_________________________________________________________________
_________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
August 22, 1996
PROFFITT'S, INC.
(Exact name of registrant as specified in its charter)
TENNESSEE 0-15907 62-0331040
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) No.)
P.O. Box 9388, Alcoa, TN 37701
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (423) 983-7000
_________________________________________________________________
_________________________________________________________________
Item 5. Other Events.
On August 22, 1996, the registrant issued a press release
announcing its results for the quarter and six months ended August 3,
1996. A copy of the press release is incorporated herein by
reference and is attached as Exhibit 99.1 hereto.
On August 26, 1996, the registrant issued a press release
announcing the commencement of a consent solicitation of the
holders of the 9 7/8% Senior Subordinated Notes due 2003 of
Parisian, Inc. Copies of the press release and the consent
solicitation statement are incorporated herein by reference and are
attached hereto as Exhibits 99.2 and 99.3.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
The following exhibits are filed as a part of this
report:
Exhibit
Number Description
99.1 Press release dated August 22, 1996.
99.2 Press release dated August 26, 1996.
99.3 Consent solicitation statement dated August 23,
1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
PROFFITT'S, INC.
Date: August 30, 1996 /s/ R. Brad Martin
R. Brad Martin
(Printed)
Chairman of the Board
and Chief Executive
Officer
(Title)
PROFFITT'S, INC.
PROFFITT'S, INC. ANNOUNCES RECORD SECOND QUARTER OPERATING RESULTS
Contact: Julia Bentley
(423) 983-7000
The management of Proffitt's, Inc. has scheduled a conference call at
10:00 a.m. Eastern Time on Friday, August 23, 1996 to discuss the second
quarter results. To participate, please call (816) 650-0777 (10 minutes
prior to the call).
Knoxville, Tennessee (August 22, 1996) -- Department store retailer
Proffitt's, Inc. (NASDAQ: PRFT) today announced record operating results
for the quarter ended August 3, 1996.
Proffitt's, Inc. merged with Younkers, Inc. effective February 3, 1996,
immediately before the Company's fiscal year end. The combination has
been accounted for as a pooling of interests. Results below are
consolidated and include Younkers for both the current and prior year.
Earnings per share numbers assume full dilution unless otherwise noted.
For the quarter, total Company sales were $271.7 million, a 3% decrease
from $278.8 million in the prior year. On a comparable stores basis,
total Company sales increased 1% for the quarter. Revenues for the
Younkers Division were $123.8 million, down 5% from $130.1 million last
year; revenues for the McRae's Division totaled $92.8 million, a 3%
increase over $90.6 million in the prior year; and revenues for the
Proffitt's Division were $55.1 million compared to $58.1 million last
year, a 5% decrease. For the quarter, comparable store sales were flat
with last year for the Younkers Division, up 1% for the McRae's
Division, and up 4% for the Proffitt's Division.
For the six months ended August 3, 1996, total Company sales were $568.3
million compared to $565.9 million last year. On a comparable stores
basis, total Company sales increased 4% for the six months. Revenues
for the Younkers Division were $250.4 million, down 3% from $256.8
million in the prior year; revenues for the McRae's Division totaled
$202.3 million, a 4% increase over $194.4 million last year; and
revenues for the Proffitt's Division were $115.7 million, a 1% increase
over $114.8 million last year. For the six months, comparable store
sales increased 2%, 3%, and 10% for the Younkers, McRae's, and
Proffitt's Divisions, respectively.
The total store sales performance for the periods indicated was lower
than the comparable store sales performance primarily due to the closing
of two Younkers stores and one Proffitt's store in January 1996 and the
sale of two Younkers stores in March 1996.
The conversion of the Younkers shoe operation from leased to owned was
completed on August 3, 1996. Sales performance was negatively affected
during the transition period for the first six months of 1996.
Excluding Younkers' leased shoe sales, comparable store sales for the
Younkers Division increased 2% and 3% for the quarter and six months,
respectively. For the total Company, comparable store sales increased
2% and 4% for the quarter and six months, respectively, excluding
Younkers' leased shoe sales.
Prior to the non-recurring items outlined below, second quarter net
income totaled $4.4 million, or $.21 per share, a 32% increase over $3.4
million, or $.15 per share, last year. Prior to the non-recurring items
outlined below, net income for the six months totaled $11.0 million, or
$.51 per share, a 52% increase over $7.3 million, or $.33 per share,
last year.
As previously announced, in conjunction with the Younkers merger,
certain non-recurring merger, restructuring, and integration charges
were incurred for the quarter and six months ended August 3, 1996. For
the quarter, these charges totaled $.9 million after tax, or $.04 per
share. These charges were primarily related to items such as the
conversion of Younkers' computer systems and expenses of consolidating
administrative functions. For the six months, these charges totaled
$2.6 million after tax, or $.12 per share. Of this total, $1.1 million
was related to the termination of a Younkers pension plan, and the
remainder related to such items as the computer conversion and
administrative consolidations.
In March 1996, the Company sold two Younkers stores in Rockford,
Illinois to Carson Pirie Scott & Co., realizing an after-tax gain on the
transaction of $1.4 million, or $.06 per share.
For the quarter and six months ended July 29, 1995, the Company incurred
after-tax expenses of approximately $.9 million and $1.1 million,
respectively, or $.04 and $.06 per share, respectively, related to the
defense of the attempted hostile takeover of Younkers by Carson Pirie
Scott & Co.
After these non-recurring items, net income for the quarter and six
months ended August 3, 1996 totaled $3.5 million, or $.16 per share, and
$9.8 million, or $.46 per share, respectively, compared to $2.5 million,
or $.10 per share, and $6.1 million, or $.27 per share, respectively,
for the quarter and six months ended July 29, 1995.
As previously announced, on June 28, 1996, the Company's Series A
Cumulative Convertible Exchangeable Preferred Stock ("Series A Preferred
Stock") held by Apollo Specialty Retail Partners, L.P. ("Apollo") was
converted into approximately 1.4 million shares of Proffitt's, Inc.
Common Stock. In order to complete this early conversion of the Series
A Preferred Stock and eliminate future dividend payments on this
security, the Company paid approximately $3.0 million to Apollo. The
payment had no effect on the Company's fully diluted earnings per share
calculations for the quarter or six months. After non-recurring items
and the one-time payment to Apollo, primary earnings per share totaled
$.01 and $.30 for the quarter and six months ended August 3, 1996,
respectively.
R. Brad Martin, Chairman and Chief Executive Officer of Proffitt's,
Inc., stated, "In spite of the relatively soft retail sales enviroment,
we are pleased with our record operating results for the quarter and the
six months. Our results were in line with expectations and primarily
were achieved thorugh solid gross margin performance and expense
control. We are well positioned to execute our business objectives for
the remainder of 1996."
Proffitt's, Inc. is a leading regional specialty department store
company which operates three department store divisions - the Proffitt's
Division with 25 stores in Tennessee, Virginia, Georgia, Kentucky, and
North Carolina; the McRae's Division with 29 stores in Alabama,
Mississippi, Florida, and Louisiana; and the Younkers Division with 48
stores in Iowa, Wisconsin, Nebraska, Michigan, Illinois, Minnesota, and
South Dakota. On a combined basis, the Company operates 102 stores in
sixteen states.
PROFFITT'S, INC.
PROFFITT'S, INC. COMMENCES CONSENT SOLICITATION OF THE HOLDERS OF
THE 9-7/8% SENIOR SUBORDINATED NOTES DUE 2003 OF PARISIAN, INC.
REGARDING PROPOSED AMENDMENTS TO THE NOTE INDENTURE
Contacts: NationsBanc Capital Markets: Scott Marler
(704) 388-3651
Proffitt's: Julia Bentley
(423) 983-7000
Knoxville, Tennessee (August 26, 1996) -- Proffitt's, Inc.
("Proffitt's") announced today that it has commenced a solicitation (the
"Solicitation") of consents (the "Consents") of the registered holders
as of the close of business on August 14, 1996 (the
"Registered Holders") of the 9-7/8% Senior Subordinated Notes due 2003
(the "Notes") of Parisian, Inc. ("Parisian") to amend and
restate the Indenture, dated as of July 15, 1993 (the "Indenture"),
between Parisian and AmSouth Bank of Alabama (f/k/a AmSouth Bank, N.A.),
as trustee (the "Trustee").
Proffitt's will make a payment (the "Consent Payment") to each
Registered Holder in the amount of $5.00 in cash for each $1,000
principal amount of Notes with respect to which a Consent is
received and not revoked. The Solicitation will expire at 5:00
P.M., New York City time, on September 11, 1996, unless extended.
Proffitt's, Casablanca Merger Corp., a wholly-owned subsidiary of
Proffitt's ("Casablanca"), and Parisian have entered into an
Agreement and Plan of Merger (the "Merger Agreement") whereby
Casablanca will be merged with and into Parisian and Parisian will
become a wholly-owned subsidiary of Proffitt's (the "Merger"). If the
Solicitation is unsuccessful, Proffitt's will have the option under the
terms of the Merger Agreement to proceed with or to
decline to consummate the Merger. At the current time, there can be no
assurance as to which option Proffitt's will elect if the
Solicitation is unsuccessful.
Proffitt's is proposing in this Solicitation to fully and
unconditionally guarantee, on a senior subordinated and unsecured basis,
the payment by the Parisian of the principal of, and
interest and premium, if any, on the Notes (the "Parent Guarantee") and
effect the proposed amendments to the Indenture (the "Proposed
Amendments"). The purpose of the Parent Guarantee is to provide holders
of Notes with recourse to Proffitt's for payment of the
Notes. The Proposed Amendments are designed to effect changes in the
existing Indenture covenants which are appropriate in view of the
addition of the Parent Guarantee. The Parent Guarantee will be issued
by Proffitt's only if the Proposed Amendments are approved and become
effective.
Adoption of the Proposed Amendments requires the Consent of the
Registered Holders of a majority in aggregate principal amount of the
Notes outstanding and not owned by Parisian or any of its affiliates
(the "Requisite Consents"). Registered Holders who do not timely
consent to the Proposed Amendments will not be eligible to receive
Consent Payments even though they will be bound by the Proposed
Amendments, if adopted.
Consents may be revoked at any time until the Requisite
Consents have been received and the supplemental indenture has been
executed by Proffitt's, Parisian and the Trustee.
NationsBanc Capital Markets, Inc. is serving as solicitation agent
(the "Solicitation Agent") and Georgeson & Company, Inc. is serving as
information agent (the "Information Agent") in
connection with the Solicitation.
Requests for assistance should be directed to the Information Agent
at (212) 440-9800 (collect) or 1-800-223-2064 (toll free), or to the
Solicitation Agent, attention of Scott Marler at (704)
388-3651. Requests for additional documents (including the
prospectus pursuant to which the Parent Guarantee is being offered)
should be directed to the Information Agent at one of the telephone
numbers listed above or at Wall Street Plaza, 88 Pine Street, New York,
New York 10005.
CONSENT SOLICITATION STATEMENT
PROFFITT'S, INC.
Solicitation of Consents to Amendment of
the Indenture Governing the
9 7/8% Senior Subordinated Notes due 2003
of Parisian, Inc.
Proffitt's, Inc. (referred to herein as either "Proffitt's" or the
"Parent") is soliciting (the "Solicitation") the consents (the
"Consents") of registered holders of the 9 7/8% Senior Subordinated Notes
due 2003 (the "Notes") of Parisian, Inc. (referred to herein as either
"Parisian" or "the Company") to amend and restate the
Indenture, dated as of July 15, 1993 (the "Indenture"), between
Parisian and AmSouth Bank of Alabama (f/k/a AmSouth Bank, N.A.), as
trustee (in such capacity, the "Trustee"). The proposed amendments to
the Indenture are herein referred to as the "Proposed
Amendments."
