As filed with the Securities and Exchange Commission on June 24, 1997
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-------------------------------
<TABLE>
<S> <C>
HEILIG-MEYERS COMPANY MACSAVER FINANCIAL
SERVICES, INC.
(Exact name of registrant as specified in its charter) (Exact name of registrant as specified in its charter)
Virginia Delaware
(State or other jurisdiction of incorporation or organization) (State or other jurisdiction of incorporation or organization)
54-0558861 62-1419691
(I.R.S. employer identification number) (I.R.S. employer identification number)
2235 Staples Mill Road 2 Reads Way, Suite 224
Richmond, Virginia 23230 New Castle, Delaware 19720
(804) 359-9171 (302) 325-3841
(Address, including zip code, and telephone number, including (Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices) area code, of registrant's principal executive offices)
</TABLE>
-----------------------
David W. Robertson, Esq.
McGuire, Woods, Battle & Boothe, L.L.P.
One James Center
901 East Cary Street
Richmond, Virginia 23219
(804) 775-1000
(Name, address, including zip code, and
telephone number, including area code, of
agent for service)
-----------------------
Copies to:
Dennis C. Sullivan
Sullivan & Cromwell
1701 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. ___
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. X
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. ___
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. ___
-1-
<PAGE>
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. ___
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each
Class of Securities Proposed Maximum Amount of
to be Registered Aggregate Offering Price (1) Registration Fee (8)
<S> <C>
Common stock of Heilig-Meyers Company
(par value $2 per share).................................(2)(3)
Warrants of Heilig-Meyers Company........................(2)(4)
Debt Securities of MacSaver Financial Services, Inc...(2)(5)(6)
Guarantees by Heilig-Meyers Company of Debt Securities of
MacSaver Financial Services, Inc.........................(2)(7)
Total.......................................................... $400,000,000 $125,393
================ ========
</TABLE>
(1) Estimated solely for the purpose of determining the
registration fee in accordance with Rule 457(o) under the
Securities Act of 1933.
(2) There are being registered hereunder such principal amount or
number of Securities as may from time to time be issued, but
in no event will the aggregate initial offering price of the
Securities exceed $400,000,000.
(3) Each share of Common Stock being registered hereunder includes
a preferred share purchase right.
(4) Warrants may be sold separately or with Debt Securities or
Common Stock.
(5) Any offering of Debt Securities offered in a currency other
than in U.S. dollars will be treated as the equivalent in U.S.
dollars based on the official exchange rate applicable to the
purchase of Debt Securities from the registrant.
(6) If any Debt Securities are issued at a discount or with
accrued interest, the amount of such securities registered
hereunder is that greater amount that will result in an
aggregate offering price of $400,000,000.
(7) No separate registration fee is required for the Guarantees in
accordance with Rule 457(n) under the Securities Act of 1933.
No separate consideration will be given for any Guarantee.
(8) As permitted by Rule 429 under the Securities Act of 1933, the
Prospectus contained in this registration statement also
relates to $100,000,000 of unsold and remaining unissued
securities registered on the registration statement on Form
S-3 (Registration No. 333-07753) with respect to which the
Registrants have previously paid a filing fee of $34,483.
--------------------------
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
As permitted by Rule 429 under the Securities Act of 1933, the
Prospectus contained in this registration statement also relates to $100,000,000
of unsold and remaining unissued securities registered on the registration
statement on Form S-3 (Registration No. 333-07753).
-2-
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
SUBJECT TO COMPLETION, DATED JUNE 24, 1997
[Logo]
$400,000,000
HEILIG-MEYERS COMPANY
COMMON STOCK AND WARRANTS
MACSAVER FINANCIAL SERVICES, INC.
(a subsidiary of Heilig-Meyers Company)
GUARANTEED DEBT SECURITIES
Unconditionally guaranteed as to payment of
principal, premium, if any, and interest, if any, by
Heilig-Meyers Company.
Heilig-Meyers Company (the "Company") may offer and sell from time to time,
together or separately, (i) shares of its common stock, $2 par value per share
(the "Common Stock") and (ii) warrants to purchase Common Stock (the
"Warrants"). MacSaver Financial Services, Inc., a wholly-owned subsidiary of the
Company ("MacSaver"), may offer and sell from time to time its debt securities
consisting of debentures, notes and/or other unsecured evidences of indebtedness
(the "Debt Securities"). The Debt Securities will be unconditionally guaranteed
(the "Guarantees") as to payment of principal of, and premium and interest on,
if any, the Debt Securities by the Company. The Common Stock, Warrants and Debt
Securities (collectively, together with the Guarantees, the "Securities") may be
offered, separately or together, at prices and terms to be set forth in one or
more supplements to this Prospectus (each a "Prospectus Supplement") up to an
aggregate initial offering price of $400,000,000 (or its equivalent, based on
the applicable exchange rate at the time of sale, in one or more foreign
currencies, currency units or composite currencies as shall be designated by the
Company or MacSaver, as the case may be).
Specific terms of the Securities for which this Prospectus is being
delivered are set forth in the accompanying Prospectus Supplement including,
where applicable, (i) in the case of Debt Securities, the specific designation,
aggregate principal amount, denominations, currency, maturity, premium, rate of
interest (or method of calculation) and time of payment thereof, terms for
redemption at the option of MacSaver or the holder, the form of the Debt
Securities (which may be in registered or permanent global form), the initial
public offering price and certain other terms of the offering and sale of the
Debt Securities and the terms of the Guarantees in respect of which this
Prospectus is being delivered; (ii) in the case of Common Stock, the number of
shares and initial public offering price of the Common Stock, and (iii) in the
case of Warrants, the number of shares of Common Stock which are issuable upon
exercise, the exercise period, the methods of distribution, the initial public
offering or purchase price and the exercise price and detachability if issued
with other Securities, of Warrants for which the Prospectus Supplement is being
delivered. The Prospectus Supplement will also contain information, as
applicable, about any listing on a securities exchange of the Securities for
which the Prospectus Supplement is being delivered.
The Securities may be sold by the Company and MacSaver directly or
indirectly through agents, underwriters or dealers as designated from time to
time or through a combination of such methods. See "Plan of Distribution." The
accompanying Prospectus Supplement sets forth the names of any underwriters,
dealers or agents involved in the sale
-1-
<PAGE>
of the Securities in respect of which this Prospectus is being delivered and any
applicable fee, commission or discount arrangements with them.
This Prospectus may not be used to consummate sales of Securities unless
accompanied or, to the extent permitted by applicable law, preceded by a
Prospectus Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is June __, 1997.
-2-
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549; and at the Commission's regional offices at
500 West Madison Street, Chicago, Illinois 60606; and 7 World Trade Center, 13th
Floor, New York, New York 10048. Copies of such material can be obtained by mail
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission also maintains a
World Wide Web site at http://www.sec.gov containing reports, proxy and
information statements and other information regarding registrants, such as the
Company, that file electronically with the Commission. The Company's common
stock is listed on the New York and Pacific Stock Exchanges, and such material
may also be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005 and the Pacific Stock Exchange, Incorporated,
301 Pine Street, San Francisco, California 94104.
The Company and MacSaver have filed with the Commission a Registration
Statement on Form S-3 (herein, together with all amendments and exhibits,
referred to as the "Registration Statement") under the Securities Act of 1933,
as amended (the "Securities Act"), of which this Prospectus constitutes a part.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information, reference
is made to the Registration Statement.
In accordance with Staff Accounting Bulletin No. 53, relating to financial
statement requirements in filings involving the guarantee of securities by a
parent corporation, separate financial statements for MacSaver are not included
or incorporated in this Prospectus.
The Company has received from the staff of the Commission a "no-action"
letter that it would not raise any objection if MacSaver does not file periodic
reports under Sections 13 and 15(d) of the Exchange Act. Accordingly, MacSaver
is not expected to file periodic reports under the Exchange Act. Notes to the
consolidated financial statements of the Company included in Company reports
incorporated herein contain summarized financial information regarding MacSaver.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company are hereby
incorporated by reference into this Prospectus:
(a) the annual report on Form 10-K for the fiscal year ended
February 28, 1997;
(b) the current report on Form 8-K/A dated February 19, 1997;
(c) the description of the Common Stock contained in the
Registration Statement on Form 8-A filed with the Commission
on April 26, 1983 (File No. 1-8484), as amended by amendments
on Form 8, filed with the Commission on April 9, 1985,
February 23, 1988, September 20, 1989, July 31, 1990, August
6, 1992 and July 28, 1994, respectively (File No. 1-8484); and
(d) the description of the Rights to Purchase Preferred Stock,
Series A contained in the Registration Statement on Form 8-A
filed with the Commission on February 23, 1988 (File No.
1-8484) as amended by an amendment on Form 8 filed with the
Commission on September 20, 1989 (File No. 1-8484).
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Securities shall be deemed to be
-3-
<PAGE>
incorporated by reference into this Prospectus and to be a part hereof from the
respective dates of filing of such documents. Any statement contained herein or
in a document all or any portion of which is incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such earlier statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to any person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated herein by reference (other
than certain exhibits to such documents). Requests for such copies should be
directed to Heilig-Meyers Company, 2235 Staples Mill Road, Richmond, Virginia
23230; Attention: Paige H. Wilson, Secretary, telephone (804) 359-9171.
-4-
<PAGE>
HEILIG-MEYERS COMPANY
BUSINESS
General
The Company is the nation's largest publicly held specialty retailer of
home furnishings with 989 stores (as of May 31, 1997), in 32 states and Puerto
Rico. The Company currently operates stores under four names and formats. The
"Heilig-Meyers" name is associated with the Company's historical format with a
majority of the stores operating in smaller markets with a broad line of
merchandise. The Company's Heilig-Meyers stores are primarily located in small
towns and rural markets in the Southeast, Southcentral, Midwest, West, Northwest
and Southwest of the continental United States. All of the Company's Puerto
Rican stores operate under the "Berrios" name. The Berrios format is similar to
the format used by the stores operated under the "Heilig-Meyers" name. The
"Rhodes" name is used for the 99 stores operated by Rhodes, Inc., which was
acquired by the Company on December 31, 1996. The Rhodes format retailing
strategy is selling quality furniture to a broad base of middle income
customers. The 99 Rhodes stores are primarily located in the midsized markets
and metropolitan areas of 14 southern, midwestern and western states. "The
RoomStore" name and format is utilized for 18 stores in Texas, 10 of which were
acquired in February 1997 and 8 of which were converted from former Rhodes
stores. Stores using The RoomStore format display and sell furniture in complete
room packages, which are arranged by professional designers and sell at a value
if purchased as a group. As a result of the acquisition of Rhodes and The
RoomStore, the Company now has the ability to expand by matching operating
formats to markets with appropriate demographic and competitive factors. The
Company expects to expand these formats as appropriate markets are identified.
The Company's operating strategy includes: (1) offering a broad selection
of competitively priced home furnishings including furniture and bedding and in
the Heilig-Meyers and Berrios stores, consumer electronics, appliances, and
other items such as jewelry, small appliances and seasonal goods; (2) locating
Heilig-Meyers stores primarily in small towns and rural markets which are at
least 25 miles from a metropolitan area; (3) offering credit programs to provide
flexible financing to its customers; (4) utilizing centralized inventory and
distribution systems in strategic regional locations to support store inventory
and merchandise delivery operations; and (5) emphasizing customer service,
including free delivery on most major purchases in the Heilig-Meyers stores and
repair service for consumer electronics and other mechanical items.
The Company believes this strategy of offering selection, credit, delivery
and service generally allows its HeiligMeyers stores to have the largest market
share among home furnishings retailers in most of its small-town markets.
The Company's executive offices are located at 2235 Staples Mill Road,
Richmond, Virginia 23230. The telephone number is (804) 359-9171. MacSaver is
a Delaware corporation and a wholly-owned subsidiary of the
-5-
<PAGE>
Company through which financing is obtained for the operations of the Company
and its other subsidiaries. The executive offices of MacSaver are located at 2
Reads Way, Suite 224, New Castle, Delaware 19720. The telephone number is (302)
325-3841.
Store Operations
General
The Company believes that locating its Heilig-Meyers stores in small towns
and rural markets provides an important competitive advantage. Currently,
approximately 80% of all Heilig-Meyers stores are located in towns with
populations under 50,000 and more than 25 miles from a metropolitan market.
Competition in these small towns largely comes from locally-owned store
operations which generally lack the financial strength to compete effectively
with the Company. The Company believes that its Heilig-Meyers stores have the
largest market share among home furnishings retailers in the majority of their
areas.
The Company's Heilig-Meyers stores generally range in size from 10,000 to
35,000 square feet, with the average being approximately 20,000 square feet. A
store's attached or nearby warehouse usually measures from 3,000 to 5,000 square
feet. A typical store is designed to give the customer an urban shopping
experience in a rural location. The Company's existing store remodeling program,
under which stores are remodeled on a rotational basis, provides the Company's
older stores with a fresh look and up-to-date displays on a periodic basis. The
existing Rhodes and The RoomStore formats average approximately 34,000 and
25,000 square feet, respectively.
Distribution
The Company currently operates eight Heilig-Meyers distribution centers in
the continental U.S. and one center in Puerto Rico, each of which has cantilever
racking and computer-controlled random-access inventory storage. The Company
also operates eleven Rhodes distribution centers, which collectively have more
than 1.1 million square feet and include home delivery operations in certain
markets. The Company also operates The RoomStore's 200,000-square-foot
distribution center. Management is in the process of evaluating the distribution
function in light of recent acquisitions in order to maximize warehousing and
transportation efficiencies.
Credit Operations
The Company believes that offering flexible credit is an important part of
its business strategy which provides a significant competitive advantage. The
Company believes its credit program fosters customer loyalty and repeat
business. Historically, approximately 80% of the sales in Heilig-Meyers stores
have been made through the Company's installment credit program. Because
installment credit is administered at the store level, terms can generally be
tailored to meet the customer's ability to pay. Approximately 70% of Rhodes
sales are made through its revolving credit program.
-6-
<PAGE>
The following table sets forth certain data regarding the Company's installment
credit operations:
<TABLE>
<CAPTION>
Fiscal Years Ended
Feb. 28 Feb. 29, Feb. 28, Feb. 28, Feb. 28,
1997 1996 1995 1994 1993
<S> <C>
Average number of installment
accounts receivable (in thousands)(1) 1,280,173 1,220,660 972,418 799,501 652,569
Average initial term of account
(in months)(2)....................... 17.4 17.2 16.6 16.7 16.6
Provision for doubtful accounts
as % of sales.......................... 6.0% 5.7% 4.8% 4.5% 4.4%
Net charge-offs as % of sales........... 5.2 5.0 4.6 4.1 4.1
</TABLE>
- ----------------
(1) Includes securitized accounts receivable which are still serviced by
the Company.
(2) For installment contracts originated during the indicated fiscal year,
calculated at the date of origination.
Merchandising
The Company's Heilig-Meyers merchandising strategy is to offer a broad
selection of competitively priced home furnishings, including furniture and
accessories, consumer electronics, appliances, bedding, and other items such as
jewelry and seasonal goods. The table below sets forth the percentage of sales
of these items during the last five years:
<TABLE>
<CAPTION>
Fiscal Years Ended
Feb. 28. Feb. 29, Feb. 28, Feb. 28, Feb. 28,
1997 1996 1995 1994 1993
<S> <C>
Furniture and accessories... 60% 58% 59% 59% 59%
Consumer electronics........ 10 12 11 12 13
Appliances..................... 8 9 8 8 8
Bedding........................ 12 11 10 10 10
Other items.................... 10 10 12 11 10
</TABLE>
The Rhodes and The RoomStore stores primarily sell mid-price point
furniture and bedding. Historically, 89% of Rhodes' sales consisted of furniture
and accessories with bedding comprising the remaining 11%.
Advertising and Promotion
In fiscal 1997, the Company distributed over 140 million direct mail
circulars. This included monthly circulars sent by direct mail to over nine
million households on the Company's mailing list and special private sale
circulars mailed to approximately two million of these households each month, as
well as during special promotional periods. During fiscal 1997, the Company
continued to utilize market segmentation techniques (begun in fiscal 1994) to
identify prospective customers by matching their demographics to those of
existing customers. Management believes ongoing market research and improved
mailing techniques enhance the Company's ability to place circulars in the hands
of those potential customers most likely to make a purchase. The Company
believes that availability, as well as the terms of credit, are key determinants
in the purchase decision, and therefore, promotes credit availability by
disclosing monthly payment terms in its circulars.
-7-
<PAGE>
Corporate Expansion
The Company has grown from 374 stores at February 28, 1992, to 989 stores
at May 31, 1997. Over this time period, the Company has expanded from its
traditional Southeast operating region into the Midwest, West, Southwest,
Northwest and Southcentral continental United States as well as Puerto Rico. In
addition, the Company has acquired new operating formats as a result of the
Rhodes and The RoomStore acquisitions. The Company currently operates stores in
Alabama, Arizona, Arkansas, California, Colorado, Florida, Georgia, Idaho,
Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Mississippi,
Missouri, Montana, Nevada, New Mexico, North Carolina, Ohio, Oklahoma, Oregon,
Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington, West
Virginia, Wisconsin and Puerto Rico. Management believes that the Company's size
and geographically diverse store locations, as well as the diversity in store
format created by the Rhodes and The RoomStore acquisitions, are competitive
advantages and allow for greater stability in its operations.
USE OF PROCEEDS
Except as otherwise provided in the applicable Prospectus Supplement, the
net proceeds from the sale of the Securities will be used for general corporate
purposes, which may include repayment of outstanding indebtedness, capital
expenditures, working capital requirements and possible future acquisitions. The
precise amount and timing of the application of such proceeds will depend upon
the funding requirements of the Company or MacSaver, as the case may be, and the
availability and cost of other funds. Allocation of the proceeds of particular
Securities, or the principal reasons for the offering if no such allocation has
been made, will be described in the applicable Prospectus Supplement.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges for
the years indicated:
<TABLE>
<CAPTION>
Year Ended February (28)29
-----------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S><C>
Ratio of Earnings to 1.51x 1.62x 2.28x 2.50x 2.26x
Fixed Charges
</TABLE>
For purposes of this ratio, earnings are calculated by adding fixed charges
(excluding capitalized leases) to income before income taxes and extraordinary
items. Fixed charges consist of interest on indebtedness (including amortization
of debt discount and premium) and the portion of rental expense representative
of an interest factor.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement and
the extent, if any, to which such general provisions may not apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating to
such Debt Securities.
The Debt Securities and related Guarantees are to be issued under an
Indenture (the "Indenture"), among MacSaver, the Company and First Union
National Bank of Virginia, as trustee (the "Trustee"). The Indenture is filed as
an exhibit to the Registration Statement of which this Prospectus is a part. The
following summaries of
-8-
<PAGE>
certain provisions of the Debt Securities and the Indenture do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all the provisions of the Indenture, including the definitions therein of
certain terms. Wherever particular Sections, Articles or defined terms of the
Indenture are referred to, such Sections, Articles or defined terms are
incorporated herein by reference. Article and Section references used herein are
references to Articles and Sections of the Indenture. Capitalized terms not
otherwise defined herein shall have the meanings given in the Indenture.
Unless otherwise indicated, currency amounts in this Prospectus and any
Prospectus Supplement are stated in United States dollars ("$", "U.S. Dollars"
or "dollars").
General
The Indenture does not limit the aggregate principal amount of Debt
Securities which may be issued thereunder and provides that Debt Securities may
be issued thereunder up to an aggregate principal amount which may be authorized
from time to time by MacSaver. The Debt Securities will be unsecured
unsubordinated obligations of MacSaver and will rank on a parity in right of
payment with all other unsecured and unsubordinated indebtedness of MacSaver.
The Debt Securities will be unconditionally guaranteed by the Company as to
payment of principal, premium, if any, and interest, if any. See "Guarantees."
Reference is made to the applicable Prospectus Supplement relating to the
series of Debt Securities offered thereby for specific terms, including (where
applicable): (1) the title or designation of such Debt Securities; (2) any limit
on the aggregate principal amount of such Debt Securities; (3) the price or
prices (expressed as a percentage of the principal amount thereof) at which such
Debt Securities will be issued; (4) the date or dates on which the principal of
and premium, if any, on such Debt Securities will be payable, or the method or
methods, if any, by which such date or dates will be determined; (5) the rate or
rates (which may be fixed or variable) at which such Debt Securities will bear
interest, if any, or the method or methods, if any, by which such rate or rates
are to be determined, the date or dates, if any, from which such interest will
accrue, or the method or methods, if any, by which such date or dates are to be
determined, and whether and under what circumstances Additional Amounts on such
Debt Securities will be payable, and the basis upon which interest will be
calculated if other than that of a 360- day year of twelve 30-day months; (6)
the dates on which such interest, if any, will be payable and the record dates
therefor; (7) the place or places where the principal of, premium, if any, and
interest, if any, on such Debt Securities will be payable and the place or
places where such Debt Securities may be surrendered for registration of
transfer and exchange, if other than The City of New York; (8) the date or dates
on which, the period or periods within which, the price or prices at which and
the other terms and conditions upon which such Debt Securities may be redeemed
at the option of MacSaver or are subject to repurchase at the option of the
holders; (9) the terms of any sinking fund or analogous provision; (10) if other
than U.S. dollars, the Currency for which the Debt Securities may be purchased
and the Currency in which the payment of principal thereof and premium, if any,
and interest, if any, thereon may be made, and the ability, if any, of MacSaver,
or the holders of Debt Securities to have payments made in any Currency other
than those in which the Debt Securities are stated to be payable; (11) any
addition to, or modification or deletion of, any covenant or Event of Default
with respect to such Debt Securities; (12) whether any such Debt Securities are
to be issuable in registered or bearer form or both and, if in bearer form, the
terms and conditions relating thereto and any limitations on issuance of such
Bearer Securities (including in exchange for Registered Securities of the same
series); (13) whether any such Debt Securities will be issued in temporary or
permanent global form and, if so, the identity of the depositary for such global
Debt Security; (14) the applicability, if any, of the defeasance or covenant
defeasance provisions of the Indenture applicable to such Debt Securities; (15)
the person to whom any interest on any Registered Securities of the series shall
be payable, if other than the person in whose name the Registered Security (or
one or more Predecessor Securities) is registered at the close of business on
the Regular Record Date for such interest, the manner in which, or the person to
whom, any interest on any
-9-
<PAGE>
Bearer Security of the series shall be payable, if other than upon presentation
and surrender of the coupons appertaining thereto as they severally mature, and
the extent to which, or the manner in which, any interest payable on a temporary
global Debt Security will be paid if other than in the manner provided in the
Indenture; (16) the portion of the principal amount of Debt Securities which
shall be payable upon acceleration thereof if other than the full principal
amount thereof; (17) the authorized denominations in which Debt Securities will
be issuable, if other than denominations of $1,000 and any integral multiple
thereof (in the case of Registered Securities) or $5,000 (in the case of Bearer
Securities); (18) the terms, if any, upon which Debt Securities may be
exchangeable for other Securities; (19) whether the amount of payments of
principal of, premium, if any, and interest, if any, on Debt Securities may be
determined with reference to an index, formula or other method or methods (any
Debt Securities being hereinafter called "Indexed Securities") and the manner in
which such amounts will be determined; (20) the terms of the Guarantees in
respect of which this Prospectus is being delivered; and (21) any other terms of
such Debt Securities.
As used in this Prospectus and any Prospectus Supplement relating to the
offering of any Debt Securities, references to the principal of and premium, if
any, and interest, if any, on Debt Securities will be deemed to include mention
of the payment of Additional Amounts, if any, required by the terms of Debt
Securities in such context.
Debt Securities may be issued as Original Issue Discount Securities (as
defined in the Indenture) to be sold at a substantial discount below their
principal amount. In the event of an acceleration of the maturity of any
Original Issue Discount Security, the amount payable to the holder thereof upon
such acceleration will be determined in the manner described in the applicable
Prospectus Supplement. Special United States federal income tax considerations
applicable to Debt Securities issued at an original issue discount, including
Original Issue Discount Securities, and special United States tax considerations
applicable to any Debt Securities which are denominated in a currency or
currency unit other than United States dollars, are described below under
"United States Taxation."
If the purchase price of any Debt Securities is payable in a Currency other
than U.S. dollars or if principal of, or premium, if any, or interest, if any,
on any of the Debt Securities is payable in any Currency other than U.S.
dollars, the specific terms and other information with respect to such Debt
Securities and such Foreign Currency will be specified in the Prospectus
Supplement relating thereto.
Under the Indenture, the terms of the Debt Securities of any series may
differ and MacSaver, without the consent of the holders of the Debt Securities
of any series, may reopen a previous series of Debt Securities and issue
additional Debt Securities of such series.
The Indenture does not contain any provisions which may afford the holders
of any of the Debt Securities protection in the event of a highly leveraged
transaction or similar transaction involving the Company or MacSaver. Any such
provisions, if applicable to any Debt Securities, will be described in the
Prospectus Supplement or Prospectus Supplements relating thereto.
Guarantees; Holding Company Structure
The Company will unconditionally guarantee the due and punctual payment of
principal of, premium, if any, and interest on the Debt Securities, when and as
the same shall become due and payable, whether at the maturity date, by
declaration of acceleration, call for redemption or otherwise. The Guarantees
will remain in effect until the entire principal of, premium, if any, and
interest on the Debt Securities shall have been paid in full or otherwise
discharged in accordance with the provisions of the Indenture.
The Company conducts its operations primarily through its wholly-owned
subsidiaries, including MacSaver, and substantially all of the Company's
consolidated assets are held by its subsidiaries. Accordingly, the cash flow of
the
-10-
<PAGE>
Company and the consequent ability to service its debt, including its
obligations under the Guarantees, are largely dependent upon the earnings of
such subsidiaries.
