FORM 8-A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
HEILIG-MEYERS COMPANY
(Exact name of registrant as specified in its charter)
Virginia 54-0558861
(State of incorporation or (I.R.S. Employer
organization) Identification No.)
12560 West Creek Parkway, Richmond, Virginia 23238
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Rights to Purchase Preferred New York Stock Exchange
Stock, Series A, par value Pacific Stock Exchange
$10.00 per share
If this Form relates to the registration of a class of securities
pursuant to Section 12(b) of the Exchange Act and is effective pursuant to
General Instruction A.(c), please check the following box. [ X ]
If this Form relates to the registration of a class of securities
pursuant to Section 12(g) of the Exchange Act and is effective pursuant to
General Instruction A.(d), please check the following box. [ ]
Securities Act registration statement file number to which this form relates:
N/A
Securities to be registered pursuant to Section 12(g) of the Act:
(Title of Class)
(Title of Class)
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Item 1. Description of Registrant's Securities to be Registered.
On February 10, 1998, the Board of Directors of Heilig- Meyers Company,
a Virginia corporation (the "Company"), declared a dividend of one preferred
share purchase right (a "Right") for each outstanding share of Common Stock,
$.01 par value ("Common Share"), of the Company. The distribution is payable on
February 20, 1998 to shareholders of record at the close of business on that
date.
Each Right will entitle the holder to purchase from the Company one
one-hundredth of a share of the Company's Cumulative Participating Preferred
Stock, Series A, par value $10 per share ("Preferred Share") at an initial price
of $110 per one one-hundredth of a Preferred Share (the "Purchase Price"). The
description and terms of the Rights are set forth in the Rights Agreement dated
as of February 10, 1998 (the "Rights Agreement"), between the Company and
Wachovia Bank, N.A. as rights agent (the "Rights Agent").
The Rights are not exercisable, and are not transferable apart from the
Common Shares, until the "Distribution Date" which is the earlier of (i) the
tenth day after a public announcement that a Person (which term as used in this
summary means an individual or any business entity, other than the Company and
certain related entities) or group of affiliated or associated Persons has
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the outstanding Common Shares, thereby becoming an "Acquiring Person," or
(ii) the tenth business day after the date of the commencement of, or first
public announcement of the intent of any Person to commence, a tender or
exchange offer the consummation of which would result in such Person becoming an
Acquiring Person.
After the Distribution Date, the Rights are exercisable and separately
transferable.
Before the Distribution Date, a holder of Common Shares will be the
owner of one Right for each Common Share he holds, but the Rights will be
evidenced by one or more certificates ("Rights Certificate") held by the Rights
Agent. After the Distribution Date, separate Rights Certificates will be mailed
to holders of record of the Common Shares at the close of business on the
Distribution Date.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable. The Purchase Price payable, and the
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number of Common Shares or other securities or property issuable upon exercise
of the Rights, as well as the number of Rights outstanding, are subject to
adjustment from time to time upon the occurrence of certain dilutive events.
Any additional Common Shares issued before the Distribution Date will
also have Rights issued in respect thereof and Common Shares issued after the
Distribution Date will be issued with Rights if such shares are issued in
respect of stock options, employee benefit plans or convertible securities which
were granted, established or issued before the Distribution Date.
The Rights will expire at the close of business on February 28, 2008,
unless earlier exercised or redeemed by the Company.
No fractional Preferred Shares will be issued (other than fractions
which are integral multiples of one one-hundredth of a Preferred Share) when a
Right is exercised and, in lieu thereof, an adjustment in cash will be made
based on the market price of the Preferred Shares on the last trading date prior
to the date of exercise.
Each holder of a Right will have the right to receive, upon exercise of
a Right, Common Shares (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to two times the purchase price
for the Rights then in effect, (a) if after the Distribution Date, (i) the
Company is the surviving or continuing corporation in a merger or other
combination with an Acquiring Person and the Common Shares are not changed or
exchanged, (ii) an Acquiring Person consummates, with the Company or any
subsidiary, any one of a number of transactions listed in the Rights Agreement,
examples of which include acquiring stock or convertible securities except on a
pro rata basis with other shareholders, obtaining any assets except on an
arm's-length basis, obtaining or disposing of any assets having a fair market
value of more than $2 million, or receiving certain financial benefits such as
loans, guarantees, tax benefits, except on a pro rata basis with other
shareholders, or compensation, except as a full-time employee at normal rates,
or (iii) while there is an Acquiring Person, an event occurs which results in
such Acquiring Person's ownership interest being increased by more than 1%
(e.g., a reverse stock split), or (b) if an Acquiring Person acquired beneficial
ownership of 20% or more of the outstanding Common Shares except pursuant to a
cash tender offer for all outstanding shares which is determined to be fair by
the Continuing Directors (each of which events is popularly termed a flip-in
event). Notwithstanding any of the foregoing, following the occurrence of any of
the events set forth in this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person will be null and void.
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The Continuing Directors are (i) the directors on the first date of public
announcement that a Person or group has become an Acquiring Person or (ii)
directors elected or nominated by a majority of the Continuing Directors in
office on the date of such election or nomination.
For example, if the Purchase Price is $110 upon exercise of a Right and
the payment of $110 a Right holder would receive $220 worth of Common Shares (or
other consideration, as noted above).
Each holder of a Right will have the right to receive, upon exercise,
common stock (or equivalent securities) of the acquiring entity having a value
equal to two times the Purchase Price then in effect, if after it is announced
that a Person or group has become an Acquiring Person, (i) the Company is
acquired in a merger or other business combination transaction and is not the
surviving or continuing corporation, (ii) the Company is the surviving or
continuing corporation in a merger or other business combination and the Common
Shares are changed or exchanged for securities of another Person, or (iii) 50%
or more of the assets or earning power of the Company is sold or transferred
(each of which events is popularly termed a flip-over event).
If the Company is not able to issue the Preferred Shares or Common
Shares because of the absence of necessary regulatory approval, restrictions
contained in the Company's Articles of Incorporation or for any other reason, a
person exercising Rights will be entitled to receive a combination of cash or
property or other securities having a value equal to the value of the Common
Shares which would otherwise have been issued upon exercise of the Rights.
At any time until ten days after the announcement that a Person or
group has become an Acquiring Person, the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right, payable in cash or Common
Shares. After the redemption period has expired, the Company's ability to redeem
the Rights may be reinstated if each Acquiring Person reduces his beneficial
ownership to 5% or less of the outstanding Common Shares in one or more
transactions not involving the Company and there is at the time no other
Acquiring Person. When the Board of Directors (with, when required, the approval
of a majority of Continuing Directors) orders a redemption of the Rights, the
Rights will terminate and the only right of the holders of Rights will be to
receive the redemption price.
After a Person becomes an Acquiring Person and before the Acquiring
Person acquires 50% or more of the outstanding Common Shares, the Company, with
the approval of a majority of Continuing Directors, may require a holder to
exchange all or any portion of his Rights for one Common Share (or in certain
circumstances, other securities of the Company) per Right.
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Certain provisions relating to the principal economic terms of the
Rights may not be amended at any time; however, before a flip-in event or a
flip-over event, the Rights Agreement may be amended to change the type and
number of securities for which a Right is exercisable, if the new securities
generally have a value and voting rights at least equal to the securities for
which the Rights were exercisable before the amendment. Other provisions of the
Rights Agreement may be amended by the Board of Directors of the Company prior
to the Distribution Date. Thereafter these provisions of the Rights Agreement
may be amended by the Board (under certain circumstances only with the approval
of a majority of the Continuing Directors) in order to cure any ambiguity,
defect or inconsistency, to make changes which do not adversely affect the
interests of holders of Rights (excluding the interests of any Acquiring
Person), or to shorten or lengthen any time period under the Rights Agreement
(including the time period for redeeming the Rights); provided, however, that no
amendment to adjust the time period governing redemption shall be made if the
Rights are not redeemable.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to (i) an aggregate quarterly
dividend equal to the greater of (a) one hundred times the quarterly dividend
declared per Common Share (other than those dividends payable in Common Shares)
or (b) $1.00, (ii) upon liquidation, a minimum preferential liquidation payment
equal to the greater of (a) $11,000 or (b) an aggregate liquidation payment
equal to one hundred times the liquidation payment made per share of Common
Shares, (iii) one hundred votes, voting together with the shares of Common
Shares, on all matters submitted to the Company's shareholders and (iv) in the
event of any merger, consolidation or other transaction in which shares of
Common Shares are exchanged, one hundred times the amount received per Common
Share. These rights are protected by customary anti-dilution provisions. Because
of the nature of the Preferred Shares' dividend, liquidation and voting rights,
the value of each one one-hundredth of a Preferred Share purchasable upon
exercise of each Right should approximate the value of one Common Share.
A copy of the Rights Agreement is filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement of the Company on
Form 8-A. A copy of the Rights Agreement is available free of charge from the
Company upon written request therefor. This summary description of the Rights
does not purport to be complete and is qualified in its entirety by reference to
the Rights Agreement, which is incorporated herein by reference.
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Item 2. Exhibits.
1. Rights Agreement dated as of February 10, 1998 between
Heilig-Meyers Company and Wachovia Bank, N.A., as Rights
Agent.
2. Company's Restated Articles of Incorporation, filed with the
Commission as Exhibit 3(a) to the 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.
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.
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.
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.
6. Articles of Amendment to Company's Restated Articles of
Incorporation, dated February 10, 1998.
7. Form of Rights Certificate (attached as Exhibit B to the
Rights Agreement filed as Exhibit 1 hereto).
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
Date: February 19, 1998
HEILIG-MEYERS COMPANY
By: /s/ William C. DeRusha
------------------------------------
William C. DeRusha,
Chairman and
Chief Executive Officer
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INDEX TO EXHIBITS
1. Rights Agreement dated as of February 10, 1998 between
Heilig-Meyers Company and Wachovia Bank, N.A., as Rights
Agent.
6. Articles of Amendment to Company's Restated Articles of
Incorporation, dated February 10, 1998.
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EXHIBIT 1
RIGHTS AGREEMENT
between
HEILIG-MEYERS COMPANY
and
WACHOVIA BANK, N.A.
