be made as provided in paragraph B(7)(s)(i)
of this Article, or in securities of the Corporation
attributed to the CarMax Group, for which provision shall be
made as set forth in the third to last sentence of this
definition), an amount of assets or properties previously
attributed to the CarMax Group of the same kind as were paid
in such dividend or other distribution with respect to shares
of CarMax Stock as have a Fair Value on the record date for
such dividend or distribution equal to the product of (1) the
Fair Value on such record date of the aggregate of such
dividend or distribution to holders of shares of CarMax Stock
declared multiplied by (2) a fraction the numerator of which
is equal to the Inter-Group Interest Fraction in effect on the
record date for such dividend or distribution and the
denominator of which is equal to the Outstanding CarMax
Fraction in effect on the record date for such dividend or
distribution;
provided that from and after any transfer of any assets or properties
from the Circuit City Group to the CarMax Group, the Circuit City Group
shall no longer include such assets or properties so transferred (other
than as reflected in respect of such a transfer by the Inter-Group
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<PAGE>
Interest Fraction, as provided by paragraph B(7)(d)(ii) of this
Article).
If the Corporation shall pay a dividend or make some other
distribution with respect to shares of CarMax Stock payable in
securities of the Corporation that are attributed to the CarMax Group
for purposes of this Article (other than CarMax Stock), the Circuit
City Group shall be deemed to hold an interest in the CarMax Group
equivalent to the number or amount of such securities that is equal to
the product of the number or amount of securities so distributed to
holders of CarMax Stock multiplied by the fraction specified in clause
(2) of paragraph B(7)(d)(vi) of this Article (determined as of the
record date for such distribution) and, to the extent interest is or
dividends are paid on the securities so distributed, the Circuit City
Group shall include, and there shall be transferred thereto from the
CarMax Group, a corresponding ratable amount of the kind of assets paid
as such interest or dividends as would have been paid in respect of
such securities so deemed to be held by the Circuit City Group if such
securities were outstanding. The Corporation may also, to the extent
the securities so paid as a dividend or other distribution to the
holders of CarMax Stock are Convertible Securities and at the time are
convertible into or exchangeable or exercisable for shares of CarMax
Stock, treat such Convertible Securities as are so deemed to be held by
the Circuit City Group to be deemed to be converted, exchanged or
exercised, and shall do so to the extent such Convertible Securities
are mandatorily converted, exchanged or exercised (and to the extent
the terms of such Convertible Securities require payment of
consideration for such conversion, exchange or exercise, the Circuit
City Group shall then no longer include an amount of the kind of
properties or assets required to be paid as such consideration for the
amount of Convertible Securities deemed converted, exchanged or
exercised (and the CarMax Group shall be attributed such properties or
assets), in which case, from and after such time, the securities into
or for which such Convertible Securities so deemed to be held by the
Circuit City Group were so considered converted, exchanged or exercised
shall be deemed held by the Circuit City Group (as provided in clause
(3) of paragraph B(7)(s)(iii) of this Article) and such Convertible
Securities shall no longer be deemed to be held by the Circuit City
Group. A statement setting forth the election to effectuate any such
deemed conversion, exchange or exercise of Convertible Securities so
deemed to be held by the Circuit City Group and the properties or
assets, if any, to be attributed to the CarMax Group in consideration
of such conversion, exchange or exercise (if any) shall be filed in the
records of the actions of the Board of Directors and, upon such filing,
such deemed conversion, exchange or exercise shall be effectuated.
(e) "Circuit City Group Available Dividend Amount", on any
date, shall mean the excess, if any, of:
(i) an amount equal to the total assets of the
Circuit City Group less its total liabilities as of such date
determined in accordance with generally accepted accounting
principles as in effect at such time applied on a basis
consistent with that applied in determining the Circuit City
Group Net Earnings (Loss), over
(ii) except to the extent that these Amended and
Restated Articles of Incorporation permit otherwise, the
amount that would be needed to satisfy the preferential rights
to which holders of any Preferred Stock attributed to the
Circuit City Group are entitled upon dissolution of the
Corporation;
provided, that such excess shall be reduced by an amount sufficient to
ensure that the Circuit City Group would be able to pay its debts as
they become due in the usual course of business.
(f) "Circuit City Group Net Earnings (Loss)", for any period
through any date, shall mean the net earnings or loss of the Circuit
City Group for such period (or in respect of fiscal periods of the
Corporation commencing prior to the date of the first issuance of
CarMax Stock, the pro forma net earnings or loss of the Circuit City
Group for such period as if such date had been the first day of such
period) determined in accordance with generally accepted accounting
principles in effect at such time, reflecting income and expense of the
Corporation attributed to the Circuit City Group on a basis
substantially consistent
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with attributions of income and expense made in the calculation of
CarMax Group Net Earnings (Loss), including, without limitation,
corporate administrative costs, net interest and other financial costs
and income taxes.
(g) "Common Stock" shall mean the collective reference to the
Circuit City Stock and the CarMax Stock, and either may sometimes be
called a series of Common Stock.
(h) "Conversion Date" shall mean the date fixed by the Board
of Directors as the effective date for the conversion of shares of
Circuit City Stock or CarMax Stock, as the case may be, into shares of
CarMax Stock or Circuit City Stock, respectively (or another class or
series of common stock of the Corporation, as the case may be) as shall
be set forth in the notice to holders of shares of the series of Common
Stock subject to such conversion and to holders of any Convertible
Securities that are convertible into or exchangeable or exercisable for
shares of the series of Common Stock subject to such conversion
required pursuant to paragraph B(5)(d)(v) of this Article.
(i) "Convertible Securities" at any time shall mean any
securities of the Corporation or of any subsidiary thereof (other than
shares of the Common Stock), including warrants and options,
outstanding at such time that by their terms are convertible into or
exchangeable or exercisable for or evidence the right to acquire any
shares of either series of the Common Stock, whether convertible,
exchangeable or exercisable at such time or a later time or only upon
the occurrence of certain events, but in respect of antidilution
provisions of such securities only upon the effectiveness thereof.
(j) "Disposition" shall mean a sale, transfer, assignment or
other disposition (whether by merger, consolidation, sale or
contribution of assets or stock or otherwise) of properties or assets
(including stock, other securities and goodwill).
