-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EtCdB2niqmNRGWUoqeOnw63sPKVb+ulNzTgdayx4Jf+xlX//Q/JC+NsP9lp/B8d+ jVvUTxOUWbcqkRvfza4REg== 0000916641-97-000614.txt : 19970625 0000916641-97-000614.hdr.sgml : 19970625 ACCESSION NUMBER: 0000916641-97-000614 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19970624 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEILIG MEYERS CO CENTRAL INDEX KEY: 0000046601 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-FURNITURE STORES [5712] IRS NUMBER: 540558861 STATE OF INCORPORATION: VA FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-29929 FILM NUMBER: 97629082 BUSINESS ADDRESS: STREET 1: 2235 STAPLES MILL RD CITY: RICHMOND STATE: VA ZIP: 23230 BUSINESS PHONE: 8043599171 MAIL ADDRESS: STREET 1: 2235 STAPLES MILL RD CITY: RICHMOND STATE: VA ZIP: 23230 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MACSAVER FINANCIAL SERVICES INC CENTRAL INDEX KEY: 0001017721 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-MISC GENERAL MERCHANDISE STORES [5399] IRS NUMBER: 621419691 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-29929-01 FILM NUMBER: 97629083 BUSINESS ADDRESS: STREET 1: 2 READS WAY STREET 2: SUITE 224 CITY: NEW CASTLE STATE: DE ZIP: 19720 BUSINESS PHONE: 3023253841 MAIL ADDRESS: STREET 1: 2 READS WAY STREET 2: SUITE 224 CITY: NEW CASTLE STATE: DE ZIP: 19720 S-3 1 HEILIG MEYERS & MACSAVER S-3 As filed with the Securities and Exchange Commission on June 24, 1997 Registration No. 333-_______ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- FORM S-3 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 ------------------------------- HEILIG-MEYERS COMPANY MACSAVER FINANCIAL SERVICES, INC. (Exact name of registrant as specified in its charter) (Exact name of registrant as specified in its charter) Virginia Delaware (State or other jurisdiction of incorporation or organization) (State or other jurisdiction of incorporation or organization) 54-0558861 62-1419691 (I.R.S. employer identification number) (I.R.S. employer identification number) 2235 Staples Mill Road 2 Reads Way, Suite 224 Richmond, Virginia 23230 New Castle, Delaware 19720 (804) 359-9171 (302) 325-3841 (Address, including zip code, and telephone number, including (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) area code, of registrant's principal executive offices)
----------------------- David W. Robertson, Esq. McGuire, Woods, Battle & Boothe, L.L.P. One James Center 901 East Cary Street Richmond, Virginia 23219 (804) 775-1000 (Name, address, including zip code, and telephone number, including area code, of agent for service) ----------------------- Copies to: Dennis C. Sullivan Sullivan & Cromwell 1701 Pennsylvania Avenue, N.W. Washington, D.C. 20006 Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement. If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ___ If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. X If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ___ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ___ -1- If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. ___ CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities Proposed Maximum Amount of to be Registered Aggregate Offering Price (1) Registration Fee (8) Common stock of Heilig-Meyers Company (par value $2 per share).................................(2)(3) Warrants of Heilig-Meyers Company........................(2)(4) Debt Securities of MacSaver Financial Services, Inc...(2)(5)(6) Guarantees by Heilig-Meyers Company of Debt Securities of MacSaver Financial Services, Inc.........................(2)(7) Total.......................................................... $400,000,000 $125,393 ================ ========
(1) Estimated solely for the purpose of determining the registration fee in accordance with Rule 457(o) under the Securities Act of 1933. (2) There are being registered hereunder such principal amount or number of Securities as may from time to time be issued, but in no event will the aggregate initial offering price of the Securities exceed $400,000,000. (3) Each share of Common Stock being registered hereunder includes a preferred share purchase right. (4) Warrants may be sold separately or with Debt Securities or Common Stock. (5) Any offering of Debt Securities offered in a currency other than in U.S. dollars will be treated as the equivalent in U.S. dollars based on the official exchange rate applicable to the purchase of Debt Securities from the registrant. (6) If any Debt Securities are issued at a discount or with accrued interest, the amount of such securities registered hereunder is that greater amount that will result in an aggregate offering price of $400,000,000. (7) No separate registration fee is required for the Guarantees in accordance with Rule 457(n) under the Securities Act of 1933. No separate consideration will be given for any Guarantee. (8) As permitted by Rule 429 under the Securities Act of 1933, the Prospectus contained in this registration statement also relates to $100,000,000 of unsold and remaining unissued securities registered on the registration statement on Form S-3 (Registration No. 333-07753) with respect to which the Registrants have previously paid a filing fee of $34,483. -------------------------- The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. As permitted by Rule 429 under the Securities Act of 1933, the Prospectus contained in this registration statement also relates to $100,000,000 of unsold and remaining unissued securities registered on the registration statement on Form S-3 (Registration No. 333-07753). -2- Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. SUBJECT TO COMPLETION, DATED JUNE 24, 1997 [Logo] $400,000,000 HEILIG-MEYERS COMPANY COMMON STOCK AND WARRANTS MACSAVER FINANCIAL SERVICES, INC. (a subsidiary of Heilig-Meyers Company) GUARANTEED DEBT SECURITIES Unconditionally guaranteed as to payment of principal, premium, if any, and interest, if any, by Heilig-Meyers Company. Heilig-Meyers Company (the "Company") may offer and sell from time to time, together or separately, (i) shares of its common stock, $2 par value per share (the "Common Stock") and (ii) warrants to purchase Common Stock (the "Warrants"). MacSaver Financial Services, Inc., a wholly-owned subsidiary of the Company ("MacSaver"), may offer and sell from time to time its debt securities consisting of debentures, notes and/or other unsecured evidences of indebtedness (the "Debt Securities"). The Debt Securities will be unconditionally guaranteed (the "Guarantees") as to payment of principal of, and premium and interest on, if any, the Debt Securities by the Company. The Common Stock, Warrants and Debt Securities (collectively, together with the Guarantees, the "Securities") may be offered, separately or together, at prices and terms to be set forth in one or more supplements to this Prospectus (each a "Prospectus Supplement") up to an aggregate initial offering price of $400,000,000 (or its equivalent, based on the applicable exchange rate at the time of sale, in one or more foreign currencies, currency units or composite currencies as shall be designated by the Company or MacSaver, as the case may be). Specific terms of the Securities for which this Prospectus is being delivered are set forth in the accompanying Prospectus Supplement including, where applicable, (i) in the case of Debt Securities, the specific designation, aggregate principal amount, denominations, currency, maturity, premium, rate of interest (or method of calculation) and time of payment thereof, terms for redemption at the option of MacSaver or the holder, the form of the Debt Securities (which may be in registered or permanent global form), the initial public offering price and certain other terms of the offering and sale of the Debt Securities and the terms of the Guarantees in respect of which this Prospectus is being delivered; (ii) in the case of Common Stock, the number of shares and initial public offering price of the Common Stock, and (iii) in the case of Warrants, the number of shares of Common Stock which are issuable upon exercise, the exercise period, the methods of distribution, the initial public offering or purchase price and the exercise price and detachability if issued with other Securities, of Warrants for which the Prospectus Supplement is being delivered. The Prospectus Supplement will also contain information, as applicable, about any listing on a securities exchange of the Securities for which the Prospectus Supplement is being delivered. The Securities may be sold by the Company and MacSaver directly or indirectly through agents, underwriters or dealers as designated from time to time or through a combination of such methods. See "Plan of Distribution." The accompanying Prospectus Supplement sets forth the names of any underwriters, dealers or agents involved in the sale -1- of the Securities in respect of which this Prospectus is being delivered and any applicable fee, commission or discount arrangements with them. This Prospectus may not be used to consummate sales of Securities unless accompanied or, to the extent permitted by applicable law, preceded by a Prospectus Supplement. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus is June __, 1997. -2- AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549; and at the Commission's regional offices at 500 West Madison Street, Chicago, Illinois 60606; and 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such material can be obtained by mail from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission also maintains a World Wide Web site at http://www.sec.gov containing reports, proxy and information statements and other information regarding registrants, such as the Company, that file electronically with the Commission. The Company's common stock is listed on the New York and Pacific Stock Exchanges, and such material may also be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005 and the Pacific Stock Exchange, Incorporated, 301 Pine Street, San Francisco, California 94104. The Company and MacSaver have filed with the Commission a Registration Statement on Form S-3 (herein, together with all amendments and exhibits, referred to as the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), of which this Prospectus constitutes a part. This Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. For further information, reference is made to the Registration Statement. In accordance with Staff Accounting Bulletin No. 53, relating to financial statement requirements in filings involving the guarantee of securities by a parent corporation, separate financial statements for MacSaver are not included or incorporated in this Prospectus. The Company has received from the staff of the Commission a "no-action" letter that it would not raise any objection if MacSaver does not file periodic reports under Sections 13 and 15(d) of the Exchange Act. Accordingly, MacSaver is not expected to file periodic reports under the Exchange Act. Notes to the consolidated financial statements of the Company included in Company reports incorporated herein contain summarized financial information regarding MacSaver. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Commission by the Company are hereby incorporated by reference into this Prospectus: (a) the annual report on Form 10-K for the fiscal year ended February 28, 1997; (b) the current report on Form 8-K/A dated February 19, 1997; (c) the description of the Common Stock contained in the Registration Statement on Form 8-A filed with the Commission on April 26, 1983 (File No. 1-8484), as amended by amendments on Form 8, filed with the Commission on April 9, 1985, February 23, 1988, September 20, 1989, July 31, 1990, August 6, 1992 and July 28, 1994, respectively (File No. 1-8484); and (d) the description of the Rights to Purchase Preferred Stock, Series A contained in the Registration Statement on Form 8-A filed with the Commission on February 23, 1988 (File No. 1-8484) as amended by an amendment on Form 8 filed with the Commission on September 20, 1989 (File No. 1-8484). All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Securities shall be deemed to be -3- incorporated by reference into this Prospectus and to be a part hereof from the respective dates of filing of such documents. Any statement contained herein or in a document all or any portion of which is incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such earlier statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to any person to whom this Prospectus is delivered, upon the written or oral request of such person, a copy of any or all of the foregoing documents incorporated herein by reference (other than certain exhibits to such documents). Requests for such copies should be directed to Heilig-Meyers Company, 2235 Staples Mill Road, Richmond, Virginia 23230; Attention: Paige H. Wilson, Secretary, telephone (804) 359-9171. -4- HEILIG-MEYERS COMPANY BUSINESS General The Company is the nation's largest publicly held specialty retailer of home furnishings with 989 stores (as of May 31, 1997), in 32 states and Puerto Rico. The Company currently operates stores under four names and formats. The "Heilig-Meyers" name is associated with the Company's historical format with a majority of the stores operating in smaller markets with a broad line of merchandise. The Company's Heilig-Meyers stores are primarily located in small towns and rural markets in the Southeast, Southcentral, Midwest, West, Northwest and Southwest of the continental United States. All of the Company's Puerto Rican stores operate under the "Berrios" name. The Berrios format is similar to the format used by the stores operated under the "Heilig-Meyers" name. The "Rhodes" name is used for the 99 stores operated by Rhodes, Inc., which was acquired by the Company on December 31, 1996. The Rhodes format retailing strategy is selling quality furniture to a broad base of middle income customers. The 99 Rhodes stores are primarily located in the midsized markets and metropolitan areas of 14 southern, midwestern and western states. "The RoomStore" name and format is utilized for 18 stores in Texas, 10 of which were acquired in February 1997 and 8 of which were converted from former Rhodes stores. Stores using The RoomStore format display and sell furniture in complete room packages, which are arranged by professional designers and sell at a value if purchased as a group. As a result of the acquisition of Rhodes and The RoomStore, the Company now has the ability to expand by matching operating formats to markets with appropriate demographic and competitive factors. The Company expects to expand these formats as appropriate markets are identified. The Company's operating strategy includes: (1) offering a broad selection of competitively priced home furnishings including furniture and bedding and in the Heilig-Meyers and Berrios stores, consumer electronics, appliances, and other items such as jewelry, small appliances and seasonal goods; (2) locating Heilig-Meyers stores primarily in small towns and rural markets which are at least 25 miles from a metropolitan area; (3) offering credit programs to provide flexible financing to its customers; (4) utilizing centralized inventory and distribution systems in strategic regional locations to support store inventory and merchandise delivery operations; and (5) emphasizing customer service, including free delivery on most major purchases in the Heilig-Meyers stores and repair service for consumer electronics and other mechanical items. The Company believes this strategy of offering selection, credit, delivery and service generally allows its HeiligMeyers stores to have the largest market share among home furnishings retailers in most of its small-town markets. The Company's executive offices are located at 2235 Staples Mill Road, Richmond, Virginia 23230. The telephone number is (804) 359-9171. MacSaver is a Delaware corporation and a wholly-owned subsidiary of the -5- Company through which financing is obtained for the operations of the Company and its other subsidiaries. The executive offices of MacSaver are located at 2 Reads Way, Suite 224, New Castle, Delaware 19720. The telephone number is (302) 325-3841. Store Operations General The Company believes that locating its Heilig-Meyers stores in small towns and rural markets provides an important competitive advantage. Currently, approximately 80% of all Heilig-Meyers stores are located in towns with populations under 50,000 and more than 25 miles from a metropolitan market. Competition in these small towns largely comes from locally-owned store operations which generally lack the financial strength to compete effectively with the Company. The Company believes that its Heilig-Meyers stores have the largest market share among home furnishings retailers in the majority of their areas. The Company's Heilig-Meyers stores generally range in size from 10,000 to 35,000 square feet, with the average being approximately 20,000 square feet. A store's attached or nearby warehouse usually measures from 3,000 to 5,000 square feet. A typical store is designed to give the customer an urban shopping experience in a rural location. The Company's existing store remodeling program, under which stores are remodeled on a rotational basis, provides the Company's older stores with a fresh look and up-to-date displays on a periodic basis. The existing Rhodes and The RoomStore formats average approximately 34,000 and 25,000 square feet, respectively. Distribution The Company currently operates eight Heilig-Meyers distribution centers in the continental U.S. and one center in Puerto Rico, each of which has cantilever racking and computer-controlled random-access inventory storage. The Company also operates eleven Rhodes distribution centers, which collectively have more than 1.1 million square feet and include home delivery operations in certain markets. The Company also operates The RoomStore's 200,000-square-foot distribution center. Management is in the process of evaluating the distribution function in light of recent acquisitions in order to maximize warehousing and transportation efficiencies. Credit Operations The Company believes that offering flexible credit is an important part of its business strategy which provides a significant competitive advantage. The Company believes its credit program fosters customer loyalty and repeat business. Historically, approximately 80% of the sales in Heilig-Meyers stores have been made through the Company's installment credit program. Because installment credit is administered at the store level, terms can generally be tailored to meet the customer's ability to pay. Approximately 70% of Rhodes sales are made through its revolving credit program. -6- The following table sets forth certain data regarding the Company's installment credit operations:
Fiscal Years Ended Feb. 28 Feb. 29, Feb. 28, Feb. 28, Feb. 28, 1997 1996 1995 1994 1993 Average number of installment accounts receivable (in thousands)(1) 1,280,173 1,220,660 972,418 799,501 652,569 Average initial term of account (in months)(2)....................... 17.4 17.2 16.6 16.7 16.6 Provision for doubtful accounts as % of sales.......................... 6.0% 5.7% 4.8% 4.5% 4.4% Net charge-offs as % of sales........... 5.2 5.0 4.6 4.1 4.1
- ---------------- (1) Includes securitized accounts receivable which are still serviced by the Company. (2) For installment contracts originated during the indicated fiscal year, calculated at the date of origination. Merchandising The Company's Heilig-Meyers merchandising strategy is to offer a broad selection of competitively priced home furnishings, including furniture and accessories, consumer electronics, appliances, bedding, and other items such as jewelry and seasonal goods. The table below sets forth the percentage of sales of these items during the last five years:
Fiscal Years Ended Feb. 28. Feb. 29, Feb. 28, Feb. 28, Feb. 28, 1997 1996 1995 1994 1993 Furniture and accessories... 60% 58% 59% 59% 59% Consumer electronics........ 10 12 11 12 13 Appliances..................... 8 9 8 8 8 Bedding........................ 12 11 10 10 10 Other items.................... 10 10 12 11 10
The Rhodes and The RoomStore stores primarily sell mid-price point furniture and bedding. Historically, 89% of Rhodes' sales consisted of furniture and accessories with bedding comprising the remaining 11%. Advertising and Promotion In fiscal 1997, the Company distributed over 140 million direct mail circulars. This included monthly circulars sent by direct mail to over nine million households on the Company's mailing list and special private sale circulars mailed to approximately two million of these households each month, as well as during special promotional periods. During fiscal 1997, the Company continued to utilize market segmentation techniques (begun in fiscal 1994) to identify prospective customers by matching their demographics to those of existing customers. Management believes ongoing market research and improved mailing techniques enhance the Company's ability to place circulars in the hands of those potential customers most likely to make a purchase. The Company believes that availability, as well as the terms of credit, are key determinants in the purchase decision, and therefore, promotes credit availability by disclosing monthly payment terms in its circulars. -7- Corporate Expansion The Company has grown from 374 stores at February 28, 1992, to 989 stores at May 31, 1997. Over this time period, the Company has expanded from its traditional Southeast operating region into the Midwest, West, Southwest, Northwest and Southcentral continental United States as well as Puerto Rico. In addition, the Company has acquired new operating formats as a result of the Rhodes and The RoomStore acquisitions. The Company currently operates stores in Alabama, Arizona, Arkansas, California, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Mississippi, Missouri, Montana, Nevada, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington, West Virginia, Wisconsin and Puerto Rico. Management believes that the Company's size and geographically diverse store locations, as well as the diversity in store format created by the Rhodes and The RoomStore acquisitions, are competitive advantages and allow for greater stability in its operations. USE OF PROCEEDS Except as otherwise provided in the applicable Prospectus Supplement, the net proceeds from the sale of the Securities will be used for general corporate purposes, which may include repayment of outstanding indebtedness, capital expenditures, working capital requirements and possible future acquisitions. The precise amount and timing of the application of such proceeds will depend upon the funding requirements of the Company or MacSaver, as the case may be, and the availability and cost of other funds. Allocation of the proceeds of particular Securities, or the principal reasons for the offering if no such allocation has been made, will be described in the applicable Prospectus Supplement. RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the ratios of earnings to fixed charges for the years indicated:
Year Ended February (28)29 ----------------------------------------- 1997 1996 1995 1994 1993 ---- ---- ---- ---- ---- Ratio of Earnings to 1.51x 1.62x 2.28x 2.50x 2.26x Fixed Charges
For purposes of this ratio, earnings are calculated by adding fixed charges (excluding capitalized leases) to income before income taxes and extraordinary items. Fixed charges consist of interest on indebtedness (including amortization of debt discount and premium) and the portion of rental expense representative of an interest factor. DESCRIPTION OF DEBT SECURITIES The following description sets forth certain general terms and provisions of the Debt Securities to which any Prospectus Supplement may relate. The particular terms of the Debt Securities offered by any Prospectus Supplement and the extent, if any, to which such general provisions may not apply to the Debt Securities so offered will be described in the Prospectus Supplement relating to such Debt Securities. The Debt Securities and related Guarantees are to be issued under an Indenture (the "Indenture"), among MacSaver, the Company and First Union National Bank of Virginia, as trustee (the "Trustee"). The Indenture is filed as an exhibit to the Registration Statement of which this Prospectus is a part. The following summaries of -8- certain provisions of the Debt Securities and the Indenture do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all the provisions of the Indenture, including the definitions therein of certain terms. Wherever particular Sections, Articles or defined terms of the Indenture are referred to, such Sections, Articles or defined terms are incorporated herein by reference. Article and Section references used herein are references to Articles and Sections of the Indenture. Capitalized terms not otherwise defined herein shall have the meanings given in the Indenture. Unless otherwise indicated, currency amounts in this Prospectus and any Prospectus Supplement are stated in United States dollars ("$", "U.S. Dollars" or "dollars"). General The Indenture does not limit the aggregate principal amount of Debt Securities which may be issued thereunder and provides that Debt Securities may be issued thereunder up to an aggregate principal amount which may be authorized from time to time by MacSaver. The Debt Securities will be unsecured unsubordinated obligations of MacSaver and will rank on a parity in right of payment with all other unsecured and unsubordinated indebtedness of MacSaver. The Debt Securities will be unconditionally guaranteed by the Company as to payment of principal, premium, if any, and interest, if any. See "Guarantees." Reference is made to the applicable Prospectus Supplement relating to the series of Debt Securities offered thereby for specific terms, including (where applicable): (1) the title or designation of such Debt Securities; (2) any limit on the aggregate principal amount of such Debt Securities; (3) the price or prices (expressed as a percentage of the principal amount thereof) at which such Debt Securities will be issued; (4) the date or dates on which the principal of and premium, if any, on such Debt Securities will be payable, or the method or methods, if any, by which such date or dates will be determined; (5) the rate or rates (which may be fixed or variable) at which such Debt Securities will bear interest, if any, or the method or methods, if any, by which such rate or rates are to be determined, the date or dates, if any, from which such interest will accrue, or the method or methods, if any, by which such date or dates are to be determined, and whether and under what circumstances Additional Amounts on such Debt Securities will be payable, and the basis upon which interest will be calculated if other than that of a 360- day year of twelve 30-day months; (6) the dates on which such interest, if any, will be payable and the record dates therefor; (7) the place or places where the principal of, premium, if any, and interest, if any, on such Debt Securities will be payable and the place or places where such Debt Securities may be surrendered for registration of transfer and exchange, if other than The City of New York; (8) the date or dates on which, the period or periods within which, the price or prices at which and the other terms and conditions upon which such Debt Securities may be redeemed at the option of MacSaver or are subject to repurchase at the option of the holders; (9) the terms of any sinking fund or analogous provision; (10) if other than U.S. dollars, the Currency for which the Debt Securities may be purchased and the Currency in which the payment of principal thereof and premium, if any, and interest, if any, thereon may be made, and the ability, if any, of MacSaver, or the holders of Debt Securities to have payments made in any Currency other than those in which the Debt Securities are stated to be payable; (11) any addition to, or modification or deletion of, any covenant or Event of Default with respect to such Debt Securities; (12) whether any such Debt Securities are to be issuable in registered or bearer form or both and, if in bearer form, the terms and conditions relating thereto and any limitations on issuance of such Bearer Securities (including in exchange for Registered Securities of the same series); (13) whether any such Debt Securities will be issued in temporary or permanent global form and, if so, the identity of the depositary for such global Debt Security; (14) the applicability, if any, of the defeasance or covenant defeasance provisions of the Indenture applicable to such Debt Securities; (15) the person to whom any interest on any Registered Securities of the series shall be payable, if other than the person in whose name the Registered Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, the manner in which, or the person to whom, any interest on any -9- Bearer Security of the series shall be payable, if other than upon presentation and surrender of the coupons appertaining thereto as they severally mature, and the extent to which, or the manner in which, any interest payable on a temporary global Debt Security will be paid if other than in the manner provided in the Indenture; (16) the portion of the principal amount of Debt Securities which shall be payable upon acceleration thereof if other than the full principal amount thereof; (17) the authorized denominations in which Debt Securities will be issuable, if other than denominations of $1,000 and any integral multiple thereof (in the case of Registered Securities) or $5,000 (in the case of Bearer Securities); (18) the terms, if any, upon which Debt Securities may be exchangeable for other Securities; (19) whether the amount of payments of principal of, premium, if any, and interest, if any, on Debt Securities may be determined with reference to an index, formula or other method or methods (any Debt Securities being hereinafter called "Indexed Securities") and the manner in which such amounts will be determined; (20) the terms of the Guarantees in respect of which this Prospectus is being delivered; and (21) any other terms of such Debt Securities. As used in this Prospectus and any Prospectus Supplement relating to the offering of any Debt Securities, references to the principal of and premium, if any, and interest, if any, on Debt Securities will be deemed to include mention of the payment of Additional Amounts, if any, required by the terms of Debt Securities in such context. Debt Securities may be issued as Original Issue Discount Securities (as defined in the Indenture) to be sold at a substantial discount below their principal amount. In the event of an acceleration of the maturity of any Original Issue Discount Security, the amount payable to the holder thereof upon such acceleration will be determined in the manner described in the applicable Prospectus Supplement. Special United States federal income tax considerations applicable to Debt Securities issued at an original issue discount, including Original Issue Discount Securities, and special United States tax considerations applicable to any Debt Securities which are denominated in a currency or currency unit other than United States dollars, are described