Dated as of February 10, 1998
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RIGHTS AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 1. Certain Definitions..................................................................................2
Section 2. Appointment of Rights Agent..........................................................................8
Section 3. Issuance of Rights Certificates......................................................................8
Section 4. Form of Rights Certificates.........................................................................11
Section 5. Countersignature and Registration...................................................................13
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates..........................................................................15
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights...........................................................................................17
Section 8. Cancellation and Destruction of Rights
Certificates........................................................................................22
Section 9. Reservation and Availability of Preferred Shares....................................................22
Section 10. Preferred Shares Record Date........................................................................27
Section 11. Adjustment of Purchase Price, Number and Kind
of Shares or Number of Rights.......................................................................28
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares...........................................................................................49
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.............................................................................49
Section 14. Fractional Rights and Fractional Shares.............................................................54
Section 15. Rights of Action....................................................................................56
Section 16. Agreement of Rights Holders.........................................................................57
Section 17. Rights Certificate Holder Not Deemed a
Shareholder.........................................................................................59
Section 18. Concerning the Rights Agent.........................................................................59
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<S> <C>
Section 19. Merger or Consolidation or Change of Name of
Rights Agent........................................................................................60
Section 20. Duties of Rights Agent..............................................................................62
Section 21. Change of Rights Agent..............................................................................66
Section 22. Issuance of New Rights Certificates.................................................................68
Section 23. Redemption and Termination..........................................................................69
Section 24. Exchange............................................................................................71
Section 25. Notice of Certain Events............................................................................74
Section 26. Notices ............................................................................................76
Section 27. Supplements and Amendments..........................................................................77
Section 28. Successors..........................................................................................79
Section 29. Determinations and Actions by the Board of
Directors, etc......................................................................................79
Section 30. Benefits of this Agreement..........................................................................80
Section 31. Severability........................................................................................80
Section 32. Governing Law.......................................................................................81
Section 33. Counterparts........................................................................................81
Section 34. Descriptive Headings................................................................................82
</TABLE>
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of February 10, 1998 (the "Agreement"),
between Heilig-Meyers Company, a Virginia corporation (the "Company"), and
Wachovia Bank, N.A., a national banking association (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common Share
(as hereinafter defined) of the Company outstanding on February 20, 1998 (the
"Record Date"), each Right representing the right to purchase one one-hundredth
of a share of Cumulative Participating Preferred Stock, Series A, par value
$10.00 per share, of the Company having the rights and preferences set forth in
the Company's Restated Articles of Incorporation as amended by the Articles of
Amendment attached hereto as Exhibit A to this Agreement, upon the terms and
subject to the conditions herein set forth, and, subject to such terms and
conditions, has further authorized the issuance of one Right with respect to
each Common Share that shall become outstanding (i) between the Record Date and
the earliest of the Distribution Date (as hereinafter defined), the Redemption
Date and the Final Expiration Date (as such terms are defined in Sections 3 and
7 hereof), or (ii) after the Distribution Date but before the earlier of the
Redemption Date or the Final Expiration Date, if such Common Share shall become
outstanding (A) upon the exercise of a stock option, (B) pursuant to any
employee plan or arrangement, or (c) upon the conversion or exchange of a
security which option, plan, arrangement or security was granted,
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established or issued, as the case may be, by the Company before
the Distribution Date.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 2. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 15% or more of the Common Shares
then outstanding, but shall not include the Company, any wholly-owned Subsidiary
(as such term is hereinafter defined) of the Company or any employee benefit
plan of the Company or any Subsidiary of the Company, any dividend reinvestment
plan of the Company or any Person or entity holding Common Shares for or
pursuant to the terms of any such plan.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as in effect on the
date of this Agreement.
(c) "Agreement" shall have the meaning set forth in the first
introductory paragraph of this Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
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(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has (A) the right to
acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing), or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially own,
(1) securities tendered pursuant to a tender or exchange offer made by
or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase or
exchange, or (2) securities issuable upon exercise of Rights at any
time prior to the occurrence of a Triggering Event, or (3) securities
issuable upon exercise of Rights from and after the occurrence of a
Triggering Event which Rights were acquired by such Person or any of
such Person's Affiliates or Associates prior to the Distribution Date
or pursuant to Section 3(a) or Section 22 hereof (the "Original
Rights") or pursuant to Section 11(i) hereof in connection with an
adjustment made with respect to any Original Rights; or (B) the right
to vote or dispose of or has "beneficial
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ownership" of (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act, including pursuant to any
agreement, arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, any security if the agreement,
arrangement or understanding to vote such security: (1) arises solely
from a revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations of the Exchange
Act, and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly
or indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person (or any of such Person's Affiliates or
Associates) has any agreement, arrangement or understanding (whether or
not in writing), for the purpose of acquiring, holding, voting (except
to the extent contemplated by the proviso to Section 1(c)(ii)(B)), or
disposing of any securities of the Company; provided, however, that
nothing in this paragraph (iii) shall cause a Person engaged in
business as an underwriter of securities to be the "Beneficial Owner"
of, or to "beneficially own", any securities acquired through such
Person's participation
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in good faith in a firm commitment underwriting until the expiration of
40 days after the date of such acquisition.
(e) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the Commonwealth of Virginia
or the State of New York are authorized or obligated by law or executive order
to close.
(f) "Close of business" on any given date shall mean 5:00
P.M., New York City time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., New York City time, on the next
succeeding Business Day.
(g) "Common Shares" when used with reference to the Company
shall mean shares of Common Stock, par value $2.00 per share, of the Company.
"Common Shares" when used with reference to any Person other than the Company
shall mean the capital stock (or equity interest) with the greatest voting
power, or the equity securities or other equity interest having power, directly
or indirectly (through one or more tiers of Persons), to control or direct the
management of such Person.
(h) "Company" shall have the meaning set forth in the first
introductory paragraph of this Agreement, unless otherwise specified.
(i) "Continuing Director" shall mean a director who was a
member of the Board of Directors of the Company on the Share Acquisition Date or
who subsequently became a director and whose election, or nomination for
election by the Company's shareholders, was approved by a vote of a majority of
Continuing
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Directors on the Board of Directors of the Company on the date of such election
or nomination.
(j) "Current Market Price" per share of the Common Shares
shall have the meaning set forth in Section 11(d)(i) hereof. "Current Market
Price" per share of the Preferred Shares shall have the meaning set forth in
Section 11(d)(ii) hereof.
(k) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(l) "Exchange Act" shall have the meaning set forth in Section
1(b) hereof.
(m) "Final Expiration Date" shall have the meaning set forth
in Section 7(a) hereof.
(n) "NASDAQ" shall have the meaning set forth in Section
11(d)(i) hereof.
(o) "Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor (by merger or
otherwise) of such entity.
(p) "Preferred Shares" shall mean shares of Cumulative
Participating Preferred Stock, Series A, par value $10.00 per share, of the
Company and, to the extent there are not sufficient shares of Preferred Stock,
Series A, authorized to permit full exercise of the Rights, any other series of
Preferred Stock, par value $10.00 per share, of the Company designated for such
purpose containing terms substantially similar to the terms of Preferred Stock,
Series A, par value $10.00 per share.
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(q) "Purchase Price" shall have the meaning set forth in
Section 4(a) hereof, unless otherwise specified and as may be adjusted from time
to time pursuant to the terms of this Agreement.
(r) "Record Date" shall have the meaning set forth in the
second introductory paragraph of this Agreement.
(s) "Redemption Date" shall have the meaning set forth in
Section 7(a) hereof.
(t) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
(u) "Right" shall have the meaning set forth in the second
introductory paragraph of this Agreement.
(v) "Rights Agent" shall have the meaning set forth in the
first introductory paragraph of this Agreement.
(w) "Rights Certificates" shall have the meaning set forth in
Section 3(a) hereof.
(x) "Section 11(a)(ii) Event" shall mean any event described
in Section 11(a)(ii)(A), (B) or (C) hereof.
(y) "Section 13 Event" shall mean any event described in
clauses (i), (ii) or (iii) of Section 13(a) hereof.
(z) "Share Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) under the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person has become
such.
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(aa) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
(bb) "Summary of Rights" shall have the meaning set
forth in Section 3(b) hereof.
(cc) "Triggering Event" shall mean any Section
11(a)(ii) Event or any Section 13 Event.
Section 3. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of the Common Shares) in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents as
it may deem necessary or desirable.
Section 4. Issuance of Rights Certificates. (a) The Rights in
respect of the issued and outstanding Common Shares will be issued and become
effective on the Record Date. A Common Share and the Right or Rights issued or
to be issued hereunder in respect thereof will not be separately transferable
until the earlier of (i) the close of business on the tenth day after the Share
Acquisition Date (or, if the tenth day after the Share Acquisition Date occurs
before the Record Date, the close of business on the Record Date) or (ii) the
close of business on the tenth Business Day after the date of the commencement
of, or
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first public announcement of the intent of any Person (other than the Company,
any wholly-owned Subsidiary of the Company or any employee benefit plan of the
Company or of any Subsidiary of the Company or any entity holding Common Shares
for or pursuant to the terms of any such plan) to commence, a tender or exchange
offer the consummation of which would result in beneficial ownership by a Person
of 15% or more of the outstanding Common Shares (including any such date which
is after the date of this Agreement and prior to the issuance of the Rights; the
earlier of such dates being herein referred to as the "Distribution Date").
Prior to the Distribution Date, each holder of Common Shares will be the holder
of the Rights associated with each such share so held, except as otherwise
provided in Section 7(e). (A Common Share and its associated Right or Rights
before the Distribution Date shall be collectively referred to as the "Unit".)
Until the Distribution Date, the Rights issued from time to time hereunder shall
be evidenced collectively by one or more certificates (the "Rights
Certificates") delivered to and registered in the name of the Rights Agent; but
the issuance of the Rights hereunder shall not be affected by any failure to
deliver a new or replacement Rights Certificate to the Rights Agent in respect
thereof. The initial Rights Certificate and any additional or replacement Rights
Certificates delivered to the Rights Agent shall, prior to the Distribution
Date, have a legend set forth on the face thereof to the effect that the Rights
represented thereby shall not be exercisable until the Distribution Date. As
soon as
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practicable after the Company has notified the Rights Agent of the occurrence of
the Distribution Date, the Rights Agent will send, by first-class, insured,
postage prepaid mail, to each record holder of Common Shares as of the close of
business on the Distribution Date, at the address of such holder shown on the
records of the Company, a Rights Certificate, in substantially the form of
Exhibit B hereto, evidencing one Right for each Common Share so held. As of and
after the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates. The failure to mail any such Rights Certificate shall not affect
the legality or validity of the Rights.
(b) On the Record Date or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase Preferred
Shares, in substantially the form attached hereto as Exhibit C (the "Summary of
Rights"), by first-class, postage prepaid mail, to each record holder of the
Units as of the close of business on the Record Date, at the address of such
holder shown on the records of the Company. The failure to send a copy of a
Summary of Rights shall not affect the legality or validity of the Rights.
(c) Certificates for Common Shares issued after the Record
Date but prior to the earliest of the Distribution Date or the Redemption Date
or the Final Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
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The holder of this certificate is entitled to certain Rights
as set forth in a Rights Agreement between Heilig-Meyers
Company and Wachovia Bank, N.A. (the "Rights Agent"), dated as
of February 10, 1998 (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference and a copy
of which is on file at the principal executive offices of
Heilig- Meyers Company. One or more certificates evidencing
such Rights have been delivered to and registered in the name
of the Rights Agent. Heilig-Meyers Company will mail to the
holder of this certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor. As
described in the Rights Agreement, Rights issued to any Person
who becomes an Acquiring Person (as defined in the Rights
Agreement) shall become null and void.