(k) "Fair Value" shall mean, (i) in the case of equity
securities or debt securities of a class or series that has previously
been Publicly Traded for a period of at least 15 months, the Market
Value thereof (if such Market Value, as so defined, can be determined);
(ii) in the case of an equity security or debt security that has not
been Publicly Traded for at least 15 months or the Market Value of
which cannot be determined, the fair value per share of stock or per
other unit of such security, on a fully distributed basis, as
determined by an independent investment banking firm experienced in the
valuation of securities selected in good faith by the Board of
Directors, or, if no such investment banking firm is, as determined in
the good faith judgment of the Board of Directors, available to make
such determination, in good faith by the Board of Directors; (iii) in
the case of cash denominated in U.S. dollars, the face amount thereof
and in the case of cash denominated in other than U.S. dollars, the
face amount thereof converted into U.S. dollars at the rate published
in The Wall Street Journal on the date for the determination of Fair
Value or, if not so published, at such rate as shall be determined in
good faith by the Board of Directors based upon such information as the
Board of Directors shall in good faith determine to be appropriate in
accordance with good business practice; and (iv) in the case of
property other than securities or cash, the "Fair Value" thereof shall
be determined in good faith by the Board of Directors based upon such
appraisals or valuation reports of such independent experts as the
Board of Directors shall in good faith determine to be appropriate in
accordance with good business practice. Any such determination of Fair
Value shall be described in a statement filed with the records of the
actions of the Board of Directors.
(l) "Group" shall mean, as of any date, the Circuit City
Group or the CarMax Group, as the case may be.
(m) "Inter-Group Interest Fraction" as of any date shall mean
a fraction the numerator of which shall be the Number of Shares
Issuable with Respect to the Inter-Group Interest on such date and the
denominator of which shall be the sum of (A) such Number of Shares
Issuable with Respect to the Inter-Group Interest and (B) the aggregate
number of shares of CarMax Stock outstanding on such date. A statement
setting forth the Inter-Group Interest Fraction as of the record date
for any dividend or distribution on either series of the Common Stock,
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as of the effective date of any conversion, exchange or exercise of
Convertible Securities into or for shares of CarMax Stock and as of the
end of each fiscal quarter of the Corporation shall be filed by the
Secretary of the Corporation in the records of the Board of Directors
of the Corporation not later than ten days after such date.
(n) "Market Capitalization" of any class or series of common
stock on any date shall mean the product of (i) the Market Value of one
share of such class or series of common stock on such date and (ii) the
number of shares of such class or series of common stock outstanding on
such date.
(o) "Market Value" of a share of any class or series of
capital stock of the Corporation on any day shall mean the average of
the high and low reported sales prices regular way of a share of such
class or series on such Trading Day or, in case no such reported sale
takes place on such Trading Day, the average of the reported closing
bid and asked prices regular way of a share of such class or series on
such Trading Day, in either case as reported on the New York Stock
Exchange Composite Tape or, if the shares of such class or series are
not listed or admitted to trading on such Exchange on such Trading Day,
on the principal national securities exchange in the United States on
which the shares of such class or series are listed or admitted to
trading or, if not listed or admitted to trading on any national
securities exchange on such Trading Day, on The Nasdaq National Market
or, if the shares of such class or series are not listed or admitted to
trading on any national securities exchange or quoted on The Nasdaq
National Market on such Trading Day, the average of the closing bid and
asked prices of a share of such class or series in the over-the-counter
market on such Trading Day as furnished by any New York Stock Exchange
member firm selected from time to time by the Corporation or, if such
closing bid and asked prices are not made available by any such New
York Stock Exchange member firm on such Trading Day, the Fair Value of
a share of such class or series as set forth in clause (ii) of the
definition of Fair Value; provided that, for purposes of determining
the market value of a share of any class or series of capital stock for
any period, (i) the "Market Value" of a share of capital stock on any
day prior to any "ex-dividend" date or any similar date occurring
during such period for any dividend or distribution (other than any
dividend or distribution contemplated by clause (ii)(B) of this
sentence) paid or to be paid with respect to such capital stock shall
be reduced by the Fair Value of the per share amount of such dividend
or distribution and (ii) the "Market Value" of any share of capital
stock on any day prior to (A) the effective date of any subdivision (by
stock split or otherwise) or combination (by reverse stock split or
otherwise) of outstanding shares of such class or series of capital
stock occurring during such period or (B) any "ex-dividend" date or any
similar date occurring during such period for any dividend or
distribution with respect to such capital stock to be made in shares of
such class or series of capital stock or Convertible Securities that
are convertible, exchangeable or exercisable for such class or series
of capital stock shall be appropriately adjusted, as determined by the
Board of Directors, to reflect such subdivision, combination, dividend
or distribution.
(p) "Market Value Ratio of the Carmax Stock to the Circuit
City Stock" as of any date shall mean the fraction (which may be
greater or less than 1/1), expressed as a decimal (rounded to the
nearest five decimal places), of a share of Circuit City Stock (or
another class or series of common stock of the Corporation, if so
provided by paragraph B(5)(a) of this Article because Circuit City
Stock is not then Publicly Traded) to be issued in respect of a share
of CarMax Stock upon a conversion of CarMax Stock into Circuit City
Stock (or another class or series of common stock of the Corporation)
in accordance with paragraph B(5)(a) of this Article, based on the
ratio of the Market Value of a share of CarMax Stock to the Market
Value of a share of Circuit City Stock (or such other common stock) as
of such date, determined by the fraction the numerator of which shall
be the sum of (A) four times the average Market Value of one share of
CarMax Stock over the period of five consecutive Trading Days ending on
such date, (B) three times the average Market Value of one share of
CarMax Stock over the period of five consecutive Trading Days ending on
the fifth Trading Day prior to such date, (C) two times the average
Market Value of one share of CarMax Stock over the period of five
consecutive Trading Days ending on the 10th Trading Day prior to such
date and (D) the average Market Value of one share of CarMax Stock over
the period of five consecutive Trading
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Days ending on the 15th Trading Day prior to such date and the
denominator of which shall be the sum of (A) four times the average
Market Value of one share of Circuit City Stock (or such other common
stock) over the period of five consecutive Trading Days ending on such
date, (B) three times the average Market Value of one share of Circuit
City Stock (or such other common stock) over the period of five
consecutive Trading Days ending on the fifth Trading Day prior to such
date, (C) two times the average Market Value of one share of Circuit
City Stock (or such other common stock) over the period of five
consecutive Trading Days ending on the 10th Trading Day prior to such
date and (D) the average Market Value of one share of Circuit City
Stock (or such other common stock) over the period of five consecutive
Trading Days ending on the 15th Trading Day prior to such date.