below under "United States Taxation." If the purchase price of any Debt Securities is payable in a Currency other than U.S. dollars or if principal of, or premium, if any, or interest, if any, on any of the Debt Securities is payable in any Currency other than U.S. dollars, the specific terms and other information with respect to such Debt Securities and such Foreign Currency will be specified in the Prospectus Supplement relating thereto. Under the Indenture, the terms of the Debt Securities of any series may differ and MacSaver, without the consent of the holders of the Debt Securities of any series, may reopen a previous series of Debt Securities and issue additional Debt Securities of such series. The Indenture does not contain any provisions which may afford the holders of any of the Debt Securities protection in the event of a highly leveraged transaction or similar transaction involving the Company or MacSaver. Any such provisions, if applicable to any Debt Securities, will be described in the Prospectus Supplement or Prospectus Supplements relating thereto. Guarantees; Holding Company Structure The Company will unconditionally guarantee the due and punctual payment of principal of, premium, if any, and interest on the Debt Securities, when and as the same shall become due and payable, whether at the maturity date, by declaration of acceleration, call for redemption or otherwise. The Guarantees will remain in effect until the entire principal of, premium, if any, and interest on the Debt Securities shall have been paid in full or otherwise discharged in accordance with the provisions of the Indenture. The Company conducts its operations primarily through its wholly-owned subsidiaries, including MacSaver, and substantially all of the Company's consolidated assets are held by its subsidiaries. Accordingly, the cash flow of the -10- Company and the consequent ability to service its debt, including its obligations under the Guarantees, are largely dependent upon the earnings of such subsidiaries. Because the Company is a holding company, the Company's obligations under the Guarantees will be effectively subordinated to all existing and future indebtedness, trade payables, guarantees, lease obligations and letter of credit obligations of the Company's subsidiaries. Therefore, the Company's rights and the rights of its creditors, including the holders of the Debt Securities under the Guarantees, to participate in the assets of any subsidiary (other than MacSaver) upon the latter's liquidation or reorganization will be subject to the prior claims of such subsidiary's creditors, except to the extent that the Company may itself be a creditor with recognized claims against the subsidiary, in which case the claims of the Company would still be effectively subordinate to any security interest in, or mortgages or other liens on, the assets of such subsidiary and would be subordinate to any indebtedness of such subsidiary senior to that held by the Company. Although certain debt instruments to which the Company and its subsidiaries are parties impose limitations on the incurrence of additional indebtedness, both the Company and its subsidiaries retain the ability to incur substantial additional indebtedness and lease and letter of credit obligations. Registration, Transfer, Payment and Paying Agent Unless otherwise indicated in the applicable Prospectus Supplement, each series of Debt Securities will be issued in registered form only, without coupons. The Indenture, however, provides that MacSaver may also issue Debt Securities in bearer form only, or in both registered and bearer form. Bearer Securities may not be offered, sold, resold or delivered in connection with their original issuance in the United States or to any United States person (as defined below) other than offices located outside the United States of certain United States financial institutions. As used herein, "United States person" means any citizen or resident of the United States, any corporation, partnership or other entity created or organized in or under the laws of the United States, or any estate or trust, the income of which is subject to United States federal income taxation regardless of its source, and "United States" means the United States of America (including the states thereof and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction. Purchasers of Bearer Securities will be subject to certification procedures and may be affected by certain limitations under United States tax laws. Such procedures and limitations will be described in the Prospectus Supplement relating to the offering of the Bearer Securities. Unless otherwise indicated in the applicable Prospectus Supplement, Registered Securities will be issued in denominations of $1,000 or any integral multiple thereof, and Bearer Securities will be issued in denominations of $5,000. Unless otherwise indicated in the applicable Prospectus Supplement, the principal, premium, if any, and interest, if any, of or on the Debt Securities will be payable, and Debt Securities may be surrendered for registration of transfer or exchange, at an office or agency to be maintained by MacSaver in the Borough of Manhattan, The City of New York, provided that payments of interest with respect to any Registered Security may be made at the option of MacSaver by check mailed to the address of the person entitled thereto or by transfer to an account maintained by the payee with a bank located in the United States. No service charge shall be made for any registration of transfer or exchange of Debt Securities, but MacSaver may require payment of a sum sufficient to cover any tax or other governmental charge and any other expenses that may be imposed in connection therewith. Unless otherwise indicated in the applicable Prospectus Supplement, payment of principal of, premium, if any, and interest, if any, on Bearer Securities will be made, subject to any applicable laws and regulations, at such office or agency outside the United States as specified in the Prospectus Supplement and as MacSaver may designate from time to time. Unless otherwise indicated in the applicable Prospectus Supplement, payment of interest due on Bearer Securities on any Interest Payment Date will be made only against surrender of the coupon relating to such Interest Payment Date. Unless otherwise indicated in the applicable Prospectus Supplement, no payment of principal, premium or interest with respect to any Bearer Security will be made at any office or agency in the United States or -11- by check mailed to any address in the United States or by transfer to an account maintained with a bank located in the United States; provided, however, that if amounts owing with respect to any Bearer Securities shall be payable in U.S. dollars, payment with respect to any such Bearer Securities may be made at the Corporate Trust Office of the applicable Trustee or at any office or agency designated by MacSaver in the Borough of Manhattan, The City of New York, if (but only if) payment of the full amount of such principal, premium or interest at all offices outside of the United States maintained for such purpose by MacSaver is illegal or effectively precluded by exchange controls or similar restrictions. Unless otherwise indicated in the applicable Prospectus Supplement, MacSaver will not be required to (i) issue, register the transfer of or exchange Debt Securities of any series during a period beginning at the opening of business 15 days before any selection of Debt Securities of that series of like tenor to be redeemed and ending at the close of business on the day of that selection; (ii) register the transfer of or exchange any Registered Security, or portion thereof, called for redemption, except the unredeemed portion of any Registered Security being redeemed in part; (iii) exchange any Bearer Security called for redemption, except to exchange such Bearer Security for a Registered Security of that series and like tenor that is simultaneously surrendered for redemption; or (iv) issue, register the transfer of or exchange any Debt Security which has been surrendered for repayment at the option of the holder, except the portion, if any, of such Debt Security not to be so repaid. Global Securities The Debt Securities may be issued in whole or in part in the form of one or more global securities that will be deposited with, or on behalf of, a depositary (the "Depositary") identified in the Prospectus Supplement relating to such series. Global Debt Securities may be issued in either registered or bearer form and in either temporary or permanent form. Unless and until it is exchanged in whole or in part for individual certificates evidencing Debt Securities in definitive form represented thereby, a global Debt Security may not be transferred except as a whole by the Depositary for such global Debt Security to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor of such Depositary or a nominee of such successor. The specific terms of the depositary arrangement with respect to a series of global Debt Securities and certain limitations and restrictions relating to a series of global Bearer Securities will be described in the Prospectus Supplement relating to such series. Outstanding Debt Securities In determining whether the holders of the requisite principal amount of outstanding Debt Securities have given any request, demand, authorization, direction, notice, consent or waiver under the Indenture, or whether a quorum is present at a meeting of the holders thereunder, (i) the portion of the principal amount of an Original Issue Discount Security that shall be deemed to be outstanding for such purposes shall be that portion of the principal amount thereof that could be declared to be due and payable upon a declaration of acceleration thereof pursuant to the terms of such Original Issue Discount Security as of the date of such determination, (ii) the principal amount of any Indexed Security that shall be deemed to be outstanding for such purpose shall be the principal face amount of such Indexed Security determined on the date of its original issuance, (iii) the principal amount of a Debt Security denominated in a Currency other than U.S. dollars shall be the U.S. dollar equivalent, determined on the date of original issue of such Debt Security, of the principal amount of such Debt Security and (iv) any Debt Security beneficially owned by the Company or MacSaver or by any obligor on such Debt Security or any Affiliate of the Company or MacSaver or such other obligor shall be deemed not to be outstanding. -12- Redemption and Repurchase The Debt Securities of any series may be redeemable at the option of MacSaver, may be subject to mandatory redemption pursuant to a sinking fund or otherwise, or may be subject to repurchase by MacSaver at the option of the holders, in each case upon the terms, at the times and at the prices set forth in the applicable Prospectus Supplement. Certain Covenants of the Company Restricted and Unrestricted Subsidiaries. The various restrictive provisions of the Indenture applicable to the Company and the Restricted Subsidiaries do not apply to Unrestricted Subsidiaries. The assets of Unrestricted Subsidiaries are not consolidated with those of the Company and the Restricted Subsidiaries in calculating Consolidated Net Tangible Assets, and investments by the Company or by the Restricted Subsidiaries in Unrestricted Subsidiaries are excluded in calculating Consolidated Net Tangible Assets. A "Restricted Subsidiary" is MacSaver or any other subsidiary of the Company or MacSaver which is organized under the laws of the United States or any state thereof or Canada or Puerto Rico, which conducts substantially all of its business and has substantially all of its assets within the United States or Canada or Puerto Rico, of which more than 80% (by number of votes) of the voting securities or other similar ownership interests is owned by the Company and/or one or more Restricted Subsidiaries and which is not designated by the Company as an Unrestricted Subsidiary in accordance with the Indenture. An "Unrestricted Subsidiary" is a subsidiary of the Company or MacSaver which is designated by the Company as an Unrestricted Subsidiary in accordance with the Indenture or which does not come within the definition of a Restricted Subsidiary. As of the date of this Prospectus, there were no Unrestricted Subsidiaries. (Section 101) The Company may designate any Restricted Subsidiary, other than MacSaver, as an Unrestricted Subsidiary if, immediately after such designation, (i) such subsidiary does not hold or own, directly or indirectly, any Funded Debt or capital stock of any Restricted Subsidiary, (ii) the Company could incur additional Secured Funded Debt in compliance with the Indenture, (iii) neither the Company nor any Restricted Subsidiary guarantees any obligations of such subsidiary and (iv) no Default or Event of Default would exist. The Company may not designate any Unrestricted Subsidiary as a Restricted Subsidiary unless, immediately after giving effect to such designation, such subsidiary is in compliance with all of the covenants of the Indenture applicable to Restricted Subsidiaries, the Company could incur additional Secured Funded Debt (without securing the Debt Securities equally and ratably) in compliance with the Indenture and no Default or Event of Default would exist. The Company must at all times ensure that MacSaver is a wholly-owned Restricted Subsidiary. (Section 1010) Restrictions on Secured Funded Debt. The Company may not, and may not permit any Restricted Subsidiary to, issue, assume, guarantee, incur, create or otherwise become liable in respect of any Secured Funded Debt, unless the Debt Securities are secured equally and ratably with (or prior to) such Secured Funded Debt, except (i) Secured Funded Debt of a Restricted Subsidiary outstanding at the date of the Indenture (there was no such Secured Funded Debt outstanding on such date), (ii) Secured Funded Debt of a Restricted Subsidiary payable to the Company or to a Restricted Subsidiary, (iii) Secured Funded Debt of any corporation or other entity outstanding at the time such corporation or other entity became a Restricted Subsidiary (and not incurred in contemplation thereof), (iv) Secured Funded Debt otherwise permitted under the Indenture (see "Restrictions on Liens"), (v) Attributable Debt otherwise permitted under the Indenture (see "Restrictions on Sale and Leaseback Transactions"), (vi) Secured Funded Debt not otherwise permitted by clauses (i) through (v) above, provided that, (1) at the time of the issuance, assumption, guarantee, incurrence or creation thereof no Default or Event of Default is continuing or would be created thereby and (2) after giving effect thereto and to the application of the proceeds thereof, no Default or Event of Default shall have occurred and be continuing and the aggregate amount of all Secured Funded Debt does not exceed 5% of Consolidated Net Tangible Assets as of the end of the immediately preceding fiscal quarter and (vii) renewals, -13- extensions and refundings of Secured Funded Debt permitted by clauses (i) through (vi) above, provided that the amount of such Secured Funded Debt is not increased unless otherwise permitted by such clauses. (Section 1007) "Secured Funded Debt" means Funded Debt of any Restricted Subsidiary (other than MacSaver) or which is secured by a mortgage, security interest, pledge, conditional sale or other title retention agreement or other lien upon any assets of the Company, MacSaver or any other Restricted Subsidiary (other than liabilities in connection with capital lease obligations or industrial development bonds). (Section 101) "Funded Debt" means Indebtedness having a final maturity of more than one year from the date of determination thereof or which is renewable or extendible at the option of the obligor for a period or periods more than one year from such date of determination. (Section 101) "Indebtedness" means all obligations of the Company, MacSaver or any other Restricted Subsidiary which, in accordance with generally accepted accounting principles consistently applied, are classified as liabilities on the most recently available consolidated balance sheet of the Company and the Restricted Subsidiaries (other than liabilities for minority interests or deferred taxes), together with the following obligations of the Company, MacSaver or any other Restricted Subsidiary, determined in accordance with generally accepted accounting principles consistently applied, whether or not classified as liabilities (other than obligations with respect to leases of real property or interests therein that are classified as operating leases in accordance with generally accepted accounting principles consistently applied): (i) indebtedness for borrowed money and deferred payment obligations representing the unpaid purchase price of property, assets or services; (ii) capitalized lease obligations; (iii) guarantees and endorsements of obligations of others, directly or indirectly, and all other repurchase agreements and indebtedness in effect guaranteed through an agreement, contingent or otherwise, to purchase such indebtedness, or to purchase or sell property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of the indebtedness or to assure the owner of the indebtedness against loss, or to supply funds to or in any manner invest in the debtor, or otherwise to assure a creditor against loss (but excluding guarantees and endorsements of notes, bills and checks made in the ordinary course of business and of obligations of Restricted Subsidiaries); and (iv) indebtedness secured by any mortgage, lien, pledge, conditional sale agreement, title retention agreement, or other security interest or encumbrance upon property owned by the Company, MacSaver or any other Restricted Subsidiary, even though such indebtedness has not been assumed and notwithstanding that the rights and remedies of the seller, lender or lessor under such agreement in the event of default may be limited to repossession or sale of such property. (Section 101) "Attributable Debt" means the obligations incurred by MacSaver, the Company or any other Restricted Subsidiary as lessee in connection with sale and leaseback transactions, in each case valued at the lesser of (i) the fair market value of the property subject to such transaction or (ii) the present value (discounted to present value in accordance with generally accepted accounting principles consistently applied) of the obligation of the lessee for rental payments (other than contingent rental payments and amounts required to be paid on account of maintenance, repairs, insurance, taxes, assessments and similar charges) during the term of such lease. (Section 101) "Consolidated Net Tangible Assets" means the total amount of all assets of the Company, MacSaver and the other Restricted Subsidiaries determined on a consolidated basis in accordance with generally accepted accounting principles consistently applied, less the sum (without duplication) of (i) the amount, if any, at which intangible assets (including goodwill, trade names, trademarks, patents, organization expenses and other similar intangibles) and unamortized debt discount and expense appear on a consolidated balance sheet, (ii) any write-up of tangible assets after the date of the Indenture, (iii) all investments, loans or advances made by the Company, MacSaver or any other Restricted Subsidiary in or to any Unrestricted Subsidiary (valued at the book value thereof) and (iv) all liabilities other than minority interests, deferred taxes and the aggregate amount of Funded Debt of the Company, MacSaver and the other Restricted Subsidiaries on a consolidated basis (eliminating intercompany items). (Section 101) -14- Restrictions on Liens. The Company may not, and may not permit any Restricted Subsidiary to, create or incur, or suffer to be incurred or to exist, any mortgage, pledge, security interest, lien, encumbrance or charge of any kind on its or such Restricted Subsidiary's property or assets, whether now owned or hereafter acquired, or upon any income or profits therefrom, or transfer any property for the purpose of subjecting the same to the payment of obligations in priority to the payment of its or any Restricted Subsidiary's general creditors, or acquire or agree to acquire any property or assets upon conditional sale agreements or other title retention devices, except (i) liens securing Indebtedness existing on the date of the Indenture (the principal amount of such Indebtedness outstanding at the end of the quarterly period immediately preceding the date of the Indenture was $3,842,816, $2,999,505 of which was outstanding as of May 31, 1997), (ii) liens securing Indebtedness incurred to finance the purchase, construction or other acquisition of assets after the date of the Indenture, provided that (A) any such lien shall attach only to such asset and (B) at the time of acquisition of such asset, the amount remaining unpaid on the Indebtedness secured by such lien shall not exceed 100% of the lesser of the total purchase price or fair market value of such asset, (iii) liens for property taxes and assessments or governmental charges or levies, and liens securing claims or demands of mechanics, suppliers, carriers, landlords and other like Persons, provided that payment thereof is being contested in good faith by appropriate proceedings and adequate reserves have been set aside with respect thereto, (iv) liens incurred or deposits made in the ordinary course of business (A) in connection with worker's compensation, unemployment insurance, social security and other like laws or (B) to secure the performance of letters of credit, bids, tenders, sales contracts, leases, statutory obligations, surety, appeal and performance bonds and other similar obligations, in each case not incurred in connection with the borrowing of money, the obtaining of advances or the payment of the deferred purchase price of property, (v) attachment, judgment and other similar liens arising in connection with court proceedings, provided that execution and other enforcement are effectively stayed and all claims which the liens secure are being actively contested in good faith by appropriate proceedings, (vi) liens securing Indebtedness of a Restricted Subsidiary to the Company or to a Restricted Subsidiary, (vii) liens on real property, interests therein or related fixtures and equipment subject to leases that are classified as operating leases in accordance with generally accepted accounting principles consistently applied, (viii) minor reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions and other minor title exceptions and (ix) liens securing Indebtedness incurred after the date of the Indenture and not otherwise permitted by clauses (i) through (viii) above, provided that, (1) at the time of the issuance, assumption, guarantee, incurrence or creation thereof no Default or Event of Default is continuing or would be created thereby, and (2) after giving effect thereto and to the application of the proceeds thereof, the aggregate amount of all such Indebtedness does not exceed 10% of Consolidated Net Tangible Assets as of the end of the immediately preceding fiscal quarter. (Section 1008) The Company, MacSaver or any other Restricted Subsidiary may subject any of its properties to any lien or encumbrance otherwise prohibited by the foregoing paragraph provided that, concurrently with the imposition of any such lien, the Debt Securities are secured equally and ratably with all other obligations secured thereby (as evidenced by an opinion of counsel). (Section 1008) Restrictions on Sale and Leaseback Transactions. The Company may not, and may not permit any Restricted Subsidiary to, sell any property and then lease back that property or similar property under a lease that (i) is entered into more than 365 days after the later of the date of acquisition of such property by the Company, MacSaver or any other Restricted Subsidiary or the date of completion and occupancy by the Company, MacSaver or any other Restricted Subsidiary of improvements constructed on such property and (ii) has a term of more than three years, or is renewable or extendible for a total term of more than three years, unless, after giving effect to such transaction and to the application of the proceeds thereof, no Default or Event of Default shall have occurred and be continuing and the aggregate amount of all Attributable Debt does not exceed 10% of Consolidated Net Tangible Assets as of the end of the immediately preceding fiscal quarter. (Section 1009) Restrictions on Mergers, Consolidations, Conveyances and Transfers. The Company may not, and may not permit any Restricted Subsidiary to, merge or consolidate with or into any other Person or convey, transfer or lease its properties or assets substantially as an entirety to any other Person, except (i) any Restricted Subsidiary may -15- merge or consolidate with or into the Company or any other wholly-owned Restricted Subsidiary so long as, in any merger or consolidation involving the Company, the Company is the surviving or continuing corporation, (ii) any wholly-owned Restricted Subsidiary formed solely to facilitate transfers of properties or assets accounted for as sales under generally accepted accounting principles consistently applied may convey or transfer such properties or assets substantially as an entirety to any other Person and (iii) the Company or any Restricted Subsidiary may merge or consolidate with or into any other Person or convey, transfer or lease its properties or assets substantially as an entirety to any other Person if (A) the Person into which the Company or such Restricted Subsidiary is merged or the Person formed by such consolidation, or the Person that acquires by conveyance or transfer, or that leases, the properties or assets of the Company or such Restricted Subsidiary substantially as an entirety, is organized and validly existing under the laws of the United States and expressly assumes, by written instrument, all of the obligations of the Company or MacSaver, as the case may be, under the Indenture, (B) at the time of such transaction and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing and (C) certain other conditions are met. (Article VIII) Events of Default An Event of Default with respect to the Debt Securities of any series is defined in the Indenture as being: (i) default for 30 days in payment of any interest with respect to any Debt Security of such series; (ii) default in payment of principal or any premium with respect to any Debt Security of such series when due upon maturity, redemption or otherwise; (iii) default in making any sinking fund payment or payment under any analogous provision when due with respect to any Debt Security of such series; (iv) default by the Company or MacSaver in the performance, or breach, of any other covenant or warranty in the Indenture (other than a covenant or warranty included therein solely for the benefit of series of Debt Securities other than that series) or any Debt Security of such series which shall not have been remedied for a period of 60 days after notice to MacSaver and the Company by the Trustee or the holders of not less than 25% in aggregate principal amount of the Debt Securities of such series then outstanding; (v) certain events of bankruptcy, insolvency or reorganization of the Company or MacSaver; (vi) any acceleration of the maturity of any Indebtedness of the Company, MacSaver or any other Restricted Subsidiary for borrowed money in an aggregate principal amount exceeding $20,000,000, or a failure to pay such Indebtedness at its stated maturity; provided, that an Event of Default shall not be deemed to occur with respect to the acceleration of the maturity of any such Indebtedness if the event that caused such acceleration shall be cured or such acceleration shall be rescinded within 10 days; or (vii) any other Event of Default established for the Debt Securities of such series. No Event of Default with respect to any particular series of Debt Securities necessarily constitutes an Event of Default with respect to any other series of Debt Securities. The Indenture provides that the Trustee thereunder may withhold notice to the holders of the Debt Securities of any series of the occurrence of a default with respect to the Debt Securities of such series (except a default in payment of principal, premium, if any, interest, if any, or sinking fund payments, if any) if the Trustee considers it in the interest of the holders to do so. The Indenture provides that if an Event of Default with respect to any series of Debt Securities issued thereunder shall have occurred and be continuing, either the Trustee or the holders of at least 25% in principal amount of the Debt Securities of such series then outstanding may declare the principal amount (or if any Debt Securities of such series are Original Issue Discount Securities, such lesser amount as may be specified in the terms thereof) of all the Debt Securities of such series to be due and payable immediately; provided that in the case of certain events of bankruptcy, insolvency or reorganization, such principal amount (or portion thereof) shall automatically become due and payable. However, at any time after an acceleration with respect to the Debt Securities of any series has occurred, but before a judgment or decree based on such acceleration has been obtained, the holders of a majority in principal amount of the outstanding Debt Securities of such series may, under certain circumstances, rescind and annul such acceleration. (Section 502) For information as to waiver of defaults, see "Description of Debt Securities -- Modification, Waiver and Meetings." Reference is made to the Prospectus Supplement relating to each series of Debt Securities which are Original Issue Discount Securities or Indexed Securities for the particular provisions -16- relating to acceleration of the Maturity of a portion of the principal amount of such Original Issue Discount Securities or Indexed Securities upon the occurrence of an Event of Default and the continuation thereof. Subject to the provisions of the Trust Indenture Act of 1939 requiring the Trustee, during an Event of Default under the Indenture, to act with the requisite standard of care, a Trustee is under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the holders of Debt Securities of any series unless such holders have offered such Trustee reasonable indemnity. Subject to the foregoing, holders of a majority in principal amount of the then outstanding Debt Securities of any series shall have the right, subject to certain limitations, to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee under the Indenture with respect to such series. No holder of a Debt Security of any series will have any right to institute any proceeding with respect to the Indenture, or for the appointment of a receiver or a trustee, or for any other remedy thereunder, unless (i) such holder has previously given to the Trustee written notice of a continuing Event of Default with respect to the Debt Securities of that series, (ii) the holders of at least 25% in aggregate principal amount of the outstanding Debt Securities of that series have made written