Section 5. Form of Rights Certificates. (a) The Rights
Certificates (and the forms of assignment and of election to purchase Preferred
Shares to be printed on the reverse thereof) shall each be substantially the
same as Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation of
any stock exchange on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Section 11 and Section 22 hereof,
the Rights Certificates, whenever issued, that are issued in respect of Common
Shares that were issued and outstanding as of the Distribution Date shall be
dated as of the Distribution Date, and all Rights Certificates that are issued
in respect of other Common Shares shall be dated as of the
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respective dates of issuance of such Common Shares, and in each such case on
their face shall entitle the holders thereof to purchase such number of one
one-hundredths of a Preferred Share as shall be set forth therein at the price
per one one-hundredth of a Preferred Share set forth therein (the "Purchase
Price"), but the amount and type of securities purchasable upon the exercise of
each Right and the Purchase Price thereof shall be subject to adjustment as
provided herein.
(b) Any Rights Certificates issued pursuant to Section 3(a) or
Section 22 hereof that represent Rights beneficially owned by: (i) an Acquiring
Person or any Associate or Affiliate of an Acquiring Person, (ii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement, or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of Section 7(e) hereof, and any Rights
Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer,
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exchange, replacement or adjustment of any other Rights Certificate referred to
in this sentence, shall contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may be or become null and void in the
circumstances specified in Section 7(e) of the Rights Agreement.
The provisions of Section 7(e) of this Agreement shall be operative whether or
not the foregoing legend is contained on any such Rights Certificates.
Notwithstanding anything contained herein to the contrary, no Rights Certificate
shall be so issued that would represent Rights (i) which have already become
void under Section 7(e) hereof or (ii) which would become void under Section
7(e) hereof upon the completion of any purported transfer with respect to which
such Rights Certificate would otherwise be issued; and any Rights Certificate
delivered to the Rights Agent for transfer under the circumstances to which
clause (ii) of this sentence shall be applicable shall be canceled by the Rights
Agent.
Section 6. Countersignature and Registration. (a) The Rights
Certificates shall be executed on behalf of the Company by any one of its
Chairman of the Board and Chief Executive Officer,
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its President, any Executive Vice President, any Senior Vice President, or any
Vice President, and by the Secretary, an Assistant Secretary, Treasurer or an
Assistant Treasurer of the Company, either manually or by facsimile signature,
and shall have affixed thereto the Company's seal or a facsimile thereof. The
Rights Certificates shall not be valid for any purpose unless manually
countersigned by the Rights Agent. In case any officer of the Company who shall
have signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent, and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
(b) The Rights Agent will keep or cause to be kept, at its
principal offices, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and addresses of
the respective holders of the Rights Certificates, the Certificate number of
each of the Rights Certificates, the number of Rights evidenced on its face by
each
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of the Rights Certificates and the date of each of the Rights
Certificates.
Section 7. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e) and Section 14
hereof, at or prior to the close of business on the earlier of the Redemption
Date or the Final Expiration Date (as such terms are defined in Section 7
hereof), any Rights Certificate or Rights Certificates (other than Rights
Certificates representing Rights that have become void pursuant to Section 7(e))
may be transferred, split up, combined or exchanged for another Rights
Certificate or Rights Certificates, entitling the registered holder to purchase
a like number of one one-hundredths of a Preferred Share (or, following a
Triggering Event, Common Shares, other securities, cash or other assets, as the
case may be) as the Rights Certificate or Rights Certificates surrendered then
entitled such holder (or former holder in the case of a transfer) to purchase.
Any registered holder desiring to transfer, split up, combine or exchange any
Rights Certificate shall make such request in writing delivered to the Rights
Agent, and shall surrender the Rights Certificate or Rights Certificates to be
transferred, split up, combined or exchanged at the principal office or offices
of the Rights Agent designated for such purpose. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the
transfer of any such
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surrendered Rights Certificate until the registered holder shall have completed
and signed the certificate contained in the form of assignment on the reverse
side of such Rights Certificate and shall have provided such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall request. Thereupon the
Rights Agent shall, subject to Section 4(b), Section 7(e) and Section 14 hereof,
countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates.
(b) Upon (i) receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to them of all reasonable expenses incidental thereto,
and (ii) surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company will execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for counter-signature and delivery
to the registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
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Section 8. Exercise of Rights; Purchase Price; Expiration Date
of Rights. (a) Subject to Section 7(e) hereof, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c) and Section 11(a)(iii) hereof) in whole
or in part at any time after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase on the reverse side thereof
and the certificate contained therein both duly executed, to the Rights Agent at
the principal office or offices of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price with respect to the total
number of one one-hundredths of a Preferred Share (or other securities, cash or
other assets, as the case may be) as to which such surrendered Rights are then
exercisable, at or prior to the earlier of (i) the close of business on February
28, 2008 (the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption Date") or (iii) the
time at which the Board of Directors takes action ordering the exchange of such
Rights as provided in Section 24 hereof.
(b) The Purchase Price for each one one-hundredth of a
Preferred Share pursuant to the exercise of a Right shall initially be $110,
shall be subject to adjustment from time to time as provided in Sections 11 and
13(a) hereof and shall be payable in accordance with paragraph (c) below.
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(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
contained therein duly executed, accompanied by payment, with respect to each
Right so exercised, of the Purchase Price per one one-hundredth of a Preferred
Share (or other shares, securities, cash or other assets, as the case may be) to
be purchased as set forth below and an amount equal to any applicable transfer
tax required to be paid by the holder of such Rights Certificate in accordance
with Section 9(e), the Rights Agent shall, subject to Section 20(k) hereof,
thereupon promptly (i) (A) requisition from any transfer agent of the Preferred
Shares (or make available, if the Rights Agent is the transfer agent for such
shares) certificates for the total number of one one-hundredths of a Preferred
Share to be purchased and the Company hereby irrevocably authorizes its transfer
agent to comply with all such requests, or (B) if the Company shall have elected
to deposit the total number of Preferred Shares issuable upon exercise of the
Rights hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of one one-hundredths of a
Preferred Share as are to be purchased (in which case certificates for the
Preferred Shares represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company hereby directs the depositary
agent to comply with such requests, (ii) when appropriate, requisition from the
Company the amount of cash, if any, to be paid in lieu of issuance of fractional
shares
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<PAGE>
in accordance with Section 14 hereof, (iii) promptly after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Rights Certificate, registered in
such name or names as may be designated by such holder and (iv) when
appropriate, after receipt thereof, promptly deliver such cash, if any, to or
upon the order of the registered holder of such Rights Certificate. The payment
of the Purchase Price (as such amount may be reduced pursuant to Section
11(a)(iii) hereof) shall be made (x) in cash or by certified bank check or bank
draft payable to the order of the Company, or (y) at the election of the Company
with respect to all exercisable Rights by delivery of a certificate or
certificates (with appropriate stock powers executed in blank attached thereto)
evidencing a number of Common Shares equal to the then Purchase Price divided by
the closing price (as determined pursuant to Section 11(d) hereof) per Common
Share on the Trading Day (as hereinafter defined) immediately preceding the date
of such exercise or (z) in the event the Company permits payment with Common
Shares, a combination thereof. In the event that the Company is obligated to
issue other securities (including Common Shares) of the Company, pay cash and/or
distribute other property pursuant to Section 11(a) hereof, the Company will
make all arrangements necessary so that such other securities, cash and/or other
property are available for distribution by the Rights Agent, if and when
appropriate.
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(d) In case the registered holder of any Rights Certificate
shall exercise fewer than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to, or upon the order of, the
registered holder of such Rights Certificate or to his duly authorized assigns,
subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii) Event, any
Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee before or concurrently
with the Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to any Person
with whom the Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer that the Board
of Directors of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall be void without any further action and any holder of such
Rights shall thereafter have no
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<PAGE>
right whatsoever with respect to such Rights (including, without limitation, the
right to exercise such Rights) under any provision of this Agreement or
otherwise. No Rights Certificate shall be issued pursuant to Section 3 that
represents Rights beneficially owned by an Acquiring Person whose Rights would
be void pursuant to the preceding sentence or any Associate or Affiliate
thereof; no Rights Certificate shall be issued at any time upon the transfer of
any Rights to an Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof or to any nominee of
such Acquiring Person, Associate or Affiliate; and any Rights Certificate
delivered to the Rights Agent for transfer to an Acquiring Person whose Rights
would be void pursuant to the preceding sentence shall be canceled. The Company
shall use all reasonable efforts to insure that the provisions of this Section
7(e) and Section 4(b) hereof are complied with, but shall have no liability to
any holder of Rights Certificates or any other Person as a result of its failure
to make any determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the form
of
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election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise, and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Section 9. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Rights Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Rights Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
Section 10. Reservation and Availability of Preferred
Shares. (a) The Company covenants and agrees that it will cause
to be reserved and kept available out of its authorized and
unissued Preferred Shares (and, following the occurrence of a
Triggering Event, out of its authorized and unissued Common
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Shares and/or other securities) the number of Preferred Shares (and, following
the occurrence of a Triggering Event, Common Shares and/or other securities)
that, as provided in this Agreement, will be sufficient to permit the exercise
in full of all outstanding Rights.
(b) So long as the Preferred Shares (and, following the
occurrence of a Triggering Event, Common Shares and/or other securities)
issuable and deliverable upon the exercise of the Rights are qualified to be
listed on any national securities exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights become exercisable (but
only to the extent that it is reasonably likely that the Rights will be
exercised), all shares (or other securities) reserved for such issuance to be
listed on such exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as
soon as practicable following the earliest date after the first occurrence of a
Section 11(a)(ii) Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined pursuant to this
Agreement (including in accordance with Section 11(a)(iii) hereof), a
registration statement under the Securities Act of 1933 (the "Securities Act"),
with respect to the securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become effective as
soon as practicable after such filing, (iii) cause such registration statement
to
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remain effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities, and (B) the Final Expiration Date, and
(iv) obtain such regulatory approvals as may be necessary for it to issue
securities purchasable upon the exercise of the Rights. The Company will also
take such action as may be appropriate under, or to ensure compliance with, the
securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a period
of time not to exceed 90 days after the date set forth in clause (i) of the
first sentence of this Section 9(c), the exercisability of the Rights in order
to prepare and file such registration statement and permit it to become
effective or to obtain any other required regulatory approval in connection with
the exercisability of the Rights. Upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. In addition, if the Company shall determine
that a registration statement is required following the Distribution Date, the
Company may temporarily suspend the exercisability of the Rights until such time
as a registration statement has been declared effective. In the event any Right
is exercised prior to the occurrence of a Section 11(a)(ii) Event or a Section
13 Event, the Company may defer for up to 90 days the
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<PAGE>
issuance of Preferred Shares upon such exercise in order to obtain any necessary
regulatory approval. If, within 90 days after such exercise of any Right, the
Company is unable to obtain any required regulatory approval for the issuance of
the Preferred Shares, or if the Company is otherwise unable to issue the
Preferred Shares under the terms of its Articles of Incorporation or any
amendments thereto or for any other reason, then the Company shall substitute
for the Preferred Shares otherwise issuable upon exercise of the Right (1) cash,
(2) a reduction in the Purchase Price, (3) Common Shares or other equity
securities of the Company, except to the extent that the Company has not
obtained any necessary regulatory approval for such issuance, (4) debt
securities of the Company, except to the extent that the Company has not
obtained any necessary regulatory approval for such issuance, (5) other assets,
or (6) any combination of the foregoing, having an aggregate value equal to the
Current Market Price (as defined in Section 11(d)(ii)) of the Preferred Shares
for which such Right is exercisable, where such aggregate value has been
determined by the Board of Directors of the Company based upon the advice of a
nationally recognized investment banking firm selected by the Board of Directors
of the Company. Notwithstanding any provision of this Agreement to the contrary,
the Rights shall not be exercisable in any jurisdiction if the requisite
qualification in such jurisdiction shall not have been obtained or the exercise
thereof shall not be permitted under applicable law.