(q) "Market Value Ratio of the Circuit City Stock to the
Carmax Stock" as of any date shall mean the fraction (which may be
greater or less than 1/1), expressed as a decimal (rounded to the
nearest five decimal places), of a share of CarMax Stock (or another
class or series of common stock of the Corporation, if so provided by
paragraph B(5)(a) of this Article because CarMax Stock is not then
Publicly Traded) to be issued in respect of a share of Circuit City
Stock upon a conversion of Circuit City Stock into CarMax Stock (or
another class or series of common stock of the Corporation) in
accordance with paragraph B(5)(a) of this Article, based on the ratio
of the Market Value of a share of Circuit City Stock to the Market
Value of a share of CarMax Stock (or such other common stock) as of
such date, determined by the fraction the numerator of which shall be
the sum of (A) four times the average Market Value of one share of
Circuit City Stock over the period of five consecutive Trading Days
ending on such date, (B) three times the average Market Value of one
share of Circuit City Stock over the period of five consecutive Trading
Days ending on the fifth Trading Day prior to such date, (C) two times
the average Market Value of one share of Circuit City Stock over the
period of five consecutive Trading Days ending on the 10th Trading Day
prior to such date and (D) the average Market Value of one share of
Circuit City Stock over the period of five consecutive Trading Days
ending on the 15th Trading Day prior to such date and the denominator
of which shall be the sum of (A) four times the average Market Value of
one share of CarMax Stock (or such other common stock) over the period
of five consecutive Trading Days ending on such date, (B) three times
the average Market Value of one share of CarMax Stock (or such other
common stock) over the period of five consecutive Trading Days ending
on the fifth Trading Day prior to such date, (C) two times the average
Market Value of one share of CarMax Stock (or such other common stock)
over the period of five consecutive Trading Days ending on the 10th
Trading Day prior to such date and (D) the average Market Value of one
share of CarMax Stock (or such other common stock) over the period of
five consecutive Trading Days ending on the 15th Trading Day prior to
such date.
(r) "Net Proceeds" shall mean, as of any date with respect to
any Disposition of any of the properties and assets attributed to the
Circuit City Group or the CarMax Group, as the case may be, an amount,
if any, equal to what remains of the gross proceeds of such Disposition
after payment of, or reasonable provision is made as determined by the
Board of Directors for, (A) any taxes payable by the Corporation (or
which would have been payable but for the utilization of tax benefits
attributable to the other Group) in respect of such Disposition or in
respect of any resulting dividend or redemption pursuant to paragraphs
B(5)(a)(i)(1)(a) or (b) of this Article, (B) any transaction costs,
including, without limitation, any legal, investment banking and
accounting fees and expenses and (C) any liabilities (contingent or
otherwise) of or attributed to such Group, including, without
limitation, any liabilities for deferred taxes or any indemnity or
guarantee obligations of the Corporation incurred in connection with
the Disposition or otherwise, and any liabilities for future purchase
price adjustments and any preferential amounts plus any accumulated and
unpaid dividends in respect of the Preferred Stock attributed to such
Group. For purposes of this definition, any properties and assets
attributed to the Group, the properties and assets of which are subject
to such Disposition, remaining after such Disposition shall constitute
"reasonable provision" for such amount of taxes, costs and liabilities
(contingent or otherwise) as the Board of Directors determines can be
expected to be supported by such properties and assets.
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(s) "Number of Shares Issuable with Respect to the Inter-Group
Interest" shall be determined by the Board of Directors prior to the
first issuance of shares of CarMax Stock to be the number of shares of
CarMax Stock that initially represents 100% of the common shareholders'
equity of the Corporation attributable to the CarMax Group, which
determination shall be set forth in a statement filed with the records
of the actions of the Board of Directors; provided, however, that such
number shall from time to time thereafter be:
(i) adjusted, if before such adjustment such number
is greater than zero, as determined by the Board of Directors
to be appropriate to reflect equitably any subdivision (by
stock split or otherwise) or combination (by reverse stock
split or otherwise) of the CarMax Stock or any dividend or
other distribution of shares of CarMax Stock to holders of
shares of CarMax Stock or any reclassification of CarMax
Stock;
(ii) decreased (but to not less than zero), if before
such adjustment such number is greater than zero, by action of
the Board of Directors by (1) the number of shares of CarMax
Stock issued or sold by the Corporation that, immediately
prior to such issuance or sale, were included in the Number of
Shares Issuable with Respect to the Inter-Group Interest, (2)
the number of shares of CarMax Stock issued upon conversion,
exchange or exercise of Convertible Securities that,
immediately prior to the issuance or sale of such Convertible
Securities, were included in the Number of Shares Issuable
with Respect to the Inter-Group Interest, (3) the number of
shares of CarMax Stock issued by the Corporation as a dividend
or other distribution (including in connection with any
reclassification or exchange of shares) to holders of Circuit
City Stock, (4) the number of shares of CarMax Stock issued
upon the conversion, exchange or exercise of any Convertible
Securities issued by the Corporation as a dividend or other
distribution (including in connection with any
reclassification or exchange of shares) to holders of Circuit
City Stock, or (5) the number (rounded, if necessary, to the
nearest whole number) equal to the quotient of (a) the
aggregate Fair Value as of the date of contribution of
properties or assets (including cash) transferred from the
CarMax Group to the Circuit City Group in consideration for a
reduction in the Number of Shares Issuable with Respect to the
Inter-Group Interest divided by (b) the Market Value of one
share of CarMax Stock as of the date of such transfer; and
(iii) increased by (1) the number of outstanding
shares of CarMax Stock repurchased by the Corporation for
consideration that is attributed as provided by paragraph
B(7)(d) of this Article to the Circuit City Group and (2) the
number (rounded, if necessary, to the nearest whole number)
equal to the quotient of (a) the Fair Value of properties or
assets (including cash) theretofore attributed as provided by
paragraph B(7)(d) of this Article to the Circuit City Group
that are contributed to the CarMax Group in consideration of
an increase in the Number of Shares Issuable with Respect to
the Inter-Group Interest, divided by (b) the Market Value of
one share of CarMax Stock as of the date of such contribution
and (3) the number of shares of CarMax Stock into or for which
Convertible Securities are deemed converted, exchanged or
exercised pursuant to the penultimate sentence of the
definition of "Circuit City Group" in paragraph B(7)(d) of
this Article.
(t) "Outstanding Carmax Fraction", as of any date, means the
fraction (which may simplify to 1/1) the numerator of which shall be
the number of shares of CarMax Stock outstanding on such date and the
denominator of which shall be the sum of the number of shares of CarMax
Stock outstanding on such date and the Number of Shares Issuable with
Respect to the Inter-Group Interest on such date. A statement setting
forth the Outstanding CarMax Fraction as of the record date for the
payment of any dividend or distribution on either series of the Common
Stock and as of the end of each fiscal quarter of the Corporation shall
be filed by the Secretary of the Corporation in the records of the
actions of the Board of Directors not later than ten days after such
date.
(u) "Publicly Traded" with respect to any security shall
mean (i) registered under Section 12 of the Securities Exchange Act of
1934,
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as amended (or any successor provision of law), and (ii) listed for
trading on the New York Stock Exchange or the American Stock Exchange
(or any national securities exchange registered under Section 7 of the
Securities Exchange Act of 1934, as amended (or any successor provision
of law), that is the successor to either such exchange) or listed on
The Nasdaq Stock Market (or any successor market system).