request, and such holder or holders have offered reasonable indemnity, to such Trustee to institute such proceeding as trustee and (iii) such Trustee has failed to institute such proceeding, and has not received from the holders of a majority in aggregate principal amount of the outstanding Debt Securities of that series a direction inconsistent with such request, within 60 days after such notice, request and offer. (Section 507) However, such limitations do not apply to a suit instituted by a holder of a Debt Security for the enforcement of payment of the principal of or any premium or interest on such Debt Security on or after the applicable due date specified in such Debt Security. (Section 508) The Company and MacSaver each will be required to furnish to the Trustee annually a statement by certain of its officers as to whether or not, to their knowledge, it is in default in the performance or observance of any of the terms, provisions and conditions of the Indenture and, if so, specifying all such known defaults. (Section 1005) Modification, Waivers and Meetings The Indenture contains provisions permitting the Company or MacSaver and the Trustee thereunder, with the consent of the holders of a majority in principal amount of the outstanding Debt Securities of each series and affected by a modification or amendment, to modify or amend any of the provisions of the Indenture or of the Debt Securities of such series or the rights of the holders of the Debt Securities of such series under the Indenture, provided that no such modification or amendment shall, among other things, (i) change the stated maturity of the principal of, or premium, if any, or any installment of interest, if any, on any Debt Securities or reduce the principal amount thereof or any premium thereon, or reduce the rate of interest thereon, or reduce the amount of principal of any Debt Securities that would be due and payable upon an acceleration of the maturity thereof, or adversely affect any right of repayment at the option of any holder, or change any place where, or the Currency in which, any Debt Securities issued under the Indenture are payable, or impair the holder's right to institute suit to enforce the payment of any such Debt Securities or (ii) reduce the aforesaid percentage of Debt Securities of any series, the consent of the holders of which is required for any such modification or amendment or the consent of whose holders is required for any waiver (of compliance with certain provisions of the Indenture or certain defaults thereunder and their consequences) or reduce the requirements for a quorum or voting at a meeting of holders of such Debt Securities. The Indenture also contains provisions permitting the Company, MacSaver, and the Trustee, without the consent of the holders of any Debt Securities issued thereunder, to modify or amend the Indenture in order to, among other things, (a) add to the Events of Default or the covenants of the Company or MacSaver for the benefit of the holders of all or any series of Debt Securities; (b) to add or change any provisions of the Indenture to facilitate the issuance of Bearer Securities; (c) to establish the form or terms of Debt Securities of any series and any related coupons; (d) to cure any ambiguity or correct or supplement any provision therein which may be inconsistent with other provisions therein, or to make any other provisions with respect to matters or questions arising under the Indenture -17- which shall not adversely affect the interests of the holders of any series of Debt Securities in any material respect; or (e) to amend or supplement any provision contained in the Indenture, provided that such amendment or supplement does not apply to any outstanding Debt Securities issued prior to the date of such amendment or supplement and entitled to the benefits of such provision. The holders of a majority in aggregate principal amount of the outstanding Debt Securities of any series may waive, insofar as that series is concerned, compliance by the Company or MacSaver with certain restrictive provisions of the Indenture. The holders of a majority in aggregate principal amount of the outstanding Debt Securities of any series may, on behalf of all holders of Debt Securities of that series, waive any past default under the Indenture with respect to Debt Securities of that series and its consequences, except a default in the payment of the principal of, or premium, if any, or interest, if any, on any Debt Securities of such series or in respect of a covenant or provision which cannot be modified or amended without the consent of the holder of each outstanding Debt Securities of such series affected. The Indenture contains provisions for convening meetings of the holders of Debt Securities of each series. A meeting may be called at any time by the Trustee, and also, upon request, by MacSaver or the holders of at least 10% in principal amount of the outstanding Debt Securities of such series, in any such case upon notice given in accordance with the provisions of the Indenture. Except for any consent which must be given by the holder of each outstanding Debt Security affected thereby, as described above, any resolution presented at a meeting or adjourned meeting duly reconvened at which a quorum (as described below) is present may be adopted by the affirmative vote of the holders of a majority in principal amount of the outstanding Debt Securities of that series; provided, however, that any resolution with respect to any request, demand, authorization, direction, notice, consent, waiver or other action which may be made, given or taken by the holders of a specified percentage, which is less than a majority, in principal amount of the outstanding Debt Securities of a series may be adopted at a meeting or adjourned meeting duly reconvened at which a quorum is present by the affirmative vote of the holders of such specified percentage in principal amount of the outstanding Debt Securities of that series. Any resolution passed or decision taken at any meeting of holders of Debt Securities of any series duly held in accordance with the Indenture will be binding on all holders of Debt Securities of that series and the related coupons. The quorum at any meeting called to adopt a resolution, and at any reconvened meeting, will be persons holding or representing a majority in principal amount of the outstanding Debt Securities of a series, subject to certain exceptions. Discharge, Defeasance and Covenant Defeasance Upon the direction of MacSaver, the Indenture shall cease to be of further effect with respect to any series of Debt Securities issued thereunder specified by MacSaver (subject to the survival of certain provisions thereof, including the obligation to pay Additional Amounts to the extent described below) when (i) either (A) all outstanding Debt Securities of such series and, in the case of Bearer Securities, all coupons appertaining thereto, have been delivered to the Trustee for cancellation (subject to certain exceptions) or (B) all Debt Securities of such series have become due and payable or will become due and payable at their stated maturity within one year or are to be called for redemption within one year and MacSaver has deposited with the Trustee, in trust, funds in U.S. dollars or in such other currency in which such Debt Securities are payable in an amount sufficient to pay the entire indebtedness on such Debt Securities in respect of principal (and premium, if any) and interest, if any, (and, to the extent that (x) the Debt Securities of such series provide for the payment of Additional Amounts upon the occurrence of certain events of taxation, assessment or governmental charge with respect to payments on such Debt Securities and (y) the amount of any such Additional Amounts is at the time of deposit reasonably determinable by MacSaver, any such Additional Amounts) to the date of such deposit (if such Debt Securities have become due and payable) or to the Maturity thereof, as the case may be, (ii) MacSaver or the Company, as the case may be, has paid all other sums payable under the Indenture with respect to the Debt Securities of such series, and (iii) certain other conditions are met. If the Debt Securities of any such series provide for the payment of Additional Amounts, MacSaver will remain obligated, following such deposit, to pay (and the Guarantee of the Company will continue to apply to such -18- payment of) Additional Amounts on such Debt Securities to the extent that the amount thereof exceeds the amount deposited in respect of such Additional Amounts as aforesaid. Unless otherwise provided in the applicable Prospectus Supplement, MacSaver may elect with respect to any series of Debt Securities either (a) to defease and be discharged from any and all obligations with respect to such Debt Securities (except for, among other things, the obligation to pay Additional Amounts, if any, upon the occurrence of certain events of taxation, assessment or governmental charge with respect to payments on such Debt Securities to the extent that the amount thereof exceeds the amount deposited in respect of such Additional Amounts as provided below, and the obligations to register the transfer or exchange of such Debt Securities, to replace temporary or mutilated, destroyed, lost or stolen Debt Securities, to maintain an office or agency in respect of such Debt Securities, to hold moneys for payment in trust, and, if applicable, to exchange or convert such Debt Securities into other securities in accordance with their terms) ("defeasance"), or (b) to omit to comply with its obligations with respect to certain restrictive covenants in Section 1005 (Statement as to Compliance), Section 1011 (Waiver of Certain Covenants), and, to the extent specified pursuant to Section 301 (Amount Unlimited; Issuable in Series), and any other covenant applicable to such Debt Securities in the Indenture and, if indicated in the applicable Prospectus Supplement, its obligations with respect to any other covenant applicable to the Debt Securities of such series, and any omission to comply with such obligations shall not constitute a Default or an Event of Default with respect to the Debt Securities of such series ("covenant defeasance"), in either case upon the irrevocable deposit with the Trustee (or other qualifying trustee), in trust for such purpose, of an amount, in U.S. dollars or in such other currency in which such Debt Securities are payable at Stated Maturity, and/or Government Obligations (as defined in the Indenture) which through the payment of principal and interest in accordance with their terms will provide money, in an amount sufficient to pay the principal of and any premium and any interest on (and, to the extent that (x) the Debt Securities of such series provide for the payment of Additional Amounts and (y) the amount of any such Additional Amounts is at the time of deposit reasonably determinable by MacSaver, any such Additional Amounts with respect to) such Debt Securities, and any mandatory sinking fund or analogous payments thereon, on the due dates therefor, whether upon maturity, redemption or otherwise. Such defeasance or covenant defeasance shall only be effective if, among other things, (i) it shall not result in a breach or violation of, or constitute a default under, the Indenture or any other material agreement to which MacSaver or the Company is a party or is bound, and (ii) MacSaver has delivered to the Trustee an opinion of counsel (as specified in the Indenture) to the effect that the holders of such Debt Securities will not recognize income, gain or loss for federal income tax purposes as a result of such defeasance or covenant defeasance, as the case may be, and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance or covenant defeasance had not occurred. It shall also be a condition to the effectiveness of such defeasance (or covenant defeasance) that no Event of Default or event which with notice or lapse of time or both would become an Event of Default with respect to Debt Securities of such series shall have occurred and been continuing on the date of such deposit and, with respect to defeasance only, at any time or during the period ending on the 91st day after the date of, such deposit into trust. Unless otherwise provided in the applicable Prospectus Supplement, if after MacSaver has deposited funds and/or Government Obligations to effect defeasance or covenant defeasance with respect to Debt Securities of any series, (a) the holder of a Debt Security of such series is entitled to, and does, elect pursuant to the Indenture or the terms of such Debt Security to receive payment in a Currency other than that in which such deposit has been made in respect of such Debt Security, or (b) a Conversion Event (as defined below) occurs in respect of the Foreign Currency in which such deposit has been made, the indebtedness represented by such Debt Security shall be deemed to have been, and will be, fully discharged and satisfied through the payment of the principal of (and premium, if any) and interest, if any, on such Debt Security as such Debt Security becomes due out of the proceeds yielded by converting the amount so deposited in respect of such Debt Security into the currency in which such Debt Security becomes payable as a result of such election or such Conversion Event based on (x) in the case of payments made pursuant to clause (a) above, the applicable market exchange rate for such Foreign Currency in effect on the second -19- business day prior to such payment date, or (y) with respect to a Conversion Event, the applicable market exchange rate for such Foreign Currency in effect (as nearly as feasible) at the time of the Conversion Event. "Conversion Event" means the cessation of use of (i) a Foreign Currency both by the government of the country or the confederation which issued such Foreign Currency and for the settlement of transactions by a central bank or other public institutions of or within the international banking community, (ii) the ECU both within the European Monetary System and for the settlement of transactions by public institutions of or within the European Union or (iii) any currency unit or composite currency other than the ECU for the purposes for which it was established. In the event MacSaver effects covenant defeasance with respect to any Debt Securities and such Debt Securities are declared due and payable because of the occurrence of any Event of Default other than an Event of Default with respect to any other covenant as to which there has been covenant defeasance, the amount of monies and/or Government Obligations deposited with the Trustee to effect such covenant defeasance may not be sufficient to pay amounts due on such Debt Securities at the time of any acceleration resulting from such Event of Default. However, MacSaver would remain liable to make payment of such amounts due at the time of acceleration. The applicable Prospectus Supplement may further describe the provisions, if any, permitting or restricting such defeasance or covenant defeasance with respect to the Debt Securities of a particular series. Title The Company, MacSaver, the Trustee and any agent of any of them may treat the person in whose name a registered Debt Security is registered as the absolute owner thereof (whether or not such Debt Security may be overdue) for the purpose of making payment and for all other purposes. (Section 308) Governing Law The Indenture and the Debt Securities will be governed by, and construed in accordance with, the laws of the State of New York. Regarding the Trustee The Trust Indenture Act of 1939 contains limitations on the rights of a trustee, should it become a creditor of the Company or MacSaver, as the case may be, to obtain payment of claims in certain cases or to realize on certain property received by it in respect of any such claims, as security or otherwise. The Trustee is permitted to engage in other transactions with MacSaver, the Company and its other subsidiaries from time to time, provided that if such Trustee acquires any conflicting interest it must eliminate such conflict upon the occurrence of an Event of Default under the Indenture, or else resign. In that event, MacSaver would be required to appoint a successor Trustee. DESCRIPTION OF COMMON STOCK The Company has authorized 250,000,000 shares of Common Stock, par value $2.00 per share. As of May 31, 1997, there were 54,414,297 shares of Common Stock outstanding. The following brief description of the Common Stock does not purport to be complete and is subject in all respects to applicable Virginia law and to the provisions of the Company's Restated Articles of Incorporation and its By-laws, copies of which have been filed with the Commission. Holders of Common Stock are entitled to such dividends as may be declared by the Board of Directors out of funds legally available therefor after payment of dividends on any outstanding Preferred Stock and are entitled to one vote for each share of Common Stock held by them with respect to all matters upon which they are entitled to vote. -20- The Company's Restated Articles of Incorporation contain a provision that reduces the shareholder vote required for amending the Articles of Incorporation in certain circumstances from the two-thirds vote generally applicable to a simple majority vote. The majority vote will be applicable except when the effect of the amendment is (a) to reduce the shareholder vote required to approve a merger, a statutory share exchange, a sale of all or substantially all of the assets of the Company or the dissolution of the Company, or (b) to delete all or any part of such provision. In addition, the vote required by other provisions of the Restated Articles of Incorporation is necessary if such provisions require the approval of more than a majority of the votes entitled to be cast. Preferred Stock The Company has authorized 3,000,000 shares of Preferred Stock, par value $10.00 per share. As of May 31, 1997, there were no shares of Preferred Stock outstanding. The Board of Directors of the Company, without further action by the shareholders, is authorized to designate and issue in series Preferred Stock and to fix as to any series the dividend rate, redemption prices, preferences on dissolution, the terms of any sinking fund, conversion rights, voting right, and any other preferences of special rights and qualifications. Shares of Common Stock would be subject to the preferences, rights and powers of any such shares of Preferred Stock as set forth in the Company's Restated Articles of Incorporation and the resolutions establishing one or more series of Preferred Stock. Holders of the Preferred Stock, if and when issued, will be entitled to vote as required under applicable Virginia law. Such law includes provisions for the voting of the Preferred Stock in the case of any amendment to the Restated Articles of Incorporation affecting the rights of holders of the Preferred Stock, the payment of certain stock dividends, merger or consolidation, sale of all or substantially all of the Company's assets and dissolution. There are no agreements or understandings for the designation of series of Preferred Stock or the issuance of shares thereunder, except pursuant to the Shareholders' Rights Plan discussed below. Shareholders' Rights Plan The following summary of certain provisions of the Company's Shareholders' Rights Plan and the Rights Agreement dated as of February 17, 1988 between the Company and Crestar Bank as Rights Agent, as amended by Supplements No. 1 through No. 4 dated as of September 15, 1989 (together, as amended, the "Rights Agreement"), does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement, including the form of Rights Certificate attached thereto, each of which has been filed with the Commission and is incorporated by reference herein. On February 17, 1988 the Board of Directors of the Company declared a dividend distribution of one preferred share purchase right (a "Right") on each outstanding share of Common Stock pursuant to a Shareholders' Rights Plan. The Rights are exercisable only upon the attainment of, or the commencement of a tender offer to attain, a specified ownership interest in the Company by a person or group. When exercisable, each Right would entitle its holder to purchase one-hundredth of a newly issued share of cumulative Participating Preferred Stock, Series A, par value $10.00 per share (the "Series A Preferred Stock") at an exercise price of $75, subject to adjustment. A total of 750,000 shares of Series A Preferred Stock has been reserved. Each share of Series A Preferred Stock will entitle the holder to 100 votes and has an aggregate dividend rate of 100 times the amount paid to holders of the Common Stock. Upon occurrence of certain events, each holder of a Right will become entitled to purchase shares of Common Stock having a value of twice the Right's then current exercise price in lieu of Series A Preferred Stock. Each share of Common Stock offered pursuant to this Prospectus and an accompanying Prospectus Supplement shall have one Right attached to it. Virginia Stock Corporation Act The Virginia Stock Corporation Act contains provisions governing "Affiliated Transactions." These provisions, with several exceptions discussed below, require approval of certain material transactions between a Virginia -21- corporation and any beneficial holder of more than 10% of any class of its outstanding voting shares (an "Interested Shareholder") by the holders of at least two-thirds of the remaining voting shares. Affiliated Transactions subject to this approval requirement include mergers, share exchanges, material dispositions of corporate assets not in the ordinary course of business, any dissolution of the corporation proposed by or on behalf of an Interested Shareholder, or any reclassification, including reverse stock splits, recapitalization or merger of the corporation with its subsidiaries which increases the percentage of voting shares owned beneficially by an Interested Shareholder by more than 5%. For three years following the time that an Interested Shareholder becomes an owner of more than 10% of the outstanding voting shares, a Virginia corporation cannot engage in an Affiliated Transaction with such Interested Shareholder without approval of two-thirds of the voting shares other than those shares beneficially owned by the Interested Shareholder, and majority approval of the "Disinterested Directors." A Disinterested Director means, with respect to a particular Interested Shareholder, a member of the Company's Board of Directors who was (1) a member on the date on which an Interested Shareholder became an Interested Shareholder or (2) recommended for election by, or was elected to fill a vacancy and received the affirmative vote of, a majority of the Disinterested Directors then on the Board. At the expiration of the three-year period, the statute requires approval of Affiliated Transactions by two-thirds of the voting shares other than those beneficially owned by the Interested Shareholder. The principal exceptions to the special voting requirement apply to transactions proposed after the three-year period has expired and require either that the transaction be approved by a majority of the corporation's Disinterested Directors or that the transaction satisfy the fair-price requirements of the statute. In general, the fair-price requirements provide that in a two-step acquisition transaction, the Interested Shareholder must pay the shareholders in the second step either the same amount of cash or the same amount and type of consideration paid to acquire the Virginia corporation's shares in the first step. None of the foregoing limitations and special voting requirements applies to a transaction with an Interested Shareholder whose acquisition of shares making such person an Interested Shareholder was approved by a majority of the Virginia corporation's Disinterested Directors. These provisions were designed to deter certain takeovers of Virginia corporations. In addition, the statute provides that, by affirmative vote of a majority of the voting shares other than shares owned by any Interested Shareholder, a corporation can adopt an amendment to its articles of incorporation or bylaws providing that the Affiliated Transactions provisions shall not apply to the corporation. The Company has not "opted out" of the Affiliated Transactions provisions. Virginia law provides that shares acquired in a transaction that would cause the acquiring person's voting strength to meet or exceed any of three thresholds (20%, 33-1/3% or 50%) have no voting rights unless granted by a majority vote of shares not owned by the acquiring person or any officer or employee-director of the Virginia corporation. This provision empowers an acquiring person to require the Virginia corporation to hold a special meeting of shareholders to consider the matter within 50 days of its request. The Board of Directors of a Virginia corporation can opt out of this provision at any time before four days after receipt of a control share acquisition notice. Transfer Agent The transfer agent for the Common Stock is Wachovia Bank of North Carolina, N.A. -22- DESCRIPTION OF WARRANTS The Company may issue (either separately or together with other Securities) warrants for the purchase of Common Stock (the "Warrants"). The Warrants are to be issued under warrant agreements (each a "Warrant Agreement") to be entered into between the Company and a bank or trust company, as warrant agent ("Warrant Agent"), all as set forth in the Prospectus Supplement relating to the particular issue of Warrants. The form of Warrant Agreement, including the form of certificates representing the Warrants ("Warrant Certificates"), that will be entered into with respect to a particular offering of Warrants will be filed as an exhibit to or incorporated by reference in the Registration Statement. The following summary of certain provisions of the Warrant Agreement and the Warrants and the summary of certain terms of the particular Warrant Agreement and Warrants set forth in the applicable Prospectus Supplement do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all the provisions of the particular Warrant Agreement and the related Warrant Certificates, all of which are incorporated herein by reference. The following description of the Warrants sets forth certain general terms and provisions of the Warrants and the related Warrant Agreement to which any Prospectus Supplement may relate. Certain other terms of any Warrants and the related Warrant Agreement will be described in the applicable Prospectus Supplement. If so indicated in the accompanying Prospectus Supplement, the terms of the Warrants offered thereby and the related Warrant Agreement may differ from the terms set forth below. General Reference is made to the applicable Prospectus Supplement for the terms of the Warrants offered thereby, including (where applicable): (1) the title and aggregate number of such Warrants; (2) the number of shares of Common Stock that may be purchased upon exercise of each such Warrant; (3) the price, or the manner of determining the price, at which such shares may be purchased upon such exercise; (4) if other than cash, the property and manner in which the exercise price of such Warrants may be paid; and any minimum number of such Warrants that are exercisable at any one time; (5) the time or times at which, or period or periods during which, such Warrants may be exercised and the expiration date of such Warrants; (6) the terms of any right of the Company to redeem such Warrants; (7) the terms of any right of the Company to accelerate the exercise of such Warrants upon the occurrence of certain events; (8) whether such Warrants will be sold with any other Securities, and the date, if any, on and after which such Warrants and any such other Securities will be separately transferable; (9) whether Warrants will be issued in registered or bearer form; (10) a discussion of certain Federal income tax, accounting and other special considerations, procedures and limitations relating to such Warrants; and (11) any other terms of such Warrants. Warrant Certificates may be surrendered for transfer or exchange for new Warrant Certificates of authorized denominations at any office or agency of the relevant Warrant Agent maintained for such purpose, subject to the terms of the related Warrant Agreement. Unless otherwise specified in the applicable Prospectus Supplement, Warrant Certificates will be issued in denominations evidencing any whole number of Warrants. No service charge will be made for any permitted transfer or exchange of Warrant Certificates, but the Company or the Warrant Agent may require payment of any tax or other governmental charge payable in connection therewith. Exercise of Warrants Each Warrant will entitle the holder to purchase such number of shares of Common Stock at such exercise price as shall in each case be set forth in, or be determinable from, the Prospectus Supplement relating to such Warrants, by payment of such exercise price in the Currency and in the manner specified in the Prospectus Supplement. Warrants may be exercised at any time up to the date and time specified in the applicable Prospectus Supplement for the expiration thereof. After the specified expiration time on the specified date of expiration, unexercised Warrants will become void. -23- Upon receipt at an office or agency indicated in the applicable Prospectus Supplement of (i) payment of the exercise price and (ii) the Warrant Certificate properly completed and duly executed, the Company will, as soon as practicable, issue and deliver the shares of Common Stock purchasable upon such exercise. Unless otherwise indicated in the applicable Prospectus Supplement, fractional shares of Common Stock will not be issued upon the exercise of Warrants and, in lieu thereof, the Company will make a cash payment in an amount determined as provided in the applicable Prospectus Supplement. If less than all of the Warrants represented by such Warrant Certificate are exercised, a new Warrant Certificate will be issued for the remaining number of Warrants. The holder of a Warrant will be required to pay any tax or other governmental charge that may be imposed in connection with any transfer involved in the issuance of Common Stock purchased upon such exercise. Modifications Any Warrant Agreement and the terms of the related Warrants may be modified or amended by the Company and the applicable Warrant Agent, without the consent of any holder of the related Warrants, for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective or inconsistent provision contained therein, or in any other manner that the Company deems necessary or desirable and that will not materially and adversely affect the interests of the holders of the related Warrants. The Company and the applicable Warrant Agent may also modify or amend the applicable Warrant Agreement and the terms of the related Warrants with the consent of the holders of not less than a majority in number of the then outstanding unexercised Warrants affected thereby; provided that no such modification or amendment that accelerates the expiration date, increases the exercise price, or reduces the number of outstanding Warrants the