Registered holders of Notes as of the close of business on
August 14, 1996 ("Registered Holders") will be entitled to execute and
deliver a Consent with respect to the Proposed Amendments. The
Solicitation will expire at 5:00 P.M., New York City time, on
September 11, 1996, unless extended for a specified period or on a daily
basis until the Requisite Consents (as defined below) have been received
(the "Expiration Date"). Consents may be revoked at any time up to, but
will become irrevocable upon, the receipt of the Requisite Consents and
the execution of the supplemental
indenture (the "Supplemental Indenture") by Proffitt's, Parisian and the
Trustee (the "Consent Time"), which may be prior to the
Expiration Date. However, the Supplemental Indenture will provide that
the Proposed Amendments will not become effective until
consummation of the Merger (as defined below).
Upon the terms and subject to the conditions set forth in this
Consent Solicitation Statement and the accompanying form of
Consent, Proffitt's will make a payment (a "Consent Payment") to each
Registered Holder of Notes whose properly executed Consent is received
prior to the Expiration Date (unless such Consent is
revoked prior to the Consent Time). The Consent Payment will be $5.00
in cash for each $1,000 in principal amount of Notes with
respect to which a Consent is received and not revoked as
aforesaid.
Adoption of the Proposed Amendments requires the consent of the
Registered Holders of a majority in aggregate principal amount of the
Notes outstanding and not owned by Parisian or any of its affiliates
(the "Requisite Consents"). Only registered holders of Notes as of the
close of business on August 14, 1996 (the "Record Date") or persons who
hold valid proxies from such Registered
Holders will be eligible to consent to the Proposed Amendments. Any
beneficial owner of Notes held of record by The Depository
Trust Company ("DTC") or its nominee, through authority granted by DTC,
may direct the participant in DTC (the "DTC Participant")
through which such beneficial owner's Notes are held in DTC to
execute, on such beneficial owner's behalf, or may obtain a proxy from
such DTC Participant and execute directly, as if such
beneficial owner were a Registered Holder, a Consent with respect to
Notes beneficially owned by such beneficial owner on the date of
execution.
For a description of the purpose of the Proposed Amendments, see
"Description of the Notes As Amended." Registered Holders who do not
timely consent to the Proposed Amendments will not be
eligible to receive Consent Payments even though they will be bound by
the Proposed Amendments, if approved by the Requisite Consents.
Consents should be sent to AmSouth Bank of Alabama as
depositary (in such capacity, the "Depositary"), and not to
Proffitt's, Parisian, the Information Agent or the Solicitation
Agent. In no event should a Registered Holder tender or deliver Notes.
This Solicitation does not constitute an offer by
Proffitt's or Parisian to buy, or the solicitation by Proffitt's or
Parisian of an offer to sell, any Notes.
The Solicitation Agent for the Solicitation is:
NATIONSBANC CAPITAL MARKETS, INC.
August 23, 1996<PAGE>
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 3
SUMMARY 4
BUSINESS OF PROFFITT'S AND PARISIAN 6
THE MERGER 6
THE SOLICITATION 9
DESCRIPTION OF THE NOTES AS AMENDED 14
FEDERAL INCOME TAX CONSEQUENCES 33
MISCELLANEOUS 35
<PAGE>
AVAILABLE INFORMATION
Proffitt's is subject to the information and reporting
requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files periodic reports
and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information filed
by Proffitt's with the Commission may be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices located at Seven World Trade Center, 13th
Floor, New York, New York 10048 and CitiCorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. 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.
Proffitt's has filed with the Commission a Registration
"Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Parent
Guarantee (as defined herein). The Registration Statement, the
prospectus included therein (the "Prospectus") and the exhibits
thereto may be obtained from the commission's principal office in
Washington, D.C.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed for Proffitt's with
the Commission (Commission File No. 0-15907) pursuant to the Exchange
Act, are incorporated herein by reference:
1. Proffitt's Annual Report on Form 10-K for the fiscal year
ended February 3, 1996, and Amendment No. 1 thereto dated May 1, 1996
(the "Proffitt's 1996 Form 10-K");
2. Proffitt's Quarterly Report on Form 10-Q for the quarter ended
May 4, 1996 (the "Proffitt's First Quarter Form 10-Q");
3. Proffitt's Current Reports on Form 8-K filed with the
Commission on February 16, 1996, April 1, 1996, July 18, 1996 and August
12, 1996, respectively; and
4. The Registration Statement.
The following documents filed for Parisian with the Commission
(Commission File No. 33-60418) pursuant to the Exchange Act are
incorporated herein by reference:
1. Parisian's Annual Report on Form 10-K for the fiscal year
ended February 3, 1996; and
2. Parisian's Quarterly Report on Form 10-Q for the quarter ended
May 4, 1996.
All documents filed by Proffitt's or Parisian pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of this Consent Solicitation Statement and prior to the Expiration
Date shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of the filing of such
documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Consent Solicitation Statement to the
extent that a statement contained herein or in any other subsequently
filed document that also is or is deemed to be incorporated by reference
herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a
part of this Consent Solicitation Statement.
The Proffitt's 1996 Form 10-K, the Proffitt's 1996 Annual
Report to Shareholders, the Proffitt's First Quarter Form 10-Q, the
Prospectus and the prospectus included in the Registration
Statement on Form S-4 with respect to the Merger are being
delivered to Registered Holders together with this Consent
Solicitation Statement.
SUMMARY
The following summary is qualified by reference to, and should be
read in conjunction with, the information contained herein and in the
documents incorporated by reference herein.
The Solicitation: Proffitt's is offering to fully and
unconditionally guarantee, on a senior subordinated and unsecured basis,
the payment by Parisian of the principal of, and interest and premium,
if any, on the Notes (the "Parent Guarantee") and is seeking consents
(the "Consents") from holders of the Notes to
amend and restate the Indenture governing the Notes (the
"Indenture").
Consent Payments: $5.00 in cash for each $1,000 in principal
amount of Notes for which Consents are timely received and not
revoked. No accrued interest will be paid on Consent Payments.
Parent Guarantee: The Parent Guarantee will rank pari passu with all
other existing and future indebtedness of Proffitt's that is expressly
subordinated to Proffitt's senior indebtedness. The
Parent Guarantee will be subordinated to senior indebtedness of
Proffitt's to at least the same extent as the Notes are
subordinated to senior indebtedness of Parisian.
Proposed Amendments: The Supplemental Indenture, if approved by the
Registered Holders, would amend and restate the Indenture to add the
Parent Guarantee, make Proffitt's a party to the Indenture, make
applicable to Proffitt's certain covenants which are currently
applicable to Parisian, remove certain provisions which will be
rendered obsolete upon the closing of the Merger (as defined
herein) and make certain other amendments described herein. The
proposed amendments to the Indenture are herein referred to as the
"Proposed Amendments".
Requisite Consents: Adoption of the Proposed Amendments requires the
receipt, without revocation, of the Requisite Consents,
consisting of the Consents of the Registered Holders of a majority in
aggregate principal amount of the Notes outstanding and not
owned by Parisian or any of its affiliates. Registered Holders who do
not timely consent to the Proposed Amendments will not be
eligible to receive Consent Payments even though they will be bound by
the Proposed Amendments, if adopted.
Purposes of Parent
Guarantee and
Solicitation: The purpose of the Parent Guarantee is to
provide holders of Notes with recourse to Proffitt's for payment of the
principal of, and interest and premium, if any, on the Notes. The
Proposed Amendments are designed to effect changes in the
existing Indenture covenants which are appropriate in view of the
addition of the Parent Guarantee.
Proffitt's Obligation
to Consummate
Merger: If the Solicitation is unsuccessful, Proffitt's will have
the option under the terms of the Merger Agreement to proceed with the
Merger or to decline to consummate the Merger. At the
current time, there can be no assurance as to which option
Proffitt's will elect if the Solicitation is unsuccessful.
Conditions to
Solicitation: Proffitt's obligation to accept and pay for the
Consents received and issue the Parent Guarantee is subject to and
conditioned upon, among other things, the following: (i) there
having been validly delivered (and not revoked) prior to the
Expiration Date the Requisite Consents, (ii) the execution of the
Supplemental Indenture amending and restating the Indenture
following receipt of the Requisite Consents and (iii) effectiveness of
the Supplemental Indenture and the Proposed Amendments. The
Supplemental Indenture and the Proposed Amendments will not become
effective until consummation of the Merger.
Expiration Date: 5:00 p.m., New York City time, on September 11,
1996, unless extended.
Record Date: Only registered holders of Notes as of the
close of business on August 14, 1996 (the "Record Date") or persons who
hold valid proxies from such Registered Holders will be
eligible to consent to the Proposed Amendments.
Withdrawal Rights: Delivery of Consents may be revoked at any time
until the time that the Requisite Consents have been received and the
Supplemental Indenture has been executed (the "Consent Time").
Solicitation Agent: NationsBanc Capital Markets, Inc. ("NCMI") is
serving as Solicitation Agent for Proffitt's in connection with the
Solicitation.
Delivery of Consents: Delivery of all Consents should be made only to
AmSouth Bank of Alabama, which is serving as Depositary.
Information Agent: Georgeson & Company, Inc. is serving as
Information Agent in connection with the Solicitation. Requests for
assistance should be directed to the Information Agent.
Requests for additional copies of this Consent Solicitation
Statement, the form of Consent and any other required documents
should be directed to the Information Agent or the Solicitation
Agent at one of the addresses set forth on the back page of this Consent
Solicitation Statement. The telephone number of the
Information Agent is 1-800-223-2064.
BUSINESS OF PROFFITT'S AND PARISIAN
Proffitt's is a leading regional specialty department store company
offering a wide selection of fashion apparel, accessories, cosmetics,
and decorative home furnishings, featuring assortments of premier brands
and unique specialty merchandise. Proffitt's
stores are primarily anchor stores in leading regional malls. The
principal executive offices of Proffitt's are located at 115 North
Calderwood, Alcoa, Tennessee 37701.
Parisian operates 38 specialty department stores, including one
store location which opened in March 1996, selling moderate to better-
priced fashion merchandise for the entire family.
Parisian's stores are generally anchor stores in enclosed regional and
premium community malls. As a specialty department store, a Parisian
store carries apparel, cosmetics, shoes, accessories and gifts
customarily found in typical department stores, but does not carry home
furnishings, housewares, furniture, large or small
appliances or electronics. Parisian concentrates on providing
value through superior customer service, competitive pricing and strong
relationships with its customers and suppliers. Parisian seeks to
create a special shopping experience in its stores through carefully
selected fashion merchandise assortments, attractive
store design, exciting visual presentations and promotional events and
personal amenities that enhance customer convenience and
comfort. The principal executive offices of Parisian are located at 750
Lakeshore Parkway, Birmingham, Alabama 35211.
THE MERGER
Merger Agreement
On July 8, 1996, Proffitt's, Casablanca Merger Corp., a
wholly-owned subsidiary of Proffitt's ("Casablanca"), and Parisian
entered into an Agreement and Plan of Merger (the "Merger
Agreement"), which provides that, subject to the satisfaction or waiver
of the conditions set forth therein, Casablanca will be
merged with and into Parisian and Parisian will become a wholly-
owned subsidiary of Proffitt's (the "Merger"). A meeting of the
shareholders of Parisian to consider approval of the Merger will be held
on September 20, 1996. Assuming Parisian shareholder approval is
obtained at such meeting, Proffitt's expects that Articles of Merger
will be filed with the Secretary of State of the State of Alabama, and
the Merger will become effective upon such filing,
which is anticipated to be on or before October 15, 1996.