Because the Company is a holding company, the Company's obligations under
the Guarantees will be effectively subordinated to all existing and future
indebtedness, trade payables, guarantees, lease obligations and letter of credit
obligations of the Company's subsidiaries. Therefore, the Company's rights and
the rights of its creditors, including the holders of the Debt Securities under
the Guarantees, to participate in the assets of any subsidiary (other than
MacSaver) upon the latter's liquidation or reorganization will be subject to the
prior claims of such subsidiary's creditors, except to the extent that the
Company may itself be a creditor with recognized claims against the subsidiary,
in which case the claims of the Company would still be effectively subordinate
to any security interest in, or mortgages or other liens on, the assets of such
subsidiary and would be subordinate to any indebtedness of such subsidiary
senior to that held by the Company. Although certain debt instruments to which
the Company and its subsidiaries are parties impose limitations on the
incurrence of additional indebtedness, both the Company and its subsidiaries
retain the ability to incur substantial additional indebtedness and lease and
letter of credit obligations.
Registration, Transfer, Payment and Paying Agent
Unless otherwise indicated in the applicable Prospectus Supplement, each
series of Debt Securities will be issued in registered form only, without
coupons. The Indenture, however, provides that MacSaver may also issue Debt
Securities in bearer form only, or in both registered and bearer form. Bearer
Securities may not be offered, sold, resold or delivered in connection with
their original issuance in the United States or to any United States person (as
defined below) other than offices located outside the United States of certain
United States financial institutions. As used herein, "United States person"
means any citizen or resident of the United States, any corporation, partnership
or other entity created or organized in or under the laws of the United States,
or any estate or trust, the income of which is subject to United States federal
income taxation regardless of its source, and "United States" means the United
States of America (including the states thereof and the District of Columbia),
its territories, its possessions and other areas subject to its jurisdiction.
Purchasers of Bearer Securities will be subject to certification procedures and
may be affected by certain limitations under United States tax laws. Such
procedures and limitations will be described in the Prospectus Supplement
relating to the offering of the Bearer Securities.
Unless otherwise indicated in the applicable Prospectus Supplement,
Registered Securities will be issued in denominations of $1,000 or any integral
multiple thereof, and Bearer Securities will be issued in denominations of
$5,000.
Unless otherwise indicated in the applicable Prospectus Supplement, the
principal, premium, if any, and interest, if any, of or on the Debt Securities
will be payable, and Debt Securities may be surrendered for registration of
transfer or exchange, at an office or agency to be maintained by MacSaver in the
Borough of Manhattan, The City of New York, provided that payments of interest
with respect to any Registered Security may be made at the option of MacSaver by
check mailed to the address of the person entitled thereto or by transfer to an
account maintained by the payee with a bank located in the United States. No
service charge shall be made for any registration of transfer or exchange of
Debt Securities, but MacSaver may require payment of a sum sufficient to cover
any tax or other governmental charge and any other expenses that may be imposed
in connection therewith.
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of, premium, if any, and interest, if any, on Bearer Securities
will be made, subject to any applicable laws and regulations, at such office or
agency outside the United States as specified in the Prospectus Supplement and
as MacSaver may designate from time to time. Unless otherwise indicated in the
applicable Prospectus Supplement, payment of interest due on Bearer Securities
on any Interest Payment Date will be made only against surrender of the coupon
relating to such Interest Payment Date. Unless otherwise indicated in the
applicable Prospectus Supplement, no payment of principal, premium or interest
with respect to any Bearer Security will be made at any office or agency in the
United States or
-11-
<PAGE>
by check mailed to any address in the United States or by transfer to an account
maintained with a bank located in the United States; provided, however, that if
amounts owing with respect to any Bearer Securities shall be payable in U.S.
dollars, payment with respect to any such Bearer Securities may be made at the
Corporate Trust Office of the applicable Trustee or at any office or agency
designated by MacSaver in the Borough of Manhattan, The City of New York, if
(but only if) payment of the full amount of such principal, premium or interest
at all offices outside of the United States maintained for such purpose by
MacSaver is illegal or effectively precluded by exchange controls or similar
restrictions.
Unless otherwise indicated in the applicable Prospectus Supplement,
MacSaver will not be required to (i) issue, register the transfer of or exchange
Debt Securities of any series during a period beginning at the opening of
business 15 days before any selection of Debt Securities of that series of like
tenor to be redeemed and ending at the close of business on the day of that
selection; (ii) register the transfer of or exchange any Registered Security, or
portion thereof, called for redemption, except the unredeemed portion of any
Registered Security being redeemed in part; (iii) exchange any Bearer Security
called for redemption, except to exchange such Bearer Security for a Registered
Security of that series and like tenor that is simultaneously surrendered for
redemption; or (iv) issue, register the transfer of or exchange any Debt
Security which has been surrendered for repayment at the option of the holder,
except the portion, if any, of such Debt Security not to be so repaid.
Global Securities
The Debt Securities may be issued in whole or in part in the form of one or
more global securities that will be deposited with, or on behalf of, a
depositary (the "Depositary") identified in the Prospectus Supplement relating
to such series. Global Debt Securities may be issued in either registered or
bearer form and in either temporary or permanent form. Unless and until it is
exchanged in whole or in part for individual certificates evidencing Debt
Securities in definitive form represented thereby, a global Debt Security may
not be transferred except as a whole by the Depositary for such global Debt
Security to a nominee of such Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or by such Depositary or
any such nominee to a successor of such Depositary or a nominee of such
successor.
The specific terms of the depositary arrangement with respect to a series
of global Debt Securities and certain limitations and restrictions relating to a
series of global Bearer Securities will be described in the Prospectus
Supplement relating to such series.
Outstanding Debt Securities
In determining whether the holders of the requisite principal amount of
outstanding Debt Securities have given any request, demand, authorization,
direction, notice, consent or waiver under the Indenture, or whether a quorum is
present at a meeting of the holders thereunder, (i) the portion of the principal
amount of an Original Issue Discount Security that shall be deemed to be
outstanding for such purposes shall be that portion of the principal amount
thereof that could be declared to be due and payable upon a declaration of
acceleration thereof pursuant to the terms of such Original Issue Discount
Security as of the date of such determination, (ii) the principal amount of any
Indexed Security that shall be deemed to be outstanding for such purpose shall
be the principal face amount of such Indexed Security determined on the date of
its original issuance, (iii) the principal amount of a Debt Security denominated
in a Currency other than U.S. dollars shall be the U.S. dollar equivalent,
determined on the date of original issue of such Debt Security, of the principal
amount of such Debt Security and (iv) any Debt Security beneficially owned by
the Company or MacSaver or by any obligor on such Debt Security or any Affiliate
of the Company or MacSaver or such other obligor shall be deemed not to be
outstanding.
-12-
<PAGE>
Redemption and Repurchase
The Debt Securities of any series may be redeemable at the option of
MacSaver, may be subject to mandatory redemption pursuant to a sinking fund or
otherwise, or may be subject to repurchase by MacSaver at the option of the
holders, in each case upon the terms, at the times and at the prices set forth
in the applicable Prospectus Supplement.
Certain Covenants of the Company
Restricted and Unrestricted Subsidiaries. The various restrictive
provisions of the Indenture applicable to the Company and the Restricted
Subsidiaries do not apply to Unrestricted Subsidiaries. The assets of
Unrestricted Subsidiaries are not consolidated with those of the Company and the
Restricted Subsidiaries in calculating Consolidated Net Tangible Assets, and
investments by the Company or by the Restricted Subsidiaries in Unrestricted
Subsidiaries are excluded in calculating Consolidated Net Tangible Assets. A
"Restricted Subsidiary" is MacSaver or any other subsidiary of the Company or
MacSaver which is organized under the laws of the United States or any state
thereof or Canada or Puerto Rico, which conducts substantially all of its
business and has substantially all of its assets within the United States or
Canada or Puerto Rico, of which more than 80% (by number of votes) of the voting
securities or other similar ownership interests is owned by the Company and/or
one or more Restricted Subsidiaries and which is not designated by the Company
as an Unrestricted Subsidiary in accordance with the Indenture. An "Unrestricted
Subsidiary" is a subsidiary of the Company or MacSaver which is designated by
the Company as an Unrestricted Subsidiary in accordance with the Indenture or
which does not come within the definition of a Restricted Subsidiary. As of the
date of this Prospectus, there were no Unrestricted Subsidiaries.
(Section 101)
The Company may designate any Restricted Subsidiary, other than MacSaver,
as an Unrestricted Subsidiary if, immediately after such designation, (i) such
subsidiary does not hold or own, directly or indirectly, any Funded Debt or
capital stock of any Restricted Subsidiary, (ii) the Company could incur
additional Secured Funded Debt in compliance with the Indenture, (iii) neither
the Company nor any Restricted Subsidiary guarantees any obligations of such
subsidiary and (iv) no Default or Event of Default would exist. The Company may
not designate any Unrestricted Subsidiary as a Restricted Subsidiary unless,
immediately after giving effect to such designation, such subsidiary is in
compliance with all of the covenants of the Indenture applicable to Restricted
Subsidiaries, the Company could incur additional Secured Funded Debt (without
securing the Debt Securities equally and ratably) in compliance with the
Indenture and no Default or Event of Default would exist. The Company must at
all times ensure that MacSaver is a wholly-owned Restricted Subsidiary. (Section
1010)
Restrictions on Secured Funded Debt. The Company may not, and may not
permit any Restricted Subsidiary to, issue, assume, guarantee, incur, create or
otherwise become liable in respect of any Secured Funded Debt, unless the Debt
Securities are secured equally and ratably with (or prior to) such Secured
Funded Debt, except (i) Secured Funded Debt of a Restricted Subsidiary
outstanding at the date of the Indenture (there was no such Secured Funded Debt
outstanding on such date), (ii) Secured Funded Debt of a Restricted Subsidiary
payable to the Company or to a Restricted Subsidiary, (iii) Secured Funded Debt
of any corporation or other entity outstanding at the time such corporation or
other entity became a Restricted Subsidiary (and not incurred in contemplation
thereof), (iv) Secured Funded Debt otherwise permitted under the Indenture (see
"Restrictions on Liens"), (v) Attributable Debt otherwise permitted under the
Indenture (see "Restrictions on Sale and Leaseback Transactions"), (vi) Secured
Funded Debt not otherwise permitted by clauses (i) through (v) above, provided
that, (1) at the time of the issuance, assumption, guarantee, incurrence or
creation thereof no Default or Event of Default is continuing or would be
created thereby and (2) after giving effect thereto and to the application of
the proceeds thereof, no Default or Event of Default shall have occurred and be
continuing and the aggregate amount of all Secured Funded Debt does not exceed
5% of Consolidated Net Tangible Assets as of the end of the immediately
preceding fiscal quarter and (vii) renewals,
-13-
<PAGE>
extensions and refundings of Secured Funded Debt permitted by clauses (i)
through (vi) above, provided that the amount of such Secured Funded Debt is not
increased unless otherwise permitted by such clauses. (Section 1007)
"Secured Funded Debt" means Funded Debt of any Restricted Subsidiary (other
than MacSaver) or which is secured by a mortgage, security interest, pledge,
conditional sale or other title retention agreement or other lien upon any
assets of the Company, MacSaver or any other Restricted Subsidiary (other than
liabilities in connection with capital lease obligations or industrial
development bonds). (Section 101)
"Funded Debt" means Indebtedness having a final maturity of more than one
year from the date of determination thereof or which is renewable or extendible
at the option of the obligor for a period or periods more than one year from
such date of determination. (Section 101)
"Indebtedness" means all obligations of the Company, MacSaver or any other
Restricted Subsidiary which, in accordance with generally accepted accounting
principles consistently applied, are classified as liabilities on the most
recently available consolidated balance sheet of the Company and the Restricted
Subsidiaries (other than liabilities for minority interests or deferred taxes),
together with the following obligations of the Company, MacSaver or any other
Restricted Subsidiary, determined in accordance with generally accepted
accounting principles consistently applied, whether or not classified as
liabilities (other than obligations with respect to leases of real property or
interests therein that are classified as operating leases in accordance with
generally accepted accounting principles consistently applied): (i) indebtedness
for borrowed money and deferred payment obligations representing the unpaid
purchase price of property, assets or services; (ii) capitalized lease
obligations; (iii) guarantees and endorsements of obligations of others,
directly or indirectly, and all other repurchase agreements and indebtedness in
effect guaranteed through an agreement, contingent or otherwise, to purchase
such indebtedness, or to purchase or sell property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment of
the indebtedness or to assure the owner of the indebtedness against loss, or to
supply funds to or in any manner invest in the debtor, or otherwise to assure a
creditor against loss (but excluding guarantees and endorsements of notes, bills
and checks made in the ordinary course of business and of obligations of
Restricted Subsidiaries); and (iv) indebtedness secured by any mortgage, lien,
pledge, conditional sale agreement, title retention agreement, or other security
interest or encumbrance upon property owned by the Company, MacSaver or any
other Restricted Subsidiary, even though such indebtedness has not been assumed
and notwithstanding that the rights and remedies of the seller, lender or lessor
under such agreement in the event of default may be limited to repossession or
sale of such property. (Section 101)
"Attributable Debt" means the obligations incurred by MacSaver, the Company
or any other Restricted Subsidiary as lessee in connection with sale and
leaseback transactions, in each case valued at the lesser of (i) the fair market
value of the property subject to such transaction or (ii) the present value
(discounted to present value in accordance with generally accepted accounting
principles consistently applied) of the obligation of the lessee for rental
payments (other than contingent rental payments and amounts required to be paid
on account of maintenance, repairs, insurance, taxes, assessments and similar
charges) during the term of such lease. (Section 101)
"Consolidated Net Tangible Assets" means the total amount of all assets of
the Company, MacSaver and the other Restricted Subsidiaries determined on a
consolidated basis in accordance with generally accepted accounting principles
consistently applied, less the sum (without duplication) of (i) the amount, if
any, at which intangible assets (including goodwill, trade names, trademarks,
patents, organization expenses and other similar intangibles) and unamortized
debt discount and expense appear on a consolidated balance sheet, (ii) any
write-up of tangible assets after the date of the Indenture, (iii) all
investments, loans or advances made by the Company, MacSaver or any other
Restricted Subsidiary in or to any Unrestricted Subsidiary (valued at the book
value thereof) and (iv) all liabilities other than minority interests, deferred
taxes and the aggregate amount of Funded Debt of the Company, MacSaver and the
other Restricted Subsidiaries on a consolidated basis (eliminating intercompany
items). (Section 101)
-14-
<PAGE>
Restrictions on Liens. The Company may not, and may not permit any
Restricted Subsidiary to, create or incur, or suffer to be incurred or to exist,
any mortgage, pledge, security interest, lien, encumbrance or charge of any kind
on its or such Restricted Subsidiary's property or assets, whether now owned or
hereafter acquired, or upon any income or profits therefrom, or transfer any
property for the purpose of subjecting the same to the payment of obligations in
priority to the payment of its or any Restricted Subsidiary's general creditors,
or acquire or agree to acquire any property or assets upon conditional sale
agreements or other title retention devices, except (i) liens securing
Indebtedness existing on the date of the Indenture (the principal amount of such
Indebtedness outstanding at the end of the quarterly period immediately
preceding the date of the Indenture was $3,842,816, $2,999,505 of which was
outstanding as of May 31, 1997), (ii) liens securing Indebtedness incurred to
finance the purchase, construction or other acquisition of assets after the date
of the Indenture, provided that (A) any such lien shall attach only to such
asset and (B) at the time of acquisition of such asset, the amount remaining
unpaid on the Indebtedness secured by such lien shall not exceed 100% of the
lesser of the total purchase price or fair market value of such asset, (iii)
liens for property taxes and assessments or governmental charges or levies, and
liens securing claims or demands of mechanics, suppliers, carriers, landlords
and other like Persons, provided that payment thereof is being contested in good
faith by appropriate proceedings and adequate reserves have been set aside with
respect thereto, (iv) liens incurred or deposits made in the ordinary course of
business (A) in connection with worker's compensation, unemployment insurance,
social security and other like laws or (B) to secure the performance of letters
of credit, bids, tenders, sales contracts, leases, statutory obligations,
surety, appeal and performance bonds and other similar obligations, in each case
not incurred in connection with the borrowing of money, the obtaining of
advances or the payment of the deferred purchase price of property, (v)
attachment, judgment and other similar liens arising in connection with court
proceedings, provided that execution and other enforcement are effectively
stayed and all claims which the liens secure are being actively contested in
good faith by appropriate proceedings, (vi) liens securing Indebtedness of a
Restricted Subsidiary to the Company or to a Restricted Subsidiary, (vii) liens
on real property, interests therein or related fixtures and equipment subject to
leases that are classified as operating leases in accordance with generally
accepted accounting principles consistently applied, (viii) minor reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions and other minor title exceptions and (ix) liens securing
Indebtedness incurred after the date of the Indenture and not otherwise
permitted by clauses (i) through (viii) above, provided that, (1) at the time of
the issuance, assumption, guarantee, incurrence or creation thereof no Default
or Event of Default is continuing or would be created thereby, and (2) after
giving effect thereto and to the application of the proceeds thereof, the
aggregate amount of all such Indebtedness does not exceed 10% of Consolidated
Net Tangible Assets as of the end of the immediately preceding fiscal quarter.
(Section 1008)
The Company, MacSaver or any other Restricted Subsidiary may subject any of
its properties to any lien or encumbrance otherwise prohibited by the foregoing
paragraph provided that, concurrently with the imposition of any such lien, the
Debt Securities are secured equally and ratably with all other obligations
secured thereby (as evidenced by an opinion of counsel). (Section 1008)
Restrictions on Sale and Leaseback Transactions. The Company may not, and
may not permit any Restricted Subsidiary to, sell any property and then lease
back that property or similar property under a lease that (i) is entered into
more than 365 days after the later of the date of acquisition of such property
by the Company, MacSaver or any other Restricted Subsidiary or the date of
completion and occupancy by the Company, MacSaver or any other Restricted
Subsidiary of improvements constructed on such property and (ii) has a term of
more than three years, or is renewable or extendible for a total term of more
than three years, unless, after giving effect to such transaction and to the
application of the proceeds thereof, no Default or Event of Default shall have
occurred and be continuing and the aggregate amount of all Attributable Debt
does not exceed 10% of Consolidated Net Tangible Assets as of the end of the
immediately preceding fiscal quarter. (Section 1009)
Restrictions on Mergers, Consolidations, Conveyances and Transfers. The
Company may not, and may not permit any Restricted Subsidiary to, merge or
consolidate with or into any other Person or convey, transfer or lease its
properties or assets substantially as an entirety to any other Person, except
(i) any Restricted Subsidiary may
-15-
<PAGE>
merge or consolidate with or into the Company or any other wholly-owned
Restricted Subsidiary so long as, in any merger or consolidation involving the
Company, the Company is the surviving or continuing corporation, (ii) any
wholly-owned Restricted Subsidiary formed solely to facilitate transfers of
properties or assets accounted for as sales under generally accepted accounting
principles consistently applied may convey or transfer such properties or assets
substantially as an entirety to any other Person and (iii) the Company or any
Restricted Subsidiary may merge or consolidate with or into any other Person or
convey, transfer or lease its properties or assets substantially as an entirety
to any other Person if (A) the Person into which the Company or such Restricted
Subsidiary is merged or the Person formed by such consolidation, or the Person
that acquires by conveyance or transfer, or that leases, the properties or
assets of the Company or such Restricted Subsidiary substantially as an
entirety, is organized and validly existing under the laws of the United States
and expressly assumes, by written instrument, all of the obligations of the
Company or MacSaver, as the case may be, under the Indenture, (B) at the time of
such transaction and after giving effect thereto, no Default or Event of Default
shall have occurred and be continuing and (C) certain other conditions are met.
(Article VIII)
Events of Default
An Event of Default with respect to the Debt Securities of any series is
defined in the Indenture as being: (i) default for 30 days in payment of any
interest with respect to any Debt Security of such series; (ii) default in
payment of principal or any premium with respect to any Debt Security of such
series when due upon maturity, redemption or otherwise; (iii) default in making
any sinking fund payment or payment under any analogous provision when due with
respect to any Debt Security of such series; (iv) default by the Company or
MacSaver in the performance, or breach, of any other covenant or warranty in the
Indenture (other than a covenant or warranty included therein solely for the
benefit of series of Debt Securities other than that series) or any Debt
Security of such series which shall not have been remedied for a period of 60
days after notice to MacSaver and the Company by the Trustee or the holders of
not less than 25% in aggregate principal amount of the Debt Securities of such
series then outstanding; (v) certain events of bankruptcy, insolvency or
reorganization of the Company or MacSaver; (vi) any acceleration of the maturity
of any Indebtedness of the Company, MacSaver or any other Restricted Subsidiary
for borrowed money in an aggregate principal amount exceeding $20,000,000, or a
failure to pay such Indebtedness at its stated maturity; provided, that an Event
of Default shall not be deemed to occur with respect to the acceleration of the
maturity of any such Indebtedness if the event that caused such acceleration
shall be cured or such acceleration shall be rescinded within 10 days; or (vii)
any other Event of Default established for the Debt Securities of such series.
No Event of Default with respect to any particular series of Debt Securities
necessarily constitutes an Event of Default with respect to any other series of
Debt Securities. The Indenture provides that the Trustee thereunder may withhold
notice to the holders of the Debt Securities of any series of the occurrence of
a default with respect to the Debt Securities of such series (except a default
in payment of principal, premium, if any, interest, if any, or sinking fund
payments, if any) if the Trustee considers it in the interest of the holders to
do so.
The Indenture provides that if an Event of Default with respect to any
series of Debt Securities issued thereunder shall have occurred and be
continuing, either the Trustee or the holders of at least 25% in principal
amount of the Debt Securities of such series then outstanding may declare the
principal amount (or if any Debt Securities of such series are Original Issue
Discount Securities, such lesser amount as may be specified in the terms
thereof) of all the Debt Securities of such series to be due and payable
immediately; provided that in the case of certain events of bankruptcy,
insolvency or reorganization, such principal amount (or portion thereof) shall
automatically become due and payable. However, at any time after an acceleration
with respect to the Debt Securities of any series has occurred, but before a
judgment or decree based on such acceleration has been obtained, the holders of
a majority in principal amount of the outstanding Debt Securities of such series
may, under certain circumstances, rescind and annul such acceleration. (Section
502) For information as to waiver of defaults, see "Description of Debt
Securities -- Modification, Waiver and Meetings." Reference is made to the
Prospectus Supplement relating to each series of Debt Securities which are
Original Issue Discount Securities or Indexed Securities for the particular
provisions
-16-
<PAGE>
relating to acceleration of the Maturity of a portion of the principal amount of
such Original Issue Discount Securities or Indexed Securities upon the
occurrence of an Event of Default and the continuation thereof.
Subject to the provisions of the Trust Indenture Act of 1939 requiring the
Trustee, during an Event of Default under the Indenture, to act with the
requisite standard of care, a Trustee is under no obligation to exercise any of
its rights or powers under the Indenture at the request or direction of any of
the holders of Debt Securities of any series unless such holders have offered
such Trustee reasonable indemnity. Subject to the foregoing, holders of a
majority in principal amount of the then outstanding Debt Securities of any
series shall have the right, subject to certain limitations, to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee under the Indenture with respect to such series.
No holder of a Debt Security of any series will have any right to institute
any proceeding with respect to the Indenture, or for the appointment of a
receiver or a trustee, or for any other remedy thereunder, unless (i) such
holder has previously given to the Trustee written notice of a continuing Event
of Default with respect to the Debt Securities of that series, (ii) the holders
of at least 25% in aggregate principal amount of the outstanding Debt Securities
of that series have made written request, and such holder or holders have
offered reasonable indemnity, to such Trustee to institute such proceeding as
trustee and (iii) such Trustee has failed to institute such proceeding, and has
not received from the holders of a majority in aggregate principal amount of the
outstanding Debt Securities of that series a direction inconsistent with such
request, within 60 days after such notice, request and offer. (Section 507)
However, such limitations do not apply to a suit instituted by a holder of a
Debt Security for the enforcement of payment of the principal of or any premium
or interest on such Debt Security on or after the applicable due date specified
in such Debt Security. (Section 508)
The Company and MacSaver each will be required to furnish to the Trustee
annually a statement by certain of its officers as to whether or not, to their
knowledge, it is in default in the performance or observance of any of the
terms, provisions and conditions of the Indenture and, if so, specifying all
such known defaults. (Section 1005)
Modification, Waivers and Meetings
The Indenture contains provisions permitting the Company or MacSaver and
the Trustee thereunder, with the consent of the holders of a majority in
principal amount of the outstanding Debt Securities of each series and affected
by a modification or amendment, to modify or amend any of the provisions of the
Indenture or of the Debt Securities of such series or the rights of the holders
of the Debt Securities of such series under the Indenture, provided that no such
modification or amendment shall, among other things, (i) change the stated
maturity of the principal of, or premium, if any, or any installment of
interest, if any, on any Debt Securities or reduce the principal amount thereof
or any premium thereon, or reduce the rate of interest thereon, or reduce the
amount of principal of any Debt Securities that would be due and payable upon an
acceleration of the maturity thereof, or adversely affect any right of repayment
at the option of any holder, or change any place where, or the Currency in
which, any Debt Securities issued under the Indenture are payable, or impair the
holder's right to institute suit to enforce the payment of any such Debt
Securities or (ii) reduce the aforesaid percentage of Debt Securities of any
series, the consent of the holders of which is required for any such
modification or amendment or the consent of whose holders is required for any
waiver (of compliance with certain provisions of the Indenture or certain
defaults thereunder and their consequences) or reduce the requirements for a
quorum or voting at a meeting of holders of such Debt Securities. The Indenture
also contains provisions permitting the Company, MacSaver, and the Trustee,
without the consent of the holders of any Debt Securities issued thereunder, to
modify or amend the Indenture in order to, among other things, (a) add to the
Events of Default or the covenants of the Company or MacSaver for the benefit of
the holders of all or any series of Debt Securities; (b) to add or change any
provisions of the Indenture to facilitate the issuance of Bearer Securities; (c)
to establish the form or terms of Debt Securities of any series and any related
coupons; (d) to cure any ambiguity or correct or supplement any provision
therein which may be inconsistent with other provisions therein, or to make any
other provisions with respect to matters or questions arising under the
Indenture
-17-
<PAGE>
which shall not adversely affect the interests of the holders of any series of
Debt Securities in any material respect; or (e) to amend or supplement any
provision contained in the Indenture, provided that such amendment or supplement
does not apply to any outstanding Debt Securities issued prior to the date of
such amendment or supplement and entitled to the benefits of such provision.