(v) "Redemption Date" shall mean the date fixed by the Board
of Directors as the effective date for a redemption of shares of either
series of the Common Stock, as set forth in a notice to holders thereof
required pursuant to paragraphs B(5)(d)(iii), (iv) or (vi) of this
Article.
(w) "Related Business Transaction" means any Disposition of
all or substantially all the properties and assets attributed to the
Circuit City Group or the CarMax Group, as the case may be, in a
transaction or series of related transactions that result in the
Corporation receiving in consideration of such properties and assets
primarily equity securities (including, without limitation, capital
stock, debt securities convertible into or exchangeable for equity
securities or interests in a general or limited partnership or limited
liability company, without regard to the voting power or other
management or governance rights associated therewith) of any entity
which (i) acquires such properties or assets or succeeds (by merger,
formation of a joint venture or otherwise) to the business conducted
with such properties or assets or controls such acquiror or successor
and (ii) is primarily engaged or proposes to engage primarily in one or
more businesses similar or complementary to the businesses conducted by
such Group prior to such Disposition, as determined by the Board of
Directors.
(x) "Trading Day" shall mean each weekday other than any day
on which the relevant series of common stock of the Corporation is not
traded on any national securities exchange or quoted on The Nasdaq
National Market or in the over-the-counter market."
C. Redesignation of Existing Common Stock. As of the effective date of
the Articles of Amendment pursuant to which this Section C is added to these
Amended and Restated Articles of Incorporation, and without any further action
on the part of the Corporation or its shareholders, each share of the Common
Stock then issued shall automatically be redesignated, changed and converted
into one fully paid and nonassessable share of Circuit City Stock.
ARTICLE VI
DIRECTORS
The number of directors shall be fixed by the bylaws. In the absence of
such a provision in the bylaws, the number of directors shall be ten. In no
event, however, shall the number of directors exceed seventeen. The directors of
the corporation shall be divided into three classes as nearly equal in number as
possible. The term of office of the first class of directors shall expire at the
first annual meeting of stockholders after the initial election dividing
directors into such classes, that of the second class shall expire at the second
annual meeting after such election and that of the third class at the third
annual meeting after such election. At each annual meeting of stockholders,
successors to the class of directors whose terms shall then expire and any other
nominees for election as a director of such class shall be elected to hold
office until the third succeeding annual meeting. If the number of directors is
changed, any newly created directorships or decrease in directorships shall be
so apportioned among the classes as to make all classes as nearly equal in
number as possible. Notwithstanding the foregoing, if the holders of one or more
series of Preferred Stock voting as a separate class shall become entitled to
elect members of the Board pursuant to the provisions of the Articles of Serial
Designation for such series, the terms of all members of the Board of Directors
previously elected shall expire at the time of such election and each director
shall then serve until the next meeting of stockholders at which directors are
elected; and whenever the holders of any series of Preferred Stock are no longer
entitled to so elect directors voting as a separate class, all of the directors
shall be elected by classes at the next annual meeting of stockholders held for
such purpose in the manner provided hereinabove in this paragraph with respect
to the initial election dividing directors into such classes. Subject to the
foregoing, at each annual meeting of stockholders the successors to the class of
directors whose terms shall then expire and any other nominees for election as a
director of such class shall be elected to hold office until the third
succeeding annual
32
<PAGE>
meeting. The aggregate number of vacancies resulting from an increase in the
number of directors which may be created and filled by action of the Board of
Directors between annual meetings of stockholders shall be limited to two.
ARTICLE VIII
INDEMNIFICATION
A. Definitions. For purposes of this Article the following
definitions shall apply:
"Corporation" means this Corporation only and no predecessor entity or
other legal entity.
"Expenses" include counsel fees, expert witness fees, and costs of
investigation, litigation and appeal, as well as any amounts expended in
asserting a claim for indemnification.
"Liability" means the obligation to pay a judgment, settlement,
penalty, fine, or other such obligation, including, without limitation, any
excise tax assessed with respect to an employee benefit plan.
"Legal Entity" means a corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise.
"Predecessor Entity" means a legal entity the existence of which ceased
upon its acquisition by the Corporation in a merger or otherwise.
"Proceeding" means any threatened, pending, or completed action, suit,
proceeding or appeal whether civil, criminal, administrative or investigative
and whether formal or informal.
B. Indemnification of Directors and Officers. The Corporation shall
indemnify and may contract in advance to indemnify an individual who is, was or
is threatened to be made a party to a proceeding because he is or was a director
or officer of the Corporation or, while a director or officer of the
Corporation, is or was serving the Corporation or any other legal entity in any
capacity at the request of the Corporation against all liabilities and
reasonable expenses incurred in the proceeding except such liabilities and
expenses as are incurred because of his willful misconduct or knowing violation
of the criminal law (regardless of whether the proceeding is by or in the right
of the Corporation). The determination that indemnification under this Paragraph
B is permissible and the evaluation as to the reasonableness of expenses in a
specific case shall be made, in the case of a director, as provided by law, and
in the case of an officer, as provided in Paragraph C of this Article; provided,
however, that if a majority of the directors of the Corporation has changed
after the date of the alleged conduct giving rise to a claim for
indemnification, such determination and evaluation shall, at the option of the
person claiming indemnification, be made by special legal counsel agreed upon by
the Board of Directors and such person. Unless a determination has been made
that indemnification is not permissible, the Corporation shall make advances and
reimbursements for expenses incurred by a director or officer in a proceeding
upon receipt of an undertaking from him to repay the same if it is ultimately
determined that he is not entitled to indemnification. Such undertaking shall be
an unlimited, unsecured general obligation of the director or officer and shall
be accepted without reference to his ability to make repayment. The termination
of a proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent shall not of itself create a presumption that
a director or officer acted in such a manner as to make him ineligible for
indemnification.
C. Indemnification of Others. The Corporation may, to a lesser extent
or to the same extent that the Corporation is required to provide
indemnification and make advances and reimbursements for expenses to its
directors and officers, provide indemnification and make advances and
reimbursements for expenses to its employees and agents, the directors,
officers, employees and agents of its subsidiaries and predecessor entities, and
any person serving any other legal entity in any capacity at the request of the
Corporation, and, if authorized by general or specific action of the Board of
Directors, may contract in advance to do so. The determination that
indemnification under this Paragraph C is permissible, the authorization of such
indemnification and the evaluation as to the reasonableness of expenses in a
specific case shall be made as authorized from time to time by general or
specific action of the Board of Directors, which action may be taken before or
after a claim for indemnification is made, or as otherwise provided by law.