Benefits of the Merger
The merger of Proffitt's and Parisian will result in a
combined enterprise with 141 department stores and more than $2
billion in annual sales. Proffitt's expects the combined companies to
achieve synergies and cost savings similar to those achieved in prior
acquisitions. Proffitt's expects the increased size of the combined
companies to provide an added degree of geographic and
customer diversification and to enhance its purchasing power with
vendors. The Proffitt's management team has significant experience in
integrating acquired companies and identifying synergies and
"best practices" to generate cost savings, while maintaining focus on
existing operations, as evidenced by the acquisitions of
Younkers, which was consummated on February 3, 1996, and McRae's, which
was consummated on March 31, 1994.
Proffitt's believes that the addition of the Parent Guarantee will
represent a substantial enhancement of the credit quality of the Notes
based on both improved interest coverage and reduced
leverage. As of August 3, 1996, Parisian's Consolidated Cash Flow Ratio
was 2.44:1.00. By comparison, after giving effect to the
Merger, Proffitt's Consolidated Cash Flow Ratio as of August 3,
1996, would have been 3.53:1.00, excluding the effect of
nonrecurring charges of approximately $44 million incurred in
connection with the acquisition of Younkers (or 2.59:1.00 including such
charges). Furthermore, the ratio of Parisian's total
Indebtedness to Consolidated EBITDA as of August 3, 1996 was
4.10:1.00. By comparison, after giving effect to the Merger, the ratio
of Proffitt's total Indebtedness to Consolidated EBITDA as of August 3,
1996, would have been 3.20:1.00, excluding the effect of such
nonrecurring charges incurred in connection with the
acquisition of Younkers (or 4.40:1.00 including such charges).
Except as expressly noted, the foregoing ratios for Parisian and
Proffitt's have been calculated based on the applicable definitions in
the Indenture and the proposed Amended and Restated Indenture,
respectively, which are the same in all material respects.
Source of Funds for the Merger
The source of funds for the Merger is expected to be a new
unsecured senior revolving credit facility arranged by NationsBank, N.A.
(South) which is expected to be guaranteed by all subsidiaries of
Proffitt's, including Parisian and excluding Accounts Receivable
Subsidiaries. Approximately $125 million of borrowings under such
facility will be required to finance the cash portion of the
consideration to be paid in the Merger and to pay transaction
costs. The balance of such facility is expected to be available after
the closing of the Merger for working capital and general
corporate purposes of Proffitt's and its subsidiaries (including, after
giving effect to the Merger, Parisian). Availability under such
facility is expected to be limited to the lesser of $275
million or 60% of eligible inventory. The guaranty of such
facility by Parisian requires the effectiveness of the Proposed
Amendments. If the Proposed Amendments are not approved and
Proffitt's elects to proceed with the Merger, Proffitt's intends to
increase the size of its existing credit facility to a minimum of $175
million and to leave in place the existing $50 million credit facility
of Parisian (subject to the receipt of appropriate
consents from the lenders thereunder) or to establish a replacement
Parisian credit facility of the same size. Based on its own
analysis and discussions with its financial advisers, Proffitt's
believes that the alternative dual credit facilities would provide
appropriate liquidity for the foreseeable future with interest rate
margins and other material economic terms which are as favorable in the
aggregate to Proffitt's as those available under the proposed new
Proffitt's credit facility. Proffitt's has been advised by
NationsBank, N.A. (South) that it is prepared to use its reasonable best
efforts to arrange an alternative $175 million Proffitt's
credit facility and, if necessary, a replacement $50 million
Parisian credit facility.
The limitation on Indebtedness contained in the Indenture
includes an exception for a credit facility of Parisian and its
subsidiaries of up to $50 million. As a result of the Proposed
Amendments, this exception, which is included in the definition of
Permitted Indebtedness, would be increased to $325 million for
credit facilities of Proffitt's and its subsidiaries. Proffitt's
believes that this proposed new exception is appropriate for a
department store company of its size after consummation of the
Merger. The proposed $325 million exception for bank credit
facility commitments, viewed both as a percentage of total
capitalization and a percentage of total revenue, is within the
prevailing range for comparable department store companies, based on a
review of publicly available information for Carson Pirie,
Federated, Jacobson's and Younkers, as shown in the table below.
Furthermore, as described above, Proffitt's expects its new credit
facility to permit borrowings of up to the lesser of $275 million or 60%
of eligible inventory. The balance of the proposed
exception up to $325 million is designed to afford Proffitt's some
flexibility in the future without requiring further amendments to the
Indenture.
<TABLE>
<CAPTION>
Credit Facilities Comparison for Proffitt's/Parisian Peers<F1>
(dollars in millions)
Combined
Proffitt's/ Carson
Parisian Parisian<F2> Pirie Younkers<F3> Federated Jacobson's
<S> <C> <C> <C> <C> <C> <C>
Total Bank Credit Facility
Commitments $ 50.0 $ 325.0 $150.0 $150.0 $2,800.0 $ 65.0
Outstandings under
Bank Credit Facility - 149.3 - - 1,640.0 37.2
Total Outstanding Debt 161.9 529.3 195.8 - 6,365.3 124.2
Book Equity 84.5 468.8 319.8 161.9 4,273.7 81.6
Total Capitalization<F4> 296.4 1,173.8 665.6 311.9 11,799.0 233.6
Total Revenue 663.8 1,997.3 1,083.8 613.4 15,048.5 414.3
Total Bank Credit Facility
Commitments as a percentage
of Total Capitalization 16.9% 27.7%<F5> 22.5% 48.1% 23.7% 27.8%
Total Bank Credit Facility
Commitments as a percentage
of Total Revenue 7.5% 16.3%<F6> 13.8% 24.5% 18.6% 15.7%
<FN>
<F1> All information except for Proffitt's/Parisian & Younkers is based
on latest publicly available annual reports.
<F2> Balance sheet items are derived from the Proffitt's Form S-4 filed
with the SEC on August 16, 1996 and reflect the combination of
Proffitt's and Parisian as of May 4, 1996. Total Revenue reflects the
combined revenue for the two companies for their fiscal years ended
February 3, 1996.
<F3> Younkers information was derived from internal reports furnished by
Proffitt's. Younkers was acquired by Proffitt's on February 3, 1996,
concurrent with Proffitt's fiscal year end. Younker's information has
been calculated as of February 3, 1996, prior to giving effect to the
acquisition by Proffitt's.
<F4> Total Capitalization is defined as Book Equity plus Total
Outstanding Debt, other than that debt outstanding under Bank Credit
Facilities, plus Total Bank Credit Facility Commitments.
<F5> This percentage has been calculated based on the proposed new
exception from the limitation on incurrence of indebtedness of $325
million. However, assuming that the proposed new $275 million
Proffitt's credit facility is in effect, this percentage would be 24.5%.
<F6> This percentage has been calculated based on the proposed new
exception from the limitation on incurrence of indebtedness of $325
million. However, assuming that the proposed new $275 million
Proffitt's credit facility is in effect, this percentage would be 13.8%.
</FN>
</TABLE>
Proffitt's Obligation to Consummate the Merger
If the Solicitation is unsuccessful, Proffitt's will have the
option under the terms of the Merger Agreement to proceed with the
Merger or to decline to consummate the Merger. At the current
time, there can be no assurance as to which option Proffitt's will elect
if the Solicitation is unsuccessful.
THE SOLICITATION
General
Consents with respect to the Notes will become irrevocable at the
Consent Time, which may be prior to the Expiration Date.
Promptly after the receipt of the Requisite Consents, Proffitt's,
Parisian and the Trustee will execute the Supplemental Indenture.
However, the Supplemental Indenture and the Proposed Amendments
will not become effective until consummation of the Merger. After the
Supplemental Indenture becomes effective, all then current
holders of Notes, including non-consenting holders, and all
subsequent holders of Notes will be bound by the Proposed
Amendments. If the Solicitation is terminated for any reason
before the Supplemental Indenture becomes effective, the Consents will
be voided, no Consent Payments will be made, and the Proposed Amendments
will not be effected.
Requisite Consents
Adoption of the Proposed Amendments requires the receipt
without revocation of the Requisite Consents, consisting of the
Consents of the Registered Holders of a majority in aggregate
principal amount of the Notes outstanding and not owned by Parisian or
any of its affiliates. As of the date of this Consent
Solicitation Statement, $125 million aggregate principal amount of Notes
were so outstanding.
Purpose of the Parent Guarantee and the Proposed Amendments
Proffitt's is proposing in this Solicitation to fully and
unconditionally guarantee, on a senior subordinated and unsecured basis,
the payment by Parisian of the principal of, and interest and premium,
if any, on the Notes and the performance by Parisian of its obligations
under the Indenture (the "Parent Guarantee") and to amend and restate
the Indenture on the terms described herein (the "Proposed Amendments").
The purpose of the Parent Guarantee is to provide holders of Notes with
recourse to Proffitt's for payment of the Notes. The Proposed
Amendments are designed to effect changes in the existing Indenture
covenants which are appropriate in view of the addition of the Parent
Guarantee. The Parent Guarantee will be issued by Proffitt's only if
the Proposed Amendments are approved and become effective.
Expiration Date; and Extension
The term "Expiration Date" means 5:00 P.M., New York City
time, on September 11, 1996, unless Proffitt's, in its sole
discretion, extends the period during which the Solicitation is
open, in which event the term "Expiration Date" means the latest time
and date to which the Solicitation is so extended. Proffitt's reserves
the right to extend the Solicitation at any time and from time to time,
whether or not the Requisite Consents have been
received, by giving oral or written notice to the Depositary no
later than 5:00 P.M., New York City time, on the next business day after
the previously announced Expiration Date. Any such extension will be
followed as promptly as practicable by notice thereof by press release
or other public announcement (or, at the election of Proffitt's, by
written notice to the Registered Holders). Such
announcement or notice may state that Proffitt's is extending the
Solicitation for a specified period of time or on a daily basis
until 5:00 P.M., New York City time, on the date on which the
Requisite Consents have been received.
Proffitt's expressly reserves the right for any reason (i) to
terminate the Solicitation at any time before the Supplemental
Indenture becomes effective (whether or not the Requisite Consents have
been received and whether or not the Supplemental Indenture has been
executed) by giving oral or written notice of such
termination to the Depositary and (ii) not to extend the
Solicitation beyond the Expiration Date whether or not the
Requisite Consents have been received by such date. Any such
action by Proffitt's will be followed as promptly as practicable by
notice thereof by press release or other public announcement (or, at the
election of Proffitt's, by written notice to the Registered Holders).
Consent Payments
Upon consummation of the Merger and effectiveness of the
Proposed Amendments, Proffitt's will promptly deposit sufficient funds
with the Depositary to enable the Depositary to, and direct the
Depositary to, make a payment to each Registered Holder whose properly
executed Consent is received on or prior to the Expiration Date (unless
such Consent is revoked prior to the Consent Time). The Consent Payment
will be in the amount of $5.00 in cash for each $1,000 in principal
amount of Notes with respect to which such
Consent was so received and not revoked. No accrued interest will be
paid on the Consent Payments.
Registered Holders who do not timely consent to the Proposed
Amendments will not be eligible to receive Consent Payments even though
they will be bound by the Proposed Amendments, if approved by the
Requisite Consents.