The holders of a majority in aggregate principal amount of the outstanding
Debt Securities of any series may waive, insofar as that series is concerned,
compliance by the Company or MacSaver with certain restrictive provisions of the
Indenture. The holders of a majority in aggregate principal amount of the
outstanding Debt Securities of any series may, on behalf of all holders of Debt
Securities of that series, waive any past default under the Indenture with
respect to Debt Securities of that series and its consequences, except a default
in the payment of the principal of, or premium, if any, or interest, if any, on
any Debt Securities of such series or in respect of a covenant or provision
which cannot be modified or amended without the consent of the holder of each
outstanding Debt Securities of such series affected.
The Indenture contains provisions for convening meetings of the holders of
Debt Securities of each series. A meeting may be called at any time by the
Trustee, and also, upon request, by MacSaver or the holders of at least 10% in
principal amount of the outstanding Debt Securities of such series, in any such
case upon notice given in accordance with the provisions of the Indenture.
Except for any consent which must be given by the holder of each outstanding
Debt Security affected thereby, as described above, any resolution presented at
a meeting or adjourned meeting duly reconvened at which a quorum (as described
below) is present may be adopted by the affirmative vote of the holders of a
majority in principal amount of the outstanding Debt Securities of that series;
provided, however, that any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action which may be
made, given or taken by the holders of a specified percentage, which is less
than a majority, in principal amount of the outstanding Debt Securities of a
series may be adopted at a meeting or adjourned meeting duly reconvened at which
a quorum is present by the affirmative vote of the holders of such specified
percentage in principal amount of the outstanding Debt Securities of that
series. Any resolution passed or decision taken at any meeting of holders of
Debt Securities of any series duly held in accordance with the Indenture will be
binding on all holders of Debt Securities of that series and the related
coupons. The quorum at any meeting called to adopt a resolution, and at any
reconvened meeting, will be persons holding or representing a majority in
principal amount of the outstanding Debt Securities of a series, subject to
certain exceptions.
Discharge, Defeasance and Covenant Defeasance
Upon the direction of MacSaver, the Indenture shall cease to be of further
effect with respect to any series of Debt Securities issued thereunder specified
by MacSaver (subject to the survival of certain provisions thereof, including
the obligation to pay Additional Amounts to the extent described below) when (i)
either (A) all outstanding Debt Securities of such series and, in the case of
Bearer Securities, all coupons appertaining thereto, have been delivered to the
Trustee for cancellation (subject to certain exceptions) or (B) all Debt
Securities of such series have become due and payable or will become due and
payable at their stated maturity within one year or are to be called for
redemption within one year and MacSaver has deposited with the Trustee, in
trust, funds in U.S. dollars or in such other currency in which such Debt
Securities are payable in an amount sufficient to pay the entire indebtedness on
such Debt Securities in respect of principal (and premium, if any) and interest,
if any, (and, to the extent that (x) the Debt Securities of such series provide
for the payment of Additional Amounts upon the occurrence of certain events of
taxation, assessment or governmental charge with respect to payments on such
Debt Securities and (y) the amount of any such Additional Amounts is at the time
of deposit reasonably determinable by MacSaver, any such Additional Amounts) to
the date of such deposit (if such Debt Securities have become due and payable)
or to the Maturity thereof, as the case may be, (ii) MacSaver or the Company, as
the case may be, has paid all other sums payable under the Indenture with
respect to the Debt Securities of such series, and (iii) certain other
conditions are met. If the Debt Securities of any such series provide for the
payment of Additional Amounts, MacSaver will remain obligated, following such
deposit, to pay (and the Guarantee of the Company will continue to apply to such
-18-
<PAGE>
payment of) Additional Amounts on such Debt Securities to the extent that the
amount thereof exceeds the amount deposited in respect of such Additional
Amounts as aforesaid.
Unless otherwise provided in the applicable Prospectus Supplement, MacSaver
may elect with respect to any series of Debt Securities either (a) to defease
and be discharged from any and all obligations with respect to such Debt
Securities (except for, among other things, the obligation to pay Additional
Amounts, if any, upon the occurrence of certain events of taxation, assessment
or governmental charge with respect to payments on such Debt Securities to the
extent that the amount thereof exceeds the amount deposited in respect of such
Additional Amounts as provided below, and the obligations to register the
transfer or exchange of such Debt Securities, to replace temporary or mutilated,
destroyed, lost or stolen Debt Securities, to maintain an office or agency in
respect of such Debt Securities, to hold moneys for payment in trust, and, if
applicable, to exchange or convert such Debt Securities into other securities in
accordance with their terms) ("defeasance"), or (b) to omit to comply with its
obligations with respect to certain restrictive covenants in Section 1005
(Statement as to Compliance), Section 1011 (Waiver of Certain Covenants), and,
to the extent specified pursuant to Section 301 (Amount Unlimited; Issuable in
Series), and any other covenant applicable to such Debt Securities in the
Indenture and, if indicated in the applicable Prospectus Supplement, its
obligations with respect to any other covenant applicable to the Debt Securities
of such series, and any omission to comply with such obligations shall not
constitute a Default or an Event of Default with respect to the Debt Securities
of such series ("covenant defeasance"), in either case upon the irrevocable
deposit with the Trustee (or other qualifying trustee), in trust for such
purpose, of an amount, in U.S. dollars or in such other currency in which such
Debt Securities are payable at Stated Maturity, and/or Government Obligations
(as defined in the Indenture) which through the payment of principal and
interest in accordance with their terms will provide money, in an amount
sufficient to pay the principal of and any premium and any interest on (and, to
the extent that (x) the Debt Securities of such series provide for the payment
of Additional Amounts and (y) the amount of any such Additional Amounts is at
the time of deposit reasonably determinable by MacSaver, any such Additional
Amounts with respect to) such Debt Securities, and any mandatory sinking fund or
analogous payments thereon, on the due dates therefor, whether upon maturity,
redemption or otherwise.
Such defeasance or covenant defeasance shall only be effective if, among
other things, (i) it shall not result in a breach or violation of, or constitute
a default under, the Indenture or any other material agreement to which MacSaver
or the Company is a party or is bound, and (ii) MacSaver has delivered to the
Trustee an opinion of counsel (as specified in the Indenture) to the effect that
the holders of such Debt Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such defeasance or covenant
defeasance, as the case may be, and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been the
case if such defeasance or covenant defeasance had not occurred. It shall also
be a condition to the effectiveness of such defeasance (or covenant defeasance)
that no Event of Default or event which with notice or lapse of time or both
would become an Event of Default with respect to Debt Securities of such series
shall have occurred and been continuing on the date of such deposit and, with
respect to defeasance only, at any time or during the period ending on the 91st
day after the date of, such deposit into trust.
Unless otherwise provided in the applicable Prospectus Supplement, if after
MacSaver has deposited funds and/or Government Obligations to effect defeasance
or covenant defeasance with respect to Debt Securities of any series, (a) the
holder of a Debt Security of such series is entitled to, and does, elect
pursuant to the Indenture or the terms of such Debt Security to receive payment
in a Currency other than that in which such deposit has been made in respect of
such Debt Security, or (b) a Conversion Event (as defined below) occurs in
respect of the Foreign Currency in which such deposit has been made, the
indebtedness represented by such Debt Security shall be deemed to have been, and
will be, fully discharged and satisfied through the payment of the principal of
(and premium, if any) and interest, if any, on such Debt Security as such Debt
Security becomes due out of the proceeds yielded by converting the amount so
deposited in respect of such Debt Security into the currency in which such Debt
Security becomes payable as a result of such election or such Conversion Event
based on (x) in the case of payments made pursuant to clause (a) above, the
applicable market exchange rate for such Foreign Currency in effect on the
second
-19-
<PAGE>
business day prior to such payment date, or (y) with respect to a Conversion
Event, the applicable market exchange rate for such Foreign Currency in effect
(as nearly as feasible) at the time of the Conversion Event. "Conversion Event"
means the cessation of use of (i) a Foreign Currency both by the government of
the country or the confederation which issued such Foreign Currency and for the
settlement of transactions by a central bank or other public institutions of or
within the international banking community, (ii) the ECU both within the
European Monetary System and for the settlement of transactions by public
institutions of or within the European Union or (iii) any currency unit or
composite currency other than the ECU for the purposes for which it was
established.
In the event MacSaver effects covenant defeasance with respect to any Debt
Securities and such Debt Securities are declared due and payable because of the
occurrence of any Event of Default other than an Event of Default with respect
to any other covenant as to which there has been covenant defeasance, the amount
of monies and/or Government Obligations deposited with the Trustee to effect
such covenant defeasance may not be sufficient to pay amounts due on such Debt
Securities at the time of any acceleration resulting from such Event of Default.
However, MacSaver would remain liable to make payment of such amounts due at the
time of acceleration.
The applicable Prospectus Supplement may further describe the provisions,
if any, permitting or restricting such defeasance or covenant defeasance with
respect to the Debt Securities of a particular series.
Title
The Company, MacSaver, the Trustee and any agent of any of them may treat
the person in whose name a registered Debt Security is registered as the
absolute owner thereof (whether or not such Debt Security may be overdue) for
the purpose of making payment and for all other purposes. (Section 308)
Governing Law
The Indenture and the Debt Securities will be governed by, and construed in
accordance with, the laws of the State of New York.
Regarding the Trustee
The Trust Indenture Act of 1939 contains limitations on the rights of a
trustee, should it become a creditor of the Company or MacSaver, as the case may
be, to obtain payment of claims in certain cases or to realize on certain
property received by it in respect of any such claims, as security or otherwise.
The Trustee is permitted to engage in other transactions with MacSaver, the
Company and its other subsidiaries from time to time, provided that if such
Trustee acquires any conflicting interest it must eliminate such conflict upon
the occurrence of an Event of Default under the Indenture, or else resign. In
that event, MacSaver would be required to appoint a successor Trustee.
DESCRIPTION OF COMMON STOCK
The Company has authorized 250,000,000 shares of Common Stock, par value
$2.00 per share. As of May 31, 1997, there were 54,414,297 shares of Common
Stock outstanding. The following brief description of the Common Stock does not
purport to be complete and is subject in all respects to applicable Virginia law
and to the provisions of the Company's Restated Articles of Incorporation and
its By-laws, copies of which have been filed with the Commission.
Holders of Common Stock are entitled to such dividends as may be declared
by the Board of Directors out of funds legally available therefor after payment
of dividends on any outstanding Preferred Stock and are entitled to one vote for
each share of Common Stock held by them with respect to all matters upon which
they are entitled to vote.
-20-
<PAGE>
The Company's Restated Articles of Incorporation contain a provision that
reduces the shareholder vote required for amending the Articles of Incorporation
in certain circumstances from the two-thirds vote generally applicable to a
simple majority vote. The majority vote will be applicable except when the
effect of the amendment 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 Company or the dissolution of the Company, or (b) to delete
all or any part of such provision. In addition, the vote required by other
provisions of the Restated Articles of Incorporation is necessary if such
provisions require the approval of more than a majority of the votes entitled to
be cast.
Preferred Stock
The Company has authorized 3,000,000 shares of Preferred Stock, par value
$10.00 per share. As of May 31, 1997, there were no shares of Preferred Stock
outstanding. The Board of Directors of the Company, without further action by
the shareholders, is authorized to designate and issue in series Preferred Stock
and to fix as to any series the dividend rate, redemption prices, preferences on
dissolution, the terms of any sinking fund, conversion rights, voting right, and
any other preferences of special rights and qualifications. Shares of Common
Stock would be subject to the preferences, rights and powers of any such shares
of Preferred Stock as set forth in the Company's Restated Articles of
Incorporation and the resolutions establishing one or more series of Preferred
Stock. Holders of the Preferred Stock, if and when issued, will be entitled to
vote as required under applicable Virginia law. Such law includes provisions for
the voting of the Preferred Stock in the case of any amendment to the Restated
Articles of Incorporation affecting the rights of holders of the Preferred
Stock, the payment of certain stock dividends, merger or consolidation, sale of
all or substantially all of the Company's assets and dissolution. There are no
agreements or understandings for the designation of series of Preferred Stock or
the issuance of shares thereunder, except pursuant to the Shareholders' Rights
Plan discussed below.
Shareholders' Rights Plan
The following summary of certain provisions of the Company's Shareholders'
Rights Plan and the Rights Agreement dated as of February 17, 1988 between the
Company and Crestar Bank as Rights Agent, as amended by Supplements No. 1
through No. 4 dated as of September 15, 1989 (together, as amended, the "Rights
Agreement"), does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, including the form of Rights Certificate
attached thereto, each of which has been filed with the Commission and is
incorporated by reference herein.
On February 17, 1988 the Board of Directors of the Company declared a
dividend distribution of one preferred share purchase right (a "Right") on each
outstanding share of Common Stock pursuant to a Shareholders' Rights Plan. The
Rights are exercisable only upon the attainment of, or the commencement of a
tender offer to attain, a specified ownership interest in the Company by a
person or group. When exercisable, each Right would entitle its holder to
purchase one-hundredth of a newly issued share of cumulative Participating
Preferred Stock, Series A, par value $10.00 per share (the "Series A Preferred
Stock") at an exercise price of $75, subject to adjustment. A total of 750,000
shares of Series A Preferred Stock has been reserved. Each share of Series A
Preferred Stock will entitle the holder to 100 votes and has an aggregate
dividend rate of 100 times the amount paid to holders of the Common Stock. Upon
occurrence of certain events, each holder of a Right will become entitled to
purchase shares of Common Stock having a value of twice the Right's then current
exercise price in lieu of Series A Preferred Stock. Each share of Common Stock
offered pursuant to this Prospectus and an accompanying Prospectus Supplement
shall have one Right attached to it.
Virginia Stock Corporation Act
The Virginia Stock Corporation Act contains provisions governing
"Affiliated Transactions." These provisions, with several exceptions discussed
below, require approval of certain material transactions between a Virginia
-21-
<PAGE>
corporation and any beneficial holder of more than 10% of any class of its
outstanding voting shares (an "Interested Shareholder") by the holders of at
least two-thirds of the remaining voting shares. Affiliated Transactions subject
to this approval requirement include mergers, share exchanges, material
dispositions of corporate assets not in the ordinary course of business, any
dissolution of the corporation proposed by or on behalf of an Interested
Shareholder, or any reclassification, including reverse stock splits,
recapitalization or merger of the corporation with its subsidiaries which
increases the percentage of voting shares owned beneficially by an Interested
Shareholder by more than 5%.
For three years following the time that an Interested Shareholder becomes
an owner of more than 10% of the outstanding voting shares, a Virginia
corporation cannot engage in an Affiliated Transaction with such Interested
Shareholder without approval of two-thirds of the voting shares other than those
shares beneficially owned by the Interested Shareholder, and majority approval
of the "Disinterested Directors." A Disinterested Director means, with respect
to a particular Interested Shareholder, a member of the Company's Board of
Directors who was (1) a member on the date on which an Interested Shareholder
became an Interested Shareholder or (2) recommended for election by, or was
elected to fill a vacancy and received the affirmative vote of, a majority of
the Disinterested Directors then on the Board. At the expiration of the
three-year period, the statute requires approval of Affiliated Transactions by
two-thirds of the voting shares other than those beneficially owned by the
Interested Shareholder.
The principal exceptions to the special voting requirement apply to
transactions proposed after the three-year period has expired and require either
that the transaction be approved by a majority of the corporation's
Disinterested Directors or that the transaction satisfy the fair-price
requirements of the statute. In general, the fair-price requirements provide
that in a two-step acquisition transaction, the Interested Shareholder must pay
the shareholders in the second step either the same amount of cash or the same
amount and type of consideration paid to acquire the Virginia corporation's
shares in the first step.
None of the foregoing limitations and special voting requirements applies
to a transaction with an Interested Shareholder whose acquisition of shares
making such person an Interested Shareholder was approved by a majority of the
Virginia corporation's Disinterested Directors.
These provisions were designed to deter certain takeovers of Virginia
corporations. In addition, the statute provides that, by affirmative vote of a
majority of the voting shares other than shares owned by any Interested
Shareholder, a corporation can adopt an amendment to its articles of
incorporation or bylaws providing that the Affiliated Transactions provisions
shall not apply to the corporation. The Company has not "opted out" of the
Affiliated Transactions provisions.
Virginia law provides that shares acquired in a transaction that would
cause the acquiring person's voting strength to meet or exceed any of three
thresholds (20%, 33-1/3% or 50%) have no voting rights unless granted by a
majority vote of shares not owned by the acquiring person or any officer or
employee-director of the Virginia corporation. This provision empowers an
acquiring person to require the Virginia corporation to hold a special meeting
of shareholders to consider the matter within 50 days of its request. The Board
of Directors of a Virginia corporation can opt out of this provision at any time
before four days after receipt of a control share acquisition notice.
Transfer Agent
The transfer agent for the Common Stock is Wachovia Bank of North Carolina,
N.A.
-22-
<PAGE>
DESCRIPTION OF WARRANTS
The Company may issue (either separately or together with other Securities)
warrants for the purchase of Common Stock (the "Warrants"). The Warrants are to
be issued under warrant agreements (each a "Warrant Agreement") to be entered
into between the Company and a bank or trust company, as warrant agent ("Warrant
Agent"), all as set forth in the Prospectus Supplement relating to the
particular issue of Warrants. The form of Warrant Agreement, including the form
of certificates representing the Warrants ("Warrant Certificates"), that will be
entered into with respect to a particular offering of Warrants will be filed as
an exhibit to or incorporated by reference in the Registration Statement. The
following summary of certain provisions of the Warrant Agreement and the
Warrants and the summary of certain terms of the particular Warrant Agreement
and Warrants set forth in the applicable Prospectus Supplement do not purport to
be complete and are subject to, and are qualified in their entirety by reference
to, all the provisions of the particular Warrant Agreement and the related
Warrant Certificates, all of which are incorporated herein by reference.
The following description of the Warrants sets forth certain general terms
and provisions of the Warrants and the related Warrant Agreement to which any
Prospectus Supplement may relate. Certain other terms of any Warrants and the
related Warrant Agreement will be described in the applicable Prospectus
Supplement. If so indicated in the accompanying Prospectus Supplement, the terms
of the Warrants offered thereby and the related Warrant Agreement may differ
from the terms set forth below.
General
Reference is made to the applicable Prospectus Supplement for the terms of
the Warrants offered thereby, including (where applicable): (1) the title and
aggregate number of such Warrants; (2) the number of shares of Common Stock that
may be purchased upon exercise of each such Warrant; (3) the price, or the
manner of determining the price, at which such shares may be purchased upon such
exercise; (4) if other than cash, the property and manner in which the exercise
price of such Warrants may be paid; and any minimum number of such Warrants that
are exercisable at any one time; (5) the time or times at which, or period or
periods during which, such Warrants may be exercised and the expiration date of
such Warrants; (6) the terms of any right of the Company to redeem such
Warrants; (7) the terms of any right of the Company to accelerate the exercise
of such Warrants upon the occurrence of certain events; (8) whether such
Warrants will be sold with any other Securities, and the date, if any, on and
after which such Warrants and any such other Securities will be separately
transferable; (9) whether Warrants will be issued in registered or bearer form;
(10) a discussion of certain Federal income tax, accounting and other special
considerations, procedures and limitations relating to such Warrants; and (11)
any other terms of such Warrants.
Warrant Certificates may be surrendered for transfer or exchange for new
Warrant Certificates of authorized denominations at any office or agency of the
relevant Warrant Agent maintained for such purpose, subject to the terms of the
related Warrant Agreement. Unless otherwise specified in the applicable
Prospectus Supplement, Warrant Certificates will be issued in denominations
evidencing any whole number of Warrants. No service charge will be made for any
permitted transfer or exchange of Warrant Certificates, but the Company or the
Warrant Agent may require payment of any tax or other governmental charge
payable in connection therewith.
Exercise of Warrants
Each Warrant will entitle the holder to purchase such number of shares of
Common Stock at such exercise price as shall in each case be set forth in, or be
determinable from, the Prospectus Supplement relating to such Warrants, by
payment of such exercise price in the Currency and in the manner specified in
the Prospectus Supplement. Warrants may be exercised at any time up to the date
and time specified in the applicable Prospectus Supplement for the expiration
thereof. After the specified expiration time on the specified date of
expiration, unexercised Warrants will become void.
-23-
<PAGE>
Upon receipt at an office or agency indicated in the applicable Prospectus
Supplement of (i) payment of the exercise price and (ii) the Warrant Certificate
properly completed and duly executed, the Company will, as soon as practicable,
issue and deliver the shares of Common Stock purchasable upon such exercise.
Unless otherwise indicated in the applicable Prospectus Supplement, fractional
shares of Common Stock will not be issued upon the exercise of Warrants and, in
lieu thereof, the Company will make a cash payment in an amount determined as
provided in the applicable Prospectus Supplement. If less than all of the
Warrants represented by such Warrant Certificate are exercised, a new Warrant
Certificate will be issued for the remaining number of Warrants. The holder of a
Warrant will be required to pay any tax or other governmental charge that may be
imposed in connection with any transfer involved in the issuance of Common Stock
purchased upon such exercise.
Modifications
Any Warrant Agreement and the terms of the related Warrants may be modified
or amended by the Company and the applicable Warrant Agent, without the consent
of any holder of the related Warrants, for the purpose of curing any ambiguity,
or of curing, correcting or supplementing any defective or inconsistent
provision contained therein, or in any other manner that the Company deems
necessary or desirable and that will not materially and adversely affect the
interests of the holders of the related Warrants.
The Company and the applicable Warrant Agent may also modify or amend the
applicable Warrant Agreement and the terms of the related Warrants with the
consent of the holders of not less than a majority in number of the then
outstanding unexercised Warrants affected thereby; provided that no such
modification or amendment that accelerates the expiration date, increases the
exercise price, or reduces the number of outstanding Warrants the consent of
whose holders is required for any such amendment or modification, may be made
without the consent of each holder affected thereby.
No Rights as Holders
Holders of Warrants for the purchase of shares of Common Stock are not
entitled, by virtue of being such holders, to vote, consent or receive notice as
shareholders of the Company in respect of any meeting of shareholders for the
election of directors of the Company or any other matter, or to exercise any
other rights whatsoever as shareholders of the Company, or to receive any
dividends or distributions, if any, on the Common Stock.
UNITED STATES TAXATION
The following summary of the principal United States federal income tax
consequences of ownership of Debt Securities is based upon the opinion of
McGuire, Woods, Battle & Boothe, L.L.P., special tax counsel to the Company and
MacSaver. It deals only with Debt Securities held as capital assets, and not
with special classes of holders, such as dealers in securities or currencies,
banks, tax-exempt organizations, life insurance companies, persons that hold
Debt Securities that are part of a hedge or that are hedged against currency
risks or that are part of a straddle or conversion transaction, or persons whose
functional currency is not the U.S. dollar. It also does not deal with Holders
other than original purchasers who purchase Debt Securities at the original
offering price and thus does not deal with the "market discount rules."
Moreover, the summary deals only with Debt Securities that are due to mature not
later than 30 years from the date on which they are issued. The United States
federal income tax consequences of ownership of Debt Securities that are due to
mature more than 30 years from their date of issue will be discussed in an
applicable Prospectus Supplement. The summary is based on the Internal Revenue
Code of 1986, as amended (the "Code"), its legislative history, existing and
proposed regulations thereunder, judicial decisions, and published rulings and
other administrative guidance issued by the Internal Revenue Service (the
"Service"), as currently in effect, all of which are subject to change at any
time, possibly with retroactive effect.
-24-
<PAGE>
PROSPECTIVE PURCHASERS OF DEBT SECURITIES SHOULD CONSULT THEIR OWN TAX
ADVISORS CONCERNING THE CONSEQUENCES OF OWNERSHIP OF DEBT SECURITIES, IN THEIR
PARTICULAR CIRCUMSTANCES, UNDER THE CODE AND THE APPLICABLE LAWS OF ANY STATE,
LOCAL OR FOREIGN TAXING JURISDICTION.
The federal income tax consequences of ownership of other Securities,
including Common Stock and Warrants, will be discussed in an applicable
Prospectus Supplement.
United States Holders
Payments of Interest
Except as provided below under "Original Issue Discount", interest on a
Debt Security (including "qualified stated interest" on a "Discount Debt
Security", as defined below) will be taxable to a United States Holder as
ordinary income at the time it is received or accrued, depending on the holder's
method of accounting for tax purposes. A United States Holder is a beneficial
owner who or that is (i) a citizen or resident of the United States, (ii) a
domestic corporation or (iii) otherwise subject to United States federal income
taxation on a net income basis in respect of the Debt Security.