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No person's rights under Paragraph B of this Article shall be limited by the
provisions of this Paragraph C.
D. Miscellaneous. Every reference in this Article to persons who are or
may be entitled to indemnification shall include all persons who formerly
occupied any of the positions referred to and their respective heirs, executors
and administrators. Special legal counsel selected to make determinations under
this Article may be counsel for the Corporation. Indemnification pursuant to
this Article shall not be exclusive of any other right of indemnification to
which any person may be entitled including indemnification pursuant to a valid
contract, indemnification by legal entities other than the Corporation and
indemnification under policies of insurance purchased and maintained by the
Corporation or others. However, no person shall be entitled to indemnification
by the Corporation to the extent he is indemnified by another, including an
insurer. The Corporation is authorized to purchase and maintain insurance
against any liability it may have under this Article or to protect any of the
persons named above against any liability arising from their service to the
Corporation or any other legal entity at the request of the Corporation
regardless of the Corporation's power to indemnify against such liability. The
provisions of this Article shall not be deemed to prohibit the Corporation from
entering into contracts otherwise permitted by law with any individuals or legal
entities, including those named above, for the purposes of conducting the
business of the Corporation. If any provision of this Article or its application
to any person or circumstance is held invalid by a court of competent
jurisdiction, the invalidity shall not affect other provisions or applications
of this Article, and to this and the provisions of this Article are severable.
ARTICLE IX
LIMITATION OF LIABILITY
To the full extent that the Virginia Stock Corporation Act, as it now
exists or is hereafter amended, permits the limitation or elimination of the
liability of directors or officers, a director or officer of the Corporation
shall not be liable to the Corporation or its stockholders for monetary damages.
ARTICLE X
VOTE TO AMEND OR RESTATE
As to each voting group entitled to vote on an amendment or restatement
of these Amended and Restated Articles of Incorporation the vote required for
approval shall be (i) the vote required by the Virginia Stock Corporation Act
(as applied without regard to the effect of clause (iii) of this Article) if the
effect of the amendment or restatement is (a) to reduce the shareholder vote
required to approve a merger, a statutory share exchange, a sale of all or
substantially all of the assets of the Corporation or the dissolution of the
Corporation, (b) to modify any provision of Article VI of these Amended and
Restated Articles of Incorporation, or (c) to delete all or any part of this
clause (i) of this Article; (ii) the vote required by the terms of these Amended
and Restated Articles of Incorporation, as amended or as restated from time to
time, if such terms require the approval of more than a majority of the votes
entitled to be cast thereon by such voting group; or (iii) a majority of the
votes entitled to be cast thereon if neither clause (i) nor clause (ii) of this
Article is applicable.
34
EXHIBIT 3(i)(b)
CIRCUIT CITY STORES, INC.
ARTICLES OF AMENDMENT
1. Name. The name of the corporation is Circuit City Stores, Inc.
2. The Amendment. The Amendment amends and restates Sections C and D of
Article IV of the corporation's Amended and Restated Articles of Incorporation
in the form attached hereto. The Amendment did not require shareholder approval.
3. Board Action. The Board of Directors adopted the Amendment at a
meeting held on April 14, 1998.
4. Certificate Required by Law. These Articles of Amendment contain all
of the information required by Section 13.1-710 of the Code of Virginia and this
paragraph constitutes the Certificate required by that Section.
Dated: April 21, 1998 CIRCUIT CITY STORES, INC.
By: Michael T. Chalifoux
Senior Vice President,
Chief Financial Officer and
Secretary
1
C. Series E Preferred Stock.
The Board of Directors of the Corporation has heretofore designated
500,000 shares of the Preferred Stock as the Cumulative Participating Preferred
Stock, Series E ("Series E Stock"). Such number may from time to time be
decreased (but not below the number of shares of Series E Stock then
outstanding) by the Board of Directors of the Corporation. In addition to any
relative rights and preferences hereinabove granted, the relative rights and
preferences of such series and the holders of the outstanding shares thereof are
as set forth in paragraphs (C)(1) through (C)(5) of this Article.
(1) Dividends and Distributions.
(a) The holders of shares of the Series E Stock, in preference
to the holders of shares of the Circuit City Stock and the CarMax Stock
and of any other junior stock, shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the
fifteenth day (or, if not a business day, the preceding business day)
of January, April, July and October in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing
on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of the Series E Stock, in an amount
per share (rounded to the nearest cent) equal to the greater of (a)
$4.00 or (b) subject to the provision for adjustment hereinafter set
forth, 400 times the aggregate per share amount of all cash dividends,
and 400 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions, other than a dividend
payable in shares of Circuit City Stock, or a subdivision of the
outstanding shares of Circuit City Stock (by reclassification or
otherwise), declared on the Circuit City Stock since the immediately
preceding Quarterly Dividend Payment Date or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of any share
or fraction of a share of the Series E Stock. In the event the
Corporation shall at any time after January 1, 1997 declare or pay any
dividend on Circuit City Stock payable in shares of Circuit City Stock,
or effect a subdivision or combination or consolidation of the
outstanding shares of Circuit City Stock (by reclassification or
otherwise than by payment of a dividend in shares of Circuit City
Stock) into a greater or lesser number of shares of Circuit City Stock,
then in each such case the amount per share to which holders of shares
of the Series E Stock shall be entitled under clause (b) of the
preceding sentence shall be adjusted by multiplying the amount per
share to which holders of shares of the Series E Stock were entitled
immediately prior to such event under clause (b) of the preceding
sentence by a fraction the numerator of which is the number of shares
of Circuit City Stock outstanding immediately after such event and the
denominator of which is the number of shares of Circuit City Stock that
were outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution
on the Series E Stock as provided in paragraph (C)(1)(a) of this
Article immediately after it declares a dividend or distribution on the
Circuit City Stock (other than a dividend payable in shares of Circuit
City Stock); provided that, in the event no dividend or distribution
shall have
2
been declared on the Circuit City Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $4.00 per share on the Series E
Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of the Series E Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of the
Series E Stock, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of shares of the Series E Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to accrue
and be cumulative from such Quarterly Dividend Payment Date. Accrued
but unpaid dividends shall not bear interest. Dividends paid on the
shares of the Series E Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at
the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of the Series E Stock entitled
to receive payment of a dividend or distribution declared thereon,
which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
(2) Voting Rights. Except to the extent provided by law, the
holders of shares of the Series E Stock shall not be entitled (i) to vote on any
matter or (ii) to receive notice of, or to participate in, any meeting of
shareholders of the Corporation at which they are not entitled to vote.