Amendment
Proffitt's expressly reserves the right to modify, at any time or
from time to time, the terms of the Solicitation and/or the
Proposed Amendments in any manner it deems necessary or advisable. If
Proffitt's delivers an officer's certificate to the Trustee
certifying that such modifications are not, in the aggregate,
materially adverse to holders of Notes (compared to the terms of the
Solicitation and the Proposed Amendments described in this
Consent Solicitation Statement) and so long as such modifications do not
reduce the Consent Payment, Consents given prior to such
modifications will remain valid and effective and will constitute
Consents to the Proposed Amendments, as so modified. Proffitt's will
not be obligated to deliver notice of such amendments to the holders of
Notes prior to executing the Supplemental Indenture.
Failure to Obtain Requisite Consents
In the event that the Requisite Consents are not obtained and the
Solicitation is terminated, the Consents will be voided, no
Consent Payments will be made, and the Proposed Amendments will not be
effected.
Consent Procedures
This Consent Solicitation Statement is being sent to all
Registered Holders. Only those persons who are Registered Holders of
the Notes as of the Record Date may execute and deliver a
Consent. A beneficial owner of Notes who is not the Registered
Holder of such Notes on the Record Date (e.g., a beneficial holder whose
Notes are registered in the name of a nominee such as a
brokerage firm) must (i) arrange for the Registered Holder to
execute a Consent and deliver it either to the Depositary on such
beneficial owner's behalf or to such beneficial owner for
forwarding to the Depositary by such beneficial owner or (ii)
obtain a duly executed proxy from the Registered Holder authorizing the
beneficial holder to execute and deliver to the Depositary a Consent
with respect to the Notes on behalf of such Registered
Holder. A form of proxy that may be used for such purpose is
included in the form of Consent.
Any beneficial owner of Notes held of record by DTC or its
nominee, through authority granted by DTC, may direct the DTC
Participant through which such beneficial owner's Notes are held in DTC
to execute, on such beneficial owner's behalf, or may obtain a proxy
from such DTC Participant and execute directly, as if such beneficial
owner were a Registered Holder, a Consent with respect to Notes
beneficially owned by such beneficial owner on the date of execution.
For purposes of this Consent Solicitation Statement, the term "record
holder" or "registered holder" shall be deemed to include DTC
Participants.
Giving a Consent will not affect a Registered Holder's right to
sell or transfer Notes or to receive the Consent Payment if such
Registered Holder's Consent has not been revoked prior to the
Consent Time, the Requisite Consents are received and the Proposed
Amendments become effective.
HOLDERS OF NOTES WHO WISH TO CONSENT SHOULD MAIL, HAND
DELIVER, SEND BY OVERNIGHT COURIER OR FAX (CONFIRMED BY THE
EXPIRATION DATE BY PHYSICAL DELIVERY) THEIR PROPERLY COMPLETED AND
EXECUTED CONSENTS TO THE DEPOSITARY AT THE ADDRESS SET FORTH ON THE BACK
PAGE HEREOF AND ON THE CONSENT IN ACCORDANCE WITH THE
INSTRUCTIONS SET FORTH HEREIN AND THEREIN. CONSENTS SHOULD BE
DELIVERED TO THE DEPOSITARY, AND NOT TO PROFFITT'S, PARISIAN, THE
INFORMATION AGENT OR THE SOLICITATION AGENT. HOWEVER, PROFFITT'S
RESERVES THE RIGHT TO ACCEPT ANY CONSENT RECEIVED BY IT OR THE
SOLICITATION AGENT.
IN NO EVENT SHOULD A REGISTERED HOLDER TENDER OR DELIVER
NOTES.
All Consents that are properly completed, signed and delivered to
the Depositary, and not revoked prior to the Consent Time, will be given
effect in accordance with the specifications thereof.
Registered Holders who desire to consent to the Proposed Amendments
should mark the "Consents" box on, and complete, sign and date, the
Consent included herewith and mail, hand deliver, send by overnight
courier or fax (confirmed by the Expiration Date by physical
delivery) the signed Consent to the Depositary at the address
listed on the back page of this Consent Solicitation Statement and on
the Consent, all in accordance with the instructions contained herein
and therein. If none of the boxes on the Consent is marked, but the
Consent is otherwise properly completed and signed, the
Registered Holder will be deemed to have consented to the Proposed
Amendments.
Consents by the Registered Holder(s) of Notes must be executed in
exactly the same manner as such Registered Holder(s) name(s)
appear(s) on the Notes. If Notes to which a Consent relates are held of
record by two or more joint holders, all such holders must sign the
Consent. If a Consent is signed by a trustee, partner, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, such
person must so indicate when signing and must submit with the Consent
form appropriate evidence of authority to execute the Consent. In
addition, if a Consent relates to less than the total principal amount
of Notes registered in the name of such
Registered Holder, the Registered Holder must list the serial
numbers (if applicable) and principal amount of Notes registered in the
name of such holder to which the Consent relates. If Notes are
registered in different names, separate Consents must be executed
covering each form of registration. If a Consent is executed by a
person other than the Registered Holder, then it must be
accompanied by the proxy set forth on the form of Consent duly
executed by the Registered Holder.
The registered ownership of a Note shall be approved by the
Trustee, as registrar with respect to the Notes. All questions as to
the validity, form, eligibility (including time of receipt) for Consent
Payments and revocation of Consents will be determined by Proffitt's in
its sole discretion, which determination will be
conclusive and binding subject to such final review as may be
prescribed by the Trustee concerning proof of execution and
ownership. Proffitt's reserves the absolute right to reject any or all
Consents that are not in proper form or the acceptance of which could,
in the opinion of Proffitt's or its counsel, be unlawful. Proffitt's
also reserves the right, subject to such final review as the Trustee
prescribes for proof of execution and ownership, to
waive any defects or irregularities in connection with deliveries of
particular Consents. Unless waived, any defects or
irregularities in connection with deliveries of Consents must be cured
within such time as Proffitt's determines. None of
Proffitt's, any of its affiliates, the Solicitation Agent, the
Depositary, the Trustee or any other person shall be under any duty to
give any notification of any such defects, irregularities or
waiver, nor shall any of them incur any liability for failure to give
such notification. Deliveries of Consents will not be deemed to have
been made until any irregularities or defects therein have been cured or
waived. Proffitt's interpretation of the terms and conditions of this
Solicitation shall be conclusive and binding.
Revocation of Consents
Each properly completed and executed Consent will be counted,
notwithstanding any transfer subsequent to the Record Date of the Notes
to which such Consent relates, unless prior to the Consent Time the
Depositary receives written notice of revocation from the Registered
Holder thereof or any subsequent registered holder
thereof. Subject to the foregoing, the purchaser of a Note with respect
to which a Consent has been delivered by the Registered
Holder thereof will be bound by such Consent.
A notice of revocation must indicate the certificate number or
numbers of the Notes(s) to which such revocation relates (or
information sufficient to enable Proffitt's to identify such
Notes(s)), as well as the aggregate principal amount represented by such
Notes(s). A properly executed Consent with the "Does Not
Consent" box marked, submitted in accordance with the foregoing
procedures, will be treated as a revocation of a Consent regarding the
Notes(s) to which it relates.
A revocation of a Consent shall be effective only as to the Notes
listed on the revocation and only if such revocation complies with the
provisions of this Consent Solicitation Statement. Only a registered
holder of Notes is entitled to revoke a Consent
previously given with respect to such Notes. If a revocation is signed
by a trustee, partner, executor, administrator, guardian, attorney-in-
fact, officer of a corporation or other person acting in a fiduciary or
representative capacity, such person must so
indicate when signing and must submit with the revocation
appropriate evidence of authority to execute the revocation. A
beneficial owner of Notes who is not the registered holder of such Notes
must (i) arrange with the registered holder to execute and deliver
either to the Depositary on such beneficial owner's behalf, or to such
beneficial owner for forwarding to the Depositary by
such beneficial owner, a revocation of any Consent already given with
respect to such Notes, (ii) obtain a duly executed proxy from the
registered holder authorizing such beneficial holder to act on behalf of
the registered holder as to such Consent or (iii) become a registered
holder and revoke such Consent in accordance with the procedures
described therein.
Proffitt's reserves the right to contest the validity of any
revocation, and all questions as to validity (including time of
receipt) of any revocation will be determined by Proffitt's in its sole
discretion, which determination will be conclusive and binding subject
only to such final review as may be prescribed by the
Trustee concerning proof of execution and ownership. None of
Proffitt's, Parisian, any of their affiliates, the Solicitation
Agent, the Depositary, the Trustee or any other person will be
under any duty to give notification of any defects or
irregularities with respect to any revocation nor shall any of them
incur any liability for failure to give such notification.
Conditions of the Solicitation
Proffitt's obligation to make Consent Payments and issue the
Payment Guarantee is contingent upon (i) receipt of the Requisite
Consents, (ii) the execution of the Supplemental Indenture, (iii)
effectiveness of the Supplemental Indenture and the Proposed
Amendments and (iv) the absence of any law, regulation or order
which would, and the absence of any action or other proceeding
(pending or threatened) which, if adversely determined, would, make
unlawful or invalid or enjoin the implementation of the Proposed
Amendments, the entering into of the Supplemental Indenture or the
making of the Consent Payments or question the legality or validity
thereof. In addition, the Solicitation may be abandoned by
Proffitt's at any time prior to the effectiveness of the
Supplemental Indenture, in which case all Consents will be voided, no
Consent Payments will be made and the Proposed Amendments will not be
effected. The Supplemental Indenture and the Proposed
Amendments will not become effective until consummation of the
Merger.
Subject to the satisfaction of such conditions, Consent
Payments will be made as soon as practicable after the
effectiveness of the Supplemental Indenture and the Proposed
Amendments by check mailed to the respective addresses of the
holders of Notes entitled to receive Consent Payments as such
addresses appear on the record books of the Trustee as of the
Record Date.
Solicitation Agent
Proffitt's has retained NationsBanc Capital Markets, Inc.
("NCMI") to act as Solicitation Agent in connection with the
Solicitation. In its capacity as Solicitation Agent, NCMI will
solicit Consents, may request brokers, dealers, commercial banks, trust
companies and other nominees to forward this Consent
Solicitation Statement and related materials to beneficial owners of
Notes, and will attempt to respond to inquiries of holders of Notes.
NCMI will be paid customary fees for its services as
Solicitation Agent in connection with the Solicitation. In
addition, NCMI will be reimbursed for its reasonable out-of-pocket
expenses (including the reasonable fees and disbursements of
counsel). Proffitt's has agreed to indemnify the Solicitation
Agent against certain liabilities and expenses in connection with the
Solicitation.
The Solicitation Agent does not assume any responsibility for the
accuracy or completeness of the information concerning
Proffitt's or its affiliates contained herein or for any failure by
Proffitt's to disclose events which may have occurred and may
affect the significance or accuracy of such information. All
information contained in this Consent Solicitation Statement has been
supplied by Proffitt's. Proffitt's assumes full
responsibility for the accuracy or completeness of the information
contained herein.
NCMI, in the ordinary course of its business, may from time to time
make a market in the Notes. As a result, NCMI may from time to time own
outstanding Notes.
Requests for assistance should be directed to the Solicitation
Agent or the Information Agent at one of the addresses set forth on the
back page of this Consent Solicitation Statement.
Depositary and Information Agent
AmSouth Bank of Alabama has been appointed Depositary for the
Solicitation. All deliveries and correspondence sent to the
Depositary should be directed to one of its addresses set forth on the
back cover.
Proffitt's has agreed to pay the Depositary customary fees for its
services and to reimburse the Depositary for its reasonable
out-of-pocket expenses in connection herewith. Proffitt's has also
agreed to indemnify the Depositary for certain liabilities.