consent of whose holders is required for any such amendment or modification, may be made without the consent of each holder affected thereby. No Rights as Holders Holders of Warrants for the purchase of shares of Common Stock are not entitled, by virtue of being such holders, to vote, consent or receive notice as shareholders of the Company in respect of any meeting of shareholders for the election of directors of the Company or any other matter, or to exercise any other rights whatsoever as shareholders of the Company, or to receive any dividends or distributions, if any, on the Common Stock. UNITED STATES TAXATION The following summary of the principal United States federal income tax consequences of ownership of Debt Securities is based upon the opinion of McGuire, Woods, Battle & Boothe, L.L.P., special tax counsel to the Company and MacSaver. It deals only with Debt Securities held as capital assets, and not with special classes of holders, such as dealers in securities or currencies, banks, tax-exempt organizations, life insurance companies, persons that hold Debt Securities that are part of a hedge or that are hedged against currency risks or that are part of a straddle or conversion transaction, or persons whose functional currency is not the U.S. dollar. It also does not deal with Holders other than original purchasers who purchase Debt Securities at the original offering price and thus does not deal with the "market discount rules." Moreover, the summary deals only with Debt Securities that are due to mature not later than 30 years from the date on which they are issued. The United States federal income tax consequences of ownership of Debt Securities that are due to mature more than 30 years from their date of issue will be discussed in an applicable Prospectus Supplement. The summary is based on the Internal Revenue Code of 1986, as amended (the "Code"), its legislative history, existing and proposed regulations thereunder, judicial decisions, and published rulings and other administrative guidance issued by the Internal Revenue Service (the "Service"), as currently in effect, all of which are subject to change at any time, possibly with retroactive effect. -24- PROSPECTIVE PURCHASERS OF DEBT SECURITIES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE CONSEQUENCES OF OWNERSHIP OF DEBT SECURITIES, IN THEIR PARTICULAR CIRCUMSTANCES, UNDER THE CODE AND THE APPLICABLE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION. The federal income tax consequences of ownership of other Securities, including Common Stock and Warrants, will be discussed in an applicable Prospectus Supplement. United States Holders Payments of Interest Except as provided below under "Original Issue Discount", interest on a Debt Security (including "qualified stated interest" on a "Discount Debt Security", as defined below) will be taxable to a United States Holder as ordinary income at the time it is received or accrued, depending on the holder's method of accounting for tax purposes. A United States Holder is a beneficial owner who or that is (i) a citizen or resident of the United States, (ii) a domestic corporation or (iii) otherwise subject to United States federal income taxation on a net income basis in respect of the Debt Security. If an interest payment is denominated in, or determined by reference to, a currency, composite currency or basket of currencies other than the U.S. dollars (a "foreign currency"), the amount of income recognized by a cash basis United States Holder will be the U.S. dollar value of the interest payment, based on the exchange rate in effect on the date of receipt, regardless of whether the payment is in fact converted into U.S. dollars. An accrual basis United States Holder may determine the amount of income recognized with respect to an interest payment denominated in, or determined by reference to, a foreign currency in accordance with either of two methods. Under the first method, the amount of income accrued will be based on the average exchange rate in effect during the interest accrual period (or, with respect to an accrual period that spans two taxable years, the part of the period within the taxable year). Under the second method, the United States Holder may elect to determine the amount of income accrued on the basis of the exchange rate in effect on the last day of the accrual period or, in the case of an accrual period that spans two taxable years, the exchange rate in effect on the last day of the part of the period within the taxable year. Additionally, if a payment of interest is actually received within five business days of the last day of the accrual period or taxable year, an electing accrual basis United States Holder may instead translate such accrued interest into U.S. dollars at the exchange rate in effect on the day of actual receipt. Any such election must apply to all debt instruments held by the United States Holder at the beginning of the first taxable year to which the election applies or thereafter acquired by the United States Holder, and may not be revoked without the consent of the Service. Upon receipt of an interest payment (including a payment attributable to accrued but unpaid interest upon the sale or retirement of a Debt Security) denominated in, or determined by reference to, a foreign currency, the accrual basis United States Holder will recognize ordinary income or loss measured by the difference between (x) the average exchange rate used to accrue the interest income represented by such payment, or the exchange rate as determined under the second method described above if the United States Holder elects that method, and (y) the exchange rate in effect on the date of receipt, regardless of whether the payment is in fact converted into U.S. dollars. -25- Original Issue Discount General. A Debt Security with a maturity of more than one year from the date of issue will be treated as issued at an original issue discount (a "Discount Debt Security") if its "stated redemption price at maturity" exceeds its issue price by more than a "de minimis amount" (as defined below). Generally, the issue price of a Debt Security will be the first price at which a substantial amount of Debt Securities included in the issue of which the Debt Security is a part are sold to persons other than bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents, or wholesalers. The stated redemption price at maturity of a Debt Security is the total of all payments provided by the Debt Security that are not payments of "qualified stated interest." A qualified stated interest payment generally is any one of a series of stated interest payments on a Debt Security that are unconditionally payable at least annually at a single fixed rate (with certain exceptions for lower rates paid during some periods) applied to the outstanding principal amount of the Debt Security. Special rules for determining qualified stated interest payable on certain Debt Securities bearing interest at a variable rate are described below under "Original Issue Discount--Variable Rate Debt Securities". In general, if a Debt Security's stated redemption price at maturity exceeds its issue price by less than an amount equal to 1/4 of 1 percent of the Debt Security's stated redemption price at maturity multiplied by the number of complete years to its maturity (the "de minimis amount"), then such excess, if any, constitutes "de minimis original issue discount" and the Debt Security is not a Discount Debt Security. Unless the election described below under "Election to Treat All Interest as Original Issue Discount" is made, a United States Holder of a Debt Security with de minimis original issue discount must include such de minimis original issue discount in income as stated principal payments on the Debt Security are made. The includible amount with respect to each such payment will equal the total amount of the Debt Security's de minimis original issue discount multiplied by a fraction, the numerator of which is the amount of the principal payment made and the denominator of which is the stated principal amount of the Debt Security. United States Holders of Discount Debt Securities having a maturity of more than one year from their date of issue must, generally, include in computing their taxable income original issue discount ("OID") calculated on a constant-yield method before the receipt of cash attributable to such income, and generally will have to include in income increasingly greater amounts of OID over the life of the Debt Security. The amount of OID includible in income by a United States Holder of a Discount Debt Security is the sum of the daily portions of OID with respect to the Discount Debt Security for each day during the taxable year or portion of the taxable year on which the United States Holder holds such Discount Debt Security ("accrued OID"). The daily portion is determined by allocating to each day in any "accrual period" a pro rata portion of the OID allocable to that accrual period. Accrual periods with respect to a Debt Security may be of any length selected by the United States Holder and may vary in length over the term of the Debt Security as long as (i) no accrual period is longer than one year and (ii) each scheduled payment of interest or principal on the Debt Security occurs on either the final or first day of an accrual period. The amount of OID allocable to an accrual period equals the excess of (a) the product of the Discount Debt Security's adjusted issue price at the beginning of the accrual period and such Debt Security's yield to maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period) over (b) the sum of the payments of qualified stated interest on the Debt Security allocable to the accrual period. The "adjusted issue price" of a Discount Debt Security at the beginning of any accrual period is the issue price of the Debt Security increased by (x) the amount of accrued OID for each prior accrual period and decreased by (y) the amount of any payments previously made on the Debt Security that were not qualified stated interest payments. For purposes of determining the amount of OID allocable to an accrual period, if an interval between payments of qualified stated interest on the Debt Security contains more than one accrual period, the amount of qualified stated interest payable at the end of the interval (including any qualified stated interest that is payable on the first day of the accrual period immediately following the interval) is allocated pro rata on the basis of relative lengths of each accrual period in the interval, and the adjusted issue price at the beginning of each accrual period in the interval must be increased by the amount of any qualified stated interest that has accrued prior to the first day of the accrual period -26- but that is not payable until the end of the interval. The amount of OID allocable to an initial short accrual period may be computed using any reasonable method if all other accrual periods other than a final short accrual period are of equal length. The amount of OID allocable to the final accrual period is the difference between (x) the amount payable at the maturity of the Debt Security (other than any payment of qualified stated interest) and (y) the Debt Security's adjusted issue price as of the beginning of the final accrual period. Acquisition Premium. A United States Holder that purchases a Debt Security for an amount less than or equal to the sum of all amounts payable on the Debt Security after the purchase date (other than payments of qualified stated interest) but in excess of its adjusted issue price (any such excess being "acquisition premium") and that does not make the election described below under "Election to Treat All Interest as Original Issue Discount" is permitted to reduce the daily portions of OID by a fraction, the numerator of which is the excess of the United States Holder's adjusted basis in the Debt Security immediately after its purchase over the adjusted issue price of the Debt Security, and the denominator of which is the excess of the sum of all amounts payable on the Debt Security after the purchase date, other than payments of qualified stated interest, over the Debt Security's adjusted issue price. Pre-Issuance Accrued Interest. If (i) a portion of the initial purchase price of a Debt Security is attributable to pre-issuance accrued interest, (ii) the first stated interest payment on the Debt Security is to be made within one year of the Debt Security's issue date and (iii) the payment will equal or exceed the amount of pre-issuance accrued interest, then the United States Holder may elect to decrease the issue price of the Debt Security by the amount of pre-issuance accrued interest. In that event, a portion of the first stated interest payment will be treated as a return of the excluded pre-issuance accrued interest and not as an amount payable on the Debt Security. Debt Securities Subject to Contingencies Including Optional Redemption. In general, if a Debt Security provides for an alternative payment schedule or schedules applicable upon the occurrence of a contingency or contingencies (other than a remote or incidental contingency) and the timing and amounts of the payments that comprise each payment schedule are known as of the issue date, special rules apply for purposes of determining the yield and maturity of the Debt Security. If, based on all the facts and circumstances as of the issue date, a single payment schedule, including the stated payment schedule, is significantly more likely than not to occur, then, in general, the yield and maturity of the Debt Security are computed based on that payment schedule. If there is no single payment schedule that is significantly more likely than not to occur (other than because of a mandatory sinking fund), the amount of interest taken into account for each accrual period would be determined by constructing a projected payment schedule for the Debt Security and applying rules similar to those for accruing OID on a noncontingent debt instrument. This method is applied by first determining the yield at which MacSaver would issue a fixed rate debt instrument with terms and conditions similar to the contingent payment Debt Security (the comparable yield) and then determining a payment schedule as of the issue date that would produce the comparable yield. Notwithstanding the general rules for determining yield and maturity in the case of Debt Securities subject to contingencies, if MacSaver or the Holder has an unconditional option or options that, if exercised, would require payments to be made on the Debt Security under an alternative payment schedule or schedules, then (i) in the case of an option or options of MacSaver, MacSaver will be deemed to exercise or not exercise an option or combination of options in the manner that minimizes the yield on the Debt Security and (ii) in the case of an option or options of the Holder, the Holder will be deemed to exercise or not exercise an option or combination of options in the manner that maximizes the yield on the Debt Security. If both MacSaver and the Holder have options described in the preceding sentence, those rules apply to such options in the order in which they may be exercised. For purposes of those calculations, the yield on the Debt Security is determined by using any date on which the Debt Security may be redeemed or repurchased as the maturity date and the amount payable on such date in accordance with the terms of the Debt Security as the principal amount payable at maturity. -27- If a contingency (including the exercise of an option) fails to occur, or actually occurs but in a manner inconsistent with the assumption made according to the above rules (a "change in circumstances") then, except to the extent that a portion of the Debt Security is repaid as a result of the change in circumstances and solely for purposes of the accrual of OID, the yield and maturity of the Debt Security are redetermined by treating the Debt Security as having been retired and reissued on the date of the change in circumstances for an amount equal to the Debt Security's adjusted issue price on that date. The federal income tax treatment of Debt Securities providing for alternative payment schedules applicable upon the occurrence of one or more contingencies will be described in greater detail in the applicable Prospectus Supplement. Election to Treat All Interest as Original Issue Discount. A United States Holder may elect to include in gross income all interest that accrues on a Debt Security using the constant-yield method described above under the heading "Original Issue Discount--General", with the modifications described below. For purposes of this election, interest includes stated interest, OID, de minimis original issue discount, market discount, de minimis market discount and unstated interest, as adjusted by any amortizable bond premium (described below under "Debt Securities Purchased at a Premium") or acquisition premium. In applying the constant-yield method to a Debt Security with respect to which this election has been made, the issue price of the Debt Security will equal the electing United States Holder's adjusted basis in the Debt Security immediately after its acquisition, the issue date of the Debt Security will be the date of its acquisition by the electing United States Holder, and no payments on the Debt Security will be treated as payments of qualified stated interest. This election will generally apply only to the Debt Security with respect to which it is made and may not be revoked without the consent of the Service. If this election is made with respect to a Debt Security with amortizable bond premium, then the electing United States Holder will be deemed to have elected to apply amortizable bond premium against interest with respect to all debt instruments with amortizable bond premium (other than debt instruments the interest on which is excludible from gross income) held by the electing United States Holder as of the beginning of the taxable year in which the Debt Security with respect to which the election is made is acquired or thereafter acquired. The deemed election with respect to amortizable bond premium may not be revoked without the consent of the Service. Variable Rate Debt Securities. A "Variable Rate Debt Security" is a Debt Security that: (i) has an issue price that does not exceed the total noncontingent principal payments by more than the lesser of (1) .015 multiplied by the product of (x) the total noncontingent principal payments and (y) the number of complete years to maturity from the issue date, or (2) 15 percent of the total noncontingent principal payments; (ii) does not provide for any stated interest other than stated interest compounded or paid at least annually at (1) one or more "qualified floating rates", (2) a single fixed rate and one or more qualified floating rates, (3) a single "objective rate" or (4) a single fixed rate and a single objective rate that is a "qualified inverse floating rate"; (iii) provides that a qualified floating rate or objective rate in effect at any time during the term of the instrument must be set at a "current value" of that rate (i.e., the value of the rate on any day that is no earlier than 3 months prior to the first day on which that value is in effect and no later than 1 year following that first day); and (iv) does not provide for any contingent principal payments other than as provided in clause (i) of this sentence. A variable rate is a "qualified floating rate" if (i) variations in the value of the rate can reasonably be expected to measure contemporaneous variations in the cost of newly borrowed funds in the currency in which the Debt Security is denominated or (ii) it is equal to the product of a qualified floating rate described in clause (i) and either (a) a fixed multiple that is greater than .65 but not more than 1.35, or (b) a fixed multiple greater than .65 but not more than 1.35, increased or decreased by a fixed rate. If a Debt Security provides for two or more qualified floating rates that (i) are within 0.25 percentage points of each other on the issue date or (ii) can reasonably be expected to have approximately the same values throughout the term of the Debt Security, the qualified floating rates together constitute a single qualified floating rate. A rate is not a qualified floating rate, however, if the rate is subject to certain restrictions (including caps, floors, governors or other similar restrictions) unless such restrictions are fixed -28- throughout the term of the Debt Security or are not reasonably expected to significantly affect the yield on the Debt Security. An "objective rate" is a rate, other than a qualified floating rate, that is determined using a single, fixed formula and that is based on objective financial or economic information, including one or more qualified floating rates or the yield or changes in the price of one or more actively traded items of personal property other than stock or debt of the issuer or a related party. A variable rate is not an objective rate, however, if it is based on information within the control of the issuer or a related party or is unique to the circumstances of the issuer or a related party, or if it is reasonably expected that the average value of the rate during the first half of the Debt Security's term will be either significantly less than or significantly greater than the average value of the rate during the final half of the Debt Security's term. An objective rate is a "qualified inverse floating rate" if (i) the rate is equal to a fixed rate minus a qualified floating rate, and (ii) the variations in the rate can reasonably be expected to inversely reflect contemporaneous variations in the cost of the qualified floating rate. If interest on a Debt Security is stated at a fixed rate for an initial period of one year or less followed by either a qualified floating rate or an objective rate for a subsequent period and (i) the fixed rate and the qualified floating rate or objective rate have values on the issue date of the Debt Security that do not differ by more than 0.25 percentage points or (ii) the value of the qualified floating rate or objective rate is intended to approximate the fixed rate, the fixed rate and the qualified floating rate or the objective rate constitute a single qualified floating rate or objective rate. Under these rules, Commercial Paper Rate Debt Securities, Prime Rate Debt Securities, LIBOR Debt Securities, Treasury Rate Debt Securities, CD Rate Debt Securities and Federal Funds Rate Debt Securities will generally be treated as Variable Rate Debt Securities. In general, if a Variable Rate Debt Security provides for stated interest at a single qualified floating rate or objective rate, all stated interest on the Debt Security is qualified stated interest and the amount of OID, if any, is determined by using, in the case of a qualified floating rate or qualified inverse floating rate, a fixed rate equal to the value as of the issue date of the qualified floating rate or qualified inverse floating rate, or, in the case of any other objective rate, a fixed rate that reflects the yield reasonably expected for the Debt Security. If a Variable Rate Debt Security does not provide for stated interest at a single qualified floating rate or objective rate or at a fixed rate (other than at a single fixed rate for an initial period), the amount of interest and OID accruals on the Debt Security are generally determined by (i) determining a fixed rate substitute for each variable rate provided under the Variable Rate Debt Security (generally, the value of each variable rate as of the issue date or, in the case of an objective rate that is not a qualified inverse floating rate, a rate that reflects the reasonably expected yield on the note), (ii) constructing the equivalent fixed rate debt instrument (using the fixed rate substitute described above), (iii) determining the amount of qualified stated interest and OID with respect to the equivalent fixed rate debt instrument, and (iv) making the appropriate adjustments for actual variable rates during the applicable accrual period. If a Variable Rate Debt Security provides for stated interest either at one or more qualified floating rates or at a qualified inverse floating rate, and in addition provides for stated interest at a single fixed rate (other than at a single fixed rate for an initial period), the amount of interest and OID accruals are determined as in the immediately preceding paragraph with the modification that the Variable Rate Debt Security is treated, for purposes of the first three steps of the determination, as if it provided for a qualified floating rate (or a qualified inverse floating rate, as the case may be) rather than the fixed rate. The qualified floating rate (or qualified inverse floating rate) replacing the fixed rate must be such that the fair market value of the Variable Rate Debt Security as of the issue date would be approximately the same as the fair market value of an otherwise identical debt instrument that provides for the qualified floating rate (or qualified inverse floating rate) rather than the fixed rate. The federal income tax treatment of any Debt Security that provides for payments of stated interest at a variable rate, but does not meet the foregoing requirements of a Variable Rate Debt Security, will be described in the applicable Prospectus Supplement. Short-Term Debt Securities. In general, an individual or other cash basis United States Holder of a Debt Security with a term of one year or less (a "short-term Debt Security") is not required to accrue OID (as specially defined below for the purposes of this paragraph) for United States federal income tax purposes unless it elects to do so (but may be required to include any stated interest in income as the interest is received). Accrual basis United States Holders and certain other United States Holders, including banks, regulated investment companies, dealers in securities, common trust funds, United States Holders who hold Debt Securities as part of certain identified hedging transactions, certain pass-through entities and cash basis United States Holders who so elect, are required to accrue -29- OID on short-term Debt Securities on either a straight-line basis or under the constant-yield method (based on daily compounding), at the election of the United States Holder. In the case of a United States Holder not required and not electing to include OID in income currently, any gain realized on the sale or retirement of the short-term Debt Security will be ordinary income to the extent of the OID accrued on a straight-line basis (unless an election is made to accrue the OID under the constant-yield method) through the date of sale or retirement. United States Holders who are not required and do not elect to accrue OID on short-term Debt Securities will be required to defer deductions for interest on borrowings allocable to short-term Debt Securities in an amount not exceeding the deferred income until the deferred income is realized. For purposes of determining the amount of OID subject to these rules, all interest payments on a short-term Debt Security, including stated interest, are included in the short- term Debt Security's stated redemption price at maturity. Foreign Currency Discount Debt Securities. OID for any accrual period on a Discount Debt Security that is denominated in, or determined by reference to, a foreign currency will be determined in the foreign currency and then translated into U.S. dollars in the same manner as stated interest accrued by an accrual basis United States Holder, as described under "Payments of Interest". Upon receipt of an amount attributable to OID (whether in connection with a payment of interest or the sale or retirement of a Debt Security), a United States Holder may recognize ordinary income or loss. Debt Securities Purchased at a Premium A United States Holder that purchases a Debt Security for an amount in excess of its principal amount may elect to treat such excess as "amortizable bond premium", in which case the amount required to be included in the United States Holder's income each year with respect to interest on the Debt Security will be reduced by the amount of amortizable bond premium allocable (based on the Debt Security's yield to maturity) to such year. In the case of a Debt Security that is denominated in, or determined by reference to, a foreign currency, bond premium will be computed in units of foreign currency, and amortizable bond premium will reduce interest income in units of the foreign currency. At the time amortized bond premium offsets interest income, exchange gain or loss (taxable as ordinary income or loss) is realized measured by the difference between exchange rates at that time and at the time of the acquisition of the Debt Securities. Any election to amortize bond premium shall apply to all bonds (other than bonds the interest on which is excludible from gross income) held by the United States Holder at the beginning of the first taxable year to which the election applies or thereafter acquired by the United States Holder, and is irrevocable without the consent of the Service. See also "Original Issue Discount--Election to Treat All Interest as Original Issue Discount." Purchase, Sale and Retirement of the Debt Securities A United States Holder's tax basis in a Debt Security will generally be its U.S. dollar cost (as defined below), increased by the amount of any OID or market discount included in the United States Holder's income with respect to the Debt Security and the amount, if any, of income attributable to de minimis original issue discount and de minimis market discount included in the United States Holder's income with respect to the Debt Security, and reduced by (i) the amount of any payments that are not qualified stated interest payments, and (ii) the amount of any amortizable bond premium applied to reduce interest on the Debt Security. The U.S. dollar cost of a Debt Security purchased with a foreign currency will generally be the U.S. dollar value of the purchase price on the date of purchase or, in the case of Debt Securities traded on an established securities market, as defined in the applicable Treasury Regulations, that are purchased by a cash basis United States Holder (or an accrual basis United States Holder that so elects), on the settlement date for the purchase. -30- A United States Holder will generally recognize gain or loss on the sale or retirement of a Debt Security equal to the difference between the amount realized on the sale or retirement and its tax basis in the Debt Security. The amount realized on a sale or retirement for an amount in foreign currency will be the U.S. dollar value of such amount on (i) the date payment is received in the case of a cash basis United States Holder, (ii) the date of disposition in the case of an accrual basis United States Holder or (iii) in the case of Debt Securities traded on an established securities market, as defined in the applicable Treasury Regulations, sold by a cash basis United States Holder (or an accrual basis United States Holder that so elects), on the settlement date for the sale. Except to the extent described above under "Original Issue Discount--Short-Term