(3) Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Series E Stock as provided in paragraph
(C)(1) of this Article are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not declared, on
shares of the Series E Stock outstanding shall have been paid in full,
the Corporation shall not:
(i) declare, set apart or pay dividends on or make any
other distributions on the Common Stock or any shares of stock
ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series E Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series E Stock, except dividends paid
ratably on the Series E Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares
3
are then entitled; or
(iii) redeem or purchase or otherwise acquire for
consideration shares of the Series E Stock, any such parity
stock or any stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) with the Series E
Stock, or set aside for or pay to any sinking fund therefor.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (C)(3)(a) of this Article, purchase or otherwise acquire such
shares at such time and in such manner.
(4) Reacquired Shares. Any shares of the Series E Stock
redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock, par value $20.00 per share, and may be reissued as a
new series or a part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors or as part of an existing
series of Preferred Stock.
(5) Redemption.
(a) The Corporation may, at its option and at any time and
from time to time after April 14, 2058, redeem all or any portion of
the outstanding shares of Series E Stock.
(b) The redemption price shall be an amount per share equal to
the greater of (i) $100,000.00 or (ii) subject to the provision for
adjustment hereinafter set forth, 400 times the current market price
per share of Circuit City Stock on the date fixed for redemption, plus
in each such case an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date fixed for
redemption. The current market price per share of Circuit City Stock on
any date shall be deemed to be the average of the daily closing prices
per share of such Circuit City Stock for the 30 consecutive trading
days immediately prior to such date. 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 ("NYSE")
or, if the Common Stock is not listed or admitted to trading on the
NYSE, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national
securities exchange on which the Circuit City Stock is listed or
admitted to trading or, if the Circuit City Stock is 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
Systems ("NASDAQ") or such other system then in use, or, if on any such
date the Circuit City Stock is not quoted by any such organization, the
average of the closing bid and asked prices as furnished by
4
a professional market maker making a market in the Circuit City Stock.
If no professional market maker is then making a market in the Circuit
City Stock, the current market price per share of the Circuit City
Stock shall be deemed to be $1.00. As used herein, the term trading day
shall mean a day on which the principal national securities exchange on
which the Circuit City Stock is listed or admitted to trading is open
for the transaction of business or, if the Circuit City Stock is not
listed or admitted to trading on any national securities exchange, a
business day. In the event the Corporation shall at any time after
January 1, 1997 declare or pay any dividend on Circuit City Stock
payable in shares of Circuit City Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Circuit City
Stock (by reclassification or otherwise than by payment of a dividend
in shares of Circuit City Stock) into a greater or lesser number of
shares of Circuit City Stock, then in each such case the aggregate
amount per share to which holders of shares of the Series E Stock shall
be entitled under the provisions of the first sentence of this
paragraph shall be adjusted by multiplying the amount per share to
which holders of shares of the Series E Stock should have been entitled
immediately prior to such event under the provisions of the first
sentence of this paragraph by a fraction the numerator of which is the
number of shares of Circuit City Stock outstanding immediately after
such event and the denominator of which is the number of shares of
Circuit City Stock that were outstanding immediately prior to such
event.
(c) In case less than all of the outstanding shares of Series
E Stock are to be redeemed, not more than 60 days prior to the date
fixed for redemption the Corporation shall select the shares to be
redeemed. Such shares shall be selected by lot or designated ratably or
in such other equitable manner as the Corporation may determine. The
Corporation in its discretion may select the particular certificates
(if there are more than one) representing shares registered in the name
of a holder that are to be redeemed.
(d) Not less than 30 nor more than 60 days prior to the date
fixed for redemption, notice of redemption shall be given by first
class mail, postage prepaid, to the holders of record of the
outstanding shares of the Series E Stock to be redeemed at their last
known addresses shown in the Corporation's share transfer records. The
notice of redemption shall set forth the paragraph of this Article
pursuant to which the shares are being redeemed, the number of shares
to be redeemed, the date fixed for redemption, the applicable
redemption price, and the place or places where certificates
representing shares to be redeemed may be surrendered. In case less
than all of the outstanding shares of the Series E Stock are to be
redeemed the notice of redemption shall also set forth the numbers of
the certificates representing shares to be redeemed and, in case less
than all shares represented by any such certificate are to be redeemed,
the number of shares represented by such certificate to be redeemed.
(e) If notice of redemption of any outstanding shares of
Series E Stock shall have been duly mailed as herein provided, then on
or before the date fixed for redemption the Corporation shall deposit
cash sufficient to pay the redemption price of such shares in trust for
the benefit of the holders of the shares to be redeemed with any bank
or trust company in the City of Richmond, Commonwealth of Virginia,
having capital and surplus aggregating at least $50,000,000 as of the
date of its most recent report of
5
financial condition and named in such notice, to be applied to the
redemption of the shares so called for redemption against surrender for
cancellation of the certificates representing such shares. From and
after the time of such deposit all shares for the redemption of which
such deposit shall have been made shall, whether or not the
certificates therefor shall have been surrendered for cancellation, no
longer be deemed to be outstanding for any purpose, and all rights with
respect to such shares shall thereupon cease and terminate except the
right to receive payment of redemption price but without interest. Any
interest earned on funds so deposited shall be paid to the Corporation
from time to time. Any funds so deposited and unclaimed at the end of
five years from the date fixed for redemption shall be repaid to the
Corporation, free of trust, and the holders of the shares called for
redemption who shall not have surrendered their certificates
representing such shares prior to such repayment shall be deemed to be
unsecured creditors of the Corporation for the amount of the redemption
price and shall look only to the Corporation for payment thereof,
without interest, subject to the laws of the Commonwealth of Virginia.
(f) The Corporation shall also have the right to acquire
outstanding shares of Series E Stock otherwise than by redemption
pursuant to paragraph (C)(5)(a) of this Article, from time to time for
such consideration as may be acceptable to the holders thereof;
provided, however, that if all dividends accrued on all outstanding
shares of Series E Stock shall not have been declared and paid or
declared and a sum sufficient for the payment thereof set apart,
neither the Corporation nor any subsidiary shall so acquire any shares
of Series E Stock except in accordance with a purchase offer made on
the same terms to all the holders of the outstanding shares of Series E
Stock.
(6) Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination, statutory share exchange or
other transaction in which the shares of Circuit City Stock are exchanged for or
changed into other stock or securities, cash and/or any other property, then in
any such case the shares of the Series E Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 400 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Circuit City Stock is changed or
exchanged. If the Corporation shall at any time after January 1, 1997 declare or
pay any dividend on Circuit City Stock payable in shares of Circuit City Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Circuit City Stock (by reclassification or otherwise than by payment
of a dividend in shares of Circuit City Stock) into a greater or lesser number
of shares of Circuit City Stock, then in each such case the amount set forth in
the preceding sentence with respect to the exchange or change of shares of the
Series E Stock shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Circuit City Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Circuit City Stock that were outstanding immediately prior to such
event.