Georgeson & Company, Inc. has been appointed Information Agent for
the Solicitation. Requests for additional copies of this
Consent Solicitation Statement and/or the form of Consent should be
directed to the Information Agent at its address set forth on the back
page of this Consent Solicitation Statement.
Listing of the Notes
The Notes are not listed on any national securities exchange or
quoted on any interdealer quotation system. Proffitt's does not
currently intend to cause Parisian to list the Notes on any
national securities exchange or apply to have Notes quoted on any
interdealer quotation system.
Miscellaneous
In connection with the Solicitation, directors, officers and
regular employees of Proffitt's (who will not be specifically
compensated for such services) may solicit consents by use of the mails,
personally or by telephone, telegram or facsimile
transmissions. Proffitt's also will pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket
expenses incurred by them in forwarding copies of this Consent
Solicitation Statement and related documents to the beneficial
owners of the Notes and in handling or forwarding deliveries of
Consents by their customers.
DESCRIPTION OF THE NOTES AS AMENDED
Each Registered Holder, by executing and delivering a Consent, will
consent to the Proposed Amendments as set forth in the
Supplemental Indenture and described below. The capitalized terms used
herein and not otherwise defined shall have the meanings
ascribed to them in the Supplemental Indenture. Copies of the
Indenture and the Supplemental Indenture will be available upon
request to Proffitt's or Parisian.
The following summary of certain provisions of the Notes, the
Parent Guarantee and the Indenture, as amended and restated by the
Supplemental Indenture (the "Amended and Restated Indenture") is subject
to, and is qualified in its entirety by reference to, the Supplemental
Indenture, including the definitions therein of terms not defined in
this Consent Solicitation Statement. A copy of the Supplemental
Indenture has been filed as an exhibit to the
Registration Statement.
General
The Notes were issued under an Indenture (the "Indenture"), dated
as of July 15, 1993, between the Company and AmSouth Bank
N.A., as trustee (the "Trustee"). The Notes are general unsecured
senior subordinated obligations of the Company. The Notes are
limited to $125,000,000 aggregate principal amount and will mature on
July 15, 2003.
As indicated under "Subordination" below, the Notes are
subordinated in right of payment to Senior Indebtedness of the
Company. As indicated under "Parent Guarantee" below, the
guarantee of the Notes by the Parent will be subordinated on the same
basis to senior indebtedness of the Parent as the Notes are subordinated
to senior indebtedness of the Company.
Section references used in this section of the Prospectus
refer to sections of the Amended and Restated Indenture.
Interest
The Notes bear interest at the rate of 9 %, payable semi-
annually on January 15 and July 15 (an "Interest Payment Date") of each
year, to Holders of record at the close of business on the
January 1 or July 1 next preceding each Interest Payment Date. The
Supplemental Indenture does not contain any changes to the
provisions of the Indenture regarding payment of interest.
Optional Redemption
Except as described below, the Notes may not be redeemed prior to
July 15, 1998. On or after July 15, 1998, the Company may, at its
option, redeem the Notes in whole or in part, from time to
time, at the redemption prices expressed as a percentage of
principal amount as set forth below, together with accrued and
unpaid interest to the redemption date:
If redeemed during the
12-month period beginning
on July 15 of the years
indicated below: Percentage
1998 104.938%
1999 102.469%
2000 and thereafter 100.000%
The Notes are not subject to a sinking fund.
The Supplemental Indenture does not contain any changes to the
provisions of the Indenture regarding redemption of the Notes.
Parent Guarantee
As a result of the Proposed Amendments, payment of principal of,
and interest and premium, if any, on the Notes by the Company will be
guaranteed on a senior subordinated basis by the Parent
(the "Parent Guarantee") pursuant to the terms of the Amended and
Restated Indenture. The Parent Guarantee will be an unsecured
senior subordinated obligation of the Parent, ranking pari passu with
all other existing and future Indebtedness of the Parent that is
expressly subordinated to Parent Senior Indebtedness.
Subordination of Parent Guarantee. The indebtedness evidenced by
the Parent Guarantee will be subordinated to at least the same extent to
Parent Senior Indebtedness as the Notes are subordinated to Senior
Indebtedness of the Company.
Upon any payment or distribution of assets or securities of the
Parent in any dissolution, winding up, total or partial
liquidation or reorganization of the Parent, payment under the
Parent Guarantee will be subordinated, to the extent and in the
manner set forth in the Amended and Restated Indenture, to the
prior payment in full (in cash or cash equivalents) of all Parent Senior
Indebtedness, including any interest accruing on such Parent Senior
Indebtedness subsequent to the commencement of a bankruptcy, insolvency
or similar proceeding. Upon any default by the Parent in the payment of
the principal of, premium, if any, or interest on Parent Senior
Indebtedness, when the same becomes due, no payment may be made under
the Parent Guarantee until such default has been cured or waived. The
Amended and Restated Indenture also provides that no payment may be made
by the Parent under the Parent
Guarantee for the period specified below (the "Parent Payment
Blockage Period") during the continuance of any non-payment event of
default with respect to Significant Parent Senior Indebtedness (as
defined below) pursuant to which the maturity thereof may be
accelerated. The Parent Payment Blockage Period shall commence on the
earlier of (i) receipt by the Trustee of notice from any
trustee, representative or agent for the holders of any Significant
Parent Senior Indebtedness (or the holders of a least a majority in
principal amount of such Significant Parent Senior Indebtedness
then outstanding) or (ii) if such non-payment event of default
results from the acceleration of the Notes, the date of such
acceleration, and end 179 days thereafter unless such Parent
Payment Blockage Period shall be terminated by written notice to the
Trustee from any trustee, representative or agent for the
holders of Significant Parent Senior Indebtedness (or the holders of at
least a majority in principal amount of such Significant
Parent Senior Indebtedness then outstanding). Not more than one Parent
Payment Blockage Period with respect to the Parent Guarantee may be
commenced during any period of 360 consecutive days. No
event of default that existed or was continuing on the date of the
commencement of any Parent Payment Blockage Period with respect to
Significant Parent Senior Indebtedness initiating such period shall be,
or be made, the basis for the commencement of a second Parent Payment
Blockage Period by the representative for or the holders of such
Significant Parent Senior Indebtedness whether or not within a period of
360 consecutive days unless such event of default shall have been cured
or waived for a period of not less than 90
consecutive days.
As a result of the subordination provisions described above, in the
event of the liquidation, receivership, reorganization,
dissolution or insolvency of the Parent, creditors of the Parent who are
holders of Parent Senior Indebtedness may recover more,
ratably, than the holders of the Notes and funds that would be
otherwise payable to the holders of the Notes under the Parent
Guarantee will be paid to the holders of the Parent Senior
Indebtedness to the extent necessary to pay the Parent Senior
Indebtedness in full in cash or cash equivalents, and the Parent may be
unable to meet its obligations fully with respect to the
Parent Guarantee.
As of August 3, 1996, after giving pro forma effect to the
Merger, the aggregate amount of Parent Senior Indebtedness
outstanding was $119 million, including $54 million of guarantees of
indebtedness of subsidiaries. Certain of the operations of the Parent
are conducted through its subsidiaries. As of August 3,
1996, after giving pro forma effect to the Merger, the subsidiaries of
Proffitt's (including Parisian and its subsidiaries) would have had
outstanding total Indebtedness of approximately $246 million (including
all trade payables and excluding the Notes) and would have had
outstanding Senior Indebtedness of approximately $209
million (including trade payables of Parisian to financial
institutions under factoring arrangements but excluding other trade
payables). The indebtedness evidenced by the Parent Guarantee will be
structurally subordinated to indebtedness of the subsidiaries of the
Parent, including trade payables. In the future, the Parent may issue
additional Parent Senior Indebtedness, and its
subsidiaries may issue additional indebtedness, to refinance
existing indebtedness or for other corporate purposes, subject to
applicable restrictions in the debt instruments of the Parent and its
subsidiaries, including the Amended and Restated Indenture. See
"Description of the Notes As Amended --Certain Covenants --
Limitation on Indebtedness."
Subordination of Notes
The Notes are subordinated in right of payment to the prior payment
in full of all Senior Indebtedness.
Upon any payment or distribution of assets or securities of the
Company in any dissolution, winding up, total or partial
liquidation or reorganization of the Company, payment of the
principal of, premium, if any, and interest on the Notes will be
subordinated, to the extent and in the manner set forth in the
Indenture, to the prior payment in full (in cash or cash
equivalents) of all Senior Indebtedness, including any interest
accruing on such Senior Indebtedness subsequent to the commencement of
a bankruptcy, insolvency or similar proceeding. Upon any
default by the Company in the payment of the principal of, premium, if
any, or interest on Senior Indebtedness, when the same becomes due, no
payment may be made on or in respect of the Notes until
such default has been cured or waived. The Amended and Restated
Indenture also provides that no payment may be made by the Company upon
or in respect of the Notes for the period specified below (the "Payment
Blockage Period") during the continuance of any non-
payment event of default with respect to Significant Senior
Indebtedness (as defined below) pursuant to which the maturity
thereof may be accelerated. The Payment Blockage Period shall
commence on the earlier of (i) receipt by the Trustee of notice
from any trustee, representative or agent for the holders of any
Significant Senior Indebtedness (or the holders of at least a
majority in principal amount of such Significant Senior
Indebtedness then outstanding) or (ii) if such non-payment event of
default results from the acceleration of the Notes, the date of
such acceleration, and end 179 days thereafter unless such Payment
Blockage Period shall be terminated by written notice to the
Trustee from any trustee, representative or agent for the holders of
Significant Senior Indebtedness (or the holders of at least a majority
in principal amount of such Significant Senior
Indebtedness then outstanding). Not more than one Payment Blockage
Period with respect to the Notes may be commenced during any period of
360 consecutive days. No event of default that existed or was
continuing on the date of the commencement of any Payment Blockage
Period with respect to the Significant Senior Indebtedness
initiating such period shall be, or be made, the basis for the
commencement of a second Payment Blockage Period by the
representative for or the holders of such Significant Senior
Indebtedness whether or not within a period of 360 consecutive days
unless such event of default shall have been cured or waived for a
period of not less than 90 consecutive days.
As a result of the subordination provisions described above, in the
event of insolvency of the Company, creditors of the Company who are not
holders of Senior Indebtedness may recover less ratably than holders of
Senior Indebtedness and may recover more ratably than Holders of the
Notes and the Company may be unable to make all payments due under the
Notes.
As of August 3, 1996, Parisian had outstanding total
Indebtedness of approximately $48 million (excluding all trade
payables and excluding the Notes) and had outstanding Senior
Indebtedness of approximately $54 million (including trade payables to
financial institutions under factoring arrangements). The Notes will be
structurally subordinated to indebtedness of Parisian's
subsidiaries, including trade payables. As of August 3, 1996,
Parisian's only subsidiary was its Accounts Receivable Subsidiary. In
the future, the Company may issue additional Senior
Indebtedness, and its subsidiaries may issue additional
indebtedness, to refinance existing indebtedness or for other
corporate purposes, subject to applicable restrictions in the debt
instruments of the Company and its subsidiaries, including the
Amended and Restated Indenture. See "Description of the Notes As
Amended -- Certain Covenants -- Limitation on Indebtedness."
The Supplemental Indenture does not contain any changes to the
provisions of the Indenture regarding subordination of the
Company's obligations under the Notes.
Certain Covenants
Set forth below is a description of the covenants, events of
default, definitions and certain other provisions contained in the
Indenture, as amended by the Supplemental Indenture. This
description is marked to show the Proposed Amendments. DELETIONS TO THE
INDENTURE ARE INDICATED BY TEXT WHICH HAS BEEN STRICKEN. ADDITIONS TO
THE INDENTURE ARE INDICATED BY TEXT WHICH HAS BEEN
DOUBLE-UNDERLINED.