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(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all one one-hundredths of a
Preferred Share (and, following the occurrence of a Triggering Event, Common
Shares and/or other securities) delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates for a number of one one-hundredths of a
Preferred Share (or Common Shares and/or other securities, as the case may be)
upon the exercise of Rights. The Company shall not, however, be required to pay
any transfer tax which may be payable in respect of any transfer or delivery of
Rights Certificates to a person other than, or the issuance or delivery of a
number of one one-hundredths of a Preferred Share (or Common Shares and/or other
securities, as the case may be) in respect of a name other than that of, the
registered holder of the Rights Certificate evidencing Rights surrendered for
exercise or to issue or deliver any certificates for a number of one
one-hundredths of a Preferred Share (or Common Shares and/or other securities,
as the case may be) in a name other than that of the registered holder upon the
exercise of any Rights until such tax shall have been
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paid (any such tax being payable by the holder of such Rights Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 11. Preferred Shares Record Date. Each person in whose
name any certificate for a number of one one-hundredths of a Preferred Share (or
Common Shares and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of such fractional shares of Preferred Shares (or Common Shares and/or
other securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Shares (or
Common Shares and/or other securities, as the case may be) transfer books of the
Company are closed, such person shall be deemed to have become the record holder
of such shares (fractional or otherwise) on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Shares (or Common
Shares and/or other securities, as the case may be) transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate shall not be entitled to any rights of a
shareholder of the Company with respect to shares for which the Rights shall
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be exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
Section 12. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights. The Purchase Price, the number and kind of shares
covered by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (c) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a) and in Section 7(e) hereof,
the Purchase Price in effect at the time of the record date for such dividend or
of the effective date of such subdivision, combination or reclassification, and
the number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive, upon
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payment of the Purchase Price then in effect, the aggregate number and kind of
shares of capital stock which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Shares transfer books of the
Company were open, he would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event:
(A) any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, at any time after the date
of this Agreement, directly or indirectly, (1) shall merge
into the Company or otherwise combine with the Company and the
Company shall be the continuing or surviving corporation of
such merger or combination and the Common Shares of the
Company shall remain outstanding and not changed into or
exchanged for stock or other securities of any other Person or
the Company or cash or any other property, (2) shall, in one
or more transactions, transfer any assets to the Company or
any of its Subsidiaries in exchange (in whole or in part) for
shares of any class of capital stock of the Company or any of
its Subsidiaries or for securities
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exercisable for or convertible into shares of any class of
capital stock of the Company or any of its Subsidiaries or
otherwise obtain from the Company or any of its Subsidiaries,
with or without consideration, any additional shares of any
class of capital stock of the Company or any of its
Subsidiaries or securities exercisable for or convertible into
shares of any class of capital stock of the Company or any of
its Subsidiaries (other than as part of a pro rata
distribution to all holders of such shares of any class of
capital stock of the Company or any of its Subsidiaries), (3)
shall sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise acquire or dispose (in one or more
transactions), to, from, with or of, as the case may be, the
Company or any of its Subsidiaries, assets (including
securities) on terms and conditions less favorable to the
Company than the Company would be able to obtain in arm's-
length negotiation with an unaffiliated third party (and other
than pursuant to a transaction set forth in Section 13(a)
hereof), (4) shall sell, purchase, lease, exchange, mortgage,
pledge, transfer or otherwise acquire or dispose (in one or
more transactions), to, from, with or of, as the case may be,
the Company or any of the Company's Subsidiaries (other than
incidental to the lines of business, if any, engaged in
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as of the date hereof between the Company and such Acquiring
Person or Associate or Affiliate) assets having an aggregate
fair market value of more than $2 million (other than pursuant
to a transaction set forth in Section 13(a) hereof), (5) shall
receive any compensation from the Company or any of the
Company's Subsidiaries other than compensation for full-time
employment as a regular employee at rates in accordance with
the Company's (or its Subsidiaries') past practices, or (6)
shall receive the benefit, directly or indirectly (except
proportionately as a shareholder and except if resulting from
a requirement of law or governmental regulation), of any
loans, advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantage provided
by the Company or any of its Subsidiaries,
or (B) during such time as there is an Acquiring
Person, there shall be any reclassification of securities
(including any reverse stock split), or recapitalization of
the Company, or any merger or consolidation of the Company
with any of its Subsidiaries or any other transaction or
series of transactions involving the Company or any of its
Subsidiaries (whether or not with or into or otherwise
involving an Acquiring Person) involving the Company or any of
its Subsidiaries, other than a
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transaction or transactions to which the provisions of Section
13(a) apply, which has the effect, directly or indirectly, of
increasing by more than 1% the proportionate share of the
outstanding shares of any class of equity securities or of
securities exercisable for or convertible into securities of
the Company or any of its Subsidiaries which is directly or
indirectly owned by any Acquiring Person or any Associate or
Affiliate of any Acquiring Person,
or (C) any Acquiring Person shall become the
Beneficial Owner of 20% or more of the Common Shares then
outstanding except pursuant to a tender offer made in the
manner prescribed by Section 14(d) of the Exchange Act and the
rules and regulations promulgated thereunder; provided,
however, that (a) such tender offer shall provide for the
acquisition of all of the outstanding Common Shares held by
any Person other than such Acquiring Person and its Associates
or Affiliates for cash and (b) a majority of the Continuing
Directors shall have determined that such tender offer is fair
to shareholders (taking into account all factors which such
members of the Board deem relevant including, without
limitation, values indicated in the light of long-term
prospects or business plans or aggregate prices or values
which could reasonably be achieved if part or all of the
Company or its assets were sold or
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restructured on an orderly basis designed to realize
maximum long-term value),
then, promptly following the occurrence of any event described in Section
11(a)(ii)(A), (B) or (C) hereof, proper provision shall be made so that each
holder of a Right, except as provided below and in Section 7(e) hereof, shall
thereafter have the right to receive, upon exercise thereof at the then current
Purchase Price, in accordance with the terms of this Agreement, in lieu of a
number of one one-hundredths of a Preferred Share, such number of Common Shares
as shall equal the result obtained by (x) multiplying the then current Purchase
Price by the then number of one one-hundredths of a Preferred Share for which a
Right was exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event, and dividing that product (which product, following such first
occurrence, shall thereafter be referred to as the "Purchase Price" for each
Right and for all purposes of this Agreement) by (y) 50% of the Current Market
Price per share of the Common Shares (determined pursuant to Section 11(d)
hereof) on the date of such first occurrence (such number of shares, the
"Adjustment Shares"); provided, that the Purchase Price and the number of
Adjustment Shares shall be further adjusted as provided in this Agreement to
reflect any events occurring after the date of such first occurrence.
(iii) In the event that the number of Common Shares authorized
by the Company's Articles of Incorporation or any amendments thereto but not
outstanding or reserved for issuance
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for purposes other than upon exercise of the Rights is not sufficient to permit
the exercise in full of the Rights in accordance with the foregoing subparagraph
(ii) of this Section 11(a), or if any necessary regulatory approval for such
issuance has not been obtained by the Company, the Company shall: (A) determine
the excess of (1) the value of the Adjustment Shares issuable upon the exercise
of a Right (the "Current Value") over (2) the Purchase Price (such excess, the
"Spread"), and (B) with respect to each Right, make adequate provision to
substitute for the Adjustment Shares, upon exercise of the Rights, (1) cash, (2)
a reduction in the Purchase Price, (3) Common Shares or other equity securities
of the Company (including, without limitation, shares or units of shares of
preferred stock which the Board of Directors of the Company has deemed to have
the same value as Common Shares (such shares or units of shares of preferred
stock are herein called "common stock equivalents")), except to the extent that
the Company has not obtained any necessary regulatory approval for such
issuance, (4) debt securities of the Company, except to the extent that the
Company has not obtained any necessary regulatory approval for such issuance,
(5) other assets, or (6) any combination of the foregoing, having an aggregate
value equal to the Current Value, where such aggregate value has been determined
by the Board of Directors of the Company based upon the advice of a nationally
recognized investment banking firm selected by the Board of Directors of the
Company; provided, however, if the Company shall not have made
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adequate provision to deliver value pursuant to clause (B) above within 30 days
following the later of (x) the first occurrence of a Section 11(a)(ii) Event and
(y) the date on which the Company's right of redemption pursuant to Section
23(a) expires (the later of (x) and (y) being referred to herein as the "Section
11(a)(ii) Trigger Date"), then the Company shall be obligated, subject to
Section 7(e) hereof, to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, Common Shares (to the extent
available), except to the extent that the Company has not obtained any necessary
regulatory approval for such issuance, and then, if necessary, cash, which
shares and/or cash have a value equal to the Spread. If the Board of Directors
of the Company shall determine in good faith that it is likely that sufficient
additional Common Shares could be authorized for issuance upon exercise in full
of the Rights or that any necessary regulatory approval for such issuance will
be obtained, the 30-day period set forth above may be extended to the extent
necessary, but not more than 90 days after the Section 11(a)(ii) Trigger Date,
in order that the Company may seek shareholder approval for the authorization of
such additional shares or take action to obtain such regulatory approval (such
period, as it may be extended, the "Substitution Period"). To the extent that
the Company determines that some action need be taken pursuant to the first
and/or second sentences of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) hereof, that such action shall apply uniformly
to
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all outstanding Rights, and (y) may suspend the exercisability of the Rights
until the expiration of the Substitution Period in order to seek any
authorization of additional shares, to take any action to obtain any required
regulatory approval and/or to decide the appropriate form of distribution to be
made pursuant to such first sentence and to determine the value thereof. In the
event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of the Common Shares
shall be the Current Market Price (as determined pursuant to Section 11(d)
hereof) per share of the Common Shares on the Section 11(a)(ii) Trigger Date and
the value of any "common stock equivalent" shall be deemed to have the same
value as the Common Shares on such date.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Shares (or shares having the same
rights, privileges and preferences as the Preferred Shares ("equivalent
preferred shares")) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Common Share or equivalent preferred
share (or having a conversion price per share, if a security convertible into
Preferred Shares or
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equivalent preferred shares) less than the Current Market Price per share of the
Preferred Shares (as defined in Section 11(d) hereof) on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of Preferred Shares which the
aggregate offering price of the total number of Preferred Shares or equivalent
preferred shares or both so to be offered (or the aggregate initial conversion
price of the convertible securities so to be offered) would purchase at such
Current Market Price and the denominator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of additional
Preferred Shares or equivalent preferred shares or both to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be paid
in a consideration part or all of which may be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights. Preferred Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever
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such a record date is fixed; and in the event that such rights or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness or assets
(other than a regular quarterly cash dividend or a dividend payable in Preferred
Shares) or subscription rights or warrants (excluding those referred to in
Section 11(b) hereof), the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
Current Market Price per share of the Preferred Shares (as defined in Section
11(d) hereof) on such record date, less the fair market value (as determined in
good faith by the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent) of the portion of the
assets or evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to one Preferred Share and the denominator of
which shall be such Current Market Price per share of the Preferred Shares. Such
adjustments shall be made successively whenever such a record date is fixed; and
in the event that such distribution is not so made, the Purchase
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<PAGE>
Price shall again be adjusted to be the Purchase Price which would have been in
effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other
than computations made pursuant to Section 11(a)(iii) hereof, the "Current
Market Price" per share of the Common Shares on any date shall be deemed to be
the average of the daily closing prices per share of such Common Shares for the
30 consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date, and for purposes of computations made pursuant to Section
11(a)(iii) hereof, the "Current Market Price" per share of the Common Shares on
any date shall be deemed to be the average of the daily closing prices per share
of such Common Shares for the ten consecutive Trading Days immediately following
such date; provided, however, that in the event that the Current Market Price
per share of the Common Shares is determined during a period following the
announcement by the issuer of such Common Shares of (A) a dividend or
distribution on such Common Shares payable in such Common Shares or securities
convertible into such Common Shares (other than the Rights), or (B) any
subdivision, combination or reclassification of such Common Shares, and prior to
the expiration of the requisite 30 Trading Days or ten Trading Days, as set
forth above, after the ex-dividend date for such dividend or distribution or the
record date for such subdivision, combination or reclassification, then, and in
each such case, the Current Market Price shall be appropriately adjusted to
reflect the Current Market Price per
39
<PAGE>
Common Share equivalent. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Common Shares are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Common Shares are listed or admitted to trading or, if the Common
Shares are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use, or, if on any such date the Common
Shares are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Common Shares selected by the Board of Directors of the Company. If on any
such date no market maker is making a market in the Common Shares, the fair
value of such shares on such date as determined in good faith by the Board of
Directors of the Company shall be used. The term "Trading Day" shall mean a day
on which the principal national securities exchange on which the Common
40
<PAGE>
Shares are listed or admitted to trading is open for the transaction of business
or, if the Common Shares are not listed or admitted to trading on any national
securities exchange, a Business Day. If the Common Shares are not publicly held
or not so listed or traded, "Current Market Price" per share shall mean the fair
value per share as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the
"Current Market Price" per share of the Preferred Shares shall be determined in
the same manner as set forth above for the Common Shares in clause (i) of this
Section 11(d) (other than the last sentence thereof). If the Current Market
Price per share of the Preferred Shares cannot be determined in the manner
provided above or if the Preferred Shares are not publicly held or listed or
traded in a manner described in clause (i) of this Section 11(d), the "Current
Market Price" per share of the Preferred Shares shall be conclusively deemed to
be the Current Market Price per share of the Common Shares (appropriately
adjusted to reflect any stock split, stock dividend, or similar transaction
occurring after the date of this Agreement), multiplied by 100. If neither the
Common Shares nor the Preferred Shares are publicly held or so listed or traded,
"Current Market Price" per share shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company, whose
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<PAGE>
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes. For all purposes of this Agreement, the
"Current Market Price" of one one-hundredth of a Preferred Share shall be equal
to the "Current Market Price" of one Preferred Share divided by 100.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least l% in the Purchase Price; provided,
however, that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest one ten-thousandth of a Common Share or other
share or one one-millionth of a Preferred Share, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which requires such adjustment, or (ii)
the date of the expiration of the right to exercise any Rights.
(f) If, as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than Preferred Shares, thereafter the number of such other shares so
receivable upon exercise of any Right and the Purchase Price thereof shall
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<PAGE>
be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Preferred Shares
contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m)
hereof, and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect
to the Preferred Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price per one
one-hundredth of a Preferred Share, that number of one one-hundredths of a
Preferred Share (calculated to the nearest one one-millionth of a Preferred
Share) obtained by (i) multiplying (x) the number of one one-hundredths of a
share covered by a Right immediately prior to this adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price, and
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(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in substitution
for any adjustment in the number of one one-hundredths of a Preferred Share
purchasable upon the exercise of a Right. Each of the Rights outstanding after
such adjustment in the number of Rights shall be exercisable for the number of
one one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the
Rights Certificates have been issued, shall be at least ten days later than the
date of the public announcement. If Rights Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to holders of
record of Rights Certificates on such
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<PAGE>
record date Rights Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredths of a Preferred Share issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per one one-hundredth of a
share and the number of one one-hundredths of a share which were expressed in
the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par value, if
any, of the number of one one-hundredths of a Preferred Share issuable upon
exercise of the Rights, the Company shall take any corporate action which may,
in the opinion
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of its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable Preferred Shares at such adjusted Purchase
Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, the issuance to the holder of any Right exercised after such record date
of the number of one one-hundredths of a Preferred Share and other capital stock
or securities of the Company, if any, issuable upon such exercise over and above
the number of one one-hundredths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith judgment the Board of
Directors of the Company shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Shares, (ii)
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issuance wholly for cash of any of the Preferred Shares at less than the Current
Market Price, (iii) issuance wholly for cash of Preferred Shares or securities
which by their terms are convertible into or exchangeable for Preferred Shares,
(iv) dividends on Preferred Shares payable in Preferred Shares, or (v) issuance
of rights, options or warrants referred to in this Section 11, hereafter made by
the Company to holders of its Preferred Shares shall not be taxable to such
shareholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), (ii) merge with and into any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), or (iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x) at the
time of or immediately after such consolidation, merger or sale there are any
rights, warrants or other instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior
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to, simultaneously with or immediately after such consolidation, merger or sale,
the stockholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
and Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or Section 27
hereof, take (or permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded by the
Rights.
(p) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the outstanding Common Shares payable in Common Shares, or
(ii) effect a subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (i) the
number of one one-hundredths of a Preferred Share purchasable after such event
upon proper exercise of each Right shall be determined by multiplying the number
of one one-hundredths of a Preferred Share so purchasable immediately prior to
such event by a fraction, the numerator of which shall be the number of Common
Shares outstanding
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immediately before such event and the denominator of which shall be the number
of Common Shares outstanding immediately after such event and (ii) each Common
Share outstanding immediately after such event shall have issued with respect to
it that number of Rights which each Common Share outstanding immediately prior
to such event had issued with respect to it. The adjustments provided for in
this Section 11(p) shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation is
effected. If an event occurs which would require an adjustment under Section
11(a)(ii) and this Section 11(p), the adjustments provided for in this Section
11(p) shall be in addition and prior to any adjustment required pursuant to
Section 11(a)(ii).
Section 13. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Section 11 or Section
13 hereof, the Company shall (a) promptly prepare a certificate setting forth
such adjustment, and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent, and with each transfer
agent for the Common Shares and Preferred Shares, a copy of such certificate and
(c) mail a brief summary thereof to each holder of a Rights Certificate in
accordance with Section 26 hereof.
Section 14. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power. (a) In the event that, following the
Share Acquisition Date, directly or indirectly, (i) the Company
shall consolidate with, or merge with and into, any other Person
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(other than a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof or any employee benefit plan of the Company, or any Person
or entity holding Common Shares for or pursuant to the terms of any such plan)
and the Company shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) any Person (other than a Subsidiary of the Company
in a transaction which complies with Section 11(o) hereof or any employee
benefit plan of the Company, or any Person or entity holding Common Shares for
or pursuant to the terms of any such plan) shall consolidate with the Company,
or merge with and into the Company, and the Company shall be the continuing or
surviving corporation of such consolidation or merger and, in connection with
such consolidation or merger, all or part of the outstanding Common Shares shall
be changed into or exchanged for stock or other securities of any other Person
(or the Company) or cash or any other property, or (iii) the Company shall sell
or otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or more transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other than the Company
or any of its Subsidiaries in one or more transactions each of which complies
with Section 11(o) hereof), then, and in each such case proper provision shall
be made so that (A) each holder of a Right, except as otherwise provided in
Section 7(e) hereof, shall thereafter have the right to receive, upon the
exercise thereof
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<PAGE>
at the then current Purchase Price, in accordance with the terms of this
Agreement, such number of validly authorized and issued, fully paid,
nonassessable and freely tradeable shares of Common Shares of the Principal
Party (as such term is hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as shall be equal
to the result obtained by (1) multiplying the then current Purchase Price by the
number of one one-hundredths of a Preferred Share for which a Right is then
exercisable (without taking into account any adjustment previously made pursuant
to Section 11(a)(ii)) and dividing that product (which, following the first
occurrence of a Section 13 Event, shall be referred to as the "Purchase Price"
for each Right and for all purposes of this Agreement) by (2) 50% of the Current
Market Price per share of the Common Shares of such Principal Party on the date
of consummation of such Section 13 Event; (B) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to this Agreement; (C)
the term "Company" shall thereafter be deemed to refer to such Principal Party,
it being specifically intended that the provisions of Section 11 hereof shall
apply only to such Principal Party following the first occurrence of a Section
13 Event; (D) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common
Shares in accordance with Section 9) in connection with the consummation of any
such transaction as may
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be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its Common Shares
thereafter deliverable upon the exercise of the Rights; and (E) the provisions
of Section 11(a)(ii) hereof shall be of no effect following the first occurrence
of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in
clause (i) or (ii) of the first sentence of Section 13(a), the Person
that is the issuer of any securities into which Common Shares of the
Company are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other party to such
merger or consolidation; and
(ii) in the case of any transaction described in
clause (iii) of the first sentence of Section 13(a), the Person that is
the party receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions; provided,
however, that in any such case, (1) if the Common Shares of such Person
are not at such time and have not been continuously over the preceding
twelve month period registered under Section 12 of the Exchange Act,
and such Person is a direct or indirect Subsidiary of another Person
the Common Shares of which is and has been so registered, "Principal
Party" shall refer to such other Person; and (2) in case such Person is
a
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Subsidiary, directly or indirectly, of more than one Person, the Common
Shares of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Shares having the greatest aggregate market value.
(c) The Company shall not consummate any Section 13 Event
unless the Principal Party shall have a sufficient number of authorized shares
of its Common Shares which have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this Section 13 and
unless prior thereto the Company and such Principal Party shall have executed
and delivered to the Rights Agent a supplemental agreement providing for the
terms set forth in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of any Section 13 Event,
the Principal Party will
(i) prepare and file a registration statement under
the Securities Act, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, and
will use its best efforts to cause such registration statement to (A)
become effective as soon as practicable after such filing and (B)
remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Final Expiration Date;
and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its
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Affiliates which comply in all respects with the requirements for
registration on Form 10 under the Exchange Act.
The foregoing provisions set forth in this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights which have not theretofore been exercised
shall thereafter become exercisable in the manner described in Section 13(a).