D. Series F Preferred Stock.
6
The Board of Directors of the Corporation has heretofore designated
500,000 shares of the Preferred Stock as the Cumulative Participating Preferred
Stock, Series F ("Series F Stock"). Such number may from time to time be
decreased (but not below the number of shares of Series F Stock then
outstanding) by the Board of Directors of the Corporation. In addition to any
relative rights and preferences hereinabove granted, the relative rights and
preferences of such series and the holders of the outstanding shares thereof are
as set forth in paragraphs (D)(1) through (D)(5) of this Article.
(1) Dividends and Distributions.
(a) The holders of shares of the Series F Stock, in preference
to the holders of shares of the Circuit City Stock and the CarMax Stock
and of any other junior stock, shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the
fifteenth day (or, if not a business day, the preceding business day)
of January, April, July and October in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing
on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of the Series F Stock, in an amount
per share (rounded to the nearest cent) equal to the greater of (a)
$4.00 or (b) subject to the provision for adjustment hereinafter set
forth, 400 times the aggregate per share amount of all cash dividends,
and 400 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions, other than a dividend
payable in shares of CarMax Stock, or a subdivision of the outstanding
shares of CarMax Stock (by reclassification or otherwise), declared on
the CarMax Stock since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of
the Series F Stock. In the event the Corporation shall at any time
after January 1, 1997 declare or pay any dividend on CarMax Stock
payable in shares of CarMax Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of CarMax Stock
(by reclassification or otherwise than by payment of a dividend in
shares of CarMax Stock) into a greater or lesser number of shares of
CarMax Stock, then in each such case the amount per share to which
holders of shares of the Series F Stock shall be entitled under clause
(b) of the preceding sentence shall be adjusted by multiplying the
amount per share to which holders of shares of the Series F Stock were
entitled immediately prior to such event under clause (b) of the
preceding sentence by a fraction the numerator of which is the number
of shares of CarMax Stock outstanding immediately after such event and
the denominator of which is the number of shares of CarMax Stock that
were outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution
on the Series F Stock as provided in paragraph (D)(1)(a) of this
Article immediately after it declares a dividend or distribution on the
CarMax Stock (other than a dividend payable in shares of CarMax Stock);
provided that, in the event no dividend or distribution shall have been
declared on the CarMax Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $4.00 per share on the Series F Stock shall
nevertheless be payable on such subsequent
7
Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of the Series F Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of the
Series F Stock, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of shares of the Series F Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to accrue
and be cumulative from such Quarterly Dividend Payment Date. Accrued
but unpaid dividends shall not bear interest. Dividends paid on the
shares of the Series F Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at
the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of the Series F Stock entitled
to receive payment of a dividend or distribution declared thereon,
which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
(2) Voting Rights. Except to the extent provided by law, the
holders of shares of the Series F Stock shall not be entitled (i) to vote on any
matter or (ii) to receive notice of, or to participate in, any meeting of
shareholders of the Corporation at which they are not entitled to vote.
(3) Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Series F Stock as provided in paragraph
(C)(1) of this Article are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not declared, on
shares of the Series F Stock outstanding shall have been paid in full,
the Corporation shall not:
(i) declare, set apart or pay dividends on or make any
other distributions on the Common Stock or any shares of stock
ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series F Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series F Stock, except dividends paid
ratably on the Series F Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then
entitled; or
(iii) redeem or purchase or otherwise acquire for
consideration shares of the Series F Stock, any such parity
stock or any stock ranking junior (either as to
8
dividends or upon liquidation, dissolution or winding up) with
the Series F Stock, or set aside for or pay to any sinking
fund therefor.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (D)(3)(a) of this Article, purchase or otherwise acquire such
shares at such time and in such manner.
(4) Reacquired Shares. Any shares of the Series F Stock
redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock, par value $20.00 per share, and may be reissued as a
new series or a part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors or as part of an existing
series of Preferred Stock.
(5) Redemption.
(a) The Corporation may, at its option and at any time and
from time to time after April 14, 2058, redeem all or any portion of
the outstanding shares of Series F Stock.
(b) The redemption price shall be an amount per share equal to
the greater of (i) $40,000.00 or (ii) subject to the provision for
adjustment hereinafter set forth, 400 times the current market price
per share of CarMax Stock on the date fixed for redemption, plus in
each such case an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date fixed for
redemption. The current market price per share of CarMax Stock on any
date shall be deemed to be the average of the daily closing prices per
share of such CarMax Stock for the 30 consecutive trading days
immediately prior to such date. 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 ("NYSE") or, if the
Common Stock is not listed or admitted to trading on the NYSE, as
reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities
exchange on which the CarMax Stock is listed or admitted to trading or,
if the CarMax Stock is 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 Systems ("NASDAQ") or
such other system then in use, or, if on any such date the CarMax Stock
is 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 CarMax Stock. If no professional market maker is then
making a market in the CarMax Stock, the current market price per share
of the CarMax Stock shall be deemed to be $1.00. As used herein, the
term trading day shall mean a day on which the principal national
securities exchange on which the CarMax Stock is listed or
9
admitted to trading is open for the transaction of business or, if the
CarMax Stock is not listed or admitted to trading on any national
securities exchange, a business day. In the event the Corporation shall
at any time after January 1, 1997 declare or pay any dividend on CarMax
Stock payable in shares of CarMax Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of CarMax Stock
(by reclassification or otherwise than by payment of a dividend in
shares of CarMax Stock) into a greater or lesser number of shares of
CarMax Stock, then in each such case the aggregate amount per share to
which holders of shares of the Series F Stock shall be entitled under
the provisions of the first sentence of this paragraph shall be
adjusted by multiplying the amount per share to which holders of shares
of the Series F Stock should have been entitled immediately prior to
such event under the provisions of the first sentence of this paragraph
by a fraction the numerator of which is the number of shares of CarMax
Stock outstanding immediately after such event and the denominator of
which is the number of shares of CarMax Stock that were outstanding
immediately prior to such event.
(c) In case less than all of the outstanding shares of Series
F Stock are to be redeemed, not more than 60 days prior to the date
fixed for redemption the Corporation shall select the shares to be
redeemed. Such shares shall be selected by lot or designated ratably or
in such other equitable manner as the Corporation may determine. The
Corporation in its discretion may select the particular certificates
(if there are more than one) representing shares registered in the name
of a holder that are to be redeemed.