The Amended and Restated Indenture contains, among others, the
covenants summarized below.
Limitation on Indebtedness. The [Company] PARENT will not, and
will not permit any Subsidiary to Incur any Indebtedness,
including Acquired Indebtedness, other than Permitted Indebtedness,
after giving effect to the Incurrence thereof and the application of the
proceeds thereof, unless the Consolidated Cash Flow Ratio would be equal
to or greater than 2.25 to 1.
Notwithstanding the foregoing, no Subsidiary of the [Company]
PARENT shall Guarantee any Indebtedness of the [Company] PARENT
which is expressly by its terms subordinate or junior in right of
payment to any other Indebtedness of the [Company] PARENT unless such
Subsidiary also Guarantees the Notes on a substantially
similar basis; provided that if any such Subsidiary no longer
Guarantees such Indebtedness, such Subsidiary shall also no longer be
required to Guarantee the Notes on a substantially similar
basis; provided, further, that if such subordinated Indebtedness is
expressly by its terms subordinate or junior in right of payment to the
Notes OR TO THE PARENT GUARANTEE, any such Guarantee of such Subsidiary
with respect to such subordinated Indebtedness shall be subordinated to
such Subsidiary's Guarantee with respect to the
Notes to the same extent as such subordinated Indebtedness is
subordinated to the Notes OR TO THE PARENT GUARANTEE.
For purposes of determining any particular amount of
Indebtedness, Guarantees of (or obligations with respect to letters of
credit supporting) Indebtedness otherwise included in the
determination of such amount shall not also be included and the
amount of Indebtedness issued at a price which is less than the
principal amount thereof shall be equal to the amount of the
liability in respect thereof determined in accordance with GAAP. For
the purpose of determining compliance with the "Limitation on
Indebtedness" covenant, (A) in the event that an item of
Indebtedness meets the criteria of more than one of the types of
Indebtedness the [Company] PARENT in its sole discretion shall
classify such item of Indebtedness and only be required to include the
amount and type of such Indebtedness in one of such clauses of such
covenant and (B) the amount of Indebtedness issued at a price which is
less than the principal amount thereof shall be equal to the amount of
the liability in respect thereof determined in
accordance with GAAP.
Limitation on Restricted Payments. The [Company] PARENT will not,
and will not permit any of its Subsidiaries to, directly or indirectly,
(i) declare or pay any dividend on, or make any
distribution in respect of or purchase, redeem or retire for value, any
Capital Stock of the [Company] PARENT, other than through the issuance
solely of the [Company's] PARENT'S own Capital Stock, or rights thereto,
(ii) make any principal payment on, or redeem,
repurchase, defease or otherwise acquire or retire for value, prior to
any scheduled principal payment or maturity, Indebtedness of the
[Company] PARENT or any Subsidiary that is expressly subordinate in
right of payment to the Notes OR TO THE PARENT GUARANTEE
("Subordinated Indebtedness") or (iii) make any loan, incur, or
suffer to exist any Guarantee of Indebtedness of, or make any
investment in, any Affiliate of the [Company] PARENT, other than the
[Company] PARENT or a Subsidiary of the [Company] PARENT (such payments
or any other actions described in (i), (ii) and (iii),
collectively, "Restricted Payments") unless (a) at the time of and after
giving effect to the Restricted Payment, no Default or Event of Default
shall have occurred and be continuing, (b) at the time of and after
giving effect to the Restricted Payment, the
Consolidated Cash Flow Ratio would be at least 2.25 to 1 and (c) at the
time of and after giving effect to such Restricted Payment (the value of
any such Restricted Payment, if other than cash, to be
determined by the Board of Directors OF THE PARENT, whose
determination shall be conclusive and evidenced by a board
resolution), the aggregate amount of all Restricted Payments
(together with any amounts paid pursuant to clauses (i), (ii) and (iv)
in the following paragraph) declared or made after the [date of the
Indenture] ORIGINAL ISSUE DATE shall not exceed the sum of (A)(I) 50% of
the Company's Consolidated Net Income accrued on a cumulative basis
during the period (taken as one accounting period) beginning on the
first day of the first full fiscal quarter
following the issuance of the Notes and ending on the last day of the
Company's last fiscal quarter ending prior to OR ON the date of [such
Restricted Payment] THE ACQUISITION (or, if such cumulative Consolidated
Net Income for such period shall be a loss, MINUS 100% OF SUCH LOSS) AND
(II) 50% OF THE PARENT'S CONSOLIDATED NET INCOME ACCRUED ON A CUMULATIVE
BASIS DURING THE PERIOD (TAKEN AS ONE
ACCOUNTING PERIOD) BEGINNING ON THE FIRST DAY OF THE PARENT'S
FISCAL QUARTER COMMENCING CLOSEST TO THE DATE OF THE ACQUISITION AND
ENDING ON THE LAST DAY OF THE PARENT'S LAST FISCAL QUARTER
ENDING PRIOR TO THE DATE OF SUCH RESTRICTED PAYMENT (OR IF SUCH
CUMULATIVE CONSOLIDATED NET INCOME FOR SUCH PERIOD SHALL BE A LOSS,
minus 100% of such loss), (B)(I) an amount equal to the aggregate net
proceeds (including the Fair Market Value of property other
than cash, as determined by the Board of Directors OF THE COMPANY, whose
determination shall be conclusive and evidenced by a board resolution)
received by the Company as capital contributions to the Company (other
than from a Subsidiary or [the] ANY Accounts
Receivable Subsidiary) after the [date of the Indenture] Original ISSUE
DATE AND PRIOR TO THE ACQUISITION or from the issuance and sale (other
than to a Subsidiary or [the] ANY Accounts Receivable Subsidiary) after
the [date of the Indenture] ORIGINAL ISSUE DATE AND PRIOR TO THE
ACQUISITION of Capital Stock (excluding
Disqualified Stock and proceeds from the Initial Public Offering) and
(II) AN AMOUNT EQUAL TO THE AGGREGATE NET PROCEEDS (INCLUDING THE FAIR
MARKET VALUE OF PROPERTY OTHER THAN CASH, AS DETERMINED BY THE BOARD OF
DIRECTORS OF THE PARENT, WHOSE DETERMINATION SHALL BE CONCLUSIVE AND
EVIDENCED BY A BOARD RESOLUTION) RECEIVED BY THE
PARENT AS CAPITAL CONTRIBUTIONS TO THE PARENT (OTHER THAN FROM A
SUBSIDIARY OR ANY ACCOUNTS RECEIVABLE SUBSIDIARY) AFTER THE
ACQUISITION OR FROM THE ISSUANCE AND SALE (OTHER THAN TO A
SUBSIDIARY OR ANY ACCOUNTS RECEIVABLE SUBSIDIARY) AFTER THE
ACQUISITION OF CAPITAL STOCK (OTHER THAN DISQUALIFIED STOCK), plus (C)
$15 million.
The foregoing provision shall not be violated by reason of (i) the
payment of any dividend within 60 days of declaration thereof, if at
such date of declaration such payment would comply with the foregoing
provision; (ii) the acquisition, redemption or retirement of
Disqualified Stock or Subordinated Indebtedness of the [Company] PARENT
in exchange for Capital Stock of the [Company] PARENT that is not
Disqualified Stock and is not exchangeable for or
convertible into Disqualified Stock or Indebtedness of the [
Company] PARENT or any of its Subsidiaries; (iii) refinancing of
Subordinated Indebtedness as permitted under the definition of
"Permitted Indebtedness;" (iv) the repurchase or other acquisition or
retirement for value of any share of the [Company's] PARENT'S Capital
Stock or Subordinated Indebtedness by exercise for, or upon conversion
into, or out of the proceeds of the substantially
concurrent sale for cash (other than to a Subsidiary or [the] ANY
Accounts Receivable Subsidiary) of, other shares of Capital Stock (other
than Disqualified Stock) of the [ Company] PARENT; (v) the redemption of
the Debentures [as described under "Use of
Proceeds,"] provided that such redemption is consummated by payment of
the required redemption amount to the trustee in accordance with the
terms of the indenture for the Debentures not later than 45
days after the last day of the fiscal quarter of the Company [in which
this Note Offering is consummated] FOLLOWING THE ORIGINAL
ISSUE DATE; (vi) transactions entered into in the ordinary course of
business (in a manner consistent with past practice) between the
[Company] PARENT or any Subsidiary and any Accounts Receivable
Subsidiary or between Subsidiaries of the [Company] PARENT,
including, without limitation, the sale, contribution or other
transfer of accounts receivable or any undivided interest therein or
other similar transactions relating to financing for the
[Company's] PARENT'S OR ANY SUBSIDIARY'S proprietary credit card
transactions and transactions or arrangements reasonably incident
thereto; (vii) equity contributions in an aggregate amount not to exceed
$10 million to any Accounts Receivable [Subsidiary]
SUBSIDIARIES for the purpose, as determined by the Board of
Directors of the [ Company] PARENT, of the sale or transfer of
accounts receivable or any undivided interest therein or other
similar transactions relating to financing for the [Company's]
Parent's or any Subsidiary's proprietary credit card transactions and
transactions or arrangements reasonably incident thereto;
(viii) the repurchase or other acquisition or retirement for value of
any Disqualified Stock of the [Company] PARENT with the proceeds of, or
exchange for, the substantially concurrent issuance of
Disqualified Stock, provided that the Disqualified Stock so issued shall
not require any payments (other than dividend payments) by way of
sinking fund, mandatory redemption or otherwise prior to the final
scheduled maturity of the Disqualified Stock being refinanced and (ix)
the acquisition, redemption, or repurchase of shares of the [Company's]
PARENT'S Capital Stock or options to purchase such shares for payment
either with the proceeds of life insurance or, to the extent not covered
by insurance, an aggregate amount not to exceed $2 million with respect
to the acquisition, redemption or repurchase of such shares or options
from current or former
officers, directors and employees or their families or the estates
thereof.
Limitation on Transactions with Affiliates. The [Company] PARENT
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, enter into or suffer to exist any
transaction or series of related transactions (including, without
limitation, the sale, purchase, exchange or lease of assets,
property or services) with any Affiliate of the [Company] PARENT unless
(i) any such transaction or series of related transactions is on terms
that are no less favorable to the [Company unless (i) any such
transaction or series of related transactions is on terms that are no
less favorable to the Company] PARENT (in the case of any transaction
between the [Company] PARENT and any Subsidiary or any Affiliate of the
[Company)] PARENT) or such Subsidiary (in the case of any transaction
between such Subsidiary and any Affiliate of the [Company] PARENT other
than another Subsidiary), than would be available in a comparable
transaction made on an arm's-length basis with an unrelated third party
and (ii) with respect to a
transaction or series of related transactions during any fiscal
year involving aggregate consideration in excess of $5 million,
such transaction or series of related transactions is approved by a
majority of the Board of Directors of the [Company] PARENT.