Section 15. Fractional Rights and Fractional Shares. (a) The
Company shall not be required to issue fractions of Rights or to distribute
Rights Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Rights Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price of the Rights for any day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated
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transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading, or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by NASDAQ or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights the fair value of the
Rights on such date as determined in good faith by the Board of Directors of the
Company shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Shares or Common Shares (other
than fractions which are integral multiples of one one-hundredth of a Preferred
Share). Fractions of Preferred Shares in integral
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multiples of one one-hundredth of a Preferred Share may, at the election of the
Company, be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it, provided that
such agreement shall provide that the holders of such depositary receipts shall
have all the rights, privileges and preferences to which they are entitled as
Beneficial Owners of the Preferred Shares. In lieu of Preferred Shares that are
not integral multiples of one one-hundredth of a Preferred Share, the Company
shall pay to the registered holders of Rights Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one Preferred Share. For purposes of
this Section 14(b), the current market value of a Preferred Share or Common
Share, as the case may be, shall be the closing price of a Preferred Share or
Common Share, as the case may be (as determined pursuant to the second sentence
of Section 11(d), for the Trading Day immediately prior to the date of such
exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right.
Section 16. Rights of Action. All rights of action in respect
to this Agreement, excepting the rights of action given to the Rights Agent
under Section 18 hereof, are vested in the respective registered holders of the
Rights Certificates (and, prior to the Distribution Date, the registered holders
of the
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Common Shares); and any registered holder of any Rights Certificate (or, prior
to the Distribution Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), may, on his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and shall be entitled to specific performance
of the obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
Section 17. Agreement of Rights Holders. Every holder of a
Right, by accepting the same, consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common
Shares;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the
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Rights Agent if surrendered at the principal office or offices of the Rights
Agent designated for such purposes, duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate forms and certificates fully
executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in whose name a
Rights Certificate (or, prior to the Distribution Date, the associated Common
Shares certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing
on the Rights Certificates or the associated Common Shares certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall, subject to the last sentence
of Section 7(e) hereof, be required to be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
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efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 18. Rights Certificate Holder Not Deemed a
Shareholder. No holder, as such, of any Rights Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of Preferred
Shares or any other securities of the Company which may at any time be issuable
upon the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a shareholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in Section 25 hereof), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
Section 19. Concerning the Rights Agent. (a) The Company
agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent,
its reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the acceptance, exercise and
performance of its duties hereunder.
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The Company also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense, incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done, suffered or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim or liability in the premises (including
reasonable counsel fees and expenses).
(b) The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement in reliance upon any
Rights Certificate or certificate for the Preferred Shares or Common Shares or
for other securities of the Company, instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons, or otherwise upon the advice of its counsel as set
forth in Section 20 hereof.
Section 20. Merger or Consolidation or Change of Name of
Rights Agent. (a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation
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succeeding to the corporate trust or stock transfer business of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto; provided, however, that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
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in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
Section 21. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Rights Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company or for the Rights Agent), and the opinion of
such counsel shall be full and complete authorization and protection to the
Rights Agent as to any action taken, suffered or omitted in good faith by it
under the provisions of this Agreement in reliance upon such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking, suffering or
omitting any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of the
Chairman of the Board and Chief Executive Officer, the President, any Executive
Vice President, any Senior Vice President, any Vice President, the Treasurer or
the Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full and complete authorization to the
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Rights Agent for any action taken, suffered or omitted in good faith by it under
the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for its own gross negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement, the
Summary of Rights or in the Rights Certificates (except as to its
countersignature thereof) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by the Company
only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution and delivery hereof by the Rights Agent) or in respect
of the validity or execution of any Rights Certificate (except as to its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any change in the
exercisability of the Rights or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for in Section 3, 11,
13 or 23, or the ascertaining of the existence of facts that would require any
such change or adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after actual
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notice that such change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares or other securities to be
issued pursuant to this Agreement or any Rights Certificate or as to whether any
Preferred Shares or other securities will, when issued, be validly authorized
and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board and Chief Executive Officer, the President,
any Executive Vice President, any Senior Vice President, any Vice President, the
Secretary and the Treasurer of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be liable
for any action taken, suffered or omitted to be taken in good faith by it under
the provisions of this Agreement in reliance upon instructions of any such
officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in
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any of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as fully and freely
as though it were not Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the Company or
for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct; provided, however, that reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or the form of
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election to purchase, as the case may be, has either not been completed or
indicates an affirmative response to clause 1 and/or 2 thereof, the Rights Agent
shall not take any further action with respect to such requested exercise or
transfer without first consulting with the Company.
Section 22. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to the
transfer agent of the Common Shares and Preferred Shares by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
30 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Shares and
Preferred Shares by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by any registered holder of a Rights
Certificate (who shall, with such notice, submit his Rights Certificate for
inspection by the Company), then the registered holder of any Rights Certificate
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may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be (a) a corporation organized and doing business under the
laws of the United States or of the States of New York or Virginia (or of any
other state of the United States so long as such corporation is authorized to do
business as a banking institution in the States of New York or Virginia), in
good standing, having a principal office in the States of New York or Virginia,
which is authorized under such laws to exercise corporate trust or stock
transfer powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares and Preferred Shares, and mail a
notice thereof in writing to the registered holders of the Rights Certificates.
Failure to give any notice provided for in this Section 21,
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however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 23. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of Common Shares following the
Distribution Date and prior to the redemption or expiration of the Rights, the
Company (a) shall, with respect to Common Shares so issued or sold (i) pursuant
to the exercise of stock options or under any employee plan or arrangement (so
long as such options, plan or arrangement were granted or established, as the
case may be, before the Distribution Date), or (ii) upon the exercise,
conversion or exchange of securities issued by the Company after the date hereof
and before the Distribution Date, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights Certificate
shall be issued, if, and to the extent that, the Company shall be
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advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
Section 24. Redemption and Termination. (a) The Board of
Directors of the Company may, at its option, at any time prior to the earlier of
(i) the close of business on the tenth day following the Share Acquisition Date
(or, if the Share Acquisition Date shall have occurred prior to the Record Date,
the close of business on the fifteenth day following the Record Date), or (ii)
the Final Expiration Date, redeem all but not less than all the then outstanding
Rights at a redemption price of $.01 per Right, as such amount may be
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price") and the Company may, at its
option, pay the Redemption Price either in Common Shares (based on the "Current
Market Price" of the Common Shares, as defined in Section 11(d)(i) hereof, at
the time of redemption) or cash; provided, however, if the Board of Directors of
the Company authorizes redemption of the Rights in either of the circumstances
set forth in clauses (i) and (ii) below, then there must be Continuing Directors
then in office and such authorization shall require the concurrence of a
majority of such
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Continuing Directors: (i) such authorization occurs on or after the time a
Person becomes an Acquiring Person, or (ii) such authorization occurs on or
after the date of a change (resulting from a proxy or consent solicitation) in a
majority of the directors in office at the commencement of such solicitation if
any Person who is a participant in such solicitation has stated (or, if upon the
commencement of such solicitation, a majority of the Board of Directors of the
Company has determined in good faith) that such Person (or any of its Affiliates
or Associates) intends to take, or may consider taking, any action which would
result in such Person becoming an Acquiring Person or which would cause the
occurrence of a Triggering Event. If, following the occurrence of a Share
Acquisition Date and following the expiration of the right of redemption
hereunder but prior to any Triggering Event, (i) each Person who is an Acquiring
Person shall have transferred or otherwise disposed of a number of Common Shares
in one transaction, or series of transactions, not directly or indirectly
involving the Company or any of its Subsidiaries, which did not result in the
occurrence of a Triggering Event, such that such Person is thereafter a
Beneficial Owner of 5% or less of the outstanding Common Shares, and (ii) there
are no other Persons, immediately following the occurrence of the event
described in clause (i) of this sentence, who are Acquiring Persons, then the
right of redemption set forth in the preceding sentence shall be reinstated and
thereafter be subject to the provisions of this Section 23.
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(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights pursuant to paragraph (a) of
this Section 23, evidence of which shall have been filed with the Rights Agent
and without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price for each Right so held. Promptly after
the action of the Board of Directors ordering the redemption of the Rights, the
Company shall give notice of such redemption to the Rights Agent and the holders
of the then outstanding Rights by mailing such notice to all such holders at
each holder's last address as it appears upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the transfer
agent for the Common Shares. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the payment of the
Redemption Price will be made.
Section 25. Exchange. (a) With the affirmative vote of a
majority of the Continuing Directors, the Company may at any time after any
Person becomes an Acquiring Person, exchange all or part of the then outstanding
and exercisable Rights for Common Shares at an exchange ratio of one Common
Share per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such
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exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Company shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or such Subsidiary, or any
entity holding Common Shares for or pursuant to the terms of any such plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to subsection (a) of
this Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of Common Shares equal to
the number of such Rights held by such holder multiplied by the Exchange Ratio.
The Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Shares for Rights will
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be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute Preferred Shares (or equivalent preferred shares,
as such term is defined in Section 11(b) hereof) for Common Shares exchangeable
for Rights, at the initial rate of one one-hundredth of a Preferred Share (or
equivalent preferred share) for each Common Share, as appropriately adjusted to
reflect adjustments in the voting rights of the Preferred Shares pursuant to the
terms thereof, so that the fraction of a Preferred Share delivered in lieu of
each Common Share shall have the same voting rights as one Common Share.
(d) In the event that there shall not be sufficient Common
Shares or Preferred Shares authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 24, the Company shall
take all such action as may be necessary to authorize additional Common Shares
or Preferred Shares for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares, the Company shall pay to the
registered holders of the Rights Certificates with regard to which such
fractional
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Common Shares would otherwise be issuable an amount in cash equal to the same
fraction of the current market value of a whole Common Share. For the purposes
of this subsection (e), the current market value of a whole Common Share shall
be the closing price of a Common Share (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately after the
public announcement by the Company that an exchange is to be effected pursuant
to this Section 24.
Section 26. Notice of Certain Events. In case the Company
shall propose (a) to pay any dividend payable in stock of any class to the
holders of its Preferred Shares or to make any other distribution to the holders
of its Preferred Shares (other than a regular quarterly cash dividend), or (b)
to offer to the holders of its Preferred Shares rights or warrants to subscribe
for or to purchase any additional Preferred Shares or shares of stock of any
class or any other securities, rights or options, or (c) to effect any
reclassification of its Preferred Shares (other than a reclassification
involving only the subdivision of outstanding Preferred Shares), or (d) to
effect any consolidation or merger into or with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), or to effect any sale or other transfer (or to permit one or more of
its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person (other than the Company
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and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), or (e) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Rights Certificate, in accordance with Section 26
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, or distribution of rights or warrants,
or the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and the date
of participation therein by the holders of the Common Shares and/or Preferred
Shares, if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (a) or (b) above at least 20 days prior
to the record date for determining holders of the Preferred Shares for purposes
of such action, and in the case of any such other action, at least 20 days prior
to the date of the taking of such proposed action or the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, whichever
shall be the earlier.
In case any Section 11(a)(ii) Event shall occur, then, in any
such case, the Company shall as soon as practicable thereafter give to each
holder of a Rights Certificate, in accordance with Section 26 hereof, a notice
of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii) hereof,
and all references in the preceding paragraph to Preferred Shares
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shall be deemed thereafter references to Common Shares and/or, if appropriate,
other securities.