Debt Securities" or described in the next succeeding paragraph or attributable to accrued but unpaid interest, gain or loss recognized on the sale or retirement of a Debt Security will be capital gain or loss and will be long-term capital gain or loss if the Debt Security was held for more than one year. Gain or loss recognized by a United States Holder on the sale or retirement of a Debt Security that is attributable to changes in exchange rates will be treated as ordinary income or loss. However, exchange gain or loss is taken into account only to the extent of total gain or loss realized on the transaction. Exchange of Amounts in Other Than U.S. Dollars Foreign currency received as interest on a Debt Security or on the sale or retirement of a Debt Security will have a tax basis equal to its U.S. dollar value at the time such interest is received or at the time of such sale or retirement. Foreign currency that is purchased will generally have a tax basis equal to the U.S. dollar value of the foreign currency on the date of purchase. Any gain or loss recognized on a sale or other disposition of a foreign currency (including its use to purchase Debt Securities or upon exchange for U.S. dollars) will be ordinary income or loss. Indexed Debt Securities The applicable Prospectus Supplement will contain a discussion of any special United States federal income tax rules with respect to Indexed Securities (other than Debt Securities subject to the rules governing Variable Rate Debt Securities). United States Alien Holders For purposes of this discussion, a "United States Alien Holder" is any holder of a Debt Security who is (i) a nonresident alien individual or (ii) a foreign corporation, partnership or estate or trust, in each case not subject to United States federal income tax on a net income basis in respect of income or gain from a Debt Security. This discussion assumes that the Debt Security or coupon is not subject to the rules of Section 871(h) (4) (A) of the Code (relating to interest payments that are determined by reference to the income, profits, changes in the value of property or other attributes of the debtor or a related party). In addition, solely with respect to United States federal estate tax, the discussion assumes that the Debt Security had a maturity date, when issued, that was not less than 184 days from the date of issuance. Under present United States federal income and estate tax law, and subject to the discussion of backup withholding below: (1) payments of principal, premium (if any) and interest, including OID, by MacSaver or any of its paying agents to any holder of a Debt Security or coupon that is a United States Alien Holder will not be subject to United States federal withholding tax if, in the case of interest or OID, (i) the beneficial owner of the Debt Security or coupon does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of MacSaver entitled to vote, (ii) the beneficial owner of the Debt Security is not a controlled foreign corporation that is related to MacSaver through stock ownership, (iii) if the Debt Security is a Registered Security, -31- either (a) the beneficial owner of the Debt Security certifies to MacSaver or its agent, under penalties of perjury, that it is not a United States Holder and provides its name and address or (b) a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business (a "financial institution") and holds the Debt Security on behalf of a beneficial owner certifies to MacSaver or its agent, under penalties of perjury, that such statement has been received from the beneficial owner by it or by a financial institution between it and the beneficial owner and furnishes the payor with a copy thereof and (iv) in the case of a Debt Security which is not a Registered Security, the Debt Security is offered, sold and delivered in compliance with applicable restrictions relating to issuance of debt obligations which are not in registered form and payments on the Debt Securities are made in accordance with the applicable procedures relating to the issuance of debt obligations which are not in registered form (both of which restrictions and procedures will be described in the applicable Prospectus Supplement); (2) a United States Alien Holder of a Debt Security or coupon will not be subject to United States federal withholding tax on any gain realized on the sale or exchange of a Debt Security or coupon; and (3) a Debt Security or coupon held by an individual who at death is not a citizen or resident of the United States will not be includible in the individual's gross estate for purposes of the United States federal estate tax as a result of the individual's death if (a) the individual did not actually or constructively own 10% or more of the total combined voting power of all classes of stock of MacSaver entitled to vote and (b) the income on the Debt Security would not have been effectively connected with a United States trade or business of the individual at the individual's death. Recently proposed Internal Revenue Service Treasury regulations (the "Proposed Regulations") would provide alternative methods for satisfying the certification requirement described in clause (1)(iii) above. The Proposed Regulations also would require in the case of Debt Securities held by a foreign partnership, that (x) the certification described in clause (1)(iii) above be provided by the partners rather than by the foreign partnership and (y) the partnership provide certain information, including a United States taxpayer identification number. A look-through rule would apply in the case of tiered partnerships. The Proposed Regulations are proposed to be effective for payments made after December 31, 1997. There can be no assurance that the Proposed Regulations will be adopted or as to the provisions that they will include if and when adopted in temporary or final form. Backup Withholding and Information Reporting United States Holders In general, information reporting requirements will apply to payments of principal, any premium and interest on a Debt Security and the proceeds of the sale of a Debt Security before maturity within the United States to, and to the accrual of OID on a Discount Debt Security with respect to, non-corporate United States Holders, and "backup withholding" at a rate of 31% will apply to such payments and to payments of OID if the United States Holder fails to provide an accurate taxpayer identification number or to report all interest and dividends required to be shown on its federal income tax returns. United States Alien Holders Under current law, information reporting and backup withholding will not apply to payments of principal, premium (if any) and interest (including OID) made by the Company or a paying agent to a United States Alien Holder on a Debt Security if, in the case of Debt Securities which are Registered Securities, either of the certifications described in clause (1) (iii) under 'United States Alien Holders' above is received, provided that the payor does not have actual knowledge that the holder is a United States person. The Company or a paying agent, however, may report (on Internal Revenue Service Form 1042S) payments of interest (including OID) on Debt -32- Securities that are Registered Securities. See the discussion above under "United States Alien Holders" with respect to the Proposed Regulations. Payments of the proceeds from the sale by a United States Alien Holder of a Debt Security made to or through a foreign office of a broker will not be subject to information reporting or backup withholding, except that if the broker is a United States person, a controlled foreign corporation for United States tax purposes or a foreign person 50% or more of whose gross income is effectively connected with a United States trade or business for a specified three-year period, information reporting may apply to such payments. Payments of the proceeds from the sale of a Debt Security to or through the United States office of a broker is subject to information reporting and backup withholding unless the holder or beneficial owner certifies as to its non-United States status or otherwise establishes an exemption from information reporting and backup withholding. PLAN OF DISTRIBUTION The Company or MacSaver may sell Securities to or through underwriters, and also may sell Securities directly to other purchasers or through agents. The distribution of the Securities may be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. Sales of Common Stock offered hereby may be effected from time to time in one or more transactions on the NYSE or in negotiated transactions or a combination of such methods of sale, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at other negotiated prices. In connection with distributions of Common Stock or otherwise, the Company may enter into hedging transactions with broker-dealers in connection with which such broker-dealers may sell Common Stock registered hereunder in the course of hedging through short sales the positions they assume with the Company. In connection with the sale of Securities, underwriters or agents may receive compensation from the Company or MacSaver or from purchasers of Securities for whom they may act as agents in the form of discounts, concessions or commissions. Underwriters may sell Securities to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agents. Underwriters, dealers and agents that participate in the distribution of Securities may be deemed to be underwriters, and any discounts or commissions received by them from the Company or MacSaver and any profit on the resale of Securities by them may be deemed to be underwriting discounts and commissions, under the Securities Act of 1933 (the "Act"). Any such underwriter or agent will be identified, and any such compensation received from the Company or MacSaver will be described, in the Prospectus Supplement. Under agreements which may be entered into by the Company and, in the case of Debt Securities, MacSaver, underwriters and agents who participate in the distribution of Securities may be entitled to indemnification by the Company and, in the case of Debt Securities, MacSaver against certain liabilities, including liabilities under the Act. Certain of the underwriters or agents and their associates may be customers of, engage in transactions with and perform services for the Company or MacSaver in the ordinary course of business. VALIDITY OF SECURITIES The validity of the Securities to which this Prospectus relates will be passed upon for the Company and, in the case of Debt Securities, MacSaver by McGuire, Woods, Battle & Boothe, L.L.P., Richmond, Virginia, which serves as general counsel to the Company. As of June 9, 1997, partners and associates of McGuire, Woods, Battle & -33- Boothe, L.L.P., who performed services in connection with the offering made by this Prospectus, owned of record and beneficially 2,574 shares of Common Stock. Robert L. Burrus, Jr., a director of the Company, is a partner of that firm. The validity of the Securities offered hereby will be passed upon for any relevant Underwriters by Sullivan & Cromwell, New York, New York, who will rely upon the opinion of McGuire, Woods, Battle & Boothe, L.L.P. with respect to matters of Virginia law. EXPERTS The consolidated financial statements and the related financial statement schedule incorporated in this Prospectus by reference from Heilig-Meyers Company's Annual Report on Form 10-K have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report which is incorporated herein by reference, and has been so incorporated in reliance upon the report of such firm given their authority as experts in accounting and auditing. -34- PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution SEC registration fee...................... $125,393 Accountants' fees and expenses............ 40,000 Attorneys' fees and expenses.............. 75,000 Printing and engraving expenses........... 24,000 Fees and expenses of trustee.............. 10,000 State qualification fees and expenses..... 20,000 Rating agencies' fees..................... 315,000 Miscellaneous............................. 5,607 ------- Total................................ $615,000 ======= - -------------- All fees and expenses other than the SEC registration fee are estimated. Item 15. Indemnification of Directors and Officers Article V of the Restated Articles of Incorporation of the Company provides: 1. Definitions. For purposes of this Article the following definitions shall apply: (a) "Corporation" means this Corporation only and no predecessor entity or other legal entity; (b) "expenses" include counsel fees, expert witness fees, and costs of investigation, litigation and appeal, as well as any amounts expended in asserting a claim for indemnification; (c) "liability" means the obligation to pay a judgment, settlement, penalty, fine, or other such obligation, including, without limitation, any excise tax assessed with respect to an employee benefit plan; (d) "legal entity" means a corporation, partnership, joint venture, trust, employee benefit plan or other enterprise; (e) "predecessor entity" means a legal entity the existence of which ceased upon its acquisition by the Corporation in a merger or otherwise; and (f) "proceeding" means any threatened, pending, or completed action, suit, proceeding or appeal whether civil, criminal, administrative or investigative and whether formal or informal. 2. Limit On Liability. In every instance permitted by the Virginia Stock Corporation Act, as it exists on the date hereof or may hereafter be amended, the liability of a director or officer of the Corporation to the Corporation or its shareholders arising out of a single transaction, occurrence or course of conduct shall be eliminated. 3. Indemnification of Directors and Officers. The Corporation shall indemnify any individual who is, was or is threatened to be made a party to a proceeding (including a proceeding by or in the right of the Corporation) because such individual is or was a director or officer of the Corporation or because such individual is or was serving the Corporation or any other legal entity in any capacity at the request of the Corporation while a director or officer of the Corporation against all liabilities and reasonable expenses incurred in the proceeding, except such II-1 liabilities and expenses as are incurred because of such individual's willful misconduct or knowing violation of the criminal law. Service as a director or officer of a legal entity controlled by the Corporation shall be deemed service at the request of the Corporation. The determination that indemnification under this Section 3 is permissible and the evaluation as to the reasonableness of expenses in a specific case shall be made, in the case of a director, as provided by law, and in the case of an officer, as provided in Section 4 of this Article; provided, however, that if a majority of the directors of the Corporation has changed after the date of the alleged conduct giving rise to a claim for indemnification, such determination and evaluation shall, at the option of the person claiming indemnification, be made by special legal counsel agreed upon by the Board of Directors and such person. Unless a determination has been made that indemnification is not permissible, the Corporation shall make advances and reimbursements for expenses incurred by a director or officer in a proceeding upon receipt of an undertaking from such director or officer to repay the same if it is ultimately determined that such director or officer is not entitled to indemnification. Such undertaking shall be an unlimited, unsecured general obligation of the director or officer and shall be accepted without reference to such director's or officer's ability to make repayment. The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not of itself create a presumption that a director or officer acted in such a manner as to make such director or officer ineligible for indemnification. The Corporation is authorized to contract in advance to indemnify and make advances and reimbursements for expenses to any of its directors or officers to the same extent provided in this Section. 4. Indemnification of Others. The Corporation may, to a lesser extent or to the same extent that it is required to provide indemnification and make advances and reimbursements for expenses to its directors and officers pursuant to Section 3, provide indemnification and make advances and reimbursements for expenses to its employees and agents, the directors, officers, employees and agents of its subsidiaries and predecessor entities, and any person serving any other legal entity in any capacity at the request of the Corporation, and may contract in advance to do so. The determination that indemnification under this Section 4 is permissible, the authorization of such indemnification and the evaluation as to the reasonableness of expenses in a specific case shall be made as authorized from time to time by general or specific action of the Board of Directors, which action may be taken before or after a claim for indemnification is made, or as otherwise provided by law. No person's rights under Section 3 of this Article shall be limited by the provisions of this Section 4. 5. Miscellaneous. The rights of each person entitled to indemnification under this Article shall inure to the benefit of such person's heirs, executors and administrators. Special legal counsel selected to make determinations under this Article may be counsel for the Corporation. Indemnification pursuant to this Article shall not be exclusive of any other right of indemnification to which any person may be entitled, including indemnification pursuant to a valid contract, indemnification by legal entities other than the Corporation and indemnification under policies of insurance purchased and maintained by the Corporation or others. However, no person shall be entitled to indemnification by the Corporation to the extent such person is indemnified by another, including an insurer. The Corporation is authorized to purchase and maintain insurance against any liability it may have under this Article or to protect any of the persons named above against any liability arising from their service to the Corporation or any other legal entity at the request of the Corporation regardless of the Corporation's power to indemnify against such liability. The provisions of this Article shall not be deemed to preclude the Corporation from entering into contracts otherwise permitted by law with any individuals or legal entities, including those named above. If any provision of this Article or its application to any person or circumstance is held invalid by a court of competent jurisdiction, the invalidity shall not affect other provisions or applications of this Article, and to this end the provisions of this Article are severable. 6. Application; Amendments. The provisions of this Article shall be applicable from and after its adoption even though some or all of the underlying conduct or events relating to a proceeding may have occurred before its adoption. No amendment, modification or repeal of this Article shall diminish the right provided hereunder to any person arising from conduct or events occurring before the adoption of such amendment, modification or repeal. II-2 The Ninth Article of the Certificate of Incorporation of MacSaver provides: NINTH: This Corporation shall, to the maximum extent permitted from time to time under the law of the State of Delaware, indemnify and upon request shall advance expenses to any person who is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit, proceeding or claim, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was or has agreed to be a director or officer of this corporation or while a director or officer is or was serving at the request of this corporation as a director, officer, partner, trustee, employee or agent of any corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, against expenses (including attorney's fees and expenses), judgment, fines, penalties and amounts paid in settlement incurred in connection with the investigation, preparation to defend or defense of such action, suit, proceeding or claim; provided, however, that the foregoing shall not require this corporation to indemnify or advance expenses to any person in connection with any action, suit, proceeding, claim or counterclaims initiated by or on behalf of such person. Such indemnification shall not be exclusive of other indemnification rights arising under any by-law, agreement, vote of directors or stockholders or otherwise and shall inure to the benefit of the heirs and legal representatives of such person. Any person seeking indemnification under this Ninth Paragraph shall be deemed to have met the standard of conduct required for such indemnification unless the contrary shall be established. Any repeal or modification of the foregoing provisions of this Ninth Paragraph shall not adversely effect any right or protection of a director or officer of this corporation with respect to any acts or omissions of such director or officer occurring prior to such repeal or modification. The Company and MacSaver maintain liability insurance which may provide indemnification, including indemnification against liabilities under the Securities Act of 1933, to the officers and directors of the Company and MacSaver in certain circumstances. In the Underwriting Agreements, forms of which are filed as Exhibit 1.1 and 1.2 hereto, the Underwriters will agree to indemnify, under certain conditions, the Company and MacSaver, their directors, certain of their officers and persons who control the Company and MacSaver within the meaning of the Securities Act of 1933, as amended (the "Securities Act") against certain liabilities. Item 16. Exhibits 1.1 Proposed form of Underwriting Agreement for Common Stock, filed with the Commission as Exhibit 1.1 to the Company's Registration Statement on Form S-3 (No. 333-07753), is incorporated herein by this reference. 1.2 Proposed form of Underwriting Agreement for Debt Securities. 4.1 Indenture dated as of August 1, 1996 among the Company, MacSaver and First Union National Bank of Virginia, as Trustee, including proposed form of Debt Securities and Guarantees, filed with the Commission as Exhibit 4(a) to the Company's Current Report on Form 8-K dated September 11, 1996 (No. 1-8484), is incorporated herein by this reference. 4.2 Company's Restated Articles of Incorporation, filed with the Commission as Exhibit 3(a) to Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1990 (No. 1-8484), are incorporated herein by this reference. 4.3 Articles of Amendment to Company's Restated Articles of Incorporation, filed with the Commission as Exhibit 4 to Company's Form 8 (Amendment No. 5 to Form 8-A filed April 26, 1983) filed August 6, 1992 (No. 1-8484), are incorporated herein by this reference. II-3 4.4 Articles of Amendment to Company's Restated Articles of Incorporation, filed with the Commission as Exhibit 3(c) to Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993 (No. 1-8484), are incorporated herein by this reference. 4.5 Articles of Amendment to Company's Restated Articles of Incorporation, filed with the Commission as Exhibit 3(d) to Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1995 (No. 1-8484), are incorporated herein by this reference. 4.6 Company's By-laws, as amended, filed with the Commission as Exhibit 3(e) to Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1997 (No. 1-8484), are incorporated herein by this reference. 4.7 Certificate of Incorporation of MacSaver as in effect since December 21, 1989, filed with the Commission as Exhibit 4.7 to Company's Registration Statement on Form S-3 (No. 333-07753), is incorporated herein by this reference. 4.8 By-laws of MacSaver as in effect since February 27, 1990, filed with the Commission as Exhibit 4.8 to Company's Registration Statement on Form S-3 (No. 333-07753), are incorporated herein by this reference. 4.9 Rights Agreement dated as of February 17, 1988 (the "Rights Agreement") between the Company and Crestar Bank, filed with the Commission as Exhibit (2) to Company's Registration Statement on Form 8-A dated February 19, 1988 (No. 1-8484), is incorporated herein by this reference. 4.10 Supplements Nos. 1-4 dated September 15, 1989 to Rights Agreement filed with the Commission as Exhibits 2(a)-(d) to Form 8 (No. 1-8484) filed with the Commission on September 20, 1989, are incorporated herein by this reference. 5.1 Opinion and consent of McGuire, Woods, Battle & Boothe, L.L.P. as to the validity of the Securities. 8.1 Opinion and consent of McGuire, Woods, Battle & Boothe, L.L.P. as to certain tax matters. 12.1 Computation of ratio of earnings to fixed charges. 23.1 Consent of Deloitte & Touche LLP. 23.2 Consents of McGuire, Woods, Battle & Boothe, L.L.P. (included as part of Exhibits 5.1 and 8.1). 23.3 Consent of Arthur Andersen LLP. 23.4 Consent of Deloitte & Touche LLP. 24.1 Power of Attorney for Heilig-Meyers Company (see Heilig-Meyers Company signature page). 24.2 Power of Attorney for MacSaver (see MacSaver signature page). 25.1 Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939, as amended, of First Union National Bank of Virginia. Item 17. Undertakings 1. The undersigned registrants hereby undertake: (a) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: II-4 (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act of 1933 if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated by reference in the registration statement. (b) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. 2. The undersigned registrants hereby undertake that, for purposes of determining any liability under the Securities Act, each filing of the registrants' annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 3. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under Item 15 above, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-5 SIGNATURES Pursuant to the requirements of the Securities Act, the Company certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Richmond and Commonwealth of Virginia, on June 24, 1997. HEILIG-MEYERS COMPANY By: s/William C. DeRusha ------------------------------ William C. DeRusha Chairman of the Board Principal Executive Officer Power of Attorney Each individual whose signature appears below appoints William C. DeRusha and Troy A. Peery, Jr., and each of them, as such individual's true and lawful attorneys-in-fact and agents with full power of substitution, for such individual and in his or her name, place and stead, in any and all capacities stated below, to sign any and all amendments (including post-effective amendments) to this registration statement and any registration statement related to the offering contemplated by this registration statement that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in person to enable the Company to comply with the Securities Act of 1933 and all requirements of the Securities and Exchange Commission. Pursuant to the requirements of the Securities Act, this registration statement has been signed below by the following persons in the capacities and on the date indicated.
Signature Title Date s/William C. DeRusha Chairman of the Board; June 24, 1997 - ----------------------------- Principal Executive William C. DeRusha Officer; Director s/Troy A. Peery, Jr. President; Director June 24, 1997 - ------------------------------- Troy A. Peery, Jr. s/Joseph R. Jenkins Executive Vice June 24, 1997 - --------------------------------- President; Principal Joseph R. Jenkins Financial Officer s/William J. Dieter Senior Vice President, June 24, 1997 - --------------------------------- Accounting; Principal William J. Dieter Accounting Officer s/Hyman Meyers Director June 18, 1997 - ------------------------------- Hyman Meyers s/S. Sidney Meyers Director June 18, 1997 - --------------------------------- S. Sidney Meyers s/Nathaniel Krumbein Director June 18, 1997 - --------------------------------- Nathaniel Krumbein s/Alexander Alexander Director June 18, 1997 - --------------------------------- Alexander Alexander s/Robert L. Burrus, Jr. Director June 18, 1997 - ---------------------------------- Robert L. Burrus, Jr. s/Benjamin F. Edwards, III Director June 18, 1997 - ---------------------------------- Benjamin F. Edwards, III s/Alan G. Fleischer Director June 18, 1997 - ---------------------------------- Alan G. Fleischer s/Lawrence N. Smith Director June 18, 1997 - --------------------------------- Lawrence N. Smith s/Charles A. Davis Director June 18, 1997 - -------------------------------- Charles A. Davis s/Beverley E. Dalton Director June 18, 1997 - ---------------------------------- Beverley E. Dalton s/Eugene P. Trani Director June 18, 1997 - ---------------------------- Eugene P. Trani Pursuant to the requirements of the Securities Act, MacSaver certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the County of New Castle and State of Delaware, on June 19, 1997. MACSAVER FINANCIAL SERVICES, INC. By: s/Joseph R. Jenkins ------------------------ Joseph R. Jenkins President Power of Attorney Each individual whose signature appears below appoints Joseph R. Jenkins and Roy B. Goodman, and each of them, as such individual's true and lawful attorneys-in-fact and agents with full power of substitution, for such individual and in his or her name, place and stead, in any and all capacities stated below, to sign any and all amendments (including post-effective amendments) to this registration statement and any registration statement related to the offering contemplated by this registration statement that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in person to enable the Company to comply with the Securities Act of 1933 and all requirements of the Securities and Exchange Commission. Pursuant to the requirements of the Securities Act, this registration statement has been signed below by the following persons in the capacities and on the date indicated.
Signature Title Date s/Joseph R. Jenkins President and Principal June 19, 1997 - -------------------------------- Executive Officer; Director Joseph R. Jenkins s/Roy B. Goodman Vice President and Principal June 19, 1997 - ----------------------------- Financial Officer; Director Roy B. Goodman s/William J. Dieter Director June 19, 1997 - -------------------------------- William J. Dieter s/William E. Helms Director June 19, 1997 - ------------------------------- William E. Helms
EXHIBIT INDEX
Exhibit No. Description 1.2 Proposed form of Underwriting Agreement for Debt Securities. 5.1 Opinion and consent of McGuire, Woods, Battle & Boothe, L.L.P. as to the validity of the Securities. 8.1 Opinion and consent of McGuire, Woods, Battle & Boothe, L.L.P. as to certain tax matters. 12.1 Computation of ratio of earnings to fixed charges. 23.1 Consent of Deloitte & Touche LLP. 23.2 Consents of McGuire, Woods, Battle & Boothe, L.L.P. (included as part of Exhibits 5.1 and 8.1). 23.3 Consent of Arthur Andersen LLP. 23.4 Consent of Deloitte & Touche LLP. 24.1 Power of Attorney for Heilig-Meyers Company (see Heilig-Meyers Company signature page). 24.2 Power of Attorney for MacSaver (see MacSaver signature page). 25.1 Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939, as amended, of First Union National Bank of Virginia.