(d) Not less than 30 nor more than 60 days prior to the date
fixed for redemption, notice of redemption shall be given by first
class mail, postage prepaid, to the holders of record of the
outstanding shares of the Series F Stock to be redeemed at their last
known addresses shown in the Corporation's share transfer records. The
notice of redemption shall set forth the paragraph of this Article
pursuant to which the shares are being redeemed, the number of shares
to be redeemed, the date fixed for redemption, the applicable
redemption price, and the place or places where certificates
representing shares to be redeemed may be surrendered. In case less
than all of the outstanding shares of the Series F Stock are to be
redeemed the notice of redemption shall also set forth the numbers of
the certificates representing shares to be redeemed and, in case less
than all shares represented by any such certificate are to be redeemed,
the number of shares represented by such certificate to be redeemed.
(e) If notice of redemption of any outstanding shares of
Series F Stock shall have been duly mailed as herein provided, then on
or before the date fixed for redemption the Corporation shall deposit
cash sufficient to pay the redemption price of such shares in trust for
the benefit of the holders of the shares to be redeemed with any bank
or trust company in the City of Richmond, Commonwealth of Virginia,
having capital and surplus aggregating at least $50,000,000 as of the
date of its most recent report of financial condition and named in such
notice, to be applied to the redemption of the shares so called for
redemption against surrender for cancellation of the certificates
representing such shares. From and after the time of such deposit all
shares for the redemption of which such deposit shall have been made
shall, whether or not the
10
certificates therefor shall have been surrendered for cancellation, no
longer be deemed to be outstanding for any purpose, and all rights with
respect to such shares shall thereupon cease and terminate except the
right to receive payment of redemption price but without interest. Any
interest earned on funds so deposited shall be paid to the Corporation
from time to time. Any funds so deposited and unclaimed at the end of
five years from the date fixed for redemption shall be repaid to the
Corporation, free of trust, and the holders of the shares called for
redemption who shall not have surrendered their certificates
representing such shares prior to such repayment shall be deemed to be
unsecured creditors of the Corporation for the amount of the redemption
price and shall look only to the Corporation for payment thereof,
without interest, subject to the laws of the Commonwealth of Virginia.
(f) The Corporation shall also have the right to acquire
outstanding shares of Series F Stock otherwise than by redemption
pursuant to paragraph (D)(5)(a) of this Article, from time to time for
such consideration as may be acceptable to the holders thereof;
provided, however, that if all dividends accrued on all outstanding
shares of Series F Stock shall not have been declared and paid or
declared and a sum sufficient for the payment thereof set apart,
neither the Corporation nor any subsidiary shall so acquire any shares
of Series F Stock except in accordance with a purchase offer made on
the same terms to all the holders of the outstanding shares of Series F
Stock.
(6) Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination, statutory share exchange or
other transaction in which the shares of CarMax Stock are exchanged for or
changed into other stock or securities, cash and/or any other property, then in
any such case the shares of Series F Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 400 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of CarMax Stock is changed or
exchanged. If the Corporation shall at any time after January 1, 1997 declare or
pay any dividend on CarMax Stock payable in shares of CarMax Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of CarMax
Stock (by reclassification or otherwise than by payment of a dividend in shares
of CarMax Stock) into a greater or lesser number of shares of CarMax Stock, then
in each such case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series F Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of CarMax Stock outstanding immediately after such event and the
denominator of which is the number of shares of CarMax Stock that were
outstanding immediately prior to such event.
11
Exhibit 3(i)(c)
CIRCUIT CITY STORES, INC.
ARTICLES OF AMENDMENT
1. Name. The name of the Corporation is Circuit City Stores, Inc.
2. The Amendment. The Amendment, a copy of which is attached hereto
as Exhibit "A," (i) amends Article III(A) of the Corporation's Amended and
Restated Articles of Incorporation ("Articles"), by increasing the total
authorized Common Stock from 350,000,000 shares to 525,000,000 shares and (ii)
amends Article V(B)(1) of the Articles by increasing the number of authorized
shares designated as "Circuit City Stores, Inc.-- Circuit City Group Common
Stock" ("Circuit City Stock") from 175,000,000 to 350,000,000.
3. Board Action. The Board of Directors approved the Amendment at a
meeting held on April 13, 1999, and directed that it be submitted to a vote of
the shareholders of the Corporation.
4. Shareholder Action.
(a) The Amendment was submitted to the shareholders in accordance
with the Virginia Stock Corporation Act at the annual meeting of shareholders
held on June 15, 1999 (the "annual meeting").
(b) On April 30, 1999, the record date, 101,159,903 shares of
Circuit City Stock were outstanding and entitled to vote, and 23,326,533 shares
designated as "Circuit City Stores, Inc. -- CarMax Group Common Stock" ("CarMax
Stock") were outstanding and entitled to vote. The holders of both series of
Common Stock voted together as a single group at the annual meeting. In
addition, the holders of Circuit City Stock voted as a separate voting group.
Each outstanding share of Circuit City Stock entitles the holder thereof to one
vote; each outstanding share of CarMax Stock entitles the holder thereof to .055
votes. On the record date, the total number of votes entitled to be cast by the
holders of Circuit City Stock and the holders of CarMax Stock, collectively, was
102,422,862; the total number of votes entitled to be cast by the holders of
Circuit City Stock, separately, was 101,159,903.
(c) At the annual meeting, the total number of votes cast FOR and
the total number of votes cast AGAINST the Amendment with respect to each voting
group were as follows:
FOR AGAINST
CIRCUIT CITY AND CARMAX COMMON 87,482,460 2,066,942
STOCK HOLDERS, COLLECTIVELY
CIRCUIT CITY COMMON STOCK HOLDERS, 86,369,023 2,059,401
SEPARATELY
The total number of votes cast FOR the Amendment for each voting group was
sufficient for its adoption.
Dated: June 22, 1999 CIRCUIT CITY STORES, INC.
By: s/Richard L. Sharp
Name: Richard L. Sharp
Title: Chairman and Chief
Executive Officer
-2-
Exhibit A
ARTICLE III
CAPITAL STOCK
A. Authorized Stock. The aggregate number of shares that the
Corporation shall have authority to issue and the par value per share are as
follows:
Class Number of Shares Par Value
Preferred 2,000,000 $20.00
Common 525,000,000 $ .50
<PAGE>
ARTICLE V
COMMON STOCK
B. Circuit City Stock and Carmax Stock.
(1) Designation of Series; Number of Shares of Each Series. One series
of Common Stock is hereby designated as "Circuit City Stores, Inc. - Circuit
City Group Common Stock" ("Circuit City Stock") consisting of 350,000,000 shares
and a second series of Common Stock is hereby designated as "Circuit City
Stores, Inc. - CarMax Group Common Stock" ("CarMax Stock") consisting of
175,000,000 shares. The number of shares of each such series may from time to
time be increased (but not above the total number of authorized shares of the
class of Common Stock) or decreased (but not below the number of shares of such
series then outstanding) by the Board of Directors of the Corporation.