Section 27. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Heilig-Meyers Company
12560 West Creek Parkway
Richmond, VA 23238
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
Wachovia Bank, N.A.
301 N. Church Street
Winston-Salem, N.C. 27101
Attention: David Sarporito
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
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Section 28. Supplements and Amendments. Prior to the Distribution Date
and subject to the penultimate sentence of this Section 27, the Company may and
the Rights Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement without the approval of any holders of certificates
representing Common Shares. From and after the Distribution Date and subject to
the penultimate sentence of this Section 27, the Company may and the Rights
Agent shall, if the Company so directs, supplement or amend this Agreement
without the approval of any holders of Rights Certificates in order (i) to cure
any ambiguity, (ii) to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein, (iii)
shorten or lengthen any time period hereunder (which lengthening or shortening,
following the first occurrence of an event set forth in clauses (i) and (ii) of
the proviso to Section 23(a) hereof, shall be effective only if there are
Continuing Directors and shall require the concurrence of a majority of such
Continuing Directors), or (iv) to change or supplement the provisions hereunder
in any manner which the Company may deem necessary or desirable and which shall
not adversely affect the interests of the holders of Rights Certificates (other
than an Acquiring Person or an Affiliate or Associate of an Acquiring Person);
provided, that this Agreement may not be supplemented or amended to lengthen,
pursuant to clause (iii) of this sentence, (A) a time period relating to when
the Rights may be redeemed at such time as the Rights are not
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then redeemable, or (B) any other time period unless such lengthening is for the
purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights (other than any Acquiring Person and its
Affiliates and Associates). Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment. Notwithstanding anything contained
in this Agreement to the contrary, no supplement or amendment shall be made
which changes the Redemption Price, the Final Expiration Date, the Purchase
Price, or the number of one one-hundredths of a Preferred Share for which a
Right is exercisable; provided, that this Agreement may be amended to change the
type and number of securities into which a Right is exercisable before the
occurrence of any Triggering Event if, after giving effect to such amendment,
the new securities into which each Right is so exercisable have a value equal to
the value of, and have voting rights at least equal to the voting rights of, the
securities into which such Right was exercisable prior to such amendment
(excluding any value attributable to any minimum dividend payments and excluding
any voting rights operable in the case of non-payment of dividends). Prior to
the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Shares.
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Section 29. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 30. Determinations and Actions by the Board of
Directors, etc. For all purposes of this Agreement, any calculation of the
number of Common Shares outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding Common
Shares of which any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act. The Board of Directors of the Company (with,
where specifically provided for herein, the concurrence of a majority of the
Continuing Directors) shall have the exclusive power and authority to administer
this Agreement and to exercise all rights and powers specifically granted to the
Board (with, where specifically provided for herein, the concurrence of a
majority of the Continuing Directors) or to the Company, or as may be necessary
or advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement, (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem or not to
redeem the Rights or to amend the Agreement) and (iii) make all factual
determinations deemed necessary or advisable for the
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administration of this Agreement. All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
(with, where specifically provided for herein, the concurrence of a majority of
the Continuing Directors) in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights and all
other parties, and (y) not subject the Board (or the Continuing Directors) to
any liability to the holders of the Rights.
Section 31. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, the Common Shares) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the Distribution Date, the
Common Shares).
Section 32. Severability. If any term, provision, covenant or
restriction of this Agreement, or any portion thereof is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement, including any portions of any thereof which are not held to be
invalid, void or unenforceable, shall remain in full force and
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effect and shall in no way be affected, impaired or invalidated; provided,
however, that notwithstanding anything in this Agreement to the contrary, if any
such term, provision, covenant or restriction is held by such court or authority
to be invalid, void or unenforceable and the Board of Directors of the Company,
with the concurrence of a majority of the Continuing Directors after the
Distribution Date, determines in its good faith business judgment that severing
the invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the close of business on the
tenth day following the date of such determination by the Board of Directors.
Section 33. Governing Law. This Agreement, each Right, and
each Rights Certificate issued hereunder shall be deemed to be a contract made
under the laws of the Commonwealth of Virginia and for all purposes shall be
governed by and construed in accordance with the laws of such Commonwealth
applicable to contracts to be made and performed entirely within such
Commonwealth.
Section 34. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
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Section 35. Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning
or construction of any of the provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
HEILIG-MEYERS COMPANY
Attest:
By /s/ Roy B. Goodman By /s/ William C. DeRusha
----------------------- -----------------------
Title Sr. VP and CFO Title Chairman and CEO
-------------------- --------------------
WACHOVIA BANK, N.A.
Attest:
By Laurence Leinbach By Deborah N. Keaton
------------------------ --------------------------
Title Vice President Title Vice President
--------------------- -----------------------
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Exhibit A
HEILIG-MEYERS COMPANY
ARTICLES OF AMENDMENT
1. Name. The name of the corporation is Heilig-Meyers
Company.
2. The Amendment. The Amendment, a copy of which is attached hereto,
deletes Paragraph VI of Article VII of the Restated Articles of Incorporation
and substitutes, in lieu thereof, a new paragraph and alters the liquidation
value per share of Cumulative Participating Preferred Stock, Series A. The
Amendment did not require shareholder approval.
3. Board Action. The Board of Directors adopted the
proposed Amendment at its special meeting held on February 10,
1998.
4. Certificate Required by Law. These Articles of Amendment contain all
of the information required by Section 13.1-710 of the Code of Virginia and this
paragraph constitutes the Certificate required by that Section.
Dated: February __, 1998 HEILIG-MEYERS COMPANY
By:---------------------------
William C. DeRusha
Chairman and Chief
Executive Officer
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Amendment
Paragraph VI of Article VII is deleted and the following inserted in lieu
thereof:
VI. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (1)
to the holders of shares of Common Stock or of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to the Series A
Stock unless, prior thereto, the holders of shares of the Series A Stock shall
have received an amount per share equal to the greater of (a) $11,000 or (b)
subject to the provision for adjustment hereinafter set forth, 100 times the
aggregate amount to be distributed per share to holders of Common Stock, plus in
each such case an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment, or (2) to the
holders of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Stock, except
distributions made ratably on the Series A Stock and all other such parity stock
in proportion to the total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up. In the event the
Corporation shall at any time after the first issuance of any share or fraction
of a share of the Series A Stock declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount per share to which holders of shares of the Series A Stock
shall be entitled under the provision of clause (1) of the preceding sentence
shall be adjusted by multiplying the amount per share to which holders of shares
of the Series A Stock would have been entitled immediately prior to such event
under the provision of clause (1) of the preceding sentence by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
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Exhibit B
[Form of Rights Certificate]
Certificate No. R- __________ Rights
NOT EXERCISABLE [BEFORE THE DISTRIBUTION DATE (AS SUCH TERM IS DEFINED IN THE
RIGHTS AGREEMENT) OR]1 AFTER FEBRUARY 28, 2008 OR EARLIER IF NOTICE OF
REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE
RIGHTS AGREEMENT.]2
Rights Certificate
This certifies that _______________ , or registered assigns,
is the registered holder of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement dated as of February 10, 1998 (as amended from time to time
the "Rights Agreement") between Heilig-Meyers Company, a Virginia
- --------
1This portion of the legend in brackets shall be inserted only upon the
Rights Certificates delivered to the Rights Agent prior to the Distribution
Date.
2This portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
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<PAGE>
corporation (the "Company"), and Wachovia Bank, N.A. (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 P.M. (New York City time)
on February 28, 2008 (the "Final Expiration Date") at the principal office or
offices of the Rights Agent designated for such purpose, or its successors as
Rights Agents, one one-hundredth of a fully paid nonassessable share of
Preferred Stock, Series A, par value $10.00 per share (the "Preferred Shares"),
of the Company, at a purchase price of $110 per one one-hundredth of a Preferred
Share (the "Purchase Price"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase set forth on the reverse
hereof and the Certificate contained therein both duly executed. The Purchase
Price shall be paid in cash or, if the Company so permits, Common Shares of the
Company having an equivalent value or, if the Company has permitted payment with
Common Shares, a combination of cash and Common Shares. The number of Rights
evidenced by this Rights Certificate (and the number of one one-hundredths of a
Preferred Share which may be purchased upon exercise thereof) set forth above,
and the Purchase Price per one one-hundredth of a Preferred Share set forth
above, are the number of Rights, number of one one-hundredths of a Preferred
Share, and Purchase Price as of February 20, 1998, based on the Preferred Shares
as constituted at such date.
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<PAGE>
Upon the occurrence of a Section 11(a)(ii) Event (as such term
is defined in the Rights Agreement), if the Rights evidenced by this Right
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring Person, Associate or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, concurrently with or after such
transfer, became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person, such Rights shall become null and void and no holder hereof
shall have any right with respect to such Rights from and after the occurrence
of such Section 11(a)(ii)Event.
As provided in the Rights Agreement, the Purchase Price, the
number of one one-hundredths of a Preferred Share and the kind of securities
which may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events, including Triggering Events (as such term is defined in the
Rights Agreement).
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities
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<PAGE>
hereunder of the Rights Agent, the Company and the holders of the Rights
Certificates, which limitations of rights include the temporary suspension of
the exercisability of such Rights, under the specific circumstances set forth in
the Rights Agreement. Copies of the Rights Agreement are on file at the
principal offices of the Company and are also available upon written request to
the Company.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office or offices of the Rights Agent
designated for such purpose, may be exchanged for another Rights Certificate or
Rights Certificates of like tenor and date evidencing Rights entitling the
holder to purchase a like aggregate number of one one-hundredths of a Preferred
Share as the Rights evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase. If this Rights
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender hereof another Rights Certificate or Rights Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option with
the approval of a majority of the Continuing Directors (as such term is defined
in the Rights Agreement) at a redemption price of $.01 per Right, payable, at
the option of the Company, in cash or Common Shares, at any time prior to the
earlier of the close of business on (i) the tenth
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<PAGE>
day (as such time period may be extended or shortened pursuant to the Rights
Agreement) following the Share Acquisition Date (as such term is defined in the
Rights Agreement), and (ii) the Final Expiration Date.
No fractional Preferred Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or, to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
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This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
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<PAGE>
WITNESS the facsimile signatures of the proper officers of the
Company and its corporate seal. Dated as of: ____________, [19][20]___.
ATTEST: HEILIG-MEYERS COMPANY
______________________________ By: _________________________
Title: Title:
Countersigned:
WACHOVIA BANK, N.A.
By__________________________________
Authorized Signature
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[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Rights Certificate.)
FOR VALUE RECEIVED _____________________________ hereby
sells, assigns and transfers unto
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ___________________ Attorney,
to transfer the within- named Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated:___________ [19][20]__ ______________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) after due inquiry and to the best knowledge of the
undersigned, this Rights Certificate [ ] is [ ] is not being sold, assigned or
transferred by or on behalf of a Person who is or will become as a result of the
transfer of Common Shares related to the Rights, directly or indirectly, an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as
such terms are defined pursuant to the Rights Agreement);
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<PAGE>
(2) after due inquiry and to the best knowledge of the
undersigned, he [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated:_____________, [19][20]__ _____________________________
Signature
Signature Guaranteed:
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Notices
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
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<PAGE>
[Form of Reverse Side of Rights Certificate -- continued]
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to exercise
Rights represented by the Rights Certificate.)