If an interest payment is denominated in, or determined by reference to, a
currency, composite currency or basket of currencies other than the U.S. dollars
(a "foreign currency"), the amount of income recognized by a cash basis United
States Holder will be the U.S. dollar value of the interest payment, based on
the exchange rate in effect on the date of receipt, regardless of whether the
payment is in fact converted into U.S. dollars.
An accrual basis United States Holder may determine the amount of income
recognized with respect to an interest payment denominated in, or determined by
reference to, a foreign currency in accordance with either of two methods. Under
the first method, the amount of income accrued will be based on the average
exchange rate in effect during the interest accrual period (or, with respect to
an accrual period that spans two taxable years, the part of the period within
the taxable year).
Under the second method, the United States Holder may elect to determine
the amount of income accrued on the basis of the exchange rate in effect on the
last day of the accrual period or, in the case of an accrual period that spans
two taxable years, the exchange rate in effect on the last day of the part of
the period within the taxable year. Additionally, if a payment of interest is
actually received within five business days of the last day of the accrual
period or taxable year, an electing accrual basis United States Holder may
instead translate such accrued interest into U.S. dollars at the exchange rate
in effect on the day of actual receipt. Any such election must apply to all debt
instruments held by the United States Holder at the beginning of the first
taxable year to which the election applies or thereafter acquired by the United
States Holder, and may not be revoked without the consent of the Service.
Upon receipt of an interest payment (including a payment attributable to
accrued but unpaid interest upon the sale or retirement of a Debt Security)
denominated in, or determined by reference to, a foreign currency, the accrual
basis United States Holder will recognize ordinary income or loss measured by
the difference between (x) the average exchange rate used to accrue the interest
income represented by such payment, or the exchange rate as determined under the
second method described above if the United States Holder elects that method,
and (y) the exchange rate in effect on the date of receipt, regardless of
whether the payment is in fact converted into U.S.
dollars.
-25-
<PAGE>
Original Issue Discount
General. A Debt Security with a maturity of more than one year from the
date of issue will be treated as issued at an original issue discount (a
"Discount Debt Security") if its "stated redemption price at maturity" exceeds
its issue price by more than a "de minimis amount" (as defined below).
Generally, the issue price of a Debt Security will be the first price at which a
substantial amount of Debt Securities included in the issue of which the Debt
Security is a part are sold to persons other than bond houses, brokers, or
similar persons or organizations acting in the capacity of underwriters,
placement agents, or wholesalers. The stated redemption price at maturity of a
Debt Security is the total of all payments provided by the Debt Security that
are not payments of "qualified stated interest." A qualified stated interest
payment generally is any one of a series of stated interest payments on a Debt
Security that are unconditionally payable at least annually at a single fixed
rate (with certain exceptions for lower rates paid during some periods) applied
to the outstanding principal amount of the Debt Security. Special rules for
determining qualified stated interest payable on certain Debt Securities bearing
interest at a variable rate are described below under "Original Issue
Discount--Variable Rate Debt Securities".
In general, if a Debt Security's stated redemption price at maturity
exceeds its issue price by less than an amount equal to 1/4 of 1 percent of the
Debt Security's stated redemption price at maturity multiplied by the number of
complete years to its maturity (the "de minimis amount"), then such excess, if
any, constitutes "de minimis original issue discount" and the Debt Security is
not a Discount Debt Security. Unless the election described below under
"Election to Treat All Interest as Original Issue Discount" is made, a United
States Holder of a Debt Security with de minimis original issue discount must
include such de minimis original issue discount in income as stated principal
payments on the Debt Security are made. The includible amount with respect to
each such payment will equal the total amount of the Debt Security's de minimis
original issue discount multiplied by a fraction, the numerator of which is the
amount of the principal payment made and the denominator of which is the stated
principal amount of the Debt Security.
United States Holders of Discount Debt Securities having a maturity of more
than one year from their date of issue must, generally, include in computing
their taxable income original issue discount ("OID") calculated on a
constant-yield method before the receipt of cash attributable to such income,
and generally will have to include in income increasingly greater amounts of OID
over the life of the Debt Security. The amount of OID includible in income by a
United States Holder of a Discount Debt Security is the sum of the daily
portions of OID with respect to the Discount Debt Security for each day during
the taxable year or portion of the taxable year on which the United States
Holder holds such Discount Debt Security ("accrued OID"). The daily portion is
determined by allocating to each day in any "accrual period" a pro rata portion
of the OID allocable to that accrual period. Accrual periods with respect to a
Debt Security may be of any length selected by the United States Holder and may
vary in length over the term of the Debt Security as long as (i) no accrual
period is longer than one year and (ii) each scheduled payment of interest or
principal on the Debt Security occurs on either the final or first day of an
accrual period. The amount of OID allocable to an accrual period equals the
excess of (a) the product of the Discount Debt Security's adjusted issue price
at the beginning of the accrual period and such Debt Security's yield to
maturity (determined on the basis of compounding at the close of each accrual
period and properly adjusted for the length of the accrual period) over (b) the
sum of the payments of qualified stated interest on the Debt Security allocable
to the accrual period. The "adjusted issue price" of a Discount Debt Security at
the beginning of any accrual period is the issue price of the Debt Security
increased by (x) the amount of accrued OID for each prior accrual period and
decreased by (y) the amount of any payments previously made on the Debt Security
that were not qualified stated interest payments. For purposes of determining
the amount of OID allocable to an accrual period, if an interval between
payments of qualified stated interest on the Debt Security contains more than
one accrual period, the amount of qualified stated interest payable at the end
of the interval (including any qualified stated interest that is payable on the
first day of the accrual period immediately following the interval) is allocated
pro rata on the basis of relative lengths of each accrual period in the
interval, and the adjusted issue price at the beginning of each accrual period
in the interval must be increased by the amount of any qualified stated interest
that has accrued prior to the first day of the accrual period
-26-
<PAGE>
but that is not payable until the end of the interval. The amount of OID
allocable to an initial short accrual period may be computed using any
reasonable method if all other accrual periods other than a final short accrual
period are of equal length. The amount of OID allocable to the final accrual
period is the difference between (x) the amount payable at the maturity of the
Debt Security (other than any payment of qualified stated interest) and (y) the
Debt Security's adjusted issue price as of the beginning of the final accrual
period.
Acquisition Premium. A United States Holder that purchases a Debt Security
for an amount less than or equal to the sum of all amounts payable on the Debt
Security after the purchase date (other than payments of qualified stated
interest) but in excess of its adjusted issue price (any such excess being
"acquisition premium") and that does not make the election described below under
"Election to Treat All Interest as Original Issue Discount" is permitted to
reduce the daily portions of OID by a fraction, the numerator of which is the
excess of the United States Holder's adjusted basis in the Debt Security
immediately after its purchase over the adjusted issue price of the Debt
Security, and the denominator of which is the excess of the sum of all amounts
payable on the Debt Security after the purchase date, other than payments of
qualified stated interest, over the Debt Security's adjusted issue price.
Pre-Issuance Accrued Interest. If (i) a portion of the initial purchase
price of a Debt Security is attributable to pre-issuance accrued interest, (ii)
the first stated interest payment on the Debt Security is to be made within one
year of the Debt Security's issue date and (iii) the payment will equal or
exceed the amount of pre-issuance accrued interest, then the United States
Holder may elect to decrease the issue price of the Debt Security by the amount
of pre-issuance accrued interest. In that event, a portion of the first stated
interest payment will be treated as a return of the excluded pre-issuance
accrued interest and not as an amount payable on the Debt Security.
Debt Securities Subject to Contingencies Including Optional Redemption. In
general, if a Debt Security provides for an alternative payment schedule or
schedules applicable upon the occurrence of a contingency or contingencies
(other than a remote or incidental contingency) and the timing and amounts of
the payments that comprise each payment schedule are known as of the issue date,
special rules apply for purposes of determining the yield and maturity of the
Debt Security. If, based on all the facts and circumstances as of the issue
date, a single payment schedule, including the stated payment schedule, is
significantly more likely than not to occur, then, in general, the yield and
maturity of the Debt Security are computed based on that payment schedule.
If there is no single payment schedule that is significantly more likely
than not to occur (other than because of a mandatory sinking fund), the amount
of interest taken into account for each accrual period would be determined by
constructing a projected payment schedule for the Debt Security and applying
rules similar to those for accruing OID on a noncontingent debt instrument. This
method is applied by first determining the yield at which MacSaver would issue a
fixed rate debt instrument with terms and conditions similar to the contingent
payment Debt Security (the comparable yield) and then determining a payment
schedule as of the issue date that would produce the comparable yield.
Notwithstanding the general rules for determining yield and maturity in the
case of Debt Securities subject to contingencies, if MacSaver or the Holder has
an unconditional option or options that, if exercised, would require payments to
be made on the Debt Security under an alternative payment schedule or schedules,
then (i) in the case of an option or options of MacSaver, MacSaver will be
deemed to exercise or not exercise an option or combination of options in the
manner that minimizes the yield on the Debt Security and (ii) in the case of an
option or options of the Holder, the Holder will be deemed to exercise or not
exercise an option or combination of options in the manner that maximizes the
yield on the Debt Security. If both MacSaver and the Holder have options
described in the preceding sentence, those rules apply to such options in the
order in which they may be exercised. For purposes of those calculations, the
yield on the Debt Security is determined by using any date on which the Debt
Security may be redeemed or repurchased as the maturity date and the amount
payable on such date in accordance with the terms of the Debt Security as the
principal amount payable at maturity.
-27-
<PAGE>
If a contingency (including the exercise of an option) fails to occur, or
actually occurs but in a manner inconsistent with the assumption made according
to the above rules (a "change in circumstances") then, except to the extent that
a portion of the Debt Security is repaid as a result of the change in
circumstances and solely for purposes of the accrual of OID, the yield and
maturity of the Debt Security are redetermined by treating the Debt Security as
having been retired and reissued on the date of the change in circumstances for
an amount equal to the Debt Security's adjusted issue price on that date.
The federal income tax treatment of Debt Securities providing for
alternative payment schedules applicable upon the occurrence of one or more
contingencies will be described in greater detail in the applicable Prospectus
Supplement.
Election to Treat All Interest as Original Issue Discount. A United States
Holder may elect to include in gross income all interest that accrues on a Debt
Security using the constant-yield method described above under the heading
"Original Issue Discount--General", with the modifications described below. For
purposes of this election, interest includes stated interest, OID, de minimis
original issue discount, market discount, de minimis market discount and
unstated interest, as adjusted by any amortizable bond premium (described below
under "Debt Securities Purchased at a Premium") or acquisition premium.
In applying the constant-yield method to a Debt Security with respect to
which this election has been made, the issue price of the Debt Security will
equal the electing United States Holder's adjusted basis in the Debt Security
immediately after its acquisition, the issue date of the Debt Security will be
the date of its acquisition by the electing United States Holder, and no
payments on the Debt Security will be treated as payments of qualified stated
interest. This election will generally apply only to the Debt Security with
respect to which it is made and may not be revoked without the consent of the
Service. If this election is made with respect to a Debt Security with
amortizable bond premium, then the electing United States Holder will be deemed
to have elected to apply amortizable bond premium against interest with respect
to all debt instruments with amortizable bond premium (other than debt
instruments the interest on which is excludible from gross income) held by the
electing United States Holder as of the beginning of the taxable year in which
the Debt Security with respect to which the election is made is acquired or
thereafter acquired. The deemed election with respect to amortizable bond
premium may not be revoked without the consent of the Service.
Variable Rate Debt Securities. A "Variable Rate Debt Security" is a Debt
Security that: (i) has an issue price that does not exceed the total
noncontingent principal payments by more than the lesser of (1) .015 multiplied
by the product of (x) the total noncontingent principal payments and (y) the
number of complete years to maturity from the issue date, or (2) 15 percent of
the total noncontingent principal payments; (ii) does not provide for any stated
interest other than stated interest compounded or paid at least annually at (1)
one or more "qualified floating rates", (2) a single fixed rate and one or more
qualified floating rates, (3) a single "objective rate" or (4) a single fixed
rate and a single objective rate that is a "qualified inverse floating rate";
(iii) provides that a qualified floating rate or objective rate in effect at any
time during the term of the instrument must be set at a "current value" of that
rate (i.e., the value of the rate on any day that is no earlier than 3 months
prior to the first day on which that value is in effect and no later than 1 year
following that first day); and (iv) does not provide for any contingent
principal payments other than as provided in clause (i) of this sentence.
A variable rate is a "qualified floating rate" if (i) variations in the
value of the rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the Debt
Security is denominated or (ii) it is equal to the product of a qualified
floating rate described in clause (i) and either (a) a fixed multiple that is
greater than .65 but not more than 1.35, or (b) a fixed multiple greater than
.65 but not more than 1.35, increased or decreased by a fixed rate. If a Debt
Security provides for two or more qualified floating rates that (i) are within
0.25 percentage points of each other on the issue date or (ii) can reasonably be
expected to have approximately the same values throughout the term of the Debt
Security, the qualified floating rates together constitute a single qualified
floating rate. A rate is not a qualified floating rate, however, if the rate is
subject to certain restrictions (including caps, floors, governors or other
similar restrictions) unless such restrictions are fixed
-28-
<PAGE>
throughout the term of the Debt Security or are not reasonably expected to
significantly affect the yield on the Debt Security.
An "objective rate" is a rate, other than a qualified floating rate, that
is determined using a single, fixed formula and that is based on objective
financial or economic information, including one or more qualified floating
rates or the yield or changes in the price of one or more actively traded items
of personal property other than stock or debt of the issuer or a related party.
A variable rate is not an objective rate, however, if it is based on information
within the control of the issuer or a related party or is unique to the
circumstances of the issuer or a related party, or if it is reasonably expected
that the average value of the rate during the first half of the Debt Security's
term will be either significantly less than or significantly greater than the
average value of the rate during the final half of the Debt Security's term. An
objective rate is a "qualified inverse floating rate" if (i) the rate is equal
to a fixed rate minus a qualified floating rate, and (ii) the variations in the
rate can reasonably be expected to inversely reflect contemporaneous variations
in the cost of the qualified floating rate.
If interest on a Debt Security is stated at a fixed rate for an initial
period of one year or less followed by either a qualified floating rate or an
objective rate for a subsequent period and (i) the fixed rate and the qualified
floating rate or objective rate have values on the issue date of the Debt
Security that do not differ by more than 0.25 percentage points or (ii) the
value of the qualified floating rate or objective rate is intended to
approximate the fixed rate, the fixed rate and the qualified floating rate or
the objective rate constitute a single qualified floating rate or objective
rate. Under these rules, Commercial Paper Rate Debt Securities, Prime Rate Debt
Securities, LIBOR Debt Securities, Treasury Rate Debt Securities, CD Rate Debt
Securities and Federal Funds Rate Debt Securities will generally be treated as
Variable Rate Debt Securities.
In general, if a Variable Rate Debt Security provides for stated interest
at a single qualified floating rate or objective rate, all stated interest on
the Debt Security is qualified stated interest and the amount of OID, if any, is
determined by using, in the case of a qualified floating rate or qualified
inverse floating rate, a fixed rate equal to the value as of the issue date of
the qualified floating rate or qualified inverse floating rate, or, in the case
of any other objective rate, a fixed rate that reflects the yield reasonably
expected for the Debt Security.
If a Variable Rate Debt Security does not provide for stated interest at a
single qualified floating rate or objective rate or at a fixed rate (other than
at a single fixed rate for an initial period), the amount of interest and OID
accruals on the Debt Security are generally determined by (i) determining a
fixed rate substitute for each variable rate provided under the Variable Rate
Debt Security (generally, the value of each variable rate as of the issue date
or, in the case of an objective rate that is not a qualified inverse floating
rate, a rate that reflects the reasonably expected yield on the note), (ii)
constructing the equivalent fixed rate debt instrument (using the fixed rate
substitute described above), (iii) determining the amount of qualified stated
interest and OID with respect to the equivalent fixed rate debt instrument, and
(iv) making the appropriate adjustments for actual variable rates during the
applicable accrual period.
If a Variable Rate Debt Security provides for stated interest either at one
or more qualified floating rates or at a qualified inverse floating rate, and in
addition provides for stated interest at a single fixed rate (other than at a
single fixed rate for an initial period), the amount of interest and OID
accruals are determined as in the immediately preceding paragraph with the
modification that the Variable Rate Debt Security is treated, for purposes of
the first three steps of the determination, as if it provided for a qualified
floating rate (or a qualified inverse floating rate, as the case may be) rather
than the fixed rate. The qualified floating rate (or qualified inverse floating
rate) replacing the fixed rate must be such that the fair market value of the
Variable Rate Debt Security as of the issue date would be approximately the same
as the fair market value of an otherwise identical debt instrument that provides
for the qualified floating rate (or qualified inverse floating rate) rather than
the fixed rate.
The federal income tax treatment of any Debt Security that provides for
payments of stated interest at a variable rate, but does not meet the foregoing
requirements of a Variable Rate Debt Security, will be described in the
applicable Prospectus Supplement.
Short-Term Debt Securities. In general, an individual or other cash basis
United States Holder of a Debt Security with a term of one year or less (a
"short-term Debt Security") is not required to accrue OID (as specially defined
below for the purposes of this paragraph) for United States federal income tax
purposes unless it elects to do so (but may be required to include any stated
interest in income as the interest is received). Accrual basis United States
Holders and certain other United States Holders, including banks, regulated
investment companies, dealers in securities, common trust funds, United States
Holders who hold Debt Securities as part of certain identified hedging
transactions, certain pass-through entities and cash basis United States Holders
who so elect, are required to accrue
-29-
<PAGE>
OID on short-term Debt Securities on either a straight-line basis or under the
constant-yield method (based on daily compounding), at the election of the
United States Holder.
In the case of a United States Holder not required and not electing to
include OID in income currently, any gain realized on the sale or retirement of
the short-term Debt Security will be ordinary income to the extent of the OID
accrued on a straight-line basis (unless an election is made to accrue the OID
under the constant-yield method) through the date of sale or retirement. United
States Holders who are not required and do not elect to accrue OID on short-term
Debt Securities will be required to defer deductions for interest on borrowings
allocable to short-term Debt Securities in an amount not exceeding the deferred
income until the deferred income is realized.
For purposes of determining the amount of OID subject to these rules, all
interest payments on a short-term Debt Security, including stated interest, are
included in the short- term Debt Security's stated redemption price at maturity.
Foreign Currency Discount Debt Securities. OID for any accrual period on a
Discount Debt Security that is denominated in, or determined by reference to, a
foreign currency will be determined in the foreign currency and then translated
into U.S. dollars in the same manner as stated interest accrued by an accrual
basis United States Holder, as described under "Payments of Interest". Upon
receipt of an amount attributable to OID (whether in connection with a payment
of interest or the sale or retirement of a Debt Security), a United States
Holder may recognize ordinary income or loss.
Debt Securities Purchased at a Premium
A United States Holder that purchases a Debt Security for an amount in
excess of its principal amount may elect to treat such excess as "amortizable
bond premium", in which case the amount required to be included in the United
States Holder's income each year with respect to interest on the Debt Security
will be reduced by the amount of amortizable bond premium allocable (based on
the Debt Security's yield to maturity) to such year. In the case of a Debt
Security that is denominated in, or determined by reference to, a foreign
currency, bond premium will be computed in units of foreign currency, and
amortizable bond premium will reduce interest income in units of the foreign
currency. At the time amortized bond premium offsets interest income, exchange
gain or loss (taxable as ordinary income or loss) is realized measured by the
difference between exchange rates at that time and at the time of the
acquisition of the Debt Securities. Any election to amortize bond premium shall
apply to all bonds (other than bonds the interest on which is excludible from
gross income) held by the United States Holder at the beginning of the first
taxable year to which the election applies or thereafter acquired by the United
States Holder, and is irrevocable without the consent of the Service. See also
"Original Issue Discount--Election to Treat All Interest as Original Issue
Discount."
Purchase, Sale and Retirement of the Debt Securities
A United States Holder's tax basis in a Debt Security will generally be its
U.S. dollar cost (as defined below), increased by the amount of any OID or
market discount included in the United States Holder's income with respect to
the Debt Security and the amount, if any, of income attributable to de minimis
original issue discount and de minimis market discount included in the United
States Holder's income with respect to the Debt Security, and reduced by (i) the
amount of any payments that are not qualified stated interest payments, and (ii)
the amount of any amortizable bond premium applied to reduce interest on the
Debt Security. The U.S. dollar cost of a Debt Security purchased with a foreign
currency will generally be the U.S. dollar value of the purchase price on the
date of purchase or, in the case of Debt Securities traded on an established
securities market, as defined in the applicable Treasury Regulations, that are
purchased by a cash basis United States Holder (or an accrual basis United
States Holder that so elects), on the settlement date for the purchase.
-30-
<PAGE>
A United States Holder will generally recognize gain or loss on the sale or
retirement of a Debt Security equal to the difference between the amount
realized on the sale or retirement and its tax basis in the Debt Security. The
amount realized on a sale or retirement for an amount in foreign currency will
be the U.S. dollar value of such amount on (i) the date payment is received in
the case of a cash basis United States Holder, (ii) the date of disposition in
the case of an accrual basis United States Holder or (iii) in the case of Debt
Securities traded on an established securities market, as defined in the
applicable Treasury Regulations, sold by a cash basis United States Holder (or
an accrual basis United States Holder that so elects), on the settlement date
for the sale. Except to the extent described above under "Original Issue
Discount--Short-Term Debt Securities" or described in the next succeeding
paragraph or attributable to accrued but unpaid interest, gain or loss
recognized on the sale or retirement of a Debt Security will be capital gain or
loss and will be long-term capital gain or loss if the Debt Security was held
for more than one year.
Gain or loss recognized by a United States Holder on the sale or retirement
of a Debt Security that is attributable to changes in exchange rates will be
treated as ordinary income or loss. However, exchange gain or loss is taken into
account only to the extent of total gain or loss realized on the transaction.
Exchange of Amounts in Other Than U.S. Dollars
Foreign currency received as interest on a Debt Security or on the sale or
retirement of a Debt Security will have a tax basis equal to its U.S. dollar
value at the time such interest is received or at the time of such sale or
retirement. Foreign currency that is purchased will generally have a tax basis
equal to the U.S. dollar value of the foreign currency on the date of purchase.
Any gain or loss recognized on a sale or other disposition of a foreign currency
(including its use to purchase Debt Securities or upon exchange for U.S.
dollars) will be ordinary income or loss.
Indexed Debt Securities
The applicable Prospectus Supplement will contain a discussion of any
special United States federal income tax rules with respect to Indexed
Securities (other than Debt Securities subject to the rules governing Variable
Rate Debt Securities).
United States Alien Holders
For purposes of this discussion, a "United States Alien Holder" is any
holder of a Debt Security who is (i) a nonresident alien individual or (ii) a
foreign corporation, partnership or estate or trust, in each case not subject to
United States federal income tax on a net income basis in respect of income or
gain from a Debt Security. This discussion assumes that the Debt Security or
coupon is not subject to the rules of Section 871(h) (4) (A) of the Code
(relating to interest payments that are determined by reference to the income,
profits, changes in the value of property or other attributes of the debtor or a
related party). In addition, solely with respect to United States federal estate
tax, the discussion assumes that the Debt Security had a maturity date, when
issued, that was not less than 184 days from the date of issuance.
Under present United States federal income and estate tax law, and subject
to the discussion of backup withholding below:
(1) payments of principal, premium (if any) and interest, including OID, by
MacSaver or any of its paying agents to any holder of a Debt Security or coupon
that is a United States Alien Holder will not be subject to United States
federal withholding tax if, in the case of interest or OID, (i) the beneficial
owner of the Debt Security or coupon does not actually or constructively own 10%
or more of the total combined voting power of all classes of stock of MacSaver
entitled to vote, (ii) the beneficial owner of the Debt Security is not a
controlled foreign corporation that is related to MacSaver through stock
ownership, (iii) if the Debt Security is a Registered Security,
-31-
<PAGE>
either (a) the beneficial owner of the Debt Security certifies to MacSaver or
its agent, under penalties of perjury, that it is not a United States Holder and
provides its name and address or (b) a securities clearing organization, bank or
other financial institution that holds customers' securities in the ordinary
course of its trade or business (a "financial institution") and holds the Debt
Security on behalf of a beneficial owner certifies to MacSaver or its agent,
under penalties of perjury, that such statement has been received from the
beneficial owner by it or by a financial institution between it and the
beneficial owner and furnishes the payor with a copy thereof and (iv) in the
case of a Debt Security which is not a Registered Security, the Debt Security is
offered, sold and delivered in compliance with applicable restrictions relating
to issuance of debt obligations which are not in registered form and payments on
the Debt Securities are made in accordance with the applicable procedures
relating to the issuance of debt obligations which are not in registered form
(both of which restrictions and procedures will be described in the applicable
Prospectus Supplement);
(2) a United States Alien Holder of a Debt Security or coupon will not be
subject to United States federal withholding tax on any gain realized on the
sale or exchange of a Debt Security or coupon; and
(3) a Debt Security or coupon held by an individual who at death is not a
citizen or resident of the United States will not be includible in the
individual's gross estate for purposes of the United States federal estate tax
as a result of the individual's death if (a) the individual did not actually or
constructively own 10% or more of the total combined voting power of all classes
of stock of MacSaver entitled to vote and (b) the income on the Debt Security
would not have been effectively connected with a United States trade or business
of the individual at the individual's death.