Notwithstanding the foregoing, (A) this provision will not apply to any
transaction or agreement entered into in the ordinary course of business
(including any actions undertaken to operate and maintain, in a manner
consistent with past practice, retail specialty
department stores) between the [Company] PARENT and any Subsidiary or
between Subsidiaries of the [Company] PARENT and shall not
restrict the [ Company] PARENT or any of its Subsidiaries from (i)
entering into transactions between the [Company] PARENT or any
Subsidiary and an Accounts Receivable Subsidiary, including the
sale, contribution or other transfer of accounts receivable or any
undivided interest therein or other similar transactions relating to
financing for the [Company's] PARENT'S OR ANY SUBSIDIARY'S
proprietary credit card transactions and transactions or
arrangements reasonably incident thereto, in each case in the
ordinary course of business and consistent in purpose with past
practice, (ii) paying reasonable and customary regular fees to
directors of the [Company] PARENT who are not employees of the
[Company] PARENT, (iii) paying reasonable compensation to senior
executive officers of the [Company] PARENT, (iv) paying reasonable and
customary fees for investment banking services provided by
Lehman Brothers (or such corporation as shall succeed to the
business of Lehman Brothers by purchase, merger, consolidation,
change of charter or name, or otherwise) or its Affiliates and (v)
subleasing property to a Subsidiary on substantially the same terms as
those negotiated on an arm's-length basis with a third party
with respect to such property and (B) THIS PROVISION WILL NOT APPLY TO
ANY PERMITTED DROP DOWN TRANSACTION. Transactions and
agreements BY THE Company OR ANY SUBSIDIARY OF THE COMPANY with
Affiliates in existence on the [date of the Indenture] ORIGINAL
ISSUE DATE as well as any subsequent renewals, extensions,
amendments or replacements to agreements BY THE COMPANY OR ANY
SUBSIDIARY OF THE COMPANY with Affiliates in existence on the [date of
the Indenture] ORIGINAL ISSUE DATE that are no less favorable in the
aggregate to the Company than terms already in existence on the [date of
the Indenture] ORIGINAL ISSUE DATE are expressly
permitted.
Proffitt's may in the future determine to contribute all or a
significant portion of its operating assets to a newly formed
subsidiary in order to accommodate its tax planning. If any such
transaction qualifies as a Permitted Drop Down Transaction, it
would not be subject to the limitations of the foregoing covenant.
However, in order for any such transaction to qualify as a
Permitted Drop Down Transaction (a) it must be designed in good
faith to accommodate Proffitt's tax planning, (b) such newly formed
subsidiary must enter into a supplemental indenture containing a senior
subordinated guarantee of the Notes in favor of the Holders on
substantially the terms applicable to the Parent Guarantee and (c) it
must not be disadvantageous in any material respect to the holders of
Notes in the good faith opinion of the Board of
Directors of Proffitt's, evidenced by a resolution of its Board of
Directors delivered to the Trustee.
Limitation on Future Senior Subordinated Indebtedness. The [
Company] PARENT will not Incur any Indebtedness, other than the PARENT
GUARANTEE AND THE Notes, that is subordinated in right of payment to any
other Indebtedness of the [Company] PARENT unless such Indebtedness, by
its terms or the terms of the instrument
creating or evidencing it, is pari passu with or subordinated to the
PARENT GUARANTEE OR THE Notes, AS THE CASE MAY BE.
Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries. The [Company] PARENT will not, and will not
permit any of its Subsidiaries to, directly or indirectly,
create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction on the ability of any
Subsidiary of the [Company] PARENT to (a) pay dividends or make any
other distributions on its Capital Stock, or any other interest or
participation in or measured by its profits, owned by, or pay any
Indebtedness owed to, the Company PARENT or another Subsidiary of the
[Company] PARENT, (b) make loans or advances to the [Company] PARENT or
a Subsidiary of the [Company] PARENT or (c) transfer any of its
properties or assets to the [Company] PARENT or a
Subsidiary of the [Company] PARENT, except for such encumbrances or
restrictions existing under or by reason of (i) any encumbrances or
restrictions pursuant to an agreement in effect at or entered into on
the [date of the Indenture] ORIGINAL ISSUE DATE, (ii) any
restrictions, with respect to a Person that is not a Subsidiary on the
[date of the Indenture] ORIGINAL ISSUE DATE, under any
agreement in existence at the time such Person becomes a Subsidiary
(unless such agreement was entered into in connection with, or in
contemplation of, such Person becoming a Subsidiary on or after the
[date of the Indenture) ORIGINAL ISSUE DATE), (iii) any
restrictions existing under any agreement that amends, refinances or
replaces the agreements containing restrictions described in the
foregoing clauses (i) and (ii) and this clause (iii), provided that the
terms and conditions of any such restrictions are no less
favorable to the Holders of the Notes than those under the
agreement so amended, refinanced or replaced, (iv) customary non-
assignment or sublease provisions of any lease governing a
leasehold interest of any of the [Company's] PARENT'S Subsidiaries or
customary non-assignment provisions contained in operating or other
similar agreements entered into in the ordinary course of
business with respect to stores owned by any Subsidiary, (v) those
imposed by applicable law, (vi) any restrictions with respect to a
Subsidiary imposed pursuant to an agreement which has been entered into
for the sale or disposition of all or substantially all of the Capital
Stock or assets of such Subsidiary, (vii) Purchase Money Mortgages, AND
(viii) Capitalized Lease Obligations permitted by clause (v) of the
definition of "Permitted Indebtedness," [and (ix) a first mortgage on
the Company's store in Sarasota, Florida
provided that (a) the principal amount of the Indebtedness related to
such mortgage does not exceed 100% of the Fair Market Value of such
store as of the date of such mortgage, (b) such mortgage does not extend
to or cover any other property other than such store, and any
improvements on or rights appurtenant to such store and (c) the
Incurrence of such Indebtedness is permitted by the "Limitation on
Indebtedness" covenant of the Amended and Restated Indenture.]
Purchase of Notes Upon Change of Control Triggering Event. If a
Change of Control Triggering Event shall occur at any time, each Holder
shall have the right to require the Company to repurchase such Holder's
Notes, in whole or in part, in integral multiples of $1,000, at a
purchase price in cash equal to 101% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the date of purchase, which
date (the "Repurchase Date") shall be no earlier than 60 days nor more
than 90 days from the date the
Company notifies the Holders and any trustee, representative or
agent for the holders of any Significant Senior Indebtedness of the
occurrence of a Change of Control Triggering Event.
Under the Amended and Restated Indenture, the Company is
obligated to give notice to Holders of Notes within 30 days
following a Change of Control Triggering Event specifying the
purchase date, the place at which Notes shall be presented and
surrendered for purchase, that interest accrued to the Repurchase Date
will be paid upon such presentation and surrender and that
interest will cease to accrue on Notes surrendered for purchase as of
such purchase date. The tender by a Holder of Notes shall be
irrevocable.
There can be no assurance that sufficient funds will be
available at the time of any Change of Control Triggering Event to make
any required purchases. In addition, the Company's ability to
repurchase Notes following a Change of Control Triggering Event may be
limited by the terms of its then existing Senior Indebtedness,
including, without limitation, the subordination provisions
described above. The Company will comply with all applicable
tender offer rules, including Rule 14e-1 under the Exchange Act, if the
repurchase option is triggered upon a Change of Control
Triggering Event. A Change of Control Triggering Event means the
occurrence of both a Change of Control and a Rating Decline, both as
defined below.
Limitation on Liens. The [Company] PARENT may not Incur any
Indebtedness (i) which is, by the terms of the instrument creating or
evidencing such Indebtedness or pursuant to which it is
outstanding, subordinated in right of payment to any other
Indebtedness (including the [Notes]) PARENT GUARANTEE) and (ii)
which is secured, directly or indirectly, with a Lien on the
property, assets or any income or profits thereon of the [Company]
PARENT or any Subsidiary unless
contemporaneously therewith or prior thereto the [Notes] are PARENT
GUARANTEE IS equally and ratably secured; provided that if such
Lien securing such subordinated Indebtedness ceases to exist, such equal
and ratable Lien for the benefit of the Holders of the Notes shall cease
to exist, and provided further that if such
Indebtedness is Subordinated Indebtedness, the Lien securing such
Subordinated Indebtedness shall be subordinate and junior to the Lien
securing the [Notes] PARENT GUARANTEE with the same relative priority as
such Subordinated Indebtedness shall have with respect to the [ Notes]
PARENT GUARANTEE, except for (a) any such
Indebtedness secured by Liens on the assets of any entity existing at
the time such assets are acquired by the [Company] PARENT or any of its
Subsidiaries, whether by merger, consolidation, purchase of assets or
otherwise; provided that such Liens (x) are not created, incurred or
assumed in connection with, or in contemplation of,
such assets being acquired by the [Company] PARENT or any of its
Subsidiaries and (y) do not extend to any other property or assets of
the [Company] PARENT or any of its Subsidiaries or (b) any other
Indebtedness required to be equally and ratably secured as a result of
the Incurrence of such Indebtedness.
Limitation on Preferred Stock of Subsidiaries. The [Company]
PARENT shall not permit any of its Subsidiaries to issue any
preferred stock (other than to the [Company] PARENT or a wholly
owned Subsidiary of the [Company)] PARENT), or permit any Person (other
than the [Company] PARENT or a wholly owned Subsidiary of the [Company)]
PARENT) to own or hold an interest in any preferred stock of any such
Subsidiary unless such Subsidiary would be
entitled to Incur Indebtedness pursuant to the provisions of the
"Limitation on Indebtedness" covenant described above in the
aggregate principal amount equal to the aggregate liquidation value of
such preferred stock on the date of issuance.
Consolidation, Merger and Sale of Assets
THE PARENT MAY NOT CONSOLIDATE WITH OR MERGE WITH OR INTO ANY
PERSON OR SELL, CONVEY, ASSIGN, TRANSFER, LEASE OR OTHERWISE
DISPOSE OF ALL OR SUBSTANTIALLY ALL OF ITS PROPERTIES AND ASSETS
(DETERMINED ON A CONSOLIDATED BASIS FOR THE PARENT AND ITS
SUBSIDIARIES TAKEN AS A WHOLE) TO ANY ENTITY, UNLESS: (1) EITHER (A) THE
PARENT SHALL BE THE CONTINUING CORPORATION OR (B) THE
ENTITY (IF OTHER THAN THE PARENT) FORMED BY SUCH CONSOLIDATION OR INTO
WHICH THE PARENT IS MERGED OR THE ENTITY THAT ACQUIRES, BY
SALE, ASSIGNMENT, CONVEYANCE, TRANSFER, LEASE OR DISPOSITION, ALL OR
SUBSTANTIALLY ALL OF THE PROPERTIES AND ASSETS OF THE PARENT AS AN
ENTITY SHALL BE A CORPORATION, LIMITED LIABILITY COMPANY OR
PARTNERSHIP ORGANIZED AND VALIDLY EXISTING UNDER THE LAWS OF THE UNITED
STATES OR ANY STATE THEREOF OR THE DISTRICT OF COLUMBIA, AND SHALL
EXPRESSLY ASSUME BY A SUPPLEMENTAL INDENTURE THE DUE AND
PUNCTUAL PAYMENT OF THE PRINCIPAL AND PREMIUM, IF ANY, AND INTEREST ON
ALL THE NOTES AND THE PERFORMANCE AND OBSERVANCE OF EVERY
COVENANT OF THE AMENDED AND RESTATED INDENTURE ON THE PART OF THE PARENT
TO BE PERFORMED OR OBSERVED (SUCH ENTITY IS REFERRED TO AS THE "PARENT
SUCCESSOR ENTITY"); (2) IMMEDIATELY AFTER GIVING EFFECT TO THE
TRANSACTION NO DEFAULT OR EVENT OF DEFAULT SHALL HAVE
OCCURRED AND BE CONTINUING; (3) AFTER GIVING EFFECT TO SUCH
TRANSACTION, EITHER (I) THE PARENT OR THE PARENT SUCCESSOR ENTITY COULD
INCUR AT LEAST $1.00 OF ADDITIONAL INDEBTEDNESS (OTHER THAN PERMITTED
INDEBTEDNESS) PURSUANT TO THE COVENANT OF THE AMENDED AND RESTATED
INDENTURE ENTITLED "LIMITATION ON INDEBTEDNESS" OR (II) IN THE EVENT OF
A CONSOLIDATION OR MERGER WITH ANY PERSON WITH NO
OUTSTANDING INDEBTEDNESS, THE CONSOLIDATED CASH FLOW RATIO OF THE PARENT
OR THE PARENT SUCCESSOR ENTITY, THE CONSOLIDATED CASH FLOW RATIO OF THE
PARENT OR THE PARENT SUCCESSOR ENTITY, AS THE CASE MAY BE, IS NOT LESS
THAN THE CONSOLIDATED CASH FLOW RATIO OF THE
PARENT, IMMEDIATELY PRIOR TO SUCH TRANSACTION BUT IN NO SUCH CASE SHALL
THE CONSOLIDATED CASH FLOW RATIO OF THE PARENT OR THE PARENT SUCCESSOR
ENTITY, AS THE CASE MAY BE, BE LESS THAN 1.5 TO 1.