To: Heilig-Meyers Company
The undersigned hereby irrevocably elects to exercise
__________________________ Rights represented by this Rights Certificate to
purchase the Preferred Shares issuable upon the exercise of the Rights (or such
other securities of the Company or of any other person which may be issuable
upon the exercise of the Rights) and requests that certificates for such shares
be issued in the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated:_____________, [19][20]__ ______________________________
Signature
(Signature must
conform in all
respects to name
of the holder as
specified on the
face of this
Rights Certificate
in every
particular,
without alteration
or enlargement or
any change
whatsoever)
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<PAGE>
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
Dated:____________ , [19][20]__ _____________________________
Signature
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [
] are not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, he [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: _____________, [19][20]__ ____________________________
Signature
Notice
The signatures to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
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Exhibit C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
On February 10, 1998, the Board of Directors of Heilig- Meyers Company,
a Virginia corporation (the "Company"), declared a dividend of one preferred
share purchase right (a "Right") for each outstanding share of Common Stock,
$.01 par value ("Common Share"), of the Company on February 20, 1998. The
distribution is payable on February 20, 1998 to shareholders of record at the
close of business on that date.
Each Right will entitle the holder to purchase from the Company one
one-hundredth of a share of the Company's Cumulative Participating Preferred
Stock, Series A, par value $10 per share ("Preferred Share") at an initial price
of $110 per one one-hundredth of a Preferred Share (the "Purchase Price"). The
description and terms of the Rights are set forth in the Rights Agreement dated
as of February 10, 1998 (the "Rights Agreement"), between the Company and
Wachovia Bank, N.A. as rights agent (the "Rights Agent").
The Rights are not exercisable, and are not transferable apart from the
Common Shares, until the "Distribution Date" which is the earlier of (i) the
tenth day after a public announcement that a Person (which term as used in this
summary means an individual or any business entity, other than the Company and
certain related entities) or group of affiliated or associated Persons has
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the outstanding Common Shares, thereby becoming an "Acquiring Person," or
(ii) the tenth business day after the date of the commencement of, or first
public announcement of the intent of any Person to commence, a tender or
exchange offer the consummation of which would result in such Person becoming an
Acquiring Person.
After the Distribution Date, the Rights are exercisable and separately
transferable.
Before the Distribution Date, a holder of Common Shares will be the
owner of one Right for each Common Share he holds, but the Rights will be
evidenced by one or more certificates ("Rights Certificate") held by the Rights
Agent. After the Distribution Date, separate Rights Certificates will be mailed
to holders of record of the Common Shares at the close of business on the
Distribution Date.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
<PAGE>
While the distribution of the Rights will not be taxable to shareholders or to
the Company, shareholders may, depending upon the circumstances, recognize
taxable income in the event that the Rights become exercisable. The Purchase
Price payable, and the number of Common Shares or other securities or property
issuable upon exercise of the Rights, as well as the number of Rights
outstanding, are subject to adjustment from time to time upon the occurrence of
certain dilutive events.
Any additional Common Shares issued before the Distribution Date will
also have Rights issued in respect thereof and Common Shares issued after the
Distribution Date will be issued with Rights if such shares are issued in
respect of stock options, employee benefit plans or convertible securities which
were granted, established or issued before the Distribution Date.
The Rights will expire at the close of business on February 28, 2008,
unless earlier exercised or redeemed by the Company.
No fractional Preferred Shares will be issued (other than fractions
which are integral multiples of one one-hundredth of a Preferred Share) when a
Right is exercised and, in lieu thereof, an adjustment in cash will be made
based on the market price of the Preferred Shares on the last trading date prior
to the date of exercise.
Each holder of a Right will have the right to receive, upon exercise of
a Right, Common Shares (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to two times the purchase price
for the Rights then in effect, (a) if after the Distribution Date, (i) the
Company is the surviving or continuing corporation in a merger or other
combination with an Acquiring Person and the Common Shares are not changed or
exchanged, (ii) an Acquiring Person consummates, with the Company or any
subsidiary, any one of a number of transactions listed in the Rights Agreement,
examples of which include acquiring stock or convertible securities except on a
pro rata basis with other shareholders, obtaining any assets except on an
arm's-length basis, obtaining or disposing of any assets having a fair market
value of more than $2 million, or receiving certain financial benefits such as
loans, guarantees, tax benefits, except on a pro rata basis with other
shareholders, or compensation, except as a full-time employee at normal rates,
or (iii) while there is an Acquiring Person, an event occurs which results in
such Acquiring Person's ownership interest being increased by more than 1%
(e.g., a reverse stock split), or (b) if an Acquiring Person acquired beneficial
ownership of 20% or more of the outstanding Common Shares except pursuant to a
cash tender offer for all outstanding shares which is determined to be fair by
the Continuing Directors (each of which events is
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<PAGE>
popularly termed a flip-in event). Notwithstanding any of the foregoing,
following the occurrence of any of the events set forth in this paragraph, all
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person will be null and
void. The Continuing Directors are (i) the directors on the first date of public
announcement that a Person or group has become an Acquiring Person or (ii)
directors elected or nominated by a majority of the Continuing Directors in
office on the date of such election or nomination.
For example, if the Purchase Price is $110 upon exercise of a Right and
the payment of $110 a Right holder would receive $220 worth of Common Shares (or
other consideration, as noted above).
Each holder of a Right will have the right to receive, upon exercise,
common stock (or equivalent securities) of the acquiring entity having a value
equal to two times the Purchase Price then in effect, if after it is announced
that a Person or group has become an Acquiring Person, (i) the Company is
acquired in a merger or other business combination transaction and is not the
surviving or continuing corporation, (ii) the Company is the surviving or
continuing corporation in a merger or other business combination and the Common
Shares are changed or exchanged for securities of another Person, or (iii) 50%
or more of the assets or earning power of the Company is sold or transferred
(each of which events is popularly termed a flip-over event).
If the Company is not able to issue the Preferred Shares or Common
Shares because of the absence of necessary regulatory approval, restrictions
contained in the Company's Articles of Incorporation or for any other reason, a
person exercising Rights will be entitled to receive a combination of cash or
property or other securities having a value equal to the value of the Common
Shares which would otherwise have been issued upon exercise of the Rights.
At any time until ten days after the announcement that a Person or
group has become an Acquiring Person, the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right, payable in cash or Common
Shares. After the redemption period has expired, the Company's ability to redeem
the Rights may be reinstated if each Acquiring Person reduces his beneficial
ownership to 5% or less of the outstanding Common Shares in one or more
transactions not involving the Company and there is at the time no other
Acquiring Person. When the Board of Directors (with, when required, the approval
of a majority of Continuing Directors) orders a redemption of the Rights, the
Rights will terminate and the only right of the holders of Rights will be to
receive the redemption price.
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<PAGE>
After a Person becomes an Acquiring Person and before the Acquiring
Person acquires 50% or more of the outstanding Common Shares, the Company, with
the approval of a majority of Continuing Directors, may require a holder to
exchange all or any portion of his Rights for one Common Share (or in certain
circumstances, other securities of the Company) per Right.
Certain provisions relating to the principal economic terms of the
Rights may not be amended at any time; however, before a flip-in event or a
flip-over event, the Rights Agreement may be amended to change the type and
number of securities for which a Right is exercisable, if the new securities
generally have a value and voting rights at least equal to the securities for
which the Rights were exercisable before the amendment. Other provisions of the
Rights Agreement may be amended by the Board of Directors of the Company prior
to the Distribution Date. Thereafter these provisions of the Rights Agreement
may be amended by the Board (under certain circumstances only with the approval
of a majority of the Continuing Directors) in order to cure any ambiguity,
defect or inconsistency, to make changes which do not adversely affect the
interests of holders of Rights (excluding the interests of any Acquiring
Person), or to shorten or lengthen any time period under the Rights Agreement
(including the time period for redeeming the Rights); provided, however, that no
amendment to adjust the time period governing redemption shall be made if the
Rights are not redeemable.
Preferred Shares purchasable upon exercise of the Rights will
not be redeemable. Each Preferred Share will be entitled to (i) an aggregate
quarterly dividend equal to the greater of (a) one hundred times the quarterly
dividend declared per Common Share (other than those dividends payable in Common
Shares) or (b) $1.00, (ii) upon liquidation, a minimum preferential liquidation
payment equal to the greater of (a) $11,000 or (b) an aggregate liquidation
payment equal to one hundred times the liquidation payment made per share of
Common Shares, (iii) one hundred votes, voting together with the shares of
Common Shares, on all matters submitted to the Company's shareholders and (iv)
in the event of any merger, consolidation or other transaction in which shares
of Common Shares are exchanged, one hundred times the amount received per Common
Share. These rights are protected by customary anti-dilution provisions. Because
of the nature of the Preferred Shares' dividend, liquidation and voting rights,
the value of each one one-hundredth of a Preferred Share purchasable upon
exercise of each Right should approximate the value of one Common Share.
A copy of the Rights Agreement is filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement of the Company
on Form 8-A. A copy of the Rights Agreement is available free of charge from the
Company
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<PAGE>
upon written request therefor. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is incorporated herein by reference.
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EXHIBIT 6
HEILIG-MEYERS COMPANY
ARTICLES OF AMENDMENT
1. Name. The name of the corporation is Heilig-Meyers
Company.
2. The Amendment. The Amendment, a copy of which is attached hereto,
deletes Paragraph VI of Article VII of the Restated Articles of Incorporation
and substitutes, in lieu thereof, a new paragraph and alters the liquidation
value per share of Cumulative Participating Preferred Stock, Series A. The
Amendment did not require shareholder approval.
3. Board Action. The Board of Directors adopted the proposed Amendment
at its special meeting held on February 10, 1998.
4. Certificate Required by Law. These Articles of Amendment contain all
of the information required by Section 13.1-710 of the Code of Virginia and this
paragraph constitutes the Certificate required by that Section.
Dated: February 19, 1998 HEILIG-MEYERS COMPANY
By: /s/ William C. DeRusha
William C. DeRusha
Chairman and Chief
Executive Officer
<PAGE>
Amendment
Paragraph VI of Article VII is deleted and the following inserted in lieu
thereof:
VI. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (1)
to the holders of shares of Common Stock or of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to the Series A
Stock unless, prior thereto, the holders of shares of the Series A Stock shall
have received an amount per share equal to the greater of (a) $11,000 or (b)
subject to the provision for adjustment hereinafter set forth, 100 times the
aggregate amount to be distributed per share to holders of Common Stock, plus in
each such case an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment, or (2) to the
holders of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Stock, except
distributions made ratably on the Series A Stock and all other such parity stock
in proportion to the total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up. In the event the
Corporation shall at any time after the first issuance of any share or fraction
of a share of the Series A Stock declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount per share to which holders of shares of the Series A Stock
shall be entitled under the provision of clause (1) of the preceding sentence
shall be adjusted by multiplying the amount per share to which holders of shares
of the Series A Stock would have been entitled immediately prior to such event
under the provision of clause (1) of the preceding sentence by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
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