EX-1.2 2 UNDERWRITING AGMT FOR DEBT SECURITIES Exhibit 1(a) MACSAVER FINANCIAL SERVICES, INC. Draft of June 19, 1997 Debt Securities unconditionally guaranteed as to the payment of principal, premium, if any, and interest by Heilig-Meyers Company Underwriting Agreement _________, 19__ To the Representatives of the several Underwriters named in the respective Pricing Agreements hereinafter described. Ladies and Gentlemen: From time to time MacSaver Financial Services, Inc., a Delaware corporation (the "Company"), and Heilig-Meyers Company, a Virginia corporation (the "Guarantor"), propose to enter into one or more Pricing Agreements (each a "Pricing Agreement") in the form of Annex I hereto, with such additions and deletions as the parties thereto may determine, and, subject to the terms and conditions stated herein and therein, the Company proposes to issue and sell to the firms named in Schedule I to the applicable Pricing Agreement (such firms DC_LAN01\52911.8 constituting the "Underwriters" with respect to such Pricing Agreement and the securities specified therein) certain of its debt securities (the "Debt Securities") specified in Schedule II to such Pricing Agreement (with respect to such Pricing Agreement, the "Designated Debt Securities"). Such Debt Securities, including the Designated Debt Securities, will be unconditionally guaranteed as to the payment of principal, premium, if any, and interest (the "Guarantees") by the Guarantor. The Debt Securities and the Guarantees are hereinafter collectively called the "Securities", and the Designated Debt Securities and the Guarantees relating thereto ("Designated Guarantees") are hereinafter collectively called the ("Designated Securities"). The terms and rights of any particular issuance of Designated Securities shall be as specified in the Pricing Agreement relating thereto and in or pursuant to the indenture (the "Indenture") identified in such Pricing Agreement. 1. Particular sales of Designated Securities may be made from time to time to the Underwriters of such Securities, for whom the firms designated as representatives of the Underwriters of such Securities in the Pricing Agreement relating thereto will act as representatives (the "Representatives"). The term "Representatives" also refers to a single firm acting as sole representative of the Underwriters and to an Underwriter or Underwriters who act without any firm being designated as its or their representatives. This Underwriting Agreement shall not be construed as an obligation of the Company or the Guarantor to sell any of the Securities or as an obligation of any of the Underwriters to purchase the Securities. The obligation of each of the Company and the Guarantor to issue and sell any of the Securities, on the one hand, and the obligation of any of the Underwriters to purchase any of the Securities, on the other hand, shall be evidenced by the Pricing Agreement with respect to the Designated Securities specified therein. Each Pricing Agreement shall specify the aggregate principal amount of the Designated Debt Securities comprising a part of such Designated Securities, the initial public offering price of such Designated Securities, the purchase price to the Underwriters of such Designated Securities, the names of the Underwriters of such Designated Securities, the names of the Representatives of such Underwriters and the principal amount of such Designated Debt Securities to be purchased by each Underwriter and shall set forth the date, time and manner of delivery of such Designated Securities and payment therefor. The Pricing Agreement shall also specify (to the extent not set forth in the Indenture and the registration statement and prospectus with respect thereto) the terms of such Designated Securities. A Pricing Agreement shall be in the form of an executed writing (which may be in counterparts), and may be evidenced by an exchange of telegraphic communications or any other rapid transmission device designed to produce a written record of communications transmitted. The obligations of the Underwriters under this Agreement and each Pricing Agreement shall be several and not joint. -2- DC_LAN01\52911.8 2. Each of the Company and the Guarantor, jointly and severally, represents and warrants to, and agrees with, each of the Underwriters that: (a) A registration statement on Form S-3 (File No. 333-_____ (the "Initial Registration Statement") in respect of the Securities has been filed with the Securities and Exchange Commission (the "Commission"); the Initial Registration Statement and any post-effective amendment thereto, each in the form heretofore delivered or to be delivered to the Representatives and, excluding exhibits to such registration statement, but including all documents incorporated by reference in the prospectus contained therein, to the Representatives for each of the other Underwriters, have been declared effective by the Commission in such form; other than a registration statement, if any, increasing the size of the offering (a "Rule 462(b) Registration Statement"), filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the "Act"), which became effective upon filing, no other document with respect to the Initial Registration Statement or document incorporated by reference therein has heretofore been filed or transmitted for filing with the Commission (other than prospectuses filed pursuant to Rule 424(b) of the rules and regulations of the Commission under the Act, each in the form heretofore delivered to the Representatives); and no stop order suspending the effectiveness of the Initial Registration Statement, any post-effective amendment thereto or the 462(b) Registration Statement, if any, has been issued and no proceeding for that purpose has been initiated or threatened by the Commission (any preliminary prospectus included in the Initial Registration Statement or filed with the Commission pursuant to Rule 424(a) under the Act, is hereinafter called a "Preliminary Prospectus"; the various parts of the Initial Registration Statement and the Rule 462(b) Registration Statement, if any, including all exhibits thereto and the documents incorporated by reference in the prospectus contained in the Initial Registration Statement at the time such part of the Initial Registration Statement became effective or such part of the Rule 462(b) Registration Statement, if any, became or hereafter becomes effective but excluding Form T-1, each as amended at the time such part of the registration statement became effective, are hereinafter collectively called the "Registration Statement"; the prospectus relating to the Securities, in the form in which it has most recently been filed, or transmitted for filing, with the Commission on or prior to the date of this Agreement, being hereinafter called the "Prospectus"; any reference herein to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to the applicable form under the Act, as of the date of such Preliminary Prospectus or Prospectus, as the case may be; any reference to any amendment or supplement to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include any documents filed after the date of such Preliminary Prospectus or Prospectus, as the case may be, under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and incorporated by reference in such Preliminary Prospectus or Prospectus, as the case may be; any reference to any amendment to the Registration Statement shall be deemed to refer to and include any annual report of the Company or the Guarantor filed pursuant to Sections 13(a) or 15(d) of the Exchange Act after the effective date of the Registration Statement that -3- DC_LAN01\52911.8 is incorporated by reference in the Registration Statement; and any reference to the Prospectus as amended or supplemented shall be deemed to refer to the Prospectus as amended or supplemented in relation to the applicable Designated Securities in the form in which it is filed with the Commission pursuant to Rule 424(b) under the Act in accordance with Section 5(a) hereof, including any documents incorporated by reference therein as of the date of such filing); (b) The documents incorporated by reference in the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and none of such documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and any further documents so filed and incorporated by reference in the Prospectus or any further amendment or supplement thereto, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company and the Guarantor by an Underwriter of Designated Securities through the Representatives expressly for use in the Prospectus as amended or supplemented relating to such Securities; (c) The Registration Statement and the Prospectus conform, and any further amendments or supplements to the Registration Statement or the Prospectus will conform, in all material respects to the requirements of the Act and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act") and the rules and regulations of the Commission thereunder and do not and will not, as of the applicable effective date as to the Registration Statement and any amendment thereto and as of the applicable filing date as to the Prospectus and any amendment or supplement thereto, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company and the Guarantor by an Underwriter of Designated Securities through the Representatives expressly for use in the Prospectus as amended or supplemented relating to such Securities; -4- DC_LAN01\52911.8 (d) Neither the Company, the Guarantor nor any of their subsidiaries has sustained since the date of the latest audited financial statements included or incorporated by reference in the Prospectus any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus; and, since the respective dates as of which information is given in the Registration Statement and the Prospectus, there has not been any change in the capital stock or long-term debt of the Company, the Guarantor or any of their subsidiaries or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, stockholders' equity or results of operations of the Company, the Guarantor or any of their subsidiaries, otherwise than as set forth or contemplated in the Prospectus; (e) The Company been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware and the Guarantor has been duly incorporated and is validly existing as a corporation in good standing under the laws of the Commonwealth of Virginia, and each has power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus, and each has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties, or conducts any business, so as to require such qualification, or is subject to no material liability or disability by reason of failure to be so qualified in any such jurisdiction; and each subsidiary of the Company or the Guarantor has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties, or conducts any business, so as to require such qualification, or is subject to no material liability or disability by reason of failure to be so qualified in any such jurisdiction; (f) All of the issued shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable; the Guarantor has an authorized capitalization as set forth in the Prospectus, and all of the issued shares of capital stock of the Guarantor have been duly and validly authorized and issued and are fully paid and non-assessable and conform to the description of the Securities contained in the Prospectus; and all of the issued shares of capital stock of each subsidiary of the Company or the Guarantor have been duly and validly authorized and issued, are fully paid and non-assessable and (except for directors' qualifying shares) are owned directly or indirectly by the Company or the Guarantor, as the case may be, free and clear of all liens, encumbrances, equities or claims; -5- DC_LAN01\52911.8 (g) The Securities have been duly authorized, and, when Designated Debt Securities are issued and delivered pursuant to this Agreement and the Pricing Agreement with respect to such Designated Securities and the Indenture, against payment of the consideration therefor in accordance herewith, such Designated Securities will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Company (in the case of Designated Debt Securities) and the Guarantor (in the case of Designated Guarantees) entitled to the benefits provided by the Indenture, which will be substantially in the form filed as an exhibit to the Registration Statement; the Indenture has been duly authorized and duly qualified under the Trust Indenture Act and, at the Time of Delivery for such Designated Securities (as defined in Section 4 hereof), the Indenture will constitute a valid and legally binding instrument, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; and the Indenture conforms, and the Designated Securities will conform, to the descriptions thereof contained in the Prospectus as amended or supplemented with respect to such Designated Securities; (h) The issue and sale of the Securities and the compliance by the Company and the Guarantor with all of the provisions of the Securities, the Indenture, this Agreement and any Pricing Agreement, and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or the Guarantor or any of their subsidiaries is a party or by which the Company or the Guarantor or any of their subsidiaries is bound or to which any of the property or assets of the Company or the Guarantor is subject, nor will such action result in any violation of any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company, the Guarantor or any of their subsidiaries or any of their properties, which breach, violation or default would have a material adverse effect on the financial position, stockholders' equity, or results of operations of the Guarantor and its subsidiaries taken as a whole, or upon the issue and sale of the Securities and the compliance by the Company and the Guarantor with all of the provisions of the Securities, the Indenture, this Agreement and any Pricing Agreement, and the consummation of the transactions herein and therein contemplated, nor will such action result in any violation of the provisions of the Articles of Incorporation or the By-laws of the Company or the Guarantor; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Securities or the consummation by the Company or the Guarantor of the transactions contemplated by this Agreement or any Pricing Agreement or the Indenture, except such as have been, or will have been prior to the Time of Delivery, obtained under the Act and the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky -6- DC_LAN01\52911.8 laws in connection with the purchase and distribution of the Securities by the Underwriters; (i) The statements set forth in the Prospectus as amended or supplemented under the captions "Description of Debt Securities" or "Description of Notes", insofar as they purport to constitute a summary of the terms of the Securities, and under the caption "United States Taxation", insofar as they are or refer to statements of United States law or legal conclusions relating thereto, are accurate, complete and fair in all material respects; (j) Other than as set forth in the Prospectus, there are no legal or governmental proceedings pending to which the Company, the Guarantor or any of their subsidiaries is a party or of which any property of the Company, the Guarantor or any of their subsidiaries is the subject which the Company or the Guarantor has reasonable cause to believe would either individually or in the aggregate have a material adverse effect on the current or future consolidated financial position, stockholders' equity or results of operations of the Company, the Guarantor or their subsidiaries taken as a whole; and, to the best of the Company's and the Guarantor's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; (k) Neither the Company nor the Guarantor is or, after giving effect to the offering and sale of the Securities, will be an "investment company" or an entity "controlled" by an "investment company", as such terms are defined in the Investment Company Act of 1940, as amended (the "Investment Company Act"); (l) None of the Company, the Guarantor or any of their affiliates does business with the government of Cuba or with any person or affiliate located in Cuba within the meaning of the U.S. Treasury Department's Cuban Assets Control Regulations, the Cuban Liberty and Democratic Solidarity ("LIBERTAD") Act of 1996 or Section 517.075, Florida Statutes; and (m) Deloitte & Touche LLP, who have certified certain financial statements of the Guarantor and its subsidiaries (including the Company), are independent public accountants as required by the Act and the rules and regulations of the Commission thereunder. -7- DC_LAN01\52911.8 3. Upon the execution of the Pricing Agreement applicable to any Designated Securities and authorization by the Representatives of the release of such Designated Securities, the several Underwriters propose to offer such Designated Securities for sale upon the terms and conditions set forth in the Prospectus as amended or supplemented. 4. Designated Securities to be purchased by each Underwriter pursuant to the Pricing Agreement relating thereto, in the form specified in such Pricing Agreement, and in such authorized denominations and registered in such names as the Representatives may request upon at least forty-eight hours' prior notice to the Company, shall be delivered by or on behalf of the Company and the Guarantor to the Representatives for the account of such Underwriter, against payment by such Underwriter or on its behalf of the purchase price therefor by wire transfer or certified or official bank check or checks, payable to the order of the Company in the funds specified in such Pricing Agreement, all in the manner and at the place and time and date specified in such Pricing Agreement or at such other place and time and date as the Representatives and the Company may agree upon in writing, such time and date being herein called the "Time of Delivery" for such Securities. 5. Each of the Company and the Guarantor, jointly and severally, agrees with each of the Underwriters of any Designated Securities: (a) To prepare the Prospectus as amended or supplemented in relation to the applicable Designated Securities in a form approved by the Representatives and to file such Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's close of business on the second business day following the execution and delivery of the Pricing Agreement relating to the applicable Designated Securities or, if applicable, such earlier time as may be required by Rule 424(b); to make no further amendment or any supplement to the Registration Statement or Prospectus as amended or supplemented after the date of the Pricing Agreement relating to such Securities and prior to the Time of Delivery for such Securities which shall be disapproved by the Representatives for such Securities promptly after reasonable notice thereof; to advise the Representatives promptly of any such amendment or supplement after such Time of Delivery and furnish the Representatives with copies thereof; to file promptly all reports and any definitive proxy or information statements required to be filed by the Company or the Guarantor with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act for so long as the delivery of a prospectus is required in connection with the offering or sale of such Securities, and during such same period to advise the Representatives, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed with the Commission, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any prospectus -8- DC_LAN01\52911.8 relating to the Securities, of the suspension of the qualification of such Securities for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or Prospectus or for additional information; and, in the event of the issuance of any such stop order or of any such order preventing or suspending the use of any prospectus relating to the Securities or suspending any such qualification, to promptly use its best efforts to obtain the withdrawal of such order; (b) Promptly from time to time to take such action as the Representatives may reasonably request to qualify such Securities for offering and sale under the securities laws of such jurisdictions as the Representatives may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of such Securities, provided that in connection therewith neither the Company nor the Guarantor shall be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction; (c) Prior to 10:00 a.m., New York City time, on the New York Business Day next succeeding the date of this Agreement and from time to time, to furnish the Underwriters with copies of the Prospectus as amended or supplemented in New York City in such quantities as the Representatives may reasonably request, and, if the delivery of a prospectus is required at any time in connection with the offering or sale of the Securities and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Act, the Exchange Act or the Trust Indenture Act, to notify the Representatives and upon their request to file such document and to prepare and furnish without charge to each Underwriter and to any dealer in securities as many copies as the Representatives may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance; (d) To make generally available to its securityholders as soon as practicable, but in any event not later than eighteen months after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act), an earnings statement of the Guarantor and its subsidiaries (which need not be audited) complying -9- DC_LAN01\52911.8 with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Guarantor, Rule 158); (e) During the period beginning from the date of the Pricing Agreement for such Designated Securities and continuing to and including the later of (i) the termination of trading restrictions for such Designated Securities, as notified to the Company by the Representatives and (ii) the Time of Delivery for such Designated Securities, not to offer, sell, contract to sell or otherwise dispose of any debt securities of the Company or the Guarantor, or any guarantees by the Company or the Guarantor of debt securities of others, which mature more than one year after such Time of Delivery and which are substantially similar to such Designated Debt Securities or Designated Guarantees, without the prior written consent of the Representatives; and (f) If the Company elects to rely upon Rule 462(b), the Company shall file a Rule 462(b) Registration Statement with the Commission in compliance with Rule 462(b) by 10:00 p.m., Washington, D.C. time, on the date of this Agreement, and the Company shall at the time of filing either pay to the Commission the filing fee for the Rule 462(b) Registration Statement or give irrevocable instructions for the payment of such fee pursuant to Rule 111(b) under the Act. 6. Each of the Company and the Guarantor, jointly and severally, covenants and agrees with the several Underwriters that the Company will pay or cause to be paid the following: (i) the fees, disbursements and expenses of their counsel and accountants in connection with the registration of the Securities under the Act and all other expenses in connection with the preparation, printing and filing of the Registration Statement, any Preliminary Prospectus and the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the Underwriters and dealers; (ii) the cost of printing or producing any Agreement among Underwriters, this Agreement, any Pricing Agreement, any Indenture, any Blue Sky and Legal Investment Memoranda, closing documents (including any compilations thereof) and any other documents in connection with the offering, purchase, sale and delivery of the Securities; (iii) all expenses in connection with the qualification of the Securities for offering and sale under state securities laws as provided in Section 5(b) hereof, including the fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky and Legal Investment Surveys; (iv) any fees charged by securities rating services for rating the Securities; (v) any filing fees incident to, and the fees and disbursements of counsel for the Underwriters in connection with, any required review by the National Association of Securities Dealers, Inc. of the terms of the sale of the Securities; (vi) the cost of preparing the Securities; (vii) the fees and expenses of any Trustee and any agent of any Trustee and the fees and disbursements of counsel for any Trustee in connection with any Indenture and the Securities; and (viii) all other costs and expenses incident to the performance of its obligations -10- DC_LAN01\52911.8 hereunder which are not otherwise specifically provided for in this Section. It is understood, however, that, except as provided in this Section, and Sections 8 and 11 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, transfer taxes on resale of any of the Securities by them, and any advertising expenses connected with any offers they may make. 7. The obligations of the Underwriters of any Designated Securities under the Pricing Agreement relating to such Designated Securities shall be subject, in the discretion of the Representatives, to the condition that all representations and warranties and other statements of the Company and the Guarantor in or incorporated by reference in the Pricing Agreement relating to such Designated Securities are, at and as of the Time of Delivery for such Designated Securities, true and correct, the condition that the Company and the Guarantor shall have performed all of their respective obligations hereunder theretofore to be performed, and the following additional conditions: (a) The Prospectus as amended or supplemented in relation to the applicable Designated Securities shall have been filed with the Commission pursuant to Rule 424(b) within the applicable time period prescribed for such filing by the rules and regulations under the Act and in accordance with Section 5(a) hereof; if the Company has elected to rely upon Rule 462(b), the Rule 462(b) Registration Statement shall have become effective the Rule 462(b) Registration Statement shall have become effective by 10:00 p.m., Washington, D.C. time on the date of this Agreement; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and all requests for additional information on the part of the Commission shall have been complied with to the Representatives' reasonable satisfaction; (b) Counsel for the Underwriters shall have furnished to the Representatives such opinion or opinions, (a draft of each such opinion is attached as Annex III(a) hereto) dated the Time of Delivery for such Designated Securities, with respect to the incorporation of the Company, the validity of the Designated Securities being delivered at such Time of Delivery, the Registration Statement, the Prospectus, and such other related matters as the Representatives may reasonably request, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters; -11- DC_LAN01\52911.8 (c) McGuire, Woods, Battle & Boothe, L.L.P., counsel for the Company and the Guarantor, or other counsel for the Company and the Guarantor satisfactory to the Representatives shall have furnished to the Representatives their written opinion (a draft of each such opinion is attached as Annex III(b) hereto), dated the Time of Delivery for such Designated Securities, in form and substance satisfactory to the Representatives, to the effect that: (i) Each of the Company and the Guarantor has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, with corporate power and authority to own its properties and conduct its business as described in the Prospectus as amended or supplemented; (ii) The Guarantor has an authorized capitalization as set forth in the Prospectus as amended or supplemented and all of the issued shares of capital stock of the Company and the Guarantor have been duly and validly authorized and issued and are fully paid and non-assessable; (iii) To the best of such counsel's knowledge and other than as set forth in the Prospectus, there are no legal or governmental proceedings pending to which the Company, the Guarantor or any of their subsidiaries is a party or of which any property of the Company, the Guarantor or any of their subsidiaries is the subject which could be reasonably expected to individually or in the aggregate have a material adverse effect on the current or future consolidated financial position, stockholders' equity or results of operations of the Company, the Guarantor or their subsidiaries taken as a whole; and, to the best of such counsel's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; (iv) This Agreement and the Pricing Agreement with respect to the Designated Securities have been duly authorized, executed and delivered by the Company and the Guarantor; (v) The Designated Securities have been duly authorized, executed, authenticated, issued and delivered and constitute valid and legally binding obligations of the Company (in the case of the Designated Debt Securities) and the Guarantor (in the case of the Designated Guarantees) entitled to the benefits provided by the Indenture; -12- DC_LAN01\52911.8 (vi) The Indenture has been duly authorized, executed and delivered by the Company and the Guarantor and (assuming the Indenture has been duly authorized, executed and delivered by the Trustee) constitutes a valid and legally binding obligation of the Company and the Guarantor, enforceable against the Company and the Guarantor in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; and the Indenture has been duly qualified under the Trust Indenture Act; (vii) The issue and sale of the Designated Securities and the compliance by the Company and the Guarantor with all of the provisions of the Designated Securities, the Indenture, this Agreement and the Pricing Agreement with respect to the Designated Securities and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument known to such counsel to which the Company, the Guarantor or any of their subsidiaries is a party or by which the Company, the Guarantor or any of their subsidiaries is bound or to which any of the property or assets of the Company, the Guarantor or any of their subsidiaries is subject, nor will such actions result in any violation of any statute or any order, rule or regulation known to such counsel of any court or governmental agency or body having jurisdiction over the Company, the Guarantor or any of their subsidiaries or any of their properties, which breach, violation or default would have a material adverse effect on the financial position, stockholders' equity, or results of operations of the Guarantor and its subsidiaries taken as a whole, or upon the issue and sale of the Designated Securities and the compliance by the Company and the Guarantor with all of the provisions of the Designated Securities, the Indenture, the Underwriting Agreement and any Pricing Agreement, and the consummation of the transactions therein contemplated, nor will such action result in any violation of the provisions of the Articles of Incorporation or the By-laws of the Company or the Guarantor; (viii) No consent, approval, authorization, order, registration or qualification of or with any court or governmental agency or body is required for the issue and sale of the Designated Securities or the consummation by the Company or the Guarantor of the transactions contemplated by this Agreement or such Pricing Agreement or the Indenture, except such as have been obtained under the Act and the Trust Indenture Act and such consents, approvals, authorizations, orders, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Designated Securities by the Underwriters; -13- DC_LAN01\52911.8 (ix) The statements set forth in the Prospectus as amended or supplemented under the captions "Description of Debt Securities" or "Description of Notes", insofar as they purport to constitute a summary of the terms of the Securities, and under the caption "United States Taxation", insofar as they are or refer to statements of United States law or legal conclusions relating thereto, are accurate, complete and fair in all material respects; (x) Neither the Company nor the Guarantor is an "investment company" or an entity "controlled" by an "investment company", as such terms are defined in the Investment Company Act; (xi) The documents incorporated by reference in the Prospectus as amended or supplemented (other than the financial statements, related schedules and financial data included therein, as to which such counsel need express no opinion), when they became effective or were filed with the Commission, as the case may be, complied as to form in all material respects with the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder; and they have no reason to believe that any of such documents, when they became effective or were so filed, as the case may be, contained, in the case of a registration statement which became effective under the Act, an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or, in the case of other documents which were filed under the Act or the Exchange Act with the Commission, an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such documents were so filed, not misleading; and (xii) The Registration Statement and the Prospectus as amended or supplemented and any further amendments and supplements thereto made by the Company or the Guarantor prior to the Time of Delivery for the Designated Securities (other than the financial statements, related schedules and financial data included therein, as to which such counsel need express no opinion) comply as to form in all material respects with the requirements of the Act and the Trust Indenture Act and the rules and regulations thereunder; although they do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus, except to the extent indicated in the opinion in subsection (ix) of this Section 7(c), they have no reason to believe that, as of its effective date, the Registration Statement or any further amendment thereto made by the -14- DC_LAN01\52911.8 Company or the Guarantor prior to the Time of Delivery (other than the financial statements, related schedules and financial data included therein, as to which such counsel need express no opinion) contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that, as of its date, the Prospectus as amended or supplemented or any further amendment or supplement thereto made by the Company or the Guarantor prior to the Time of Delivery (other than the financial statements, related schedules and financial data included therein, as to which such counsel need express no opinion) contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading or that, as of the Time of Delivery, either the Registration Statement or the Prospectus as amended or supplemented or any further amendment or supplement thereto made by the Company or the Guarantor prior to the Time of Delivery (other than the financial statements, related schedules and financial data included therein, as to which such counsel need express no opinion) contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and they do not know of any amendment to the Registration Statement required to be filed or any contracts or other documents of a character required to be filed as an exhibit to the Registration Statement or required to be incorporated by reference into the Prospectus as amended or supplemented or required to be described in the Registration Statement or the Prospectus as amended or supplemented which are not filed or incorporated by reference or described as required; (d) On the date of the Pricing Agreement for such Designated Securities at a time prior to the execution of the Pricing Agreement with respect to such Designated Securities and at the Time of Delivery for such Designated Securities, the independent accountants of the Company and the Guarantor who have certified the financial statements of the Guarantor and its subsidiaries (including the Company) included or incorporated by reference in the Registration Statement shall have furnished to the Representatives a letter, dated the effective date of the Registration Statement or the date of the most recent report filed with the Commission containing financial statements and incorporated by reference in the Registration Statement, if the date of such report is later than such effective date, and a letter dated such Time of Delivery, respectively, and with respect to such letter dated such Time of Delivery, as to such other matters as the Representatives may reasonably request and in form and substance satisfactory to the Representatives (the executed copy of the letter delivered prior to the execution of this Agreement is attached as Annex II(a) hereto and a draft of the form of letter to be delivered on the effective date of any post-effective amendment to the Registration Statement and as of each Time of Delivery is attached as Annex II(b) hereto); -15- DC_LAN01\52911.8 (e) (i) None of the Company, the Guarantor or any of their subsidiaries shall have sustained since the date of the latest audited financial statements included or incorporated by reference in the Prospectus as amended prior to the date of the Pricing Agreement relating to the Designated Securities any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus as amended prior to the date of the Pricing Agreement relating to the Designated Securities, and (ii) since the respective dates as of which information is given in the Prospectus as amended prior to the date of the Pricing Agreement relating to the Designated Securities there shall not have been any change in the capital stock or long-term debt of the Company, the Guarantor or any of their subsidiaries or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, stockholders' equity or results of operations of the Company, the Guarantor or any of its subsidiaries, otherwise than as set forth or contemplated in the Prospectus as amended prior to the date of the Pricing Agreement relating to the Designated Securities, the effect of which, in any such case described in Clause (i) or (ii), is in the judgment of the Representatives so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Designated Securities on the terms and in the manner contemplated in the Prospectus as first amended or supplemented relating to the Designated Securities; (f) On or after the date of the Pricing Agreement relating to the Designated Securities (i) no downgrading shall have occurred in the rating accorded the Company's debt securities or (if the Guarantor has debt securities or preferred stock that is rated) the Guarantor' debt securities or preferred stock by any "nationally recognized statistical rating organization", as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Company's or the Guarantor's debt securities or preferred stock; (g) On or after the date of the Pricing Agreement relating to the Designated Securities there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the New York Stock Exchange; (ii) a suspension or material limitation in trading in the Company's or the Guarantor's securities on the New York Stock Exchange; (iii) a general moratorium on commercial banking activities declared by either Federal or New York or Virginia State authorities; or (iv) the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war, if the effect of any such event specified in this Clause (iv) in the judgment of the Representatives makes it impracticable or inadvisable to proceed with the public offering or the delivery of the -16- DC_LAN01\52911.8 Designated Securities on the terms and in the manner contemplated in the Prospectus as amended or supplemented relating to the Designated Securities; (h) The Company shall have complied with the provisions of Section 5(c) hereof with respect to the furnishing of prospectuses on the New York Business Day next succeeding the date of this Agreement; and (i) The Company and the Guarantor shall have furnished or caused to be furnished to the Representatives at the Time of Delivery for the Designated Securities a certificate or certificates of officers of the Company and the Guarantor satisfactory to the Representatives as to the accuracy of the representations and warranties of the Company and the Guarantor herein at and as of such Time of Delivery, as to the performance by the Company and the Guarantor of all of their respective obligations hereunder to be performed at or prior to such Time of Delivery, as to the matters set forth in subsections (a) and (e) of this Section and as to such other matters as the Representatives may reasonably request. 