Recently proposed Internal Revenue Service Treasury regulations (the
"Proposed Regulations") would provide alternative methods for satisfying the
certification requirement described in clause (1)(iii) above. The Proposed
Regulations also would require in the case of Debt Securities held by a foreign
partnership, that (x) the certification described in clause (1)(iii) above be
provided by the partners rather than by the foreign partnership and (y) the
partnership provide certain information, including a United States taxpayer
identification number. A look-through rule would apply in the case of tiered
partnerships. The Proposed Regulations are proposed to be effective for payments
made after December 31, 1997. There can be no assurance that the Proposed
Regulations will be adopted or as to the provisions that they will include if
and when adopted in temporary or final form.
Backup Withholding and Information Reporting
United States Holders
In general, information reporting requirements will apply to payments of
principal, any premium and interest on a Debt Security and the proceeds of the
sale of a Debt Security before maturity within the United States to, and to the
accrual of OID on a Discount Debt Security with respect to, non-corporate United
States Holders, and "backup withholding" at a rate of 31% will apply to such
payments and to payments of OID if the United States Holder fails to provide an
accurate taxpayer identification number or to report all interest and dividends
required to be shown on its federal income tax returns.
United States Alien Holders
Under current law, information reporting and backup withholding will not
apply to payments of principal, premium (if any) and interest (including OID)
made by the Company or a paying agent to a United States Alien Holder on a Debt
Security if, in the case of Debt Securities which are Registered Securities,
either of the certifications described in clause (1) (iii) under 'United States
Alien Holders' above is received, provided that the payor does not have actual
knowledge that the holder is a United States person. The Company or a paying
agent, however, may report (on Internal Revenue Service Form 1042S) payments of
interest (including OID) on Debt
-32-
<PAGE>
Securities that are Registered Securities. See the discussion above under
"United States Alien Holders" with respect to the Proposed Regulations.
Payments of the proceeds from the sale by a United States Alien Holder of a
Debt Security made to or through a foreign office of a broker will not be
subject to information reporting or backup withholding, except that if the
broker is a United States person, a controlled foreign corporation for United
States tax purposes or a foreign person 50% or more of whose gross income is
effectively connected with a United States trade or business for a specified
three-year period, information reporting may apply to such payments. Payments of
the proceeds from the sale of a Debt Security to or through the United States
office of a broker is subject to information reporting and backup withholding
unless the holder or beneficial owner certifies as to its non-United States
status or otherwise establishes an exemption from information reporting and
backup withholding.
PLAN OF DISTRIBUTION
The Company or MacSaver may sell Securities to or through underwriters, and
also may sell Securities directly to other purchasers or through agents.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
Sales of Common Stock offered hereby may be effected from time to time in
one or more transactions on the NYSE or in negotiated transactions or a
combination of such methods of sale, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at other negotiated
prices. In connection with distributions of Common Stock or otherwise, the
Company may enter into hedging transactions with broker-dealers in connection
with which such broker-dealers may sell Common Stock registered hereunder in the
course of hedging through short sales the positions they assume with the
Company.
In connection with the sale of Securities, underwriters or agents may
receive compensation from the Company or MacSaver or from purchasers of
Securities for whom they may act as agents in the form of discounts, concessions
or commissions. Underwriters may sell Securities to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents. Underwriters, dealers and agents that participate
in the distribution of Securities may be deemed to be underwriters, and any
discounts or commissions received by them from the Company or MacSaver and any
profit on the resale of Securities by them may be deemed to be underwriting
discounts and commissions, under the Securities Act of 1933 (the "Act"). Any
such underwriter or agent will be identified, and any such compensation received
from the Company or MacSaver will be described, in the Prospectus Supplement.
Under agreements which may be entered into by the Company and, in the case
of Debt Securities, MacSaver, underwriters and agents who participate in the
distribution of Securities may be entitled to indemnification by the Company
and, in the case of Debt Securities, MacSaver against certain liabilities,
including liabilities under the Act.
Certain of the underwriters or agents and their associates may be customers
of, engage in transactions with and perform services for the Company or MacSaver
in the ordinary course of business.
VALIDITY OF SECURITIES
The validity of the Securities to which this Prospectus relates will be
passed upon for the Company and, in the case of Debt Securities, MacSaver by
McGuire, Woods, Battle & Boothe, L.L.P., Richmond, Virginia, which serves as
general counsel to the Company. As of June 9, 1997, partners and associates of
McGuire, Woods, Battle &
-33-
<PAGE>
Boothe, L.L.P., who performed services in connection with the offering made by
this Prospectus, owned of record and beneficially 2,574 shares of Common Stock.
Robert L. Burrus, Jr., a director of the Company, is a partner of that firm. The
validity of the Securities offered hereby will be passed upon for any relevant
Underwriters by Sullivan & Cromwell, New York, New York, who will rely upon the
opinion of McGuire, Woods, Battle & Boothe, L.L.P. with respect to matters of
Virginia law.
EXPERTS
The consolidated financial statements and the related financial statement
schedule incorporated in this Prospectus by reference from Heilig-Meyers
Company's Annual Report on Form 10-K have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report which is incorporated herein by
reference, and has been so incorporated in reliance upon the report of such firm
given their authority as experts in accounting and auditing.
-34-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
SEC registration fee...................... $125,393
Accountants' fees and expenses............ 40,000
Attorneys' fees and expenses.............. 75,000
Printing and engraving expenses........... 24,000
Fees and expenses of trustee.............. 10,000
State qualification fees and expenses..... 20,000
Rating agencies' fees..................... 315,000
Miscellaneous............................. 5,607
-------
Total................................ $615,000
=======
- --------------
All fees and expenses other than the SEC registration fee are estimated.
Item 15. Indemnification of Directors and Officers
Article V of the Restated Articles of Incorporation of the Company provides:
1. Definitions. For purposes of this Article the following definitions
shall apply:
(a) "Corporation" means this Corporation only and no predecessor
entity or other legal entity;
(b) "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;
(c) "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;
(d) "legal entity" means a corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise;
(e) "predecessor entity" means a legal entity the existence of which
ceased upon its acquisition by the Corporation in a merger or otherwise; and
(f) "proceeding" means any threatened, pending, or completed action,
suit, proceeding or appeal whether civil, criminal, administrative or
investigative and whether formal or informal.
2. Limit On Liability. In every instance permitted by the Virginia Stock
Corporation Act, as it exists on the date hereof or may hereafter be amended,
the liability of a director or officer of the Corporation to the Corporation or
its shareholders arising out of a single transaction, occurrence or course of
conduct shall be eliminated.
3. Indemnification of Directors and Officers. The Corporation shall
indemnify any individual who is, was or is threatened to be made a party to a
proceeding (including a proceeding by or in the right of the Corporation)
because such individual is or was a director or officer of the Corporation or
because such individual is or was serving the Corporation or any other legal
entity in any capacity at the request of the Corporation while a director or
officer of the Corporation against all liabilities and reasonable expenses
incurred in the proceeding, except such
II-1
<PAGE>
liabilities and expenses as are incurred because of such individual's willful
misconduct or knowing violation of the criminal law. Service as a director or
officer of a legal entity controlled by the Corporation shall be deemed service
at the request of the Corporation. The determination that indemnification under
this Section 3 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 Section 4 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 such director or officer to
repay the same if it is ultimately determined that such director or officer 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 such director's or officer's 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 such
director or officer ineligible for indemnification. The Corporation is
authorized to contract in advance to indemnify and make advances and
reimbursements for expenses to any of its directors or officers to the same
extent provided in this Section.
4. Indemnification of Others. The Corporation may, to a lesser extent or to
the same extent that it is required to provide indemnification and make advances
and reimbursements for expenses to its directors and officers pursuant to
Section 3, 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 may
contract in advance to do so. The determination that indemnification under this
Section 4 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. No person's rights under Section 3 of
this Article shall be limited by the provisions of this Section 4.
5. Miscellaneous. The rights of each person entitled to indemnification
under this Article shall inure to the benefit of such person's 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 such person 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 preclude the Corporation from
entering into contracts otherwise permitted by law with any individuals or legal
entities, including those named above. 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 end the provisions of this Article are
severable.
6. Application; Amendments. The provisions of this Article shall be
applicable from and after its adoption even though some or all of the underlying
conduct or events relating to a proceeding may have occurred before its
adoption. No amendment, modification or repeal of this Article shall diminish
the right provided hereunder to any person arising from conduct or events
occurring before the adoption of such amendment, modification or repeal.
II-2
<PAGE>
The Ninth Article of the Certificate of Incorporation of MacSaver provides:
NINTH: This Corporation shall, to the maximum extent permitted from
time to time under the law of the State of Delaware, indemnify and upon
request shall advance expenses to any person who is or was a party or is
threatened to be made a party to any threatened, pending or completed
action, suit, proceeding or claim, whether civil, criminal, administrative
or investigative, by reason of the fact that such person is or was or has
agreed to be a director or officer of this corporation or while a director
or officer is or was serving at the request of this corporation as a
director, officer, partner, trustee, employee or agent of any corporation,
partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, against expenses (including
attorney's fees and expenses), judgment, fines, penalties and amounts paid
in settlement incurred in connection with the investigation, preparation to
defend or defense of such action, suit, proceeding or claim; provided,
however, that the foregoing shall not require this corporation to indemnify
or advance expenses to any person in connection with any action, suit,
proceeding, claim or counterclaims initiated by or on behalf of such
person. Such indemnification shall not be exclusive of other
indemnification rights arising under any by-law, agreement, vote of
directors or stockholders or otherwise and shall inure to the benefit of
the heirs and legal representatives of such person. Any person seeking
indemnification under this Ninth Paragraph shall be deemed to have met the
standard of conduct required for such indemnification unless the contrary
shall be established. Any repeal or modification of the foregoing
provisions of this Ninth Paragraph shall not adversely effect any right or
protection of a director or officer of this corporation with respect to any
acts or omissions of such director or officer occurring prior to such
repeal or modification.
The Company and MacSaver maintain liability insurance which may provide
indemnification, including indemnification against liabilities under the
Securities Act of 1933, to the officers and directors of the Company and
MacSaver in certain circumstances.
In the Underwriting Agreements, forms of which are filed as Exhibit 1.1 and
1.2 hereto, the Underwriters will agree to indemnify, under certain conditions,
the Company and MacSaver, their directors, certain of their officers and persons
who control the Company and MacSaver within the meaning of the Securities Act of
1933, as amended (the "Securities Act") against certain liabilities.
Item 16. Exhibits
1.1 Proposed form of Underwriting Agreement for Common Stock, filed with
the Commission as Exhibit 1.1 to the Company's Registration Statement
on Form S-3 (No. 333-07753), is incorporated herein by this
reference.
1.2 Proposed form of Underwriting Agreement for Debt Securities.
4.1 Indenture dated as of August 1, 1996 among the Company, MacSaver and
First Union National Bank of Virginia, as Trustee, including proposed
form of Debt Securities and Guarantees, filed with the Commission as
Exhibit 4(a) to the Company's Current Report on Form 8-K dated
September 11, 1996 (No. 1-8484), is incorporated herein by this
reference.
4.2 Company's Restated Articles of Incorporation, filed with the Commission
as Exhibit 3(a) to Company's Annual Report on Form 10-K for the fiscal
year ended February 28, 1990 (No. 1-8484), are incorporated herein by
this reference.
4.3 Articles of Amendment to Company's Restated Articles of Incorporation,
filed with the Commission as Exhibit 4 to Company's Form 8 (Amendment
No. 5 to Form 8-A filed April 26, 1983) filed August 6, 1992 (No.
1-8484), are incorporated herein by this reference.
II-3
<PAGE>
4.4 Articles of Amendment to Company's Restated Articles of Incorporation,
filed with the Commission as Exhibit 3(c) to Company's Annual Report on
Form 10-K for the fiscal year ended February 28, 1993 (No. 1-8484), are
incorporated herein by this reference.
4.5 Articles of Amendment to Company's Restated Articles of Incorporation,
filed with the Commission as Exhibit 3(d) to Company's Annual Report on
Form 10-K for the fiscal year ended February 28, 1995 (No. 1-8484), are
incorporated herein by this reference.
4.6 Company's By-laws, as amended, filed with the Commission as Exhibit
3(e) to Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1997 (No. 1-8484), are incorporated herein by this
reference.
4.7 Certificate of Incorporation of MacSaver as in effect since December
21, 1989, filed with the Commission as Exhibit 4.7 to Company's
Registration Statement on Form S-3 (No. 333-07753), is incorporated
herein by this reference.
4.8 By-laws of MacSaver as in effect since February 27, 1990, filed with
the Commission as Exhibit 4.8 to Company's Registration Statement on
Form S-3 (No. 333-07753), are incorporated herein by this reference.
4.9 Rights Agreement dated as of February 17, 1988 (the "Rights Agreement")
between the Company and Crestar Bank, filed with the Commission as
Exhibit (2) to Company's Registration Statement on Form 8-A dated
February 19, 1988 (No. 1-8484), is incorporated herein by this
reference.
4.10 Supplements Nos. 1-4 dated September 15, 1989 to Rights Agreement filed
with the Commission as Exhibits 2(a)-(d) to Form 8 (No. 1-8484) filed
with the Commission on September 20, 1989, are incorporated herein by
this reference.
5.1 Opinion and consent of McGuire, Woods, Battle & Boothe, L.L.P. as to
the validity of the Securities.
8.1 Opinion and consent of McGuire, Woods, Battle & Boothe, L.L.P. as to
certain tax matters.
12.1 Computation of ratio of earnings to fixed charges.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consents of McGuire, Woods, Battle & Boothe, L.L.P. (included as part
of Exhibits 5.1 and 8.1).
23.3 Consent of Arthur Andersen LLP.
23.4 Consent of Deloitte & Touche LLP.
24.1 Power of Attorney for Heilig-Meyers Company (see Heilig-Meyers Company
signature page).
24.2 Power of Attorney for MacSaver (see MacSaver signature page).
25.1 Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939, as amended, of First Union National Bank of
Virginia.
Item 17. Undertakings
1. The undersigned registrants hereby undertake:
(a) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
II-4
<PAGE>
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) under the Securities Act of
1933 if, in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or 15(d) of the Exchange Act that are incorporated by reference in
the registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
2. The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act, each filing of the
registrants' annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
3. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Company certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Richmond and Commonwealth of Virginia, on June 24, 1997.
HEILIG-MEYERS COMPANY
By: s/William C. DeRusha
------------------------------
William C. DeRusha
Chairman of the Board
Principal Executive Officer
Power of Attorney
Each individual whose signature appears below appoints William C. DeRusha
and Troy A. Peery, Jr., and each of them, as such individual's true and lawful
attorneys-in-fact and agents with full power of substitution, for such
individual and in his or her name, place and stead, in any and all capacities
stated below, to sign any and all amendments (including post-effective
amendments) to this registration statement and any registration statement
related to the offering contemplated by this registration statement that is to
be effective upon filing pursuant to Rule 462(b) under the Securities Act of
1933, as amended, and to file the same, with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as he or she might or could do
in person to enable the Company to comply with the Securities Act of 1933 and
all requirements of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed below by the following persons in the capacities and
on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C>
s/William C. DeRusha Chairman of the Board; June 24, 1997
- ----------------------------- Principal Executive
William C. DeRusha Officer; Director
s/Troy A. Peery, Jr. President; Director June 24, 1997
- -------------------------------
Troy A. Peery, Jr.
s/Joseph R. Jenkins Executive Vice June 24, 1997
- --------------------------------- President; Principal
Joseph R. Jenkins Financial Officer
s/William J. Dieter Senior Vice President, June 24, 1997
- --------------------------------- Accounting; Principal
William J. Dieter Accounting Officer
<PAGE>
s/Hyman Meyers Director June 18, 1997
- -------------------------------
Hyman Meyers
s/S. Sidney Meyers Director June 18, 1997
- ---------------------------------
S. Sidney Meyers
s/Nathaniel Krumbein Director June 18, 1997
- ---------------------------------
Nathaniel Krumbein
s/Alexander Alexander Director June 18, 1997
- ---------------------------------
Alexander Alexander
s/Robert L. Burrus, Jr. Director June 18, 1997
- ----------------------------------
Robert L. Burrus, Jr.
s/Benjamin F. Edwards, III Director June 18, 1997
- ----------------------------------
Benjamin F. Edwards, III
s/Alan G. Fleischer Director June 18, 1997
- ----------------------------------
Alan G. Fleischer
s/Lawrence N. Smith Director June 18, 1997
- ---------------------------------
Lawrence N. Smith
s/Charles A. Davis Director June 18, 1997
- --------------------------------
Charles A. Davis
s/Beverley E. Dalton Director June 18, 1997
- ----------------------------------
Beverley E. Dalton
s/Eugene P. Trani Director June 18, 1997
- ----------------------------
Eugene P. Trani
<PAGE>
Pursuant to the requirements of the Securities Act, MacSaver certifies that
it has reasonable grounds to believe that it meets all of the requirements for
filing on Form S-3 and has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the County of
New Castle and State of Delaware, on June 19, 1997.
MACSAVER FINANCIAL SERVICES, INC.
By: s/Joseph R. Jenkins
------------------------
Joseph R. Jenkins
President
Power of Attorney
Each individual whose signature appears below appoints Joseph R. Jenkins and
Roy B. Goodman, and each of them, as such individual's true and lawful
attorneys-in-fact and agents with full power of substitution, for such
individual and in his or her name, place and stead, in any and all capacities
stated below, to sign any and all amendments (including post-effective
amendments) to this registration statement and any registration statement
related to the offering contemplated by this registration statement that is to
be effective upon filing pursuant to Rule 462(b) under the Securities Act of
1933, as amended, and to file the same, with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as he or she might or could do
in person to enable the Company to comply with the Securities Act of 1933 and
all requirements of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed below by the following persons in the capacities and
on the date indicated.
</TABLE>
<TABLE>
<CAPTION>
Signature Title Date
<S> <C>
s/Joseph R. Jenkins President and Principal June 19, 1997
- -------------------------------- Executive Officer; Director
Joseph R. Jenkins
s/Roy B. Goodman Vice President and Principal June 19, 1997
- ----------------------------- Financial Officer; Director
Roy B. Goodman
s/William J. Dieter Director June 19, 1997
- --------------------------------
William J. Dieter
s/William E. Helms Director June 19, 1997
- -------------------------------
William E. Helms
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
<S> <C>
1.2 Proposed form of Underwriting Agreement for Debt Securities.
5.1 Opinion and consent of McGuire, Woods, Battle & Boothe, L.L.P. as to the validity of the Securities.
8.1 Opinion and consent of McGuire, Woods, Battle & Boothe, L.L.P. as to certain tax matters.
12.1 Computation of ratio of earnings to fixed charges.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consents of McGuire, Woods, Battle & Boothe, L.L.P. (included as part of Exhibits 5.1 and 8.1).
23.3 Consent of Arthur Andersen LLP.
23.4 Consent of Deloitte & Touche LLP.
24.1 Power of Attorney for Heilig-Meyers Company (see Heilig-Meyers Company signature page).
24.2 Power of Attorney for MacSaver (see MacSaver signature page).
25.1 Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939, as amended, of First Union National Bank of
Virginia.
</TABLE>
Exhibit 1(a)
MACSAVER FINANCIAL SERVICES, INC.
Draft of June 19, 1997
Debt Securities
unconditionally guaranteed as to the payment of principal, premium,
if any, and interest by
Heilig-Meyers Company
Underwriting Agreement
_________, 19__
To the Representatives of the
several Underwriters named in the
respective Pricing Agreements
hereinafter described.
Ladies and Gentlemen:
From time to time MacSaver Financial Services, Inc., a Delaware
corporation (the "Company"), and Heilig-Meyers Company, a Virginia corporation
(the "Guarantor"), propose to enter into one or more Pricing Agreements (each a
"Pricing Agreement") in the form of Annex I hereto, with such additions and
deletions as the parties thereto may determine, and, subject to the terms and
conditions stated herein and therein, the Company proposes to issue and sell to
the firms named in Schedule I to the applicable Pricing Agreement (such firms
DC_LAN01\52911.8
<PAGE>
constituting the "Underwriters" with respect to such Pricing Agreement and the
securities specified therein) certain of its debt securities (the "Debt
Securities") specified in Schedule II to such Pricing Agreement (with respect to
such Pricing Agreement, the "Designated Debt Securities"). Such Debt Securities,
including the Designated Debt Securities, will be unconditionally guaranteed as
to the payment of principal, premium, if any, and interest (the "Guarantees") by
the Guarantor. The Debt Securities and the Guarantees are hereinafter
collectively called the "Securities", and the Designated Debt Securities and the
Guarantees relating thereto ("Designated Guarantees") are hereinafter
collectively called the ("Designated Securities").
The terms and rights of any particular issuance of Designated
Securities shall be as specified in the Pricing Agreement relating thereto and
in or pursuant to the indenture (the "Indenture") identified in such Pricing
Agreement.
1. Particular sales of Designated Securities may be made from time to
time to the Underwriters of such Securities, for whom the firms designated as
representatives of the Underwriters of such Securities in the Pricing Agreement
relating thereto will act as representatives (the "Representatives"). The term
"Representatives" also refers to a single firm acting as sole representative of
the Underwriters and to an Underwriter or Underwriters who act without any firm
being designated as its or their representatives. This Underwriting Agreement
shall not be construed as an obligation of the Company or the Guarantor to sell
any of the Securities or as an obligation of any of the Underwriters to purchase
the Securities. The obligation of each of the Company and the Guarantor to issue
and sell any of the Securities, on the one hand, and the obligation of any of
the Underwriters to purchase any of the Securities, on the other hand, shall be
evidenced by the Pricing Agreement with respect to the Designated Securities
specified therein. Each Pricing Agreement shall specify the aggregate principal
amount of the Designated Debt Securities comprising a part of such Designated
Securities, the initial public offering price of such Designated Securities, the
purchase price to the Underwriters of such Designated Securities, the names of
the Underwriters of such Designated Securities, the names of the Representatives
of such Underwriters and the principal amount of such Designated Debt Securities
to be purchased by each Underwriter and shall set forth the date, time and
manner of delivery of such Designated Securities and payment therefor. The
Pricing Agreement shall also specify (to the extent not set forth in the
Indenture and the registration statement and prospectus with respect thereto)
the terms of such Designated Securities. A Pricing Agreement shall be in the
form of an executed writing (which may be in counterparts), and may be evidenced
by an exchange of telegraphic communications or any other rapid transmission
device designed to produce a written record of communications transmitted. The
obligations of the Underwriters under this Agreement and each Pricing Agreement
shall be several and not joint.
-2-
DC_LAN01\52911.8
<PAGE>
2. Each of the Company and the Guarantor, jointly and severally,
represents and warrants to, and agrees with, each of the Underwriters that:
(a) A registration statement on Form S-3 (File No.