NOTWITHSTANDING THE FOREGOING, THIS PROVISION SHALL NOT PROHIBIT A
TRANSACTION, THE PRINCIPAL PURPOSE OF WHICH IS (AS DETERMINED IN GOOD
FAITH BY THE BOARD OF DIRECTORS OF THE PARENT AS EVIDENCED BY THE
RESOLUTION THEREOF) TO ORGANIZE THE HOLDING COMPANY OR TO
CHANGE THE STATE OF INCORPORATION OF THE PARENT, AND SUCH
TRANSACTION DOES NOT HAVE AS ONE OF ITS PURPOSES THE EVASION OF THE
LIMITATIONS IMPOSED BY THIS PROVISION.
IN THE EVENT OF ANY TRANSACTION (OTHER THAN A LEASE AND OTHER THAN
A PERMITTED DROP DOWN TRANSACTION) DESCRIBED IN AND COMPLYING WITH THE
CONDITIONS LISTED IN THE IMMEDIATELY PRECEDING PARAGRAPHS IN WHICH THE
PARENT IS NOT THE CONTINUING CORPORATION, THE PARENT SUCCESSOR ENTITY
FORMED OR REMAINING WOULD BE SUBSTITUTED FOR THE PARENT AND THE PARENT
WOULD BE DISCHARGED FROM ALL OBLIGATIONS AND COVENANTS UNDER THE AMENDED
AND RESTATED INDENTURE AND THE NOTES.
The Company may not consolidate with or merge with or into any
Person or sell, convey, assign, transfer, lease or otherwise
dispose of all or substantially all of its properties and assets
(determined on a Consolidated basis for the Company and its
Subsidiaries taken as a whole) to any entity, unless: (1) either (a) the
Company shall be the continuing corporation or (b) the
entity (if other than the Company) formed by such consolidation or into
which the Company is merged or the entity that acquires, by sale,
assignment, conveyance, transfer, lease or disposition, all or
substantially all of the properties and assets of the Company as an
entity shall be a corporation, LIMITED LIABILITY COMPANY or
partnership organized and validly existing under the laws of the United
States or any [state] STATE thereof or the District of
Columbia, and shall expressly assume by a supplemental indenture the due
and punctual payment of the principal and premium, if any, and interest
on all the Notes and the performance and observance of every covenant of
the AMENDED AND RESTATED Indenture on the part of the Company to be
performed or observed (such entity is referred to as the "Company
Successor Entity"); (2) immediately after giving effect to the
transaction no Default or Event of Default shall have occurred and be
continuing; (3) after giving effect to such
transaction, [either (a)] the [ Company or the Company Successor Entity]
PARENT could Incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to the
covenant of the AMENDED AND RESTATED Indenture entitled "Limitation on
Indebtedness" [or (b) in the event of a consolidation or merger with any
Person with no outstanding Indebtedness, the Consolidated Cash Flow
Ratio of the Company or the Successor Entity, as the case may be, is not
less than the Consolidated Cash Flow Ratio of the Company immediately
prior to such transaction but in no such case shall the Consolidated
Cash Flow Ratio of the Company or the
Successor Entity, as the case may be, be less than 1.5 to 1.]
Notwithstanding the foregoing, this provision shall not prohibit a
transaction, the principal purpose of which is (as determined in good
faith by the Board of Directors of the Company as evidenced by the
resolution thereof)[ to organize the Holding Company or] to
change the state of incorporation of the Company, and such
transaction does not have as one of its purposes the evasion of the
limitations imposed by this provision.
In the event of any transaction (other than a lease) described in
and complying with the conditions listed in the immediately
preceding paragraphs in which the Company is not the continuing
corporation, the Company Successor Entity formed or remaining would be
substituted for the Company and the Company would be discharged from all
obligations and covenants under the AMENDED AND RESTATED Indenture and
the Notes.
Events of Default
The following events are defined in the Amended and Restated
Indenture as "Events of Default" with respect to the Notes: (a)
default in the payment of any installment of interest on any Note for 30
days after becoming due; (b) default in the payment of the principal of
(or premium, if any, on) any Note when due; (c)
subject to the immediately following paragraph, default BY THE
PARENT OR THE COMPANY in the performance of any other covenant or
agreement contained in the Notes or the Amended and Restated
Indenture; (d) the failure of the [ Company] PARENT or of any of its
Subsidiaries to pay the principal of any Indebtedness with a principal
amount then outstanding in excess of $10 million,
individually or in the aggregate, when the same becomes due and
payable at final maturity and such failure shall continue after any
applicable cure or grace period specified in the agreement relating to
such Indebtedness; or a default on any such Indebtedness which results
in such Indebtedness becoming due and payable prior to its stated
maturity; [(d)](E) THE PARENT OR the Company, pursuant to or within the
meaning of any bankruptcy law, (i) commences a voluntary case or
proceeding, (ii) consents to the entry of an order for
relief against it in an involuntary case or proceeding, (iii)
consents to the appointment of a receiver, trustee, assignee,
liquidator, or similar official under any bankruptcy law (a
"Custodian") for it or for any substantial part of its property; (iv)
makes a general assignment for the benefit of its creditors or (v)
generally is unable to pay its debt as the same becomes due; (f) a court
of competent jurisdiction enters an order or decree
under any bankruptcy law that (i) is for relief against the
PARENT, THE Company or a Subsidiary of THE PARENT OR the Company that
has assets or revenues aggregating 10% or more of the
consolidated assets or revenues, respectively, of the [Company] PARENT
and its Subsidiaries taken as a whole (a "Significant
Subsidiary") in an involuntary case, (ii) appoints a Custodian of the
PARENT, THE Company or a Significant Subsidiary or for any
substantial part of its property or (iii) orders the liquidation of THE
PARENT, the Company or a Significant Subsidiary, and in any
such case the order or decree remains in effect for 60 days; or (g) the
[Company] PARENT or any Subsidiary shall fail to discharge any final
judgment or judgments, from which no further appeal may be taken, to the
extent the amount of such judgment or judgments
exceed applicable insurance coverage by more than $5 million,
individually or in the aggregate (treating any deductibles, self
insurance or retention as not so covered), and such judgment or
judgments shall remain in force, undischarged, unsatisfied,
unstayed and unbonded for more than 60 days.
A Default under clause (c) above will not be an Event of
Default until the Holders of at least 25% in principal amount of the
Notes then outstanding notify the PARENT, THE Company and the Trustee of
the Default and the PARENT AND THE Company [does] DO not cure the
Default within 60 days after receipt of the notice. Such notice must
specify the Default, demand that it be remedied and
state that such notice is a "Notice of Default."
If an Event of Default (other than an Event of Default
specified in clause (e) or (f) above) occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes by notice to the PARENT AND THE Company (and to the
Trustee if such notice is given by the Holders of the Notes) may declare
the principal amount of the Notes plus accrued and
unpaid interest to be immediately due and payable.
If an Event of Default specified in clause (e) or (f) occurs, the
principal amount of the Notes plus accrued and unpaid interest shall
automatically become and be immediately due and payable on all
outstanding Notes without any declaration or other act on the part of
the Trustee or any Holder. Upon payment of such principal amount of the
Notes plus accrued and unpaid interest, all of THE PARENT'S AND the
Company's obligations with respect to the Notes and under the Amended
and Restated Indenture shall terminate. The Holders of a majority in
principal amount of then outstanding Notes by notice to the Trustee may
rescind an acceleration and its
consequences if (a) all existing Events of Default, other than the
nonpayment of the principal of the Notes that have become due
solely by such declaration of acceleration, have been cured or
waived, and (b) the rescission would not conflict with any judgment or
decree of a court of competent jurisdiction.
The Amended and Restated Indenture provides that no Holder of a
Note may pursue any remedy with respect to the Amended and
Restated Indenture or the Notes unless (a) the Holder gives to the
Trustee written notice of a continuing Event of Default, (b) the Holders
of at least 25% in principal amount of the Notes than
outstanding make a written request to the Trustee to pursue the
remedy, (c) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense, (d)
the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity and (e) no
direction inconsistent with such written request has been given to the
Trustee during such 60-day period by the Holders of a majority in
principal amount of the Notes then outstanding.
The Amended and Restated Indenture requires BOTH the Company AND
THE PARENT to deliver annually to the Trustee an officers'
certificate [of the Company] stating whether or not to the best
knowledge of the signers thereof there exists any Default or Event of
Default. If they know of such Default or Event of Default, each such
certificate shall describe the Default or Event of Default and the
efforts to remedy the same. The Company [is] AND THE PARENT ARE also
required to give written notice to the Trustee within 10 days of the
occurrence of any Default.
Modification of Indenture
The Company or COMPANY SUCCESSOR ENTITY, THE PARENT OR PARENT
Successor Entity and the Trustee may modify or amend the Amended and
Restated Indenture with the consent of the Holders of a
majority in aggregate principal amount of the outstanding Notes;
provided, however, that no such modification or amendment may,
without the consent of the Holder of each outstanding Note affected
thereby (a) change the Stated Maturity of the principal of, or any
installment of interest on, any Note or alter the provisions with
respect to redemption, (b) reduce the principal amount of, or the
premium or interest on, any Note, (c) change the place or currency of
payment of principal of, or premium or interest on, any Note, (d) impair
the right to institute suit for the enforcement of any payment on or
with respect to any Note on or after the Stated
Maturity thereof, (e) reduce the percentage of aggregate principal
amount of outstanding Notes necessary for waiver of compliance with
certain provisions of the Amended and Restated Indenture or for
waiver of certain defaults or (f) change any provision of Article Ten
(Subordination) of the Amended and Restated Indenture that
adversely affects the rights of any Holder of a Note. The Company, THE
PARENT and the Trustee may modify or amend the Amended and
Restated Indenture without consent of any Holders to cure
ambiguities, defects and inconsistencies, to comply with the
requirements of the Commission in order to effect or maintain the
qualification of the Amended and Restated Indenture under the Trust
Indenture Act of 1939, as amended, or make any change that does not
materially adversely affect the interests of any Holder under the
Amended and Restated Indenture as then in effect.
The Holders of a majority in principal amount of the
outstanding Notes may waive compliance by the Company OR THE PARENT with
any provision of the Amended and Restated Indenture. The
Holders of a majority in principal amount of the outstanding Notes may
waive any past default under the Amended and Restated
Indenture, except a default in the payment of principal, premium or
interest or default with respect to the covenant described under
"Purchase of Notes Upon Change of Control Triggering Event."
Satisfaction and Discharge
The Trustee, on demand of and at the expense of the Company, shall
execute proper instruments acknowledging satisfaction and