8. (a) Each of the Company and the Guarantor, jointly and severally, will indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, any preliminary prospectus supplement, the Registration Statement, the Prospectus as amended or supplemented and any other prospectus relating to the Securities, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that neither the Company nor the Guarantor shall be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, any preliminary prospectus supplement, the Registration Statement, the Prospectus as amended or supplemented and any other prospectus relating to the Securities, or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by any Underwriter of Designated Securities through the Representatives expressly for use in the Prospectus as amended or supplemented relating to such Securities. -17- DC_LAN01\52911.8 (b) Each Underwriter will indemnify and hold harmless the Company and the Guarantor against any losses, claims, damages or liabilities to which the Company or the Guarantor may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, any preliminary prospectus supplement, the Registration Statement, the Prospectus as amended or supplemented and any other prospectus relating to the Securities, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Preliminary Prospectus, any preliminary prospectus supplement, the Registration Statement, the Prospectus as amended or supplemented and any other prospectus relating to the Securities, or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company or Guarantor by such Underwriter through the Representatives expressly for use therein; and will reimburse the Company and the Guarantor for any legal or other expenses reasonably incurred by the Company or the Guarantor in connection with investigating or defending any such action or claim as such expenses are incurred. (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under such subsection. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party. -18- DC_LAN01\52911.8 (d) If the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantor on the one hand and the Underwriters of the Designated Securities on the other from the offering of the Designated Securities to which such loss, claim, damage or liability (or action in respect thereof) relates. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (c) above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and the Guarantor on the one hand and the Underwriters of the Designated Securities on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company and the Guarantor on the one hand and such Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from such offering (before deducting expenses) received by the Company and the Guarantor bear to the total underwriting discounts and commissions received by such Underwriters. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and the Guarantor on the one hand or such Underwriters on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Guarantor and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the applicable Designated Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligations of the Underwriters of Designated Securities in this subsection (d) to contribute are several in proportion to their respective underwriting obligations with respect to such Securities and not joint. -19- DC_LAN01\52911.8 (e) The obligations of the Company and the Guarantor under this Section 8 shall be in addition to any liability which the Company or the Guarantor may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Act; and the obligations of the Underwriters under this Section 8 shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company or the Guarantor and to each person, if any, who controls the Company or the Guarantor within the meaning of the Act. 9. (a) If any Underwriter shall default in its obligation to purchase the Designated Securities which it has agreed to purchase under the Pricing Agreement relating to such Designated Securities, the Representatives may in their discretion arrange for themselves or another party or other parties to purchase such Designated Securities on the terms contained herein. If within thirty-six hours after such default by any Underwriter the Representatives do not arrange for the purchase of such Designated Securities, then the Company shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to the Representatives to purchase such Designated Securities on such terms. In the event that, within the respective prescribed period, the Representatives notify the Company that they have so arranged for the purchase of such Designated Securities, or the Company notifies the Representatives that it has so arranged for the purchase of such Designated Securities, the Representatives or the Company shall have the right to postpone the Time of Delivery for such Designated Securities for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus as amended or supplemented, or in any other documents or arrangements, and the Company agrees to file promptly any amendments or supplements to the Registration Statement or the Prospectus which in the opinion of the Representatives may thereby be made necessary. The term "Underwriter" as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to the Pricing Agreement with respect to such Designated Securities. (b) If, after giving effect to any arrangements for the purchase of the Designated Securities of a defaulting Underwriter or Underwriters by the Representatives and the Company as provided in subsection (a) above, the aggregate principal amount of such Designated Securities which remains unpurchased does not exceed one-eleventh of the aggregate principal amount of the Designated Securities, then the Company shall have the right to require each non-defaulting Underwriter to purchase the principal amount of Designated Securities which such Underwriter agreed to purchase under the Pricing Agreement relating to such Designated Securities and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the principal amount of Designated Securities which such Underwriter agreed to purchase under such Pricing Agreement) of the Designated Securities of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default. -20- DC_LAN01\52911.8 (c) If, after giving effect to any arrangements for the purchase of the Designated Securities of a defaulting Underwriter or Underwriters by the Representatives and the Company as provided in subsection (a) above, the aggregate principal amount of Designated Securities which remains unpurchased exceeds one-eleventh of the aggregate principal amount of the Designated Securities, as referred to in subsection (b) above, or if the Company shall not exercise the right described in subsection (b) above to require non-defaulting Underwriters to purchase Designated Securities of a defaulting Underwriter or Underwriters, then the Pricing Agreement relating to such Designated Securities shall thereupon terminate, without liability on the part of any non-defaulting Underwriter, the Company or the Guarantor, except for the expenses to be borne by the Company, the Guarantor and the Underwriters as provided in Section 6 hereof and the indemnity and contribution agreements in Section 8 hereof; but nothing herein shall relieve a defaulting Underwriter from liability for its default. 10. The respective indemnities, agreements, representations, warranties and other statements of the Company, the Guarantor and the several Underwriters, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or any controlling person of any Underwriter, the Company or the Guarantor, or any officer or director or controlling person of the Company or the Guarantor, and shall survive delivery of and payment for the Securities. 11. If any Pricing Agreement shall be terminated pursuant to Section 9 hereof, neither the Company nor the Guarantor shall then be under any liability to any Underwriter with respect to the Designated Securities covered by such Pricing Agreement except as provided in Sections 6 and 8 hereof; but, if for any other reason Designated Securities are not delivered by or on behalf of the Company and the Guarantor as provided herein, the Company and the Guarantor, jointly and severally, will reimburse the Underwriters through the Representatives for all out-of-pocket expenses approved in writing by the Representatives, including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of such Designated Securities, but neither the Company nor the Guarantor shall then be under any further liability to any Underwriter with respect to such Designated Securities except as provided in Sections 6 and 8 hereof. 12. In all dealings hereunder, the Representatives of the Underwriters of Designated Securities shall act on behalf of each of such Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by such Representatives jointly or by such of the Representatives, if any, as may be designated for such purpose in the Pricing Agreement. -21- DC_LAN01\52911.8 All statements, requests, notices and agreements hereunder shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to the address of the Representatives as set forth in the Pricing Agreement; and if to the Company or the Guarantor shall be delivered or sent by mail, telex or facsimile transmission to the address of the Company or the Guarantor, as applicable, set forth in the Registration Statement: Attention: Secretary; provided, however, that any notice to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter at its address set forth in its Underwriters' Questionnaire, or telex constituting such Questionnaire, which address will be supplied to the Company and the Guarantor by the Representatives upon request. Any such statements, requests, notices or agreements shall take effect upon receipt thereof. 13. This Agreement and each Pricing Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company, the Guarantor and, to the extent provided in Sections 8 and 10 hereof, the officers and directors of the Company, the Guarantor and each person who controls the Company, the Guarantor or any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement or any such Pricing Agreement. No purchaser of any of the Securities from any Underwriter shall be deemed a successor or assign by reason merely of such purchase. 14. Time shall be of the essence of each Pricing Agreement. As used herein, "business day" shall mean any day when the Commission's office in Washington, D.C. is open for business. 15. This Agreement and each Pricing Agreement shall be governed by and construed in accordance with the laws of the State of New York. -22- DC_LAN01\52911.8 16. This Agreement and each Pricing Agreement may be executed by any one or more of the parties hereto and thereto in any number of counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. Very truly yours, MacSaver Financial Services, Inc. By: Name: Title: Heilig-Meyers Company By: Name: Title: -23- DC_LAN01\52911.8 ANNEX I Pricing Agreement [Names of Representatives] As Representatives of the several Underwriters named in Schedule I hereto [Address of Representatives] , 199_ Ladies and Gentlemen: MacSaver Financial Services, Inc., a Delaware corporation (the "Company"), proposes, subject to the terms and conditions stated herein and in the Underwriting Agreement, dated _____ __, 1996 (the "Underwriting Agreement"), to issue and sell to the Underwriters named in Schedule I hereto (the "Underwriters") the Notes specified in Schedule II hereto (the "Notes"). The Notes will be unconditionally guaranteed as to the payment of principal, premium, if any, and interest (the "Guarantees") by Heilig-Meyers Company, a Virginia corporation (the "Guarantor"). The Notes and the Guarantees are hereinafter collectively called the "Securities". Each of the provisions of the Underwriting Agreement is incorporated herein by reference in its entirety, and shall be deemed to be a part of this Agreement to the same extent as if such provisions had been set forth in full herein; and each of the representations and warranties set forth therein shall be deemed to have been made at and as of the date of this Pricing Agreement, except that each representation and warranty which refers to the Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a representation or warranty as of the date of the Underwriting Agreement in relation to the Prospectus (as therein defined), and also a representation and warranty as of the date of this Pricing Agreement in relation to the Prospectus as amended or supplemented relating to the Notes and the Guarantees (together, the Designated Securities which are the subject of this Pricing Agreement). Each reference to the Representatives herein and in the provisions of the Underwriting Agreement so incorporated by reference shall be deemed to refer to you. Unless otherwise defined herein, terms defined in the Underwriting Agreement are used herein as therein defined. The Representatives designated to act on behalf of the Representatives and on behalf of each of the Underwriters of the Designated Securities pursuant to Section 12 of the Underwriting Agreement and the address of the Representatives referred to in such Section 12 are set forth at the end of Schedule II hereto. An amendment to the Registration Statement, or a supplement to the Prospectus, as the case may be, relating to the Designated Securities, in the form heretofore delivered to you is now proposed to be filed with the Commission. -1- DC_LAN01\52911.8 Subject to the terms and conditions set forth herein and in the Underwriting Agreement incorporated herein by reference, the Company and the Guarantor agree to issue and the Company agrees to sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company, at the time and place and at the purchase price to the Underwriters set forth in Schedule II hereto, the principal amount of Designated Securities set forth opposite the name of such Underwriter in Schedule I hereto. -2- DC_LAN01\52911.8 If the foregoing is in accordance with your understanding, please sign and return to us ten counterparts hereof, and upon acceptance hereof by you, on behalf of each of the Underwriters, this letter and such acceptance hereof, including the provisions of the Underwriting Agreement incorporated herein by reference, shall constitute a binding agreement among each of the Underwriters, the Company and the Guarantor. It is understood that your acceptance of this letter on behalf of each of the Underwriters is or will be pursuant to the authority set forth in a form of Agreement among Underwriters, the form of which shall be submitted to the Company and the Guarantor for examination upon request, but without warranty on the part of the Representatives as to the authority of the signers thereof. Very truly yours, MacSaver Financial Services, Inc. By: Name: Title: Heilig-Meyers Company By: Name: Title: Accepted as of the date hereof: Goldman, Sachs & Co. A.G. Edwards & Sons, Inc. NationsBanc Capital Markets, Inc. Salomon Brothers Inc Wheat, First Securities, Inc. By: Goldman, Sachs & Co. By: (Authorized Officer and Attorney-in-fact) On behalf of each of the Underwriters -3- DC_LAN01\52911.8 SCHEDULE I Principal Amount of Designated Securities to be Underwriter Purchased [Names of Representatives] $ [Names of other Underwriters] Total $ -4- DC_LAN01\52911.8 SCHEDULE II Title of Designated Securities: [ %] [Floating Rate] [Zero Coupon] [Notes] [Debentures] due , Aggregate principal amount: [$] Price to Public: % of the principal amount of the Designated Securities, plus accrued interest[, if any,] from to [and accrued amortization[, if any,] from to ] Purchase Price by Underwriters: % of the principal amount of the Designated Securities, plus accrued interest from to [and accrued amortization[, if any,] from to ] Form of Designated Securities: [Definitive form to be made available for checking and packaging at least twenty-four hours prior to the Time of Delivery at the office of [The Depository Trust Company or its designated custodian] [the Representatives]] [Book-entry only form represented by one or more global securities deposited with The Depository Trust Company ("DTC") or its designated custodian, to be made available for checking by the Representatives at least twenty-four hours prior to the Time of Delivery at the office of DTC.] Specified funds for payment of purchase price: Federal (same-day) funds Time of Delivery: a.m. (New York City time), , 19 Indenture: Indenture dated , 19 , among the Company, the Guarantor and , as Trustee Maturity: Interest Rate: [ %] [Zero Coupon] [See Floating Rate Provisions] Interest Payment Dates: [months and dates, commencing ....................., 19..] -5- DC_LAN01\52911.8 Redemption Provisions: [No provisions for redemption] [The Designated Securities may be redeemed, otherwise than through the sinking fund, in whole or in part at the option of the Company, in the amount of [$ ] or an integral multiple thereof, [on or after , at the following redemption prices (expressed in percentages of principal amount). If [redeemed on or before , %, and if] redeemed during the 12-month period beginning , Redemption Year Price and thereafter at 100% of their principal amount, together in each case with accrued interest to the redemption date.] [on any interest payment date falling on or after , , at the election of the Company, at a redemption price equal to the principal amount thereof, plus accrued interest to the date of redemption.]] [Other possible redemption provisions, such as mandatory redemption upon occurrence of certain events or redemption for changes in tax law] [Restriction on refunding] Sinking Fund Provisions: [No sinking fund provisions] [The Designated Securities are entitled to the benefit of a sinking fund to retire [$ ] principal amount of Designated Securities on in each of the years through at 100% of their principal amount plus accrued interest[, together with [cumulative] [noncumulative] redemptions at the option of the Company to retire an additional [$ ] principal amount of Designated Securities in the years through at 100% of their principal amount plus accrued interest.] [If Designated Securities are extendable debt securities, insert-- Extendable provisions: Designated Securities are repayable on , [insert date and years], at the option of the holder, at their principal amount with accrued interest. The initial annual interest rate will be %, and thereafter the annual interest rate will be adjusted on , and to a rate not less than % of the effective annual interest rate on U.S. Treasury obligations with -year maturities as of the [insert date 15 days prior to maturity date] prior to such [insert maturity date].] [If Designated Securities are floating rate debt securities, insert-- -6- DC_LAN01\52911.8 Floating rate provisions: Initial annual interest rate will be % through [and thereafter will be adjusted [monthly] [on each , , and ] [to an annual rate of % above the average rate for -year [month][securities][certificates of deposit] issued by and [insert names of banks].] [and the annual interest rate [thereafter] [from through ] will be the interest yield equivalent of the weekly average per annum market discount rate for -month Treasury bills plus % of Interest Differential (the excess, if any, of (i) the then current weekly average per annum secondary market yield for -month certificates of deposit over (ii) the then current interest yield equivalent of the weekly average per annum market discount rate for -month Treasury bills); [from and thereafter the rate will be the then current interest yield equivalent plus % of Interest Differential].] Defeasance provisions: Closing location for delivery of Designated Securities: Additional Closing Conditions: Names and addresses of Representatives: Designated Representatives: Address for Notices, etc.: [Other Terms:] -7- DC_LAN01\52911.8 ANNEX II Pursuant to Section 7(d) of the Underwriting Agreement, the accountants shall furnish letters to the Underwriters to the effect that: (i) They are independent certified public accountants with respect to the Guarantor and its subsidiaries (including the Company) within the meaning of the Act and the applicable published rules and regulations thereunder; (ii) In their opinion, the financial statements and any supplementary financial information and schedules audited (and, if applicable, financial forecasts and/or pro forma financial information examined) by them and included or incorporated by reference in the Registration Statement or the Prospectus comply as to form in all material respects with the applicable accounting requirements of the Act or the Exchange Act, as applicable, and the related published rules and regulations thereunder; and, if applicable, they have made a review in accordance with standards established by the American Institute of Certified Public Accountants of the consolidated interim financial statements, selected financial data, pro forma financial information, financial forecasts and/or condensed financial statements derived from audited financial statements of the Guarantor and the Company for the periods specified in such letter, as indicated in their reports thereon, copies of which have been separately furnished to the representative or representatives of the Underwriters (the "Representatives") such term to include an Underwriter or Underwriters who act without any firm being designated as its or their representatives; (iii) They have made a review in accordance with standards established by the American Institute of Certified Public Accountants of the unaudited condensed consolidated statements of income, consolidated balance sheets and consolidated statements of cash flows included in the Prospectus and/or included in the Guarantor's quarterly report on Form 10-Q incorporated by reference into the Prospectus as indicated in their reports thereon copies of which have been separately furnished to the Representatives; and on the basis of specified procedures including inquiries of officials of the Guarantor and the Company who have responsibility for financial and accounting matters regarding whether the unaudited condensed consolidated financial statements referred to in paragraph (vi)(A)(i) below comply as to form in all material respects with the applicable accounting requirements of the Act and the Exchange Act and the related published rules and regulations, nothing came to their attention that caused them to believe that the unaudited condensed consolidated financial statements do not comply as to form in all material respects with the applicable accounting requirements of the Act and the Exchange Act and the related published rules and regulations; (iv) The unaudited selected financial information with respect to the consolidated results of operations and financial position of the Guarantor and the Company for the five most recent fiscal years included in the Prospectus and included or incorporated by reference in Item 6 of the Guarantor's Annual Report on Form 10-K for the most recent fiscal year agrees with the corresponding amounts (after -1- DC_LAN01\52911.8 restatement where applicable) in the audited consolidated financial statements for five such fiscal years which were included or incorporated by reference in the Guarantor's Annual Reports on Form 10-K for such fiscal years; (v) They have compared the information in the Prospectus under selected captions with the disclosure requirements of Regulation S-K and on the basis of limited procedures specified in such letter nothing came to their attention as a result of the foregoing procedures that caused them to believe that this information does not conform in all material respects with the disclosure requirements of Items 301, 302, 402 and 503(d), respectively, of Regulation S-K; (vi) On the basis of limited procedures, not constituting an examination in accordance with generally accepted auditing standards, consisting of a reading of the unaudited financial statements and other information referred to below, a reading of the latest available interim financial statements of the Guarantor, the Company and their subsidiaries, inspection of the minute books of the Guarantor, the Company and their subsidiaries since the date of the latest audited financial statements included or incorporated by reference in the Prospectus, inquiries of officials of the Guarantor, the Company and their subsidiaries responsible for financial and accounting matters and such other inquiries and procedures as may be specified in such letter, nothing came to their attention that caused them to believe that: (A) (i) the unaudited condensed consolidated statements of income, consolidated balance sheets and consolidated statements of cash flows included in the Prospectus and/or included or incorporated by reference in the Guarantor's Quarterly Reports on Form 10-Q incorporated by reference in the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the Exchange Act and the related published rules and regulations, or (ii) any material modifications should be made to the unaudited condensed consolidated statements of income, consolidated balance sheets and consolidated statements of cash flows included in the Prospectus or included in the Guarantor's Quarterly Reports on Form 10-Q incorporated by reference in the Prospectus for them to be in conformity with generally accepted accounting principles; (B) any other unaudited income statement data and balance sheet items included in the Prospectus do not agree with the corresponding items in the unaudited consolidated financial statements from which such data and items were derived, and any such unaudited data and items were not determined on a basis substantially consistent with the basis for the corresponding amounts in the audited consolidated financial statements included or incorporated by reference in the Guarantor's Annual Report on Form 10-K for the most recent fiscal year; (C) the unaudited financial statements which were not included in the Prospectus but from which were derived the unaudited condensed financial statements referred to in clause (A) and any unaudited income statement data -2- DC_LAN01\52911.8 and balance sheet items included in the Prospectus and referred to in Clause (B) were not determined on a basis substantially consistent with the basis for the audited financial statements included or incorporated by reference in the Guarantor's Annual Report on Form 10-K for the most recent fiscal year; (D) any unaudited pro forma consolidated condensed financial statements included or incorporated by reference in the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the Act and the published rules and regulations thereunder or the pro forma adjustments have not been properly applied to the historical amounts in the compilation of those statements; (E) as of a specified date not more than five days prior to the date of such letter, there have been any changes in the consolidated capital stock (other than issuances of capital stock upon exercise of options and stock appreciation rights, upon earn-outs of performance shares and upon conversions of convertible securities, in each case which were outstanding on the date of the latest balance sheet included or incorporated by reference in the Prospectus) or any increase in the consolidated long-term debt of the Guarantor, the Company and their subsidiaries, or any decreases in consolidated net current assets or stockholders' equity or other items specified by the Representatives, or any increases in any items specified by the Representatives, in each case as compared with amounts shown in the latest balance sheet included or incorporated by reference in the Prospectus, except in each case for changes, increases or decreases which the Prospectus discloses have occurred or may occur or which are described in such letter; and (F) for the period from the date of the latest financial statements included or incorporated by reference in the Prospectus to the specified date referred to in Clause (E) there were any decreases in consolidated net revenues or operating profit or the total or per share amounts of consolidated net income or other items specified by the Representatives, or any increases in any items specified by the Representatives, in each case as compared with the comparable period of the preceding year and with any other period of corresponding length specified by the Representatives, except in each case for increases or decreases which the Prospectus discloses have occurred or may occur or which are described in such letter; and (vii) In addition to the audit referred to in their report(s) included or incorporated by reference in the Prospectus and the limited procedures, inspection of minute books, inquiries and other procedures referred to in paragraphs (iii) and (vi) above, they have carried out certain specified procedures, not constituting an audit in accordance with generally accepted auditing standards, with respect to certain amounts, percentages and financial information specified by the Representatives which are derived from the general accounting records of the Guarantor, the Company and their subsidiaries, which appear in the Prospectus (excluding documents incorporated by reference), or in Part II of, or in exhibits and schedules to, the Registration -3- DC_LAN01\52911.8 Statement specified by the Representatives or in documents incorporated by reference in the Prospectus specified by the Representatives, and have compared certain of such amounts, percentages and financial information with the accounting records of the Guarantor, the Company and their subsidiaries and have found them to be in agreement. All references in this Annex II to the Prospectus shall be deemed to refer to the Prospectus (including the documents incorporated by reference therein) as defined in the Underwriting Agreement as of the date of the letter delivered on the date of the Pricing Agreement for purposes of such letter and to the Prospectus as amended or supplemented (including the documents incorporated by reference therein) in relation to the applicable Designated Securities for purposes of the letter delivered at the Time of Delivery for such Designated Securities. -4- EX-5.1 3 CONSENT OF MWBB REGARDING VALIDITY OF SECURITIES Exhibit 5.1 June 24, 1997 Heilig-Meyers Company 2235 Staples Mill Road Richmond, Virginia 23230 MacSaver Financial Services, Inc. 2 Reads Ways, Suite 224 New Castle, Delaware 19720 Re: Registration Statement on Form S-3 $400,000,000 Aggregate Principal Amount of Securities Ladies and Gentlemen: In connection with the registration of $400,000,000 aggregate principal amount of (i) common stock, par value $2.00 per share (the "Common Stock"), of Heilig-Meyers Company, a Virginia corporation ("Heilig-Meyers"), (ii) warrants to purchase the Common Stock of Heilig-Meyers (the "Warrants"), (iii) debt securities (the "Debt Securities") of MacSaver Financial Services, Inc., a Delaware corporation ("MacSaver"), and (iv) the guarantees of the Debt Securities (the "Guarantees" and, collectively with the Common Stock , Warrants and Debt Securities, the "Securities") by Heilig-Meyers, under the Securities Act of 1933, as amended (the "Act"), on Form S-3 to be filed with the Securities and Exchange Commission (the "Commission") on the date hereof (the "Registration Statement"), and the offering of such Securities from time to time, as set forth in the prospectus contained in the Registration Statement (the "Prospectus") and as to be set forth in one or more supplements to the Prospectus (each a "Prospectus Supplement"), you have requested our opinion with respect to the matters set forth below. In connection with this opinion, we have made such legal and factual examinations and inquiries, including an examination of originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records and instruments, as we have deemed necessary or appropriate for purposes of this opinion. Heilig-Meyers Company MacSaver Financial Services, Inc. June 19, 1997 Page 2 Capitalized terms used herein without definition have the meanings ascribed to them in the Registration Statement. Subject to the foregoing and the other matters set forth herein, it is our opinion that as of the date hereof: 1. Heilig-Meyers has authority pursuant to its Restated Articles of Incorporation to issue up to 250,000,000 shares of Common Stock. Upon adoption by the Board of Directors of Heilig-Meyers of a resolution in form and content as required by applicable law and upon issuance and delivery of and payment for such shares in the manner contemplated by the Registration Statement and/or the applicable Prospectus Supplement and by such resolution, the shares of Common Stock to be sold pursuant to the Registration Statement and/or Prospectus Supplement will be validly issued, fully paid and nonassessable. 