333-_____ (the "Initial Registration Statement") in respect of the
Securities has been filed with the Securities and Exchange Commission
(the "Commission"); the Initial Registration Statement and any
post-effective amendment thereto, each in the form heretofore delivered
or to be delivered to the Representatives and, excluding exhibits to
such registration statement, but including all documents incorporated
by reference in the prospectus contained therein, to the
Representatives for each of the other Underwriters, have been declared
effective by the Commission in such form; other than a registration
statement, if any, increasing the size of the offering (a "Rule 462(b)
Registration Statement"), filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "Act"), which became effective
upon filing, no other document with respect to the Initial Registration
Statement or document incorporated by reference therein has heretofore
been filed or transmitted for filing with the Commission (other than
prospectuses filed pursuant to Rule 424(b) of the rules and regulations
of the Commission under the Act, each in the form heretofore delivered
to the Representatives); and no stop order suspending the effectiveness
of the Initial Registration Statement, any post-effective amendment
thereto or the 462(b) Registration Statement, if any, has been issued
and no proceeding for that purpose has been initiated or threatened by
the Commission (any preliminary prospectus included in the Initial
Registration Statement or filed with the Commission pursuant to Rule
424(a) under the Act, is hereinafter called a "Preliminary Prospectus";
the various parts of the Initial Registration Statement and the Rule
462(b) Registration Statement, if any, including all exhibits thereto
and the documents incorporated by reference in the prospectus contained
in the Initial Registration Statement at the time such part of the
Initial Registration Statement became effective or such part of the
Rule 462(b) Registration Statement, if any, became or hereafter becomes
effective but excluding Form T-1, each as amended at the time such part
of the registration statement became effective, are hereinafter
collectively called the "Registration Statement"; the prospectus
relating to the Securities, in the form in which it has most recently
been filed, or transmitted for filing, with the Commission on or prior
to the date of this Agreement, being hereinafter called the
"Prospectus"; any reference herein to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to the applicable form under
the Act, as of the date of such Preliminary Prospectus or Prospectus,
as the case may be; any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include any documents filed after the date of such Preliminary
Prospectus or Prospectus, as the case may be, under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and incorporated
by reference in such Preliminary Prospectus or Prospectus, as the case
may be; any reference to any amendment to the Registration Statement
shall be deemed to refer to and include any annual report of the
Company or the Guarantor filed pursuant to Sections 13(a) or 15(d) of
the Exchange Act after the effective date of the Registration Statement
that
-3-
DC_LAN01\52911.8
<PAGE>
is incorporated by reference in the Registration Statement; and any
reference to the Prospectus as amended or supplemented shall be deemed
to refer to the Prospectus as amended or supplemented in relation to
the applicable Designated Securities in the form in which it is filed
with the Commission pursuant to Rule 424(b) under the Act in accordance
with Section 5(a) hereof, including any documents incorporated by
reference therein as of the date of such filing);
(b) The documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the
case may be, conformed in all material respects to the requirements of
the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and any further documents so filed
and incorporated by reference in the Prospectus or any further
amendment or supplement thereto, when such documents become effective
or are filed with the Commission, as the case may be, will conform in
all material respects to the requirements of the Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company and the Guarantor by an
Underwriter of Designated Securities through the Representatives
expressly for use in the Prospectus as amended or supplemented relating
to such Securities;
(c) The Registration Statement and the Prospectus conform, and
any further amendments or supplements to the Registration Statement or
the Prospectus will conform, in all material respects to the
requirements of the Act and the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act") and the rules and regulations of the
Commission thereunder and do not and will not, as of the applicable
effective date as to the Registration Statement and any amendment
thereto and as of the applicable filing date as to the Prospectus and
any amendment or supplement thereto, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company and the
Guarantor by an Underwriter of Designated Securities through the
Representatives expressly for use in the Prospectus as amended or
supplemented relating to such Securities;
-4-
DC_LAN01\52911.8
<PAGE>
(d) Neither the Company, the Guarantor nor any of their
subsidiaries has sustained since the date of the latest audited
financial statements included or incorporated by reference in the
Prospectus any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus; and, since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not
been any change in the capital stock or long-term debt of the Company,
the Guarantor or any of their subsidiaries or any material adverse
change, or any development involving a prospective material adverse
change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company,
the Guarantor or any of their subsidiaries, otherwise than as set forth
or contemplated in the Prospectus;
(e) The Company been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of
Delaware and the Guarantor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
Commonwealth of Virginia, and each has power and authority (corporate
and other) to own its properties and conduct its business as described
in the Prospectus, and each has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification, or is subject to no material liability or disability by
reason of failure to be so qualified in any such jurisdiction; and each
subsidiary of the Company or the Guarantor has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation and has been duly qualified
as a foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such
qualification, or is subject to no material liability or disability by
reason of failure to be so qualified in any such jurisdiction;
(f) All of the issued shares of capital stock of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable; the Guarantor has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock
of the Guarantor have been duly and validly authorized and issued and
are fully paid and non-assessable and conform to the description of the
Securities contained in the Prospectus; and all of the issued shares of
capital stock of each subsidiary of the Company or the Guarantor have
been duly and validly authorized and issued, are fully paid and
non-assessable and (except for directors' qualifying shares) are owned
directly or indirectly by the Company or the Guarantor, as the case may
be, free and clear of all liens, encumbrances, equities or claims;
-5-
DC_LAN01\52911.8
<PAGE>
(g) The Securities have been duly authorized, and, when
Designated Debt Securities are issued and delivered pursuant to this
Agreement and the Pricing Agreement with respect to such Designated
Securities and the Indenture, against payment of the consideration
therefor in accordance herewith, such Designated Securities will have
been duly executed, authenticated, issued and delivered and will
constitute valid and legally binding obligations of the Company (in the
case of Designated Debt Securities) and the Guarantor (in the case of
Designated Guarantees) entitled to the benefits provided by the
Indenture, which will be substantially in the form filed as an exhibit
to the Registration Statement; the Indenture has been duly authorized
and duly qualified under the Trust Indenture Act and, at the Time of
Delivery for such Designated Securities (as defined in Section 4
hereof), the Indenture will constitute a valid and legally binding
instrument, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws
of general applicability relating to or affecting creditors' rights and
to general equity principles; and the Indenture conforms, and the
Designated Securities will conform, to the descriptions thereof
contained in the Prospectus as amended or supplemented with respect to
such Designated Securities;
(h) The issue and sale of the Securities and the compliance by
the Company and the Guarantor with all of the provisions of the
Securities, the Indenture, this Agreement and any Pricing Agreement,
and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or the Guarantor or any of
their subsidiaries is a party or by which the Company or the Guarantor
or any of their subsidiaries is bound or to which any of the property
or assets of the Company or the Guarantor is subject, nor will such
action result in any violation of any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company, the Guarantor or any of their
subsidiaries or any of their properties, which breach, violation or
default would have a material adverse effect on the financial position,
stockholders' equity, or results of operations of the Guarantor and its
subsidiaries taken as a whole, or upon the issue and sale of the
Securities and the compliance by the Company and the Guarantor with all
of the provisions of the Securities, the Indenture, this Agreement and
any Pricing Agreement, and the consummation of the transactions herein
and therein contemplated, nor will such action result in any violation
of the provisions of the Articles of Incorporation or the By-laws of
the Company or the Guarantor; and no consent, approval, authorization,
order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Securities or the consummation by the Company or the Guarantor of the
transactions contemplated by this Agreement or any Pricing Agreement or
the Indenture, except such as have been, or will have been prior to the
Time of Delivery, obtained under the Act and the Trust Indenture Act
and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky
-6-
DC_LAN01\52911.8
<PAGE>
laws in connection with the purchase and distribution of the Securities
by the Underwriters;
(i) The statements set forth in the Prospectus as amended or
supplemented under the captions "Description of Debt Securities" or
"Description of Notes", insofar as they purport to constitute a summary
of the terms of the Securities, and under the caption "United States
Taxation", insofar as they are or refer to statements of United States
law or legal conclusions relating thereto, are accurate, complete and
fair in all material respects;
(j) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company, the
Guarantor or any of their subsidiaries is a party or of which any
property of the Company, the Guarantor or any of their subsidiaries is
the subject which the Company or the Guarantor has reasonable cause to
believe would either individually or in the aggregate have a material
adverse effect on the current or future consolidated financial
position, stockholders' equity or results of operations of the Company,
the Guarantor or their subsidiaries taken as a whole; and, to the best
of the Company's and the Guarantor's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others;
(k) Neither the Company nor the Guarantor is or, after giving
effect to the offering and sale of the Securities, will be an
"investment company" or an entity "controlled" by an "investment
company", as such terms are defined in the Investment Company Act of
1940, as amended (the "Investment Company Act");
(l) None of the Company, the Guarantor or any of their
affiliates does business with the government of Cuba or with any person
or affiliate located in Cuba within the meaning of the U.S. Treasury
Department's Cuban Assets Control Regulations, the Cuban Liberty and
Democratic Solidarity ("LIBERTAD") Act of 1996 or Section 517.075,
Florida Statutes; and
(m) Deloitte & Touche LLP, who have certified certain
financial statements of the Guarantor and its subsidiaries (including
the Company), are independent public accountants as required by the Act
and the rules and regulations of the Commission thereunder.
-7-
DC_LAN01\52911.8
<PAGE>
3. Upon the execution of the Pricing Agreement applicable to any
Designated Securities and authorization by the Representatives of the release of
such Designated Securities, the several Underwriters propose to offer such
Designated Securities for sale upon the terms and conditions set forth in the
Prospectus as amended or supplemented.
4. Designated Securities to be purchased by each Underwriter pursuant
to the Pricing Agreement relating thereto, in the form specified in such Pricing
Agreement, and in such authorized denominations and registered in such names as
the Representatives may request upon at least forty-eight hours' prior notice to
the Company, shall be delivered by or on behalf of the Company and the Guarantor
to the Representatives for the account of such Underwriter, against payment by
such Underwriter or on its behalf of the purchase price therefor by wire
transfer or certified or official bank check or checks, payable to the order of
the Company in the funds specified in such Pricing Agreement, all in the manner
and at the place and time and date specified in such Pricing Agreement or at
such other place and time and date as the Representatives and the Company may
agree upon in writing, such time and date being herein called the "Time of
Delivery" for such Securities.
5. Each of the Company and the Guarantor, jointly and severally, agrees
with each of the Underwriters of any Designated Securities:
(a) To prepare the Prospectus as amended or supplemented in
relation to the applicable Designated Securities in a form approved by
the Representatives and to file such Prospectus pursuant to Rule 424(b)
under the Act not later than the Commission's close of business on the
second business day following the execution and delivery of the Pricing
Agreement relating to the applicable Designated Securities or, if
applicable, such earlier time as may be required by Rule 424(b); to
make no further amendment or any supplement to the Registration
Statement or Prospectus as amended or supplemented after the date of
the Pricing Agreement relating to such Securities and prior to the Time
of Delivery for such Securities which shall be disapproved by the
Representatives for such Securities promptly after reasonable notice
thereof; to advise the Representatives promptly of any such amendment
or supplement after such Time of Delivery and furnish the
Representatives with copies thereof; to file promptly all reports and
any definitive proxy or information statements required to be filed by
the Company or the Guarantor with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act for so long as the
delivery of a prospectus is required in connection with the offering or
sale of such Securities, and during such same period to advise the
Representatives, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or
becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed with the Commission, of the issuance by the
Commission of any stop order or of any order preventing or suspending
the use of any prospectus
-8-
DC_LAN01\52911.8
<PAGE>
relating to the Securities, of the suspension of the qualification of
such Securities for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose, or of
any request by the Commission for the amending or supplementing of the
Registration Statement or Prospectus or for additional information;
and, in the event of the issuance of any such stop order or of any such
order preventing or suspending the use of any prospectus relating to
the Securities or suspending any such qualification, to promptly use
its best efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify such Securities for
offering and sale under the securities laws of such jurisdictions as
the Representatives may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of such Securities, provided that in connection therewith
neither the Company nor the Guarantor shall be required to qualify as a
foreign corporation or to file a general consent to service of process
in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time
to time, to furnish the Underwriters with copies of the Prospectus as
amended or supplemented in New York City in such quantities as the
Representatives may reasonably request, and, if the delivery of a
prospectus is required at any time in connection with the offering or
sale of the Securities and if at such time any event shall have
occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading, or, if for
any other reason it shall be necessary during such same period to amend
or supplement the Prospectus or to file under the Exchange Act any
document incorporated by reference in the Prospectus in order to comply
with the Act, the Exchange Act or the Trust Indenture Act, to notify
the Representatives and upon their request to file such document and to
prepare and furnish without charge to each Underwriter and to any
dealer in securities as many copies as the Representatives may from
time to time reasonably request of an amended Prospectus or a
supplement to the Prospectus which will correct such statement or
omission or effect such compliance;
(d) To make generally available to its securityholders as soon
as practicable, but in any event not later than eighteen months after
the effective date of the Registration Statement (as defined in Rule
158(c) under the Act), an earnings statement of the Guarantor and its
subsidiaries (which need not be audited) complying
-9-
DC_LAN01\52911.8
<PAGE>
with Section 11(a) of the Act and the rules and regulations of the
Commission thereunder (including, at the option of the Guarantor, Rule
158);
(e) During the period beginning from the date of the Pricing
Agreement for such Designated Securities and continuing to and
including the later of (i) the termination of trading restrictions for
such Designated Securities, as notified to the Company by the
Representatives and (ii) the Time of Delivery for such Designated
Securities, not to offer, sell, contract to sell or otherwise dispose
of any debt securities of the Company or the Guarantor, or any
guarantees by the Company or the Guarantor of debt securities of
others, which mature more than one year after such Time of Delivery and
which are substantially similar to such Designated Debt Securities or
Designated Guarantees, without the prior written consent of the
Representatives; and
(f) If the Company elects to rely upon Rule 462(b), the
Company shall file a Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) by 10:00 p.m., Washington,
D.C. time, on the date of this Agreement, and the Company shall at the
time of filing either pay to the Commission the filing fee for the Rule
462(b) Registration Statement or give irrevocable instructions for the
payment of such fee pursuant to Rule 111(b) under the Act.
6. Each of the Company and the Guarantor, jointly and severally,
covenants and agrees with the several Underwriters that the Company will pay or
cause to be paid the following: (i) the fees, disbursements and expenses of
their counsel and accountants in connection with the registration of the
Securities under the Act and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, any Preliminary
Prospectus and the Prospectus and amendments and supplements thereto and the
mailing and delivering of copies thereof to the Underwriters and dealers; (ii)
the cost of printing or producing any Agreement among Underwriters, this
Agreement, any Pricing Agreement, any Indenture, any Blue Sky and Legal
Investment Memoranda, closing documents (including any compilations thereof) and
any other documents in connection with the offering, purchase, sale and delivery
of the Securities; (iii) all expenses in connection with the qualification of
the Securities for offering and sale under state securities laws as provided in
Section 5(b) hereof, including the fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky and Legal Investment Surveys; (iv) any fees charged by securities
rating services for rating the Securities; (v) any filing fees incident to, and
the fees and disbursements of counsel for the Underwriters in connection with,
any required review by the National Association of Securities Dealers, Inc. of
the terms of the sale of the Securities; (vi) the cost of preparing the
Securities; (vii) the fees and expenses of any Trustee and any agent of any
Trustee and the fees and disbursements of counsel for any Trustee in connection
with any Indenture and the Securities; and (viii) all other costs and expenses
incident to the performance of its obligations
-10-
DC_LAN01\52911.8
<PAGE>
hereunder which are not otherwise specifically provided for in this Section. It
is understood, however, that, except as provided in this Section, and Sections 8
and 11 hereof, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel, transfer taxes on resale of any of the
Securities by them, and any advertising expenses connected with any offers they
may make.
7. The obligations of the Underwriters of any Designated Securities
under the Pricing Agreement relating to such Designated Securities shall be
subject, in the discretion of the Representatives, to the condition that all
representations and warranties and other statements of the Company and the
Guarantor in or incorporated by reference in the Pricing Agreement relating to
such Designated Securities are, at and as of the Time of Delivery for such
Designated Securities, true and correct, the condition that the Company and the
Guarantor shall have performed all of their respective obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Prospectus as amended or supplemented in relation to
the applicable Designated Securities shall have been filed with the
Commission pursuant to Rule 424(b) within the applicable time period
prescribed for such filing by the rules and regulations under the Act
and in accordance with Section 5(a) hereof; if the Company has elected
to rely upon Rule 462(b), the Rule 462(b) Registration Statement shall
have become effective the Rule 462(b) Registration Statement shall have
become effective by 10:00 p.m., Washington, D.C. time on the date of
this Agreement; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or threatened
by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to the
Representatives' reasonable satisfaction;
(b) Counsel for the Underwriters shall have furnished to the
Representatives such opinion or opinions, (a draft of each such opinion
is attached as Annex III(a) hereto) dated the Time of Delivery for such
Designated Securities, with respect to the incorporation of the
Company, the validity of the Designated Securities being delivered at
such Time of Delivery, the Registration Statement, the Prospectus, and
such other related matters as the Representatives may reasonably
request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon
such matters;
-11-
DC_LAN01\52911.8
<PAGE>
(c) McGuire, Woods, Battle & Boothe, L.L.P., counsel for the
Company and the Guarantor, or other counsel for the Company and the
Guarantor satisfactory to the Representatives shall have furnished to
the Representatives their written opinion (a draft of each such opinion
is attached as Annex III(b) hereto), dated the Time of Delivery for
such Designated Securities, in form and substance satisfactory to the
Representatives, to the effect that:
(i) Each of the Company and the Guarantor has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to own its
properties and conduct its business as described in the
Prospectus as amended or supplemented;
(ii) The Guarantor has an authorized capitalization as
set forth in the Prospectus as amended or supplemented and all
of the issued shares of capital stock of the Company and the
Guarantor have been duly and validly authorized and issued and
are fully paid and non-assessable;
(iii) To the best of such counsel's knowledge and other
than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company, the
Guarantor or any of their subsidiaries is a party or of which
any property of the Company, the Guarantor or any of their
subsidiaries is the subject which could be reasonably expected
to individually or in the aggregate have a material adverse
effect on the current or future consolidated financial
position, stockholders' equity or results of operations of the
Company, the Guarantor or their subsidiaries taken as a whole;
and, to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(iv) This Agreement and the Pricing Agreement with
respect to the Designated Securities have been duly
authorized, executed and delivered by the Company and the
Guarantor;
(v) The Designated Securities have been duly
authorized, executed, authenticated, issued and delivered and
constitute valid and legally binding obligations of the
Company (in the case of the Designated Debt Securities) and
the Guarantor (in the case of the Designated Guarantees)
entitled to the benefits provided by the Indenture;
-12-
DC_LAN01\52911.8
<PAGE>
(vi) The Indenture has been duly authorized, executed
and delivered by the Company and the Guarantor and (assuming
the Indenture has been duly authorized, executed and delivered
by the Trustee) constitutes a valid and legally binding
obligation of the Company and the Guarantor, enforceable
against the Company and the Guarantor in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general
equity principles; and the Indenture has been duly qualified
under the Trust Indenture Act;
(vii) The issue and sale of the Designated Securities and
the compliance by the Company and the Guarantor with all of
the provisions of the Designated Securities, the Indenture,
this Agreement and the Pricing Agreement with respect to the
Designated Securities and the consummation of the transactions
herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the Company, the
Guarantor or any of their subsidiaries is a party or by which
the Company, the Guarantor or any of their subsidiaries is
bound or to which any of the property or assets of the
Company, the Guarantor or any of their subsidiaries is
subject, nor will such actions result in any violation of any
statute or any order, rule or regulation known to such counsel
of any court or governmental agency or body having
jurisdiction over the Company, the Guarantor or any of their
subsidiaries or any of their properties, which breach,
violation or default would have a material adverse effect on
the financial position, stockholders' equity, or results of
operations of the Guarantor and its subsidiaries taken as a
whole, or upon the issue and sale of the Designated Securities
and the compliance by the Company and the Guarantor with all
of the provisions of the Designated Securities, the Indenture,
the Underwriting Agreement and any Pricing Agreement, and the
consummation of the transactions therein contemplated, nor
will such action result in any violation of the provisions of
the Articles of Incorporation or the By-laws of the Company or
the Guarantor;
(viii) No consent, approval, authorization, order,
registration or qualification of or with any court or
governmental agency or body is required for the issue and sale
of the Designated Securities or the consummation by the
Company or the Guarantor of the transactions contemplated by
this Agreement or such Pricing Agreement or the Indenture,
except such as have been obtained under the Act and the Trust
Indenture Act and such consents, approvals, authorizations,
orders, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the
purchase and distribution of the Designated Securities by the
Underwriters;
-13-
DC_LAN01\52911.8
<PAGE>
(ix) The statements set forth in the Prospectus as
amended or supplemented under the captions "Description of
Debt Securities" or "Description of Notes", insofar as they
purport to constitute a summary of the terms of the
Securities, and under the caption "United States Taxation",
insofar as they are or refer to statements of United States
law or legal conclusions relating thereto, are accurate,
complete and fair in all material respects;
(x) Neither the Company nor the Guarantor is an
"investment company" or an entity "controlled" by an
"investment company", as such terms are defined in the
Investment Company Act;
(xi) The documents incorporated by reference in the
Prospectus as amended or supplemented (other than the
financial statements, related schedules and financial data
included therein, as to which such counsel need express no
opinion), when they became effective or were filed with the
Commission, as the case may be, complied as to form in all
material respects with the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of
the Commission thereunder; and they have no reason to believe
that any of such documents, when they became effective or were
so filed, as the case may be, contained, in the case of a
registration statement which became effective under the Act,
an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading, or, in the case of
other documents which were filed under the Act or the Exchange
Act with the Commission, an untrue statement of a material
fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they were made when such documents were so filed,
not misleading; and
(xii) The Registration Statement and the Prospectus as
amended or supplemented and any further amendments and
supplements thereto made by the Company or the Guarantor prior
to the Time of Delivery for the Designated Securities (other
than the financial statements, related schedules and financial
data included therein, as to which such counsel need express
no opinion) comply as to form in all material respects with
the requirements of the Act and the Trust Indenture Act and
the rules and regulations thereunder; although they do not
assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration
Statement or the Prospectus, except to the extent indicated in
the opinion in subsection (ix) of this Section 7(c), they have
no reason to believe that, as of its effective date, the
Registration Statement or any further amendment thereto made
by the
-14-
DC_LAN01\52911.8
<PAGE>
Company or the Guarantor prior to the Time of Delivery (other
than the financial statements, related schedules and financial
data included therein, as to which such counsel need express
no opinion) contained an untrue statement of a material fact
or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading or that, as of its date, the Prospectus as amended
or supplemented or any further amendment or supplement thereto
made by the Company or the Guarantor prior to the Time of
Delivery (other than the financial statements, related
schedules and financial data included therein, as to which
such counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state a material
fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading
or that, as of the Time of Delivery, either the Registration
Statement or the Prospectus as amended or supplemented or any
further amendment or supplement thereto made by the Company or
the Guarantor prior to the Time of Delivery (other than the
financial statements, related schedules and financial data
included therein, as to which such counsel need express no
opinion) contains an untrue statement of a material fact or
omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading; and they do not know of
any amendment to the Registration Statement required to be
filed or any contracts or other documents of a character
required to be filed as an exhibit to the Registration
Statement or required to be incorporated by reference into the
Prospectus as amended or supplemented or required to be
described in the Registration Statement or the Prospectus as
amended or supplemented which are not filed or incorporated by
reference or described as required;
(d) On the date of the Pricing Agreement for such Designated
Securities at a time prior to the execution of the Pricing Agreement
with respect to such Designated Securities and at the Time of Delivery
for such Designated Securities, the independent accountants of the
Company and the Guarantor who have certified the financial statements
of the Guarantor and its subsidiaries (including the Company) included
or incorporated by reference in the Registration Statement shall have
furnished to the Representatives a letter, dated the effective date of
the Registration Statement or the date of the most recent report filed
with the Commission containing financial statements and incorporated by
reference in the Registration Statement, if the date of such report is
later than such effective date, and a letter dated such Time of
Delivery, respectively, and with respect to such letter dated such Time
of Delivery, as to such other matters as the Representatives may
reasonably request and in form and substance satisfactory to the
Representatives (the executed copy of the letter delivered prior to the
execution of this Agreement is attached as Annex II(a) hereto and a
draft of the form of letter to be delivered on the effective date of
any post-effective amendment to the Registration Statement and as of
each Time of Delivery is attached as Annex II(b) hereto);
-15-
DC_LAN01\52911.8
<PAGE>
(e) (i) None of the Company, the Guarantor or any of their
subsidiaries shall have sustained since the date of the latest audited
financial statements included or incorporated by reference in the
Prospectus as amended prior to the date of the Pricing Agreement
relating to the Designated Securities any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus as amended prior to the date of the
Pricing Agreement relating to the Designated Securities, and (ii) since
the respective dates as of which information is given in the Prospectus
as amended prior to the date of the Pricing Agreement relating to the
Designated Securities there shall not have been any change in the
capital stock or long-term debt of the Company, the Guarantor or any of
their subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of
the Company, the Guarantor or any of its subsidiaries, otherwise than
as set forth or contemplated in the Prospectus as amended prior to the
date of the Pricing Agreement relating to the Designated Securities,
the effect of which, in any such case described in Clause (i) or (ii),
is in the judgment of the Representatives so material and adverse as to
make it impracticable or inadvisable to proceed with the public
offering or the delivery of the Designated Securities on the terms and
in the manner contemplated in the Prospectus as first amended or
supplemented relating to the Designated Securities;
(f) On or after the date of the Pricing Agreement relating to
the Designated Securities (i) no downgrading shall have occurred in the
rating accorded the Company's debt securities or (if the Guarantor has
debt securities or preferred stock that is rated) the Guarantor' debt
securities or preferred stock by any "nationally recognized statistical
rating organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Act, and (ii) no such organization
shall have publicly announced that it has under surveillance or review,
with possible negative implications, its rating of any of the Company's
or the Guarantor's debt securities or preferred stock;
(g) On or after the date of the Pricing Agreement relating to
the Designated Securities there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange; (ii) a suspension
or material limitation in trading in the Company's or the Guarantor's
securities on the New York Stock Exchange; (iii) a general moratorium
on commercial banking activities declared by either Federal or New York
or Virginia State authorities; or (iv) the outbreak or escalation of
hostilities involving the United States or the declaration by the
United States of a national emergency or war, if the effect of any such
event specified in this Clause (iv) in the judgment of the
Representatives makes it impracticable or inadvisable to proceed with
the public offering or the delivery of the
-16-
DC_LAN01\52911.8
<PAGE>
Designated Securities on the terms and in the manner contemplated in
the Prospectus as amended or supplemented relating to the Designated
Securities;
(h) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of prospectuses on
the New York Business Day next succeeding the date of this Agreement;
and
(i) The Company and the Guarantor shall have furnished or
caused to be furnished to the Representatives at the Time of Delivery
for the Designated Securities a certificate or certificates of officers
of the Company and the Guarantor satisfactory to the Representatives as
to the accuracy of the representations and warranties of the Company
and the Guarantor herein at and as of such Time of Delivery, as to the
performance by the Company and the Guarantor of all of their respective
obligations hereunder to be performed at or prior to such Time of
Delivery, as to the matters set forth in subsections (a) and (e) of
this Section and as to such other matters as the Representatives may
reasonably request.
8. (a) Each of the Company and the Guarantor, jointly and severally,
will indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, any preliminary prospectus supplement, the Registration
Statement, the Prospectus as amended or supplemented and any other prospectus
relating to the Securities, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that neither the Company nor the Guarantor shall be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Prospectus,
any preliminary prospectus supplement, the Registration Statement, the
Prospectus as amended or supplemented and any other prospectus relating to the
Securities, or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
of Designated Securities through the Representatives expressly for use in the
Prospectus as amended or supplemented relating to such Securities.
-17-
DC_LAN01\52911.8
<PAGE>
(b) Each Underwriter will indemnify and hold harmless the Company and
the Guarantor against any losses, claims, damages or liabilities to which the
Company or the Guarantor may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus, any preliminary
prospectus supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Securities, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in any Preliminary
Prospectus, any preliminary prospectus supplement, the Registration Statement,
the Prospectus as amended or supplemented and any other prospectus relating to
the Securities, or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company or Guarantor by
such Underwriter through the Representatives expressly for use therein; and will
reimburse the Company and the Guarantor for any legal or other expenses
reasonably incurred by the Company or the Guarantor in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
-18-
DC_LAN01\52911.8
<PAGE>
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Guarantor on the one hand and
the Underwriters of the Designated Securities on the other from the offering of
the Designated Securities to which such loss, claim, damage or liability (or
action in respect thereof) relates. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c) above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company and the
Guarantor on the one hand and the Underwriters of the Designated Securities on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Company and the Guarantor on the one hand and such Underwriters on the
other shall be deemed to be in the same proportion as the total net proceeds
from such offering (before deducting expenses) received by the Company and the
Guarantor bear to the total underwriting discounts and commissions received by
such Underwriters. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company and the Guarantor on the one hand or such
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Guarantor and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this subsection (d) were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the applicable Designated
Securities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of the Underwriters of Designated Securities
in this subsection (d) to contribute are several in proportion to their
respective underwriting obligations with respect to such Securities and not
joint.
-19-
DC_LAN01\52911.8
<PAGE>
(e) The obligations of the Company and the Guarantor under this Section
8 shall be in addition to any liability which the Company or the Guarantor may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Underwriter within the meaning of the Act; and
the obligations of the Underwriters under this Section 8 shall be in addition to
any liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of the
Company or the Guarantor and to each person, if any, who controls the Company or
the Guarantor within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Designated Securities which it has agreed to purchase under the Pricing
Agreement relating to such Designated Securities, the Representatives may in
their discretion arrange for themselves or another party or other parties to
purchase such Designated Securities on the terms contained herein. If within
thirty-six hours after such default by any Underwriter the Representatives do
not arrange for the purchase of such Designated Securities, then the Company
shall be entitled to a further period of thirty-six hours within which to
procure another party or other parties satisfactory to the Representatives to
purchase such Designated Securities on such terms. In the event that, within the
respective prescribed period, the Representatives notify the Company that they
have so arranged for the purchase of such Designated Securities, or the Company
notifies the Representatives that it has so arranged for the purchase of such
Designated Securities, the Representatives or the Company shall have the right
to postpone the Time of Delivery for such Designated Securities for a period of
not more than seven days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus as amended or
supplemented, or in any other documents or arrangements, and the Company agrees
to file promptly any amendments or supplements to the Registration Statement or
the Prospectus which in the opinion of the Representatives may thereby be made
necessary. The term "Underwriter" as used in this Agreement shall include any
person substituted under this Section with like effect as if such person had
originally been a party to the Pricing Agreement with respect to such Designated
Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Designated Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate principal amount of such Designated Securities which remains
unpurchased does not exceed one-eleventh of the aggregate principal amount of
the Designated Securities, then the Company shall have the right to require each
non-defaulting Underwriter to purchase the principal amount of Designated
Securities which such Underwriter agreed to purchase under the Pricing Agreement
relating to such Designated Securities and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the
principal amount of Designated Securities which such Underwriter agreed to
purchase under such Pricing Agreement) of the Designated Securities of such
defaulting Underwriter or Underwriters for which such arrangements have not been
made; but nothing herein shall relieve a defaulting Underwriter from liability
for its default.
-20-
DC_LAN01\52911.8
<PAGE>
(c) If, after giving effect to any arrangements for the purchase of the
Designated Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate principal amount of Designated Securities which remains unpurchased
exceeds one-eleventh of the aggregate principal amount of the Designated
Securities, as referred to in subsection (b) above, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Designated Securities of a defaulting Underwriter or
Underwriters, then the Pricing Agreement relating to such Designated Securities
shall thereupon terminate, without liability on the part of any non-defaulting
Underwriter, the Company or the Guarantor, except for the expenses to be borne
by the Company, the Guarantor and the Underwriters as provided in Section 6
hereof and the indemnity and contribution agreements in Section 8 hereof; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Guarantor and the several Underwriters,
as set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation (or any statement as to the results thereof) made by or on
behalf of any Underwriter or any controlling person of any Underwriter, the
Company or the Guarantor, or any officer or director or controlling person of
the Company or the Guarantor, and shall survive delivery of and payment for the
Securities.
11. If any Pricing Agreement shall be terminated pursuant to Section 9
hereof, neither the Company nor the Guarantor shall then be under any liability
to any Underwriter with respect to the Designated Securities covered by such
Pricing Agreement except as provided in Sections 6 and 8 hereof; but, if for any
other reason Designated Securities are not delivered by or on behalf of the
Company and the Guarantor as provided herein, the Company and the Guarantor,
jointly and severally, will reimburse the Underwriters through the
Representatives for all out-of-pocket expenses approved in writing by the
Representatives, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of such Designated Securities, but neither the Company nor the
Guarantor shall then be under any further liability to any Underwriter with
respect to such Designated Securities except as provided in Sections 6 and 8
hereof.
12. In all dealings hereunder, the Representatives of the Underwriters
of Designated Securities shall act on behalf of each of such Underwriters, and
the parties hereto shall be entitled to act and rely upon any statement,
request, notice or agreement on behalf of any Underwriter made or given by such
Representatives jointly or by such of the Representatives, if any, as may be
designated for such purpose in the Pricing Agreement.
-21-
DC_LAN01\52911.8
<PAGE>
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Representatives as set forth in the
Pricing Agreement; and if to the Company or the Guarantor shall be delivered or
sent by mail, telex or facsimile transmission to the address of the Company or
the Guarantor, as applicable, set forth in the Registration Statement:
Attention: Secretary; provided, however, that any notice to an Underwriter
pursuant to Section 8(c) hereof shall be delivered or sent by mail, telex or
facsimile transmission to such Underwriter at its address set forth in its
Underwriters' Questionnaire, or telex constituting such Questionnaire, which
address will be supplied to the Company and the Guarantor by the Representatives
upon request. Any such statements, requests, notices or agreements shall take
effect upon receipt thereof.
13. This Agreement and each Pricing Agreement shall be binding upon,
and inure solely to the benefit of, the Underwriters, the Company, the Guarantor
and, to the extent provided in Sections 8 and 10 hereof, the officers and
directors of the Company, the Guarantor and each person who controls the
Company, the Guarantor or any Underwriter, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement or any such
Pricing Agreement. No purchaser of any of the Securities from any Underwriter
shall be deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of each Pricing Agreement. As used
herein, "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. This Agreement and each Pricing Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
-22-
DC_LAN01\52911.8
<PAGE>
16. This Agreement and each Pricing Agreement may be executed by any
one or more of the parties hereto and thereto in any number of counterparts,
each of which shall be deemed to be an original, but all such respective
counterparts shall together constitute one and the same instrument.
Very truly yours,
MacSaver Financial Services, Inc.
By:
Name:
Title:
Heilig-Meyers Company
By:
Name:
Title:
-23-
DC_LAN01\52911.8
<PAGE>
ANNEX I
Pricing Agreement
[Names of Representatives]
As Representatives of the several
Underwriters named in Schedule I hereto
[Address of Representatives]
, 199_
Ladies and Gentlemen:
MacSaver Financial Services, Inc., a Delaware corporation (the
"Company"), proposes, subject to the terms and conditions stated herein and in
the Underwriting Agreement, dated _____ __, 1996 (the "Underwriting Agreement"),
to issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") the Notes specified in Schedule II hereto (the "Notes"). The
Notes will be unconditionally guaranteed as to the payment of principal,
premium, if any, and interest (the "Guarantees") by Heilig-Meyers Company, a
Virginia corporation (the "Guarantor"). The Notes and the Guarantees are
hereinafter collectively called the "Securities". Each of the provisions of the
Underwriting Agreement is incorporated herein by reference in its entirety, and
shall be deemed to be a part of this Agreement to the same extent as if such
provisions had been set forth in full herein; and each of the representations
and warranties set forth therein shall be deemed to have been made at and as of
the date of this Pricing Agreement, except that each representation and warranty
which refers to the Prospectus in Section 2 of the Underwriting Agreement shall
be deemed to be a representation or warranty as of the date of the Underwriting
Agreement in relation to the Prospectus (as therein defined), and also a
representation and warranty as of the date of this Pricing Agreement in relation
to the Prospectus as amended or supplemented relating to the Notes and the
Guarantees (together, the Designated Securities which are the subject of this
Pricing Agreement). Each reference to the Representatives herein and in the
provisions of the Underwriting Agreement so incorporated by reference shall be
deemed to refer to you. Unless otherwise defined herein, terms defined in the
Underwriting Agreement are used herein as therein defined. The Representatives
designated to act on behalf of the Representatives and on behalf of each of the
Underwriters of the Designated Securities pursuant to Section 12 of the
Underwriting Agreement and the address of the Representatives referred to in
such Section 12 are set forth at the end of Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
-1-
DC_LAN01\52911.8
<PAGE>
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company and the
Guarantor agree to issue and the Company agrees to sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company, at the time and place and at the purchase price to
the Underwriters set forth in Schedule II hereto, the principal amount of
Designated Securities set forth opposite the name of such Underwriter in
Schedule I hereto.
-2-
DC_LAN01\52911.8
<PAGE>
If the foregoing is in accordance with your understanding, please sign
and return to us ten counterparts hereof, and upon acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement among each of the Underwriters,
the Company and the Guarantor. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is or will be pursuant to the
authority set forth in a form of Agreement among Underwriters, the form of which
shall be submitted to the Company and the Guarantor for examination upon
request, but without warranty on the part of the Representatives as to the
authority of the signers thereof.
Very truly yours,
MacSaver Financial Services, Inc.
By:
Name:
Title:
Heilig-Meyers Company
By:
Name:
Title:
Accepted as of the date hereof:
Goldman, Sachs & Co.
A.G. Edwards & Sons, Inc.
NationsBanc Capital Markets, Inc.
Salomon Brothers Inc
Wheat, First Securities, Inc.
By: Goldman, Sachs & Co.
By:
(Authorized Officer and Attorney-in-fact)
On behalf of each of the Underwriters
-3-
DC_LAN01\52911.8
<PAGE>
SCHEDULE I
Principal
Amount of
Designated
Securities
to be
Underwriter Purchased
[Names of Representatives] $
[Names of other Underwriters]
Total $
-4-
DC_LAN01\52911.8
<PAGE>
SCHEDULE II
Title of Designated Securities:
[ %] [Floating Rate] [Zero Coupon] [Notes]
[Debentures] due ,
Aggregate principal amount:
[$]
Price to Public:
% of the principal amount of the Designated Securities, plus accrued
interest[, if any,] from to [and accrued
amortization[, if any,] from to
]
Purchase Price by Underwriters:
% of the principal amount of the Designated Securities, plus accrued
interest from
to [and accrued amortization[, if any,] from to
]
Form of Designated Securities:
[Definitive form to be made available for checking and packaging at
least twenty-four hours prior to the Time of Delivery at the office of
[The Depository Trust Company or its designated custodian] [the
Representatives]]
[Book-entry only form represented by one or more global securities
deposited with The Depository Trust Company ("DTC") or its designated
custodian, to be made available for checking by the Representatives at
least twenty-four hours prior to the Time of Delivery at the office of
DTC.]
Specified funds for payment of purchase price:
Federal (same-day) funds
Time of Delivery:
a.m. (New York City time), , 19
Indenture:
Indenture dated , 19 , among the Company,
the Guarantor and , as Trustee
Maturity:
Interest Rate:
[ %] [Zero Coupon] [See Floating Rate Provisions]
Interest Payment Dates:
[months and dates, commencing ....................., 19..]
-5-
DC_LAN01\52911.8
<PAGE>
Redemption Provisions:
[No provisions for redemption]
[The Designated Securities may be redeemed, otherwise than through the
sinking fund, in whole or in part at the option of the Company, in the
amount of [$ ] or an integral multiple thereof,
[on or after , at the following redemption prices (expressed
in percentages of principal amount). If [redeemed on or
before , %, and if] redeemed during the 12-month period
beginning ,
Redemption
Year Price
and thereafter at 100% of their principal amount, together in each case
with accrued interest to the redemption date.]
[on any interest payment date falling on or after , , at the election
of the Company, at a redemption price equal to the principal amount
thereof, plus accrued interest to the date of redemption.]]
[Other possible redemption provisions, such as mandatory redemption
upon occurrence of certain events or redemption for changes in tax law]
[Restriction on refunding]
Sinking Fund Provisions:
[No sinking fund provisions]
[The Designated Securities are entitled to the benefit of a sinking
fund to retire [$ ] principal amount of Designated Securities
on in each of the years through
at 100% of their principal amount plus accrued interest[,
together with [cumulative] [noncumulative] redemptions at the option of
the Company to retire an additional [$ ] principal amount of Designated
Securities in the years through at 100% of their principal amount plus
accrued interest.]
[If Designated Securities are extendable debt securities, insert--
Extendable provisions:
Designated Securities are repayable on , [insert date and years], at
the option of the holder, at their principal amount with accrued
interest. The initial annual interest rate will be %, and thereafter
the annual interest rate will be adjusted on
, and to a rate not less than % of the effective annual
interest rate on U.S. Treasury obligations with -year maturities as of
the [insert date 15 days prior to maturity date] prior to such [insert
maturity date].]
[If Designated Securities are floating rate debt securities, insert--
-6-
DC_LAN01\52911.8
<PAGE>
Floating rate provisions:
Initial annual interest rate will be % through [and
thereafter will be adjusted [monthly] [on
each , , and ] [to an annual rate of
% above the average rate for -year
[month][securities][certificates of deposit] issued by
and [insert names of banks].] [and the annual interest rate
[thereafter] [from
through ] will be the interest yield equivalent of the weekly
average per annum market discount rate for -month Treasury bills plus %
of Interest Differential (the excess, if any, of (i) the then current
weekly average per annum secondary market yield for -month certificates
of deposit over (ii) the then current interest yield equivalent of the
weekly average per annum market discount rate for
-month Treasury bills); [from and thereafter the rate will be
the then current interest yield equivalent plus % of Interest
Differential].]
Defeasance provisions:
Closing location for delivery of Designated Securities:
Additional Closing Conditions:
Names and addresses of Representatives:
Designated Representatives:
Address for Notices, etc.:
[Other Terms:]
-7-
DC_LAN01\52911.8
<PAGE>
ANNEX II
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Guarantor and its subsidiaries (including the Company)
within the meaning of the Act and the applicable published rules and
regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules audited (and, if
applicable, financial forecasts and/or pro forma financial information
examined) by them and included or incorporated by reference in the
Registration Statement or the Prospectus comply as to form in all
material respects with the applicable accounting requirements of the
Act or the Exchange Act, as applicable, and the related published rules
and regulations thereunder; and, if applicable, they have made a review
in accordance with standards established by the American Institute of
Certified Public Accountants of the consolidated interim financial
statements, selected financial data, pro forma financial information,
financial forecasts and/or condensed financial statements derived from
audited financial statements of the Guarantor and the Company for the
periods specified in such letter, as indicated in their reports
thereon, copies of which have been separately furnished to the
representative or representatives of the Underwriters (the
"Representatives") such term to include an Underwriter or Underwriters
who act without any firm being designated as its or their
representatives;
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus and/or included in the Guarantor's quarterly
report on Form 10-Q incorporated by reference into the Prospectus as
indicated in their reports thereon copies of which have been separately
furnished to the Representatives; and on the basis of specified
procedures including inquiries of officials of the Guarantor and the
Company who have responsibility for financial and accounting matters
regarding whether the unaudited condensed consolidated financial
statements referred to in paragraph (vi)(A)(i) below comply as to form
in all material respects with the applicable accounting requirements of
the Act and the Exchange Act and the related published rules and
regulations, nothing came to their attention that caused them to
believe that the unaudited condensed consolidated financial statements
do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the related
published rules and regulations;
(iv) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Guarantor and the Company for the five most recent fiscal years
included in the Prospectus and included or incorporated by reference in
Item 6 of the Guarantor's Annual Report on Form 10-K for the most
recent fiscal year agrees with the corresponding amounts (after
-1-
DC_LAN01\52911.8
<PAGE>
restatement where applicable) in the audited consolidated financial
statements for five such fiscal years which were included or
incorporated by reference in the Guarantor's Annual Reports on Form
10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K
and on the basis of limited procedures specified in such letter nothing
came to their attention as a result of the foregoing procedures that
caused them to believe that this information does not conform in all
material respects with the disclosure requirements of Items 301, 302,
402 and 503(d), respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available
interim financial statements of the Guarantor, the Company and their
subsidiaries, inspection of the minute books of the Guarantor, the
Company and their subsidiaries since the date of the latest audited
financial statements included or incorporated by reference in the
Prospectus, inquiries of officials of the Guarantor, the Company and
their subsidiaries responsible for financial and accounting matters and
such other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) (i) the unaudited condensed consolidated
statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the
Prospectus and/or included or incorporated by reference in the
Guarantor's Quarterly Reports on Form 10-Q incorporated by
reference in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements
of the Exchange Act and the related published rules and
regulations, or (ii) any material modifications should be made
to the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus or included in the
Guarantor's Quarterly Reports on Form 10-Q incorporated by
reference in the Prospectus for them to be in conformity with
generally accepted accounting principles;
(B) any other unaudited income statement data and
balance sheet items included in the Prospectus do not agree
with the corresponding items in the unaudited consolidated
financial statements from which such data and items were
derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis
for the corresponding amounts in the audited consolidated
financial statements included or incorporated by reference in
the Guarantor's Annual Report on Form 10-K for the most recent
fiscal year;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived the
unaudited condensed financial statements referred to in clause
(A) and any unaudited income statement data
-2-
DC_LAN01\52911.8
<PAGE>
and balance sheet items included in the Prospectus and
referred to in Clause (B) were not determined on a basis
substantially consistent with the basis for the audited
financial statements included or incorporated by reference in
the Guarantor's Annual Report on Form 10-K for the most recent
fiscal year;
(D) any unaudited pro forma consolidated condensed
financial statements included or incorporated by reference in
the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the
Act and the published rules and regulations thereunder or the
pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
(E) as of a specified date not more than five days
prior to the date of such letter, there have been any changes
in the consolidated capital stock (other than issuances of
capital stock upon exercise of options and stock appreciation
rights, upon earn-outs of performance shares and upon
conversions of convertible securities, in each case which were
outstanding on the date of the latest balance sheet included
or incorporated by reference in the Prospectus) or any
increase in the consolidated long-term debt of the Guarantor,
the Company and their subsidiaries, or any decreases in
consolidated net current assets or stockholders' equity or
other items specified by the Representatives, or any increases
in any items specified by the Representatives, in each case as
compared with amounts shown in the latest balance sheet
included or incorporated by reference in the Prospectus,
except in each case for changes, increases or decreases which
the Prospectus discloses have occurred or may occur or which
are described in such letter; and
(F) for the period from the date of the latest
financial statements included or incorporated by reference in
the Prospectus to the specified date referred to in Clause (E)
there were any decreases in consolidated net revenues or
operating profit or the total or per share amounts of
consolidated net income or other items specified by the
Representatives, or any increases in any items specified by
the Representatives, in each case as compared with the
comparable period of the preceding year and with any other
period of corresponding length specified by the
Representatives, except in each case for increases or
decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(vii) In addition to the audit referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (vi) above, they have carried out
certain specified procedures, not constituting an audit in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Representatives which are derived from the general accounting records
of the Guarantor, the Company and their subsidiaries, which appear in
the Prospectus (excluding documents incorporated by reference), or in
Part II of, or in exhibits and schedules to, the Registration
-3-
DC_LAN01\52911.8
<PAGE>
Statement specified by the Representatives or in documents incorporated
by reference in the Prospectus specified by the Representatives, and
have compared certain of such amounts, percentages and financial
information with the accounting records of the Guarantor, the Company
and their subsidiaries and have found them to be in agreement.
All references in this Annex II to the Prospectus shall be deemed to
refer to the Prospectus (including the documents incorporated by reference
therein) as defined in the Underwriting Agreement as of the date of the letter
delivered on the date of the Pricing Agreement for purposes of such letter and
to the Prospectus as amended or supplemented (including the documents
incorporated by reference therein) in relation to the applicable Designated
Securities for purposes of the letter delivered at the Time of Delivery for such
Designated Securities.
-4-
Exhibit 5.1
June 24, 1997
Heilig-Meyers Company
2235 Staples Mill Road
Richmond, Virginia 23230
MacSaver Financial Services, Inc.
2 Reads Ways, Suite 224
New Castle, Delaware 19720
Re: Registration Statement on Form S-3
$400,000,000 Aggregate Principal
Amount of Securities
Ladies and Gentlemen:
In connection with the registration of $400,000,000 aggregate principal
amount of (i) common stock, par value $2.00 per share (the "Common Stock"), of
Heilig-Meyers Company, a Virginia corporation ("Heilig-Meyers"), (ii) warrants
to purchase the Common Stock of Heilig-Meyers (the "Warrants"), (iii) debt
securities (the "Debt Securities") of MacSaver Financial Services, Inc., a
Delaware corporation ("MacSaver"), and (iv) the guarantees of the Debt
Securities (the "Guarantees" and, collectively with the Common Stock , Warrants
and Debt Securities, the "Securities") by Heilig-Meyers, under the Securities
Act of 1933, as amended (the "Act"), on Form S-3 to be filed with the Securities
and Exchange Commission (the "Commission") on the date hereof (the "Registration
Statement"), and the offering of such Securities from time to time, as set forth
in the prospectus contained in the Registration Statement (the "Prospectus") and
as to be set forth in one or more supplements to the Prospectus (each a
"Prospectus Supplement"), you have requested our opinion with respect to the
matters set forth below.
In connection with this opinion, we have made such legal and factual
examinations and inquiries, including an examination of originals or copies,
certified or otherwise identified to our satisfaction, of such documents,
corporate records and instruments, as we have deemed necessary or appropriate
for purposes of this opinion.
<PAGE>
Heilig-Meyers Company
MacSaver Financial Services, Inc.
June 19, 1997
Page 2
Capitalized terms used herein without definition have the meanings
ascribed to them in the Registration Statement.
Subject to the foregoing and the other matters set forth herein, it is
our opinion that as of the date hereof:
1. Heilig-Meyers has authority pursuant to its Restated Articles of
Incorporation to issue up to 250,000,000 shares of Common Stock. Upon adoption
by the Board of Directors of Heilig-Meyers of a resolution in form and content
as required by applicable law and upon issuance and delivery of and payment for
such shares in the manner contemplated by the Registration Statement and/or the
applicable Prospectus Supplement and by such resolution, the shares of Common
Stock to be sold pursuant to the Registration Statement and/or Prospectus
Supplement will be validly issued, fully paid and nonassessable.
2. The Debt Securities have been duly authorized by all necessary
corporate action of MacSaver, and when the Debt Securities have been duly
established by an Indenture, and duly executed, authenticated and delivered by
or on behalf of MacSaver against payment therefor in accordance with the terms
of an Indenture and as contemplated by the Registration Statement and/or the
applicable Prospectus Supplement, the Debt Securities will constitute legally
valid and binding obligations of MacSaver, enforceable against MacSaver in
accordance with their terms.
3. The Guarantees have been duly authorized by all necessary corporate
action of Heilig-Meyers, and when the Guarantees have been duly established by
an Indenture, and duly executed in accordance with the terms of an Indenture and
upon due execution, authentication and delivery of the Debt Securities and upon
payment therefor in accordance with the terms of an Indenture and as
contemplated by the Registration Statement and/or the applicable Prospectus
Supplement, will be legally valid and binding obligations of Heilig-Meyers.
4. The registration of the Warrants pursuant to the Registration
Statement has been duly authorized by all necessary corporate action of
Heilig-Meyers. Upon adoption by the Board of Directors of Heilig-Meyers of a
resolution in form and content as required by applicable law with respect to the
Common Stock issuable upon exercise of the Warrants, and when the Warrants have
been duly established by a Warrant Agreement, and duly executed and delivered by
or on behalf of the Company against payment therefor in accordance with the
terms of a Warrant Agreement and as contemplated by the Registration Statement
<PAGE>
Heilig-Meyers Company
MacSaver Financial Services, Inc.
June 19, 1997
Page 3
and/or the applicable Prospectus Supplement, the Warrants will constitute
legally valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms.
The opinions set forth above are subject to the following exceptions,
limitations and qualifications: (i) the effect of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting the rights and remedies of
creditors; (ii) the effect of general principles of equity, whether enforcement
is considered in a proceeding in equity or at law, and the discretion of the
court before which any proceeding therefor may be brought; (iii) the
unenforceability under certain circumstances under law or court decisions of
provisions providing for the indemnification of or contribution to a party with
respect to a liability where such indemnification or contribution is contrary to
public policy; and (iv) the enforceability of obligations under an Indenture may
be limited by (A) requirements that a claim with respect to any Securities
denominated other than in U.S. dollars (or a foreign currency or foreign
currency unit judgment in respect to such claim) be converted into United States
dollars at a rate of exchange prevailing on a date determined pursuant to
applicable law; and (B) governmental authority to limit, delay or prohibit the
making of payments in foreign currency or currency units or payments outside the
United States.
We also reaffirm our opinion regarding the rights to purchase preferred
stock, series A, $10.00 par value, of the Company ("the Rights"), attached in
equal number to the shares of Common Stock that may be issued pursuant to the
transactions described herein, given to the Company's Board of Directors as
confirmed in our letter of February 17, 1988, attached to our opinion filed as
Exhibit 5 to the Heilig-Meyers Company Registration Statement (No. 33-64616) on
Form S-8. In our opinion regarding the Rights, we discussed whether certain
provisions of Section 13.1-638 of the Virginia Code might prohibit the
restrictions on transfer imposed under the agreement governing the Rights. The
Virginia Code has been amended to provide that, notwithstanding such provisions
of Section 13.1- 638, the terms of rights issued by a corporation may include
restrictions on transfer by designated persons or classes of persons.