2. The Debt Securities have been duly authorized by all necessary corporate action of MacSaver, and when the Debt Securities have been duly established by an Indenture, and duly executed, authenticated and delivered by or on behalf of MacSaver against payment therefor in accordance with the terms of an Indenture and as contemplated by the Registration Statement and/or the applicable Prospectus Supplement, the Debt Securities will constitute legally valid and binding obligations of MacSaver, enforceable against MacSaver in accordance with their terms. 3. The Guarantees have been duly authorized by all necessary corporate action of Heilig-Meyers, and when the Guarantees have been duly established by an Indenture, and duly executed in accordance with the terms of an Indenture and upon due execution, authentication and delivery of the Debt Securities and upon payment therefor in accordance with the terms of an Indenture and as contemplated by the Registration Statement and/or the applicable Prospectus Supplement, will be legally valid and binding obligations of Heilig-Meyers. 4. The registration of the Warrants pursuant to the Registration Statement has been duly authorized by all necessary corporate action of Heilig-Meyers. Upon adoption by the Board of Directors of Heilig-Meyers of a resolution in form and content as required by applicable law with respect to the Common Stock issuable upon exercise of the Warrants, and when the Warrants have been duly established by a Warrant Agreement, and duly executed and delivered by or on behalf of the Company against payment therefor in accordance with the terms of a Warrant Agreement and as contemplated by the Registration Statement Heilig-Meyers Company MacSaver Financial Services, Inc. June 19, 1997 Page 3 and/or the applicable Prospectus Supplement, the Warrants will constitute legally valid and binding obligations of the Company, enforceable against the Company in accordance with their terms. The opinions set forth above are subject to the following exceptions, limitations and qualifications: (i) the effect of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting the rights and remedies of creditors; (ii) the effect of general principles of equity, whether enforcement is considered in a proceeding in equity or at law, and the discretion of the court before which any proceeding therefor may be brought; (iii) the unenforceability under certain circumstances under law or court decisions of provisions providing for the indemnification of or contribution to a party with respect to a liability where such indemnification or contribution is contrary to public policy; and (iv) the enforceability of obligations under an Indenture may be limited by (A) requirements that a claim with respect to any Securities denominated other than in U.S. dollars (or a foreign currency or foreign currency unit judgment in respect to such claim) be converted into United States dollars at a rate of exchange prevailing on a date determined pursuant to applicable law; and (B) governmental authority to limit, delay or prohibit the making of payments in foreign currency or currency units or payments outside the United States. We also reaffirm our opinion regarding the rights to purchase preferred stock, series A, $10.00 par value, of the Company ("the Rights"), attached in equal number to the shares of Common Stock that may be issued pursuant to the transactions described herein, given to the Company's Board of Directors as confirmed in our letter of February 17, 1988, attached to our opinion filed as Exhibit 5 to the Heilig-Meyers Company Registration Statement (No. 33-64616) on Form S-8. In our opinion regarding the Rights, we discussed whether certain provisions of Section 13.1-638 of the Virginia Code might prohibit the restrictions on transfer imposed under the agreement governing the Rights. The Virginia Code has been amended to provide that, notwithstanding such provisions of Section 13.1- 638, the terms of rights issued by a corporation may include restrictions on transfer by designated persons or classes of persons. To the extent that the obligations of Heilig-Meyers and MacSaver under an Indenture may be dependent upon such matters, we assume for purposes of this opinion that the Trustee is duly organized, validly existing and in good standing under the laws Heilig-Meyers Company MacSaver Financial Services, Inc. June 19, 1997 Page 4 of its jurisdiction of organization; that the Trustee is duly qualified to engage in the activities contemplated by an Indenture; that an Indenture has been duly authorized, executed and delivered by the Trustee and constitutes the legally valid, binding and enforceable obligation of the Trustee enforceable against the Trustee in accordance with its terms; that the Trustee is in compliance, generally and with respect to acting as a trustee under an Indenture, with all applicable laws and regulations; and that the Trustee has the requisite organizational and legal power and authority to perform its obligations under an Indenture. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to reference to us under the heading relating to the validity of the Securities in the Registration Statement (including the applicable Prospectus Supplement relating to such Securities). We do not admit by giving this consent that we are in the category of persons whose consent is required under Section 7 of the Act. Very truly yours, McGuire, Woods, Battle & Boothe, L.L.P. EX-8.1 4 CONSENT OF MWBB AS TO CERTAIN TAX MATTER Exhibit 8.1 June 24, 1997 Heilig-Meyers Company 2235 Staples Mill Road Richmond, Virginia 23230 MacSaver Financial Services, Inc. 2 Reads Ways, Suite 224 New Castle, Delaware 19720 Re: Registration Statement on Form S-3 $400,000,000 Aggregate Principal Amount of Securities Ladies and Gentlemen: We have been requested, as your special tax counsel, to render federal tax advice in connection with the registration of $400,000,000 aggregate principal amount of (i) common stock, par value $2.00 per share (the "Common Stock"), of Heilig-Meyers Company, a Virginia corporation ("Heilig-Meyers"), (ii) warrants to purchase the Common Stock of Heilig-Meyers (the "Warrants"), (iii) debt securities (the "Debt Securities") of MacSaver Financial Services, Inc., a Delaware corporation ("MacSaver"), and (iv) the guarantees of the Debt Securities (the "Guarantees" and, collectively with the Common Stock, Warrants and Debt Securities, the "Securities") by Heilig-Meyers, under the Securities Act of 1933, as amended (the "Act"), on Form S-3 to be filed with the Securities and Exchange Commission (the "Commission") on the date hereof (the "Registration Statement"), and the offering of such Securities from time to time, as set forth in the prospectus contained in the Registration Statement (the "Prospectus") and as to be set forth in one or more supplements to the Prospectus (each a "Prospectus Supplement"). We have reviewed the statements set forth in the Registration Statement under the heading "United States Taxation" and hereby advise you that such statements, insofar as they are or refer to statements of United States law or legal conclusions relating thereto, are accurate in all material respects. Heilig-Meyers Company MacSaver Financial Services, Inc. June 19, 1997 Page 2 We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to us under the heading "United States Taxation" in the Registration Statement. We do not admit by giving this consent that we are in the category of persons whose consent is required under Section 7 of the Securities Act. Very truly yours, /s/ McGuire, Woods, Battle & Boothe, L.L.P. EX-12.1 5 COMPUTATION OF RATIO OF EARNINGS Heilig-Meyers Company Computation of Ratio of Earnings to Fixed Charges (dollar amounts in thousands)
Fiscal Year Ended February 28(29) ----------------------------------------------------------------------------------- 1997 1996 1995 1994 1993 --------------- --------------- --------------- --------------- --------------- Net Income Before Taxes 61,900 64,527 105,901 87,154 59,394 Interest 47,800 40,767 32,889 23,834 23,084 Property Rentals 48,740 41,216 33,631 22,345 17,143 Equipment Rentals 24,793 21,858 16,050 11,964 6,805 --------------- --------------- --------------- --------------- --------------- Total Earnings Available 183,233 168,368 188,471 145,297 106,426 Fixed Charges: Interest 47,800 40,767 32,889 23,834 23,084 Property Rentals 48,740 41,216 33,631 22,345 17,143 Equipment Rentals 24,793 21,858 16,050 11,964 6,805 --------------- --------------- --------------- --------------- --------------- Total Fixed Charges 121,333 103,841 82,570 58,143 47,032 Ratio of Earnings to Fixed Charges 1.51 1.62 2.28 2.50 2.26
EX-23.1 6 CONSENT OF DELOITTE & TOUCHE Exhibit 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Heilig-Meyers Company on Form S-3 of our report dated March 25, 1997, appearing in the Annual Report on Form 10-K of Heilig-Meyers Company and subsidiaries for the year ended February 28, 1997 and to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement. /s/ DELOITTE & TOUCHE LLP Richmond, Virginia June 24, 1997 EX-23.3 7 CONSENT OF ARTHUR ANDERSEN LLP Exhibit 23.3 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this registration statement on Form S-3 of our reports dated April 25, 1996, incorporated by reference in Heilig-Meyers Company's Form 8-K/A dated February 19, 1997 and to all references to our firm included in this registration statement. /s/ Arthur Andersen LLP Atlanta, Georgia June 23, 1997 EX-23.4 8 CONSENT OF DELOITTE & TOUCHE LLP Exhibit 23.4 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Heilig-Meyers Company on Form S-3 to be filed on or about June 24, 1997 of our report dated January 5, 1996 on the financial statements of Weberg Division (a division of Weberg Enterprises, Inc.) as of and for the year ended December 31, 1994 which is incorporated by reference in Amendment No. 1 to Form 8-K dated February 19, 1997 of Heilig-Meyers Company. /s/ Deloitte & Touche LLP Denver, Colorado June 24, 1997 EX-25.1 9 FORM T-1 EXHIBIT 25.1 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- FORM T-1 ---------------------- STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE Check if an application to determine eligibility of a trustee pursuant to Section 305(b) (2) ----- ----------------------- FIRST UNION NATIONAL BANK OF VIRGINIA (Exact name of Trustee as specified in its charter) 213 SOUTH JEFFERSON STREET ROANOKE, VIRGINIA 24011 54-0211320 (Address of principal executive (Zip Code) (I.R.S. Employer offices) Identification No.) Dante M. Monakil, (804) 788-9659 901 E. Cary Street, Richmond, Virginia 23219 (Name, address and telephone number of agent for service) ----------------------- HEILIG-MEYERS COMPANY MACSAVER FINANCIAL (Exact name of obligor as specified in its charter) SERVICES, INC. (Exact name of obligor as specified in its charter) VIRGINIA DELAWARE (State or other jurisdiction of incorporation or organization) (State or other jurisdiction of incorporation or organization) 54-0558861 62-1419691 (I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.) 2235 STAPLES MILL ROAD 2 READS WAY, SUITE 224 RICHMOND, VA NEW CASTLE, DE (Address of principal executive offices) (Address of principal executive offices) 24112 19720 (Zip Code) (Zip Code) MACSAVER FINANCIAL SERVICES, INC. (A SUBSIDIARY OF HEILIG-MEYERS COMPANY)
Senior Debt Securities - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 1. GENERAL INFORMATION. (a) The following are the names and addresses of each examining or supervising authority to which the Trustee is subject: The Comptroller of the Currency, Washington, D.C. Federal Reserve Bank of Richmond, Richmond, Virginia. Federal Deposit Insurance Corporation, Washington, D.C. Securities and Exchange Commission, Division of Market Regulation, Washington, D.C. (b) The Trustee is authorized to exercise corporate trust powers. 2. AFFILIATIONS WITH OBLIGOR. The obligor is not an affiliate of the Trustee. 3. VOTING SECURITIES OF THE TRUSTEE. Not applicable (See answer to Item 13) 4. TRUSTEESHIPS UNDER OTHER INDENTURES. Not applicable (See answer to Item 13) 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR OR UNDERWRITERS. Not applicable (See answer to Item 13) 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS. Not applicable (See answer to Item 13) 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR OFFICIALS. Not applicable (See answer to Item 13) 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE. Not applicable (See answer to Item 13) 9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE. Not applicable (See answer to Item 13) 2 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR. Not applicable (See answer to Item 13) 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR. Not applicable (See answer to Item 13) 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE. Not applicable (See answer to Item 13) 13. DEFAULTS BY THE OBLIGOR. A. None B. None 14. AFFILIATIONS WITH THE UNDERWRITERS. Not applicable (See answer to Item 13) 15. FOREIGN TRUSTEE. Trustee is a national banking association organized under the laws of the United States. 16. LIST OF EXHIBITS. (1) Articles of Incorporation. (Incorporated by reference from Exhibit 25 to Registration 33-57401, filed January 25, 1995.) (2) Certificate of Authority of the Trustee to conduct business. (Incorporated by reference from Exhibit 25 to Registration 33-57401, filed January 25, 1995.) (3) Certificate of Authority of the Trustee to exercise corporate trust powers. (Incorporated by reference from Exhibit 25 to Registration 33-57401, filed January 25, 1995.) (4) By-laws. (Incorporated by reference from Exhibit 25 to Registration 33-57401, filed January 25, 1995.) (5) Inapplicable. (6) Consent by the Trustee required by Section 321(b) of the Trustee Indenture Act of 1939. Included at Page 4 of this Form T-1 Statement. (7) Report of condition of Trustee. (8) Inapplicable. (9) Inapplicable. 3 SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the Trustee, FIRST UNION NATIONAL BANK OF VIRGINIA, a national organized and existing under the laws of the United States of America, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Richmond, and Commonwealth of Virginia on the 19th day of June, 1997. FIRST UNION NATIONAL BANK OF VIRGINIA (Trustee) BY: /s/ DANTE M. MONAKIL -------------------------------- Dante M. Monakil, Vice President EXHIBIT T-1 (6) CONSENT OF TRUSTEE Under section 321(b) of the Trust Indenture Act of 1939 and in connection with the proposed issuance by MacSaver Financial Services, Inc., of its Senior Securities, First Union National Bank of Virginia, as the Trustee herein named, hereby consents that reports of examinations of said Trustee by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. FIRST UNION NATIONAL BANK OF VIRGINIA BY: /s/ JOHN M. TURNER ---------------------------------- John M. Turner, Vice President and Managing Director Dated: June 24, 1997 4 EXHIBIT T-1 (7) Consolidated Report of Income for the period January 1, 1997-March 31, 1997 All Report of Income schedules are to be reported on a calendar year-to-date basis in thousands of dollars. Schedule RI--Income Statement
I380 Dollar Amounts in Thousands RIAD Bil Mil Thou - ---------------------------------------------------------------------------------------------------------------------- 1. Interest income: ////////////////// a. Interest and fee income on loans: ////////////////// (1) Loans secured by real estate ........................................................ 4011 89,558 1.a.(1) (2) Loans to finance agricultural production and other loans to farmers ................. 4024 1,191 1.a.(2) (3) Commercial and industrial loans ..................................................... 4012 19,833 1.a.(3) (4) Loans to individuals for household, family, and other personal expenditures: ////////////////// (a) Credit cards and related plans ................................................. 4054 225 1.a.(4)(a) (b) Other .......................................................................... 4055 22,807 1.a.(4)(b) (5) Loans to foreign governments and official institutions .............................. 4056 0 1.a.(5) (6) Obligations (other than securities and leases) of states and political subdivisions ////////////////// in the U.S.: ////////////////// (a) Taxable obligations ............................................................ 4503 0 1.a.(6)(a) (b) Tax-exempt obligations ......................................................... 4504 2,001 1.a.(6)(b) (7) All other loans ..................................................................... 4058 1,237 1.a.(7) b. Income from lease financing receivables: ////////////////// (1) Taxable leases ...................................................................... 4505 1,949 1.b.(1) (2) Tax-exempt leases ................................................................... 4307 718 1.b.(2) c. Interest income on balances due from depository institutions(1) .......................... 4115 779 1.c. d. Interest and dividend income on securities: ////////////////// (1) U.S. Treasury securities and U.S. Government agency obligations ..................... 4027 34,826 1.d.(1) (2) Securities issued by states and political subdivisions in the U.S.: ////////////////// (a) Taxable securities ............................................................. 4506 0 1.d.(2)(a) (b) Tax-exempt securities .......................................................... 4507 14 1.d.(2)(b) (3) Other domestic debt securities ...................................................... 3657 1,386 1.d.(3) (4) Foreign debt securities ............................................................. 3658 2,724 1.d.(4) (5) Equity securities (including investments in mutual funds) ........................... 3659 1,227 1.d.(5) e. Interest income from trading assets ...................................................... 4069 0 1.e. f. Interest income on federal funds sold and securities purchased under agreements to resell. 4020 505 1.f. g. Total interest income (sum of items 1.a. through 1.f.) ................................... 4107 180,980 1.g.
- ---------- 1) Includes interest income on time certificates of deposit not held for trading. Schedule RI--Continued
Year-to-date Dollar Amounts in Thousands RIAD Bil Mil Thou - ----------------------------------------------------------------------------------------------------- 2. Interest expense: ////////////////// a. Interest on deposits: ////////////////// (1) Transaction account (NOW accounts, ATS accounts, and ////////////////// telephone and preauthorized transfer accounts) ................... 4508 2,546 2.a.(1) (2) Nontransaction accounts: ////////////////// (a) Money market deposit accounts (MMDAs) ....................... 4509 20,369 2.a.(2)(a) (b) Other savings deposits ...................................... 4511 3,034 2.a.(2)(b) (c) Time deposits of $100,000 or more ........................... A517 3,930 2.a.(2)(c) (d) Time deposits of less than $100,000 ......................... A518 24,068 2.a.(2)(d) b. Expense of federal funds purchased and securities sold under ////////////////// agreements to repurchase .............................................. 4180 26,002 2.b. c. Interest on demand notes issued to the U.S. Treasury, trading ////////////////// liabilities, and other borrowed money ................................. 4185 6,884 2.c. d. Not applicable ////////////////// e. Interest on subordinated notes and debentures ......................... 4200 2,587 2.e. f. Total interest expense (sum of items 2.a through 2.e) ................. 4073 89,420 2.f. ---------------------- 3. Net interest income (item 1.g minus 2.f) .................................. ////////////////// RIAD 4074 91,560 3. ---------------------- 4. Provisions: ////////////////// ---------------------- a. Provision for loan and lease losses ................................... ////////////////// RIAD 4230 (15) 4.a. b. Provision for allocated transfer risk ................................. ////////////////// RIAD 4243 0 4.b. ---------------------- 5. Noninterest income: ////////////////// a. Income from fiduciary activities ...................................... 4070 5,838 5.a. b. Service charges on deposit accounts ................................... 4080 14,136 5.b. c. Trading revenue (must equal Schedule RI, sum of Memorandum ////////////////// items 8.a. through 8.d.) .............................................. A220 0 5.c. d.-e. Not applicable ////////////////// f. Other noninterest income: ////////////////// (1) Other fee income .................................................. 5407 12,528 5.f.(1) (2) All other noninterest income* ..................................... 5408 10,244 5.f.(2) ---------------------- g. Total noninterest income (sum of items 5.a through 5.f) ............... ////////////////// RIAD 4079 42,746 5.g. 6. a. Realized gains (losses) on held-to-maturity securities ................ ////////////////// RIAD 3521 2 6.a. b. Realized gains (losses) on available-for-sale securities .............. ////////////////// RIAD 3196 (1,529) 6.b. ---------------------- 7. Noninterest expense: ////////////////// a. Salaries and employee benefits ........................................ 4135 33,740 7.a. b. Expenses of premises and fixed assets (net of rental income) ////////////////// (excluding salaries and employee benefits and mortgage interest) ...... 4217 11,794 7.b. c. Other noninterest expense* ............................................ 4092 31,199 7.c. ---------------------- d. Total noninterest expense (sum of items 7.a through 7.c) .............. ////////////////// RIAD 4093 76,733 7.d. ---------------------- 8. Income (loss) before income taxes and extraordinary items and other ////////////////// ---------------------- adjustments (item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b, and 7.d) . ////////////////// RIAD 4301 56,061 8. 9. Applicable income taxes (on item 8) ....................................... ////////////////// RIAD 4302 16,877 9. ---------------------- 10. Income (loss) before extraordinary items and other adjustments (item 8 ////////////////// ---------------------- minus 9) .................................................................. ////////////////// RIAD 4300 39,184 10. 11. Extraordinary items and other adjustments, net of income taxes * .......... ////////////////// RIAD 4320 0 11. 12. Net income (loss) (sum of items 10 and 11) ................................ ////////////////// RIAD 4340 39,184 12. ----------------------
- ---------- *Describe on Schedule RI-E--Explanations. 4 Schedule RI--Continued
I381 Memoranda Year-to-date Dollar Amounts in Thousands RIAD Bil Mil Thou - ------------------------------------------------------------------------------------------------------------------------ 1. Interest expense incurred to carry tax-exempt securities, loans, and leases acquired after ////////////////// August 7, 1986, that is not deductible for federal income tax purposes ....................... 4513 600 M.1. 2. Income from the sale and servicing of mutual funds and annuities (included in ////////////////// Schedule RI, item 8) ......................................................................... 8431 668 M.2. 3. Not applicable ////////////////// 4. Number of full-time equivalant employees at end of current period (round to //// Number nearest whole number) ........................................................................ 4150 3,252 M.4. 5.-6. Not applicable ////////////////// 7. If the reporting bank has restated its balance sheet as a result of applying push down //// MM DD YY accounting this calendar year, report the date of the bank's acquisition ...................... 9106 00/00/00 M.7. 8. Trading revenue (from cash instruments and off-balance sheet derivative instruments) ////////////////// (sum of Memorandum items 8.a through 8.d must equal Schedule RI, item 5.c): ////////////////// a. Interest rate exposures .................................................................. 8757 0 M.8.a. b. Foreign exchange exposures ............................................................... 8758 0 M.8.b. c. Equity security and index exposures ...................................................... 8759 0 M.8.c. d. Commodity and other exposures ............................................................ 8760 0 M.8.d. 9. Impact on income of off-balance sheet derivatives held for purposes other than trading: ////////////////// a. Net increase (decrease) to interest income ............................................... 8761 (1,732) M.9.a. b. Net (increase) decrease to interest expense .............................................. 8762 0 M.9.b. c. Other (noninterest) allocations .......................................................... 8763 0 M.9.c. 10. Credit losses on off-balance sheet derivatives (see instructions) ............................ A251 0 M.10. ------------------- 11. Does the reporting bank have a Subchapter S election in effect for federal income tax YES NO ------------------- purposes for the current tax year? ........................................................... A530 //// X M.11. ------------------- 12. Deferred portion of total applicable income taxes included in Schedule RI, //// Bil Mil Thou ------------------- items 9 and 11 (to be reported with the December Report of Income) ........................... 4772 N/A M.12. -------------------
Schedule RI-A--Changes in Equity Capital Indicate decreases and losses in parentheses.
I383 Dollar Amounts in Thousands RIAD Bil Mil Thou - -------------------------------------------------------------------------------------------------------------------------- 1. Total equity capital originally reported in the December 31, 1996, Reports of Condition ////////////////// and Income ..................................................................................... 3215 822,419 1. 2. Equity capital adjustments from amended Reports of Income, net* ................................ 3216 0 2. 3. Amended balance end of previous calendar year (sum of items 1 and 2) ........................... 3217 822,419 3. 4. Net income (loss) (must equal Schedule RI, item 12) ............................................ 4340 39,184 4. 5. Sale, conversion, acquisition, or retirement of capital stock, net ............................. 4346 0 5. 6. Changes incident to business combinations, net ................................................. 4356 0 6. 7. LESS: Cash dividends declared on preferred stock ............................................... 4470 0 7. 8. LESS: Cash dividends declared on common stock .................................................. 4460 0 8. 9. Cumulative effect of changes in accounting principles from prior years* (see instructions for ////////////////// this schedule) ................................................................................. 4411 6,818 9. 10. Corrections of material accounting errors from prior years* (see instructions for this schedule) 4412 0 10. 11. Change in net unrealized holding gains (losses) on available-for-sale securities ............... 8433 (16,960) 11. 12. Other transactions with parent holding company* (not included in items 5, 7, or 8 above) ....... 4415 0 12. 13. Total equity capital end of current period (sum of items 3 through 12) (must equal ////////////////// Schedule RC, item 28) .......................................................................... 3210 851,461 13. -------------------
- ---------- Describe on Schedule RI-E--Explanations. 5 Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for March 31, 1997 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding as of the last business day of the quarter. Schedule RC--Balance Sheet
C300 Dollar Amounts in Thousands RCON Bil Mil Thou - -------------------------------------------------------------------------------------------------------------------------- ASSETS ////////////////// 1. Cash and balances due from depository institutions (from Schedule RC-A:) ////////////////// a. Noninterest-bearing balances and currency and coin(1) ...................................... 0081 698,029 1.a. b. Interest-bearing balances(2) ............................................................... 0071 330,238 1.b. 2. Securities: ////////////////// a. Held-to-maturity securities (from Schedule RC-B, column A) ................................. 1754 112,675 2.a. b. Available-for-sale securities (from Schedule RC-B, column D) ............................... 1773 2,054,783 2.b. 3. Federal funds sold and securities purchased under agreements to resell ......................... 1350 27,400 3. 4. Loans and lease financing receivables: ////////////////// ------------------------ a. Loans and leases, net of unearned income (from Schedule RC-C) ... RCON 2122 6,868,473 ////////////////// 4.a. b. LESS: Allowance for loan and lease losses ....................... RCON 3123 98,614 ////////////////// 4.b. c. LESS: Allocated transfer risk reserve ........................... RCON 3128 0 ////////////////// 4.c. ------------------------ d. Loans and leases, net of unearned income, ////////////////// allowance, and reserve (item 4.a minus 4.b and 4.c) ........................................ 2125 6,769,859 4.d. 5. Trading assets (from Schedule RC-D) ............................................................ 3545 0 5. 6. Premises and fixed assets (including capitalized leases) ....................................... 2145 156,623 6. 7. Other real estate owned (from Schedule RC-M) ................................................... 2150 8,217 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Shedule RC-M) ........ 2130 50,360 8. 9. Customers' liability to this bank on acceptances outstanding ................................... 2155 869 9. 10. Intangible assets (from Schedule RC-M) ......................................................... 2143 164,760 10. 11. Other assets (from Schedule RC-F) .............................................................. 2160 198,157 11. 12. Total assets (sum of items 1 through 11) ....................................................... 2170 10,571,970 12. -------------------
- ---------- 1) Includes cash items in process of collection and unposted debits. 2) Includes time certificates of deposit not held for trading. 9 Schedule RC--Continued
Dollar Amounts in Thousands RCON Bil Mil Thou - -------------------------------------------------------------------------------------------------------------------------- LIABILITIES ////////////////// 13. Deposits: ////////////////// a. In domestic offices (sum of totals of columns A and C from Schedule RC-E) .................. 2200 7,066,437 13.a. ------------------------ (1) Noninterest-bearing(1) ..................................... RCON 6631 1,586,399 ////////////////// 13.a.(1) (2) Interest-bearing ........................................... RCON 6636 5,480,038 ////////////////// 13.a.(2) ------------------------ b. In foreign offices, Edge and Agreement subsidiaries, and IBFs .............................. ////////////////// (1) Noninterest-bearing ................................................................... ////////////////// (2) Interest-bearing ...................................................................... ////////////////// 14. Federal funds purchased and securities sold under agreements to repurchase ..................... 2800 1,854,412 14. 15. a. Demand notes issued to the U.S. Treasury ................................................... 2840 5,974 15.a. b. Trading liabilities (from Schedule RC-D) ................................................... 3548 0 15.b. 16. Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases): ////////////////// a. With a remaining maturity of one year or less .............................................. 2332 350,000 16.a. b. With a remaining maturity of more than one year ............................................ 2333 147,657 16.b. 17. Not applicable ////////////////// 18. Bank's liability on acceptances executed and outstanding ....................................... 2920 869 18. 19. Subordinated notes and debentures(2) ........................................................... 3200 160,000 19. 20. Other liabilities (from Schedule RC-G) ......................................................... 2930 135,160 20. 21. Total liabilities (sum of items 13 through 20) ................................................. 2948 9,720,509 21. 22. Not applicable ////////////////// EQUITY CAPITAL ////////////////// 23. Perpetual preferred stock and related surplus .................................................. 3838 0 23. 24. Common stock ................................................................................... 3230 65,164 24. 25. Surplus (exclude all surplus related to preferred stock) ....................................... 3839 729,855 25. 26. a. Undivided profits and capital reserves ..................................................... 3632 78,650 26.a. b. Net unrealized holding gains (losses) on available-for-sale securities ..................... 8434 (22,208) 26.b. 27. Cumulative foreign currency translation adjustments ............................................ ////////////////// 28. Total equity capital (sum of items 23 through 27) .............................................. 3210 851,461 28. 29. Total liabilities, limited-life preferred stock, and equity capital ////////////////// (sum of items 21 and 28) ....................................................................... 3300 10,571,970 29. -------------------
Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by independent external Number ------------------ auditors as of any date during 1996 ............................................................ RCON 6724 2 M.1. ------------------
1 - Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the bank 2 - Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately) 3 - Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) 4 - Directors' examination of the bank performed by other external auditors (may be required by state chartering authority) 5 - Review of the bank's financial statements by external auditors 6 - Compilation of the bank's financial statements by external auditors 7 - Other audit procedures (excluding tax preparation work) 8 - No external audit work - ---------- 1) Includes total demand deposits and noninterest-bearing time and savings deposits. 2) Includes limited-life preferred stock and related surplus. 10 -----END PRIVACY-ENHANCED MESSAGE-----