To the extent that the obligations of Heilig-Meyers and MacSaver under
an Indenture may be dependent upon such matters, we assume for purposes of this
opinion that the Trustee is duly organized, validly existing and in good
standing under the laws
<PAGE>
Heilig-Meyers Company
MacSaver Financial Services, Inc.
June 19, 1997
Page 4
of its jurisdiction of organization; that the Trustee is duly qualified to
engage in the activities contemplated by an Indenture; that an Indenture has
been duly authorized, executed and delivered by the Trustee and constitutes the
legally valid, binding and enforceable obligation of the Trustee enforceable
against the Trustee in accordance with its terms; that the Trustee is in
compliance, generally and with respect to acting as a trustee under an
Indenture, with all applicable laws and regulations; and that the Trustee has
the requisite organizational and legal power and authority to perform its
obligations under an Indenture.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to reference to us under the heading relating to the
validity of the Securities in the Registration Statement (including the
applicable Prospectus Supplement relating to such Securities). We do not admit
by giving this consent that we are in the category of persons whose consent is
required under Section 7 of the Act.
Very truly yours,
McGuire, Woods, Battle & Boothe, L.L.P.
Exhibit 8.1
June 24, 1997
Heilig-Meyers Company
2235 Staples Mill Road
Richmond, Virginia 23230
MacSaver Financial Services, Inc.
2 Reads Ways, Suite 224
New Castle, Delaware 19720
Re: Registration Statement on Form S-3
$400,000,000 Aggregate Principal
Amount of Securities
Ladies and Gentlemen:
We have been requested, as your special tax counsel, to render federal
tax advice in connection with the registration of $400,000,000 aggregate
principal amount of (i) common stock, par value $2.00 per share (the "Common
Stock"), of Heilig-Meyers Company, a Virginia corporation ("Heilig-Meyers"),
(ii) warrants to purchase the Common Stock of Heilig-Meyers (the "Warrants"),
(iii) debt securities (the "Debt Securities") of MacSaver Financial Services,
Inc., a Delaware corporation ("MacSaver"), and (iv) the guarantees of the Debt
Securities (the "Guarantees" and, collectively with the Common Stock, Warrants
and Debt Securities, the "Securities") by Heilig-Meyers, under the Securities
Act of 1933, as amended (the "Act"), on Form S-3 to be filed with the Securities
and Exchange Commission (the "Commission") on the date hereof (the "Registration
Statement"), and the offering of such Securities from time to time, as set forth
in the prospectus contained in the Registration Statement (the "Prospectus") and
as to be set forth in one or more supplements to the Prospectus (each a
"Prospectus Supplement").
We have reviewed the statements set forth in the Registration Statement
under the heading "United States Taxation" and hereby advise you that such
statements, insofar as they are or refer to statements of United States law or
legal conclusions relating thereto, are accurate in all material respects.
<PAGE>
Heilig-Meyers Company
MacSaver Financial Services, Inc.
June 19, 1997
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "United
States Taxation" in the Registration Statement. We do not admit by giving this
consent that we are in the category of persons whose consent is required under
Section 7 of the Securities Act.
Very truly yours,
/s/ McGuire, Woods, Battle & Boothe, L.L.P.
Heilig-Meyers Company
Computation of Ratio of Earnings to Fixed Charges
(dollar amounts in thousands)
<TABLE>
<CAPTION>
Fiscal Year Ended February 28(29)
-----------------------------------------------------------------------------------
1997 1996 1995 1994 1993
--------------- --------------- --------------- --------------- ---------------
<S> <C>
Net Income Before Taxes 61,900 64,527 105,901 87,154 59,394
Interest 47,800 40,767 32,889 23,834 23,084
Property Rentals 48,740 41,216 33,631 22,345 17,143
Equipment Rentals 24,793 21,858 16,050 11,964 6,805
--------------- --------------- --------------- --------------- ---------------
Total Earnings Available 183,233 168,368 188,471 145,297 106,426
Fixed Charges:
Interest 47,800 40,767 32,889 23,834 23,084
Property Rentals 48,740 41,216 33,631 22,345 17,143
Equipment Rentals 24,793 21,858 16,050 11,964 6,805
--------------- --------------- --------------- --------------- ---------------
Total Fixed Charges 121,333 103,841 82,570 58,143 47,032
Ratio of Earnings to Fixed Charges 1.51 1.62 2.28 2.50 2.26
</TABLE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Heilig-Meyers Company on Form S-3 of our report dated March 25, 1997,
appearing in the Annual Report on Form 10-K of Heilig-Meyers Company and
subsidiaries for the year ended February 28, 1997 and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Richmond, Virginia
June 24, 1997
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-3 of our reports dated April
25, 1996, incorporated by reference in Heilig-Meyers Company's Form 8-K/A dated
February 19, 1997 and to all references to our firm included in this
registration statement.
/s/ Arthur Andersen LLP
Atlanta, Georgia
June 23, 1997
Exhibit 23.4
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Heilig-Meyers Company on Form S-3 to be filed on or about June 24, 1997 of our
report dated January 5, 1996 on the financial statements of Weberg Division (a
division of Weberg Enterprises, Inc.) as of and for the year ended December 31,
1994 which is incorporated by reference in Amendment No. 1 to Form 8-K dated
February 19, 1997 of Heilig-Meyers Company.
/s/ Deloitte & Touche LLP
Denver, Colorado
June 24, 1997
EXHIBIT 25.1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM T-1
----------------------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an application to determine eligibility of a trustee pursuant to
Section 305(b) (2) -----
-----------------------
FIRST UNION NATIONAL BANK OF VIRGINIA
(Exact name of Trustee as specified in its charter)
213 SOUTH JEFFERSON STREET
ROANOKE, VIRGINIA 24011 54-0211320
(Address of principal executive (Zip Code) (I.R.S. Employer
offices) Identification No.)
Dante M. Monakil, (804) 788-9659
901 E. Cary Street, Richmond, Virginia 23219
(Name, address and telephone number of agent for service)
-----------------------
<TABLE>
<S> <C>
HEILIG-MEYERS COMPANY MACSAVER FINANCIAL
(Exact name of obligor as specified in its charter) SERVICES, INC.
(Exact name of obligor as specified in its charter)
VIRGINIA DELAWARE
(State or other jurisdiction of incorporation or organization) (State or other jurisdiction of incorporation or organization)
54-0558861 62-1419691
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
2235 STAPLES MILL ROAD 2 READS WAY, SUITE 224
RICHMOND, VA NEW CASTLE, DE
(Address of principal executive offices) (Address of principal executive offices)
24112 19720
(Zip Code) (Zip Code)
MACSAVER FINANCIAL SERVICES, INC.
(A SUBSIDIARY OF HEILIG-MEYERS COMPANY)
</TABLE>
Senior Debt Securities
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
1. GENERAL INFORMATION.
(a) The following are the names and addresses of each examining or
supervising authority to which the Trustee is subject:
The Comptroller of the Currency, Washington, D.C.
Federal Reserve Bank of Richmond, Richmond, Virginia.
Federal Deposit Insurance Corporation, Washington, D.C.
Securities and Exchange Commission, Division of Market Regulation,
Washington, D.C.
(b) The Trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH OBLIGOR.
The obligor is not an affiliate of the Trustee.
3. VOTING SECURITIES OF THE TRUSTEE.
Not applicable
(See answer to Item 13)
4. TRUSTEESHIPS UNDER OTHER INDENTURES.
Not applicable
(See answer to Item 13)
5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR OR
UNDERWRITERS.
Not applicable
(See answer to Item 13)
6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS.
Not applicable
(See answer to Item 13)
7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR OFFICIALS.
Not applicable
(See answer to Item 13)
8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.
Not applicable
(See answer to Item 13)
9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.
Not applicable
(See answer to Item 13)
2
<PAGE>
10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN
AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.
Not applicable
(See answer to Item 13)
11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON OWNING 50
PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.
Not applicable
(See answer to Item 13)
12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.
Not applicable
(See answer to Item 13)
13. DEFAULTS BY THE OBLIGOR.
A. None
B. None
14. AFFILIATIONS WITH THE UNDERWRITERS.
Not applicable
(See answer to Item 13)
15. FOREIGN TRUSTEE.
Trustee is a national banking association organized under the laws of
the United States.
16. LIST OF EXHIBITS.
(1) Articles of Incorporation. (Incorporated by reference from
Exhibit 25 to Registration 33-57401, filed January 25, 1995.)
(2) Certificate of Authority of the Trustee to conduct business.
(Incorporated by reference from Exhibit 25 to Registration
33-57401, filed January 25, 1995.)
(3) Certificate of Authority of the Trustee to exercise corporate
trust powers. (Incorporated by reference from Exhibit 25 to
Registration 33-57401, filed January 25, 1995.)
(4) By-laws. (Incorporated by reference from Exhibit 25 to
Registration 33-57401, filed January 25, 1995.)
(5) Inapplicable.
(6) Consent by the Trustee required by Section 321(b) of the Trustee
Indenture Act of 1939. Included at Page 4 of this Form T-1
Statement.
(7) Report of condition of Trustee.
(8) Inapplicable.
(9) Inapplicable.
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the Trustee, FIRST UNION NATIONAL BANK OF VIRGINIA, a national
organized and existing under the laws of the United States of America, has
duly caused this statement of eligibility and qualification to be signed on
its behalf by the undersigned, thereunto duly authorized, all in the City of
Richmond, and Commonwealth of Virginia on the 19th day of June, 1997.
FIRST UNION NATIONAL BANK OF VIRGINIA
(Trustee)
BY: /s/ DANTE M. MONAKIL
--------------------------------
Dante M. Monakil, Vice President
EXHIBIT T-1 (6)
CONSENT OF TRUSTEE
Under section 321(b) of the Trust Indenture Act of 1939 and in connection
with the proposed issuance by MacSaver Financial Services, Inc., of its
Senior Securities, First Union National Bank of Virginia, as the Trustee herein
named, hereby consents that reports of examinations of said Trustee by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
FIRST UNION NATIONAL BANK OF VIRGINIA
BY: /s/ JOHN M. TURNER
----------------------------------
John M. Turner, Vice President and
Managing Director
Dated: June 24, 1997
4
<PAGE>
EXHIBIT T-1 (7)
<PAGE>
Consolidated Report of Income
for the period January 1, 1997-March 31, 1997
All Report of Income schedules are to be reported on a calendar year-to-date
basis in thousands of dollars.
Schedule RI--Income Statement
<TABLE>
<CAPTION>
I380
Dollar Amounts in Thousands RIAD Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Interest income: //////////////////
a. Interest and fee income on loans: //////////////////
(1) Loans secured by real estate ........................................................ 4011 89,558 1.a.(1)
(2) Loans to finance agricultural production and other loans to farmers ................. 4024 1,191 1.a.(2)
(3) Commercial and industrial loans ..................................................... 4012 19,833 1.a.(3)
(4) Loans to individuals for household, family, and other personal expenditures: //////////////////
(a) Credit cards and related plans ................................................. 4054 225 1.a.(4)(a)
(b) Other .......................................................................... 4055 22,807 1.a.(4)(b)
(5) Loans to foreign governments and official institutions .............................. 4056 0 1.a.(5)
(6) Obligations (other than securities and leases) of states and political subdivisions //////////////////
in the U.S.: //////////////////
(a) Taxable obligations ............................................................ 4503 0 1.a.(6)(a)
(b) Tax-exempt obligations ......................................................... 4504 2,001 1.a.(6)(b)
(7) All other loans ..................................................................... 4058 1,237 1.a.(7)
b. Income from lease financing receivables: //////////////////
(1) Taxable leases ...................................................................... 4505 1,949 1.b.(1)
(2) Tax-exempt leases ................................................................... 4307 718 1.b.(2)
c. Interest income on balances due from depository institutions(1) .......................... 4115 779 1.c.
d. Interest and dividend income on securities: //////////////////
(1) U.S. Treasury securities and U.S. Government agency obligations ..................... 4027 34,826 1.d.(1)
(2) Securities issued by states and political subdivisions in the U.S.: //////////////////
(a) Taxable securities ............................................................. 4506 0 1.d.(2)(a)
(b) Tax-exempt securities .......................................................... 4507 14 1.d.(2)(b)
(3) Other domestic debt securities ...................................................... 3657 1,386 1.d.(3)
(4) Foreign debt securities ............................................................. 3658 2,724 1.d.(4)
(5) Equity securities (including investments in mutual funds) ........................... 3659 1,227 1.d.(5)
e. Interest income from trading assets ...................................................... 4069 0 1.e.
f. Interest income on federal funds sold and securities purchased under agreements to resell. 4020 505 1.f.
g. Total interest income (sum of items 1.a. through 1.f.) ................................... 4107 180,980 1.g.
</TABLE>
- ----------
1) Includes interest income on time certificates of deposit not held for
trading.
<PAGE>
Schedule RI--Continued
<TABLE>
<CAPTION>
Year-to-date
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------
<S> <C>
2. Interest expense: //////////////////
a. Interest on deposits: //////////////////
(1) Transaction account (NOW accounts, ATS accounts, and //////////////////
telephone and preauthorized transfer accounts) ................... 4508 2,546 2.a.(1)
(2) Nontransaction accounts: //////////////////
(a) Money market deposit accounts (MMDAs) ....................... 4509 20,369 2.a.(2)(a)
(b) Other savings deposits ...................................... 4511 3,034 2.a.(2)(b)
(c) Time deposits of $100,000 or more ........................... A517 3,930 2.a.(2)(c)
(d) Time deposits of less than $100,000 ......................... A518 24,068 2.a.(2)(d)
b. Expense of federal funds purchased and securities sold under //////////////////
agreements to repurchase .............................................. 4180 26,002 2.b.
c. Interest on demand notes issued to the U.S. Treasury, trading //////////////////
liabilities, and other borrowed money ................................. 4185 6,884 2.c.
d. Not applicable //////////////////
e. Interest on subordinated notes and debentures ......................... 4200 2,587 2.e.
f. Total interest expense (sum of items 2.a through 2.e) ................. 4073 89,420 2.f.
----------------------
3. Net interest income (item 1.g minus 2.f) .................................. ////////////////// RIAD 4074 91,560 3.
----------------------
4. Provisions: //////////////////
----------------------
a. Provision for loan and lease losses ................................... ////////////////// RIAD 4230 (15) 4.a.
b. Provision for allocated transfer risk ................................. ////////////////// RIAD 4243 0 4.b.
----------------------
5. Noninterest income: //////////////////
a. Income from fiduciary activities ...................................... 4070 5,838 5.a.
b. Service charges on deposit accounts ................................... 4080 14,136 5.b.
c. Trading revenue (must equal Schedule RI, sum of Memorandum //////////////////
items 8.a. through 8.d.) .............................................. A220 0 5.c.
d.-e. Not applicable //////////////////
f. Other noninterest income: //////////////////
(1) Other fee income .................................................. 5407 12,528 5.f.(1)
(2) All other noninterest income* ..................................... 5408 10,244 5.f.(2)
----------------------
g. Total noninterest income (sum of items 5.a through 5.f) ............... ////////////////// RIAD 4079 42,746 5.g.
6. a. Realized gains (losses) on held-to-maturity securities ................ ////////////////// RIAD 3521 2 6.a.
b. Realized gains (losses) on available-for-sale securities .............. ////////////////// RIAD 3196 (1,529) 6.b.
----------------------
7. Noninterest expense: //////////////////
a. Salaries and employee benefits ........................................ 4135 33,740 7.a.
b. Expenses of premises and fixed assets (net of rental income) //////////////////
(excluding salaries and employee benefits and mortgage interest) ...... 4217 11,794 7.b.
c. Other noninterest expense* ............................................ 4092 31,199 7.c.
----------------------
d. Total noninterest expense (sum of items 7.a through 7.c) .............. ////////////////// RIAD 4093 76,733 7.d.
----------------------
8. Income (loss) before income taxes and extraordinary items and other //////////////////
----------------------
adjustments (item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b, and 7.d) . ////////////////// RIAD 4301 56,061 8.
9. Applicable income taxes (on item 8) ....................................... ////////////////// RIAD 4302 16,877 9.
----------------------
10. Income (loss) before extraordinary items and other adjustments (item 8 //////////////////
----------------------
minus 9) .................................................................. ////////////////// RIAD 4300 39,184 10.
11. Extraordinary items and other adjustments, net of income taxes * .......... ////////////////// RIAD 4320 0 11.
12. Net income (loss) (sum of items 10 and 11) ................................ ////////////////// RIAD 4340 39,184 12.
----------------------
</TABLE>
- ----------
*Describe on Schedule RI-E--Explanations.
4
<PAGE>
Schedule RI--Continued
<TABLE>
<CAPTION> I381
Memoranda Year-to-date
Dollar Amounts in Thousands RIAD Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Interest expense incurred to carry tax-exempt securities, loans, and leases acquired after //////////////////
August 7, 1986, that is not deductible for federal income tax purposes ....................... 4513 600 M.1.
2. Income from the sale and servicing of mutual funds and annuities (included in //////////////////
Schedule RI, item 8) ......................................................................... 8431 668 M.2.
3. Not applicable //////////////////
4. Number of full-time equivalant employees at end of current period (round to //// Number
nearest whole number) ........................................................................ 4150 3,252 M.4.
5.-6. Not applicable //////////////////
7. If the reporting bank has restated its balance sheet as a result of applying push down //// MM DD YY
accounting this calendar year, report the date of the bank's acquisition ...................... 9106 00/00/00 M.7.
8. Trading revenue (from cash instruments and off-balance sheet derivative instruments) //////////////////
(sum of Memorandum items 8.a through 8.d must equal Schedule RI, item 5.c): //////////////////
a. Interest rate exposures .................................................................. 8757 0 M.8.a.
b. Foreign exchange exposures ............................................................... 8758 0 M.8.b.
c. Equity security and index exposures ...................................................... 8759 0 M.8.c.
d. Commodity and other exposures ............................................................ 8760 0 M.8.d.
9. Impact on income of off-balance sheet derivatives held for purposes other than trading: //////////////////
a. Net increase (decrease) to interest income ............................................... 8761 (1,732) M.9.a.
b. Net (increase) decrease to interest expense .............................................. 8762 0 M.9.b.
c. Other (noninterest) allocations .......................................................... 8763 0 M.9.c.
10. Credit losses on off-balance sheet derivatives (see instructions) ............................ A251 0 M.10.
-------------------
11. Does the reporting bank have a Subchapter S election in effect for federal income tax YES NO
-------------------
purposes for the current tax year? ........................................................... A530 //// X M.11.
-------------------
12. Deferred portion of total applicable income taxes included in Schedule RI, //// Bil Mil Thou
-------------------
items 9 and 11 (to be reported with the December Report of Income) ........................... 4772 N/A M.12.
-------------------
</TABLE>
Schedule RI-A--Changes in Equity Capital
Indicate decreases and losses in parentheses.
<TABLE>
<CAPTION>
I383
Dollar Amounts in Thousands RIAD Bil Mil Thou
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Total equity capital originally reported in the December 31, 1996, Reports of Condition //////////////////
and Income ..................................................................................... 3215 822,419 1.
2. Equity capital adjustments from amended Reports of Income, net* ................................ 3216 0 2.
3. Amended balance end of previous calendar year (sum of items 1 and 2) ........................... 3217 822,419 3.
4. Net income (loss) (must equal Schedule RI, item 12) ............................................ 4340 39,184 4.
5. Sale, conversion, acquisition, or retirement of capital stock, net ............................. 4346 0 5.
6. Changes incident to business combinations, net ................................................. 4356 0 6.
7. LESS: Cash dividends declared on preferred stock ............................................... 4470 0 7.
8. LESS: Cash dividends declared on common stock .................................................. 4460 0 8.
9. Cumulative effect of changes in accounting principles from prior years* (see instructions for //////////////////
this schedule) ................................................................................. 4411 6,818 9.
10. Corrections of material accounting errors from prior years* (see instructions for this schedule) 4412 0 10.
11. Change in net unrealized holding gains (losses) on available-for-sale securities ............... 8433 (16,960) 11.
12. Other transactions with parent holding company* (not included in items 5, 7, or 8 above) ....... 4415 0 12.
13. Total equity capital end of current period (sum of items 3 through 12) (must equal //////////////////
Schedule RC, item 28) .......................................................................... 3210 851,461 13.
-------------------
</TABLE>
- ----------
Describe on Schedule RI-E--Explanations.
5
<PAGE>
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for March 31, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
<TABLE>
<CAPTION>
C300
Dollar Amounts in Thousands RCON Bil Mil Thou
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS //////////////////
1. Cash and balances due from depository institutions (from Schedule RC-A:) //////////////////
a. Noninterest-bearing balances and currency and coin(1) ...................................... 0081 698,029 1.a.
b. Interest-bearing balances(2) ............................................................... 0071 330,238 1.b.
2. Securities: //////////////////
a. Held-to-maturity securities (from Schedule RC-B, column A) ................................. 1754 112,675 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D) ............................... 1773 2,054,783 2.b.
3. Federal funds sold and securities purchased under agreements to resell ......................... 1350 27,400 3.
4. Loans and lease financing receivables: //////////////////
------------------------
a. Loans and leases, net of unearned income (from Schedule RC-C) ... RCON 2122 6,868,473 ////////////////// 4.a.
b. LESS: Allowance for loan and lease losses ....................... RCON 3123 98,614 ////////////////// 4.b.
c. LESS: Allocated transfer risk reserve ........................... RCON 3128 0 ////////////////// 4.c.
------------------------
d. Loans and leases, net of unearned income, //////////////////
allowance, and reserve (item 4.a minus 4.b and 4.c) ........................................ 2125 6,769,859 4.d.
5. Trading assets (from Schedule RC-D) ............................................................ 3545 0 5.
6. Premises and fixed assets (including capitalized leases) ....................................... 2145 156,623 6.
7. Other real estate owned (from Schedule RC-M) ................................................... 2150 8,217 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Shedule RC-M) ........ 2130 50,360 8.
9. Customers' liability to this bank on acceptances outstanding ................................... 2155 869 9.
10. Intangible assets (from Schedule RC-M) ......................................................... 2143 164,760 10.
11. Other assets (from Schedule RC-F) .............................................................. 2160 198,157 11.
12. Total assets (sum of items 1 through 11) ....................................................... 2170 10,571,970 12.
-------------------
</TABLE>
- ----------
1) Includes cash items in process of collection and unposted debits.
2) Includes time certificates of deposit not held for trading.
9
<PAGE>
Schedule RC--Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands RCON Bil Mil Thou
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
LIABILITIES //////////////////
13. Deposits: //////////////////
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E) .................. 2200 7,066,437 13.a.
------------------------
(1) Noninterest-bearing(1) ..................................... RCON 6631 1,586,399 ////////////////// 13.a.(1)
(2) Interest-bearing ........................................... RCON 6636 5,480,038 ////////////////// 13.a.(2)
------------------------
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs .............................. //////////////////
(1) Noninterest-bearing ................................................................... //////////////////
(2) Interest-bearing ...................................................................... //////////////////
14. Federal funds purchased and securities sold under agreements to repurchase ..................... 2800 1,854,412 14.
15. a. Demand notes issued to the U.S. Treasury ................................................... 2840 5,974 15.a.
b. Trading liabilities (from Schedule RC-D) ................................................... 3548 0 15.b.
16. Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases): //////////////////
a. With a remaining maturity of one year or less .............................................. 2332 350,000 16.a.
b. With a remaining maturity of more than one year ............................................ 2333 147,657 16.b.
17. Not applicable //////////////////
18. Bank's liability on acceptances executed and outstanding ....................................... 2920 869 18.
19. Subordinated notes and debentures(2) ........................................................... 3200 160,000 19.
20. Other liabilities (from Schedule RC-G) ......................................................... 2930 135,160 20.
21. Total liabilities (sum of items 13 through 20) ................................................. 2948 9,720,509 21.
22. Not applicable //////////////////
EQUITY CAPITAL //////////////////
23. Perpetual preferred stock and related surplus .................................................. 3838 0 23.
24. Common stock ................................................................................... 3230 65,164 24.
25. Surplus (exclude all surplus related to preferred stock) ....................................... 3839 729,855 25.
26. a. Undivided profits and capital reserves ..................................................... 3632 78,650 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities ..................... 8434 (22,208) 26.b.
27. Cumulative foreign currency translation adjustments ............................................ //////////////////
28. Total equity capital (sum of items 23 through 27) .............................................. 3210 851,461 28.
29. Total liabilities, limited-life preferred stock, and equity capital //////////////////
(sum of items 21 and 28) ....................................................................... 3300 10,571,970 29.
-------------------
</TABLE>
<TABLE>
<CAPTION>
Memorandum
To be reported only with the March Report of Condition.
<S> <C>
1. Indicate in the box at the right the number of the statement below that best describes the
most comprehensive level of auditing work performed for the bank by independent external Number
------------------
auditors as of any date during 1996 ............................................................ RCON 6724 2 M.1.
------------------
</TABLE>
1 - Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 - Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3 - Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 - Directors' examination of the bank performed by other external auditors (may
be required by state chartering authority)
5 - Review of the bank's financial statements by external auditors
6 - Compilation of the bank's financial statements by external auditors
7 - Other audit procedures (excluding tax preparation work)
8 - No external audit work
- ----------
1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
2) Includes limited-life preferred stock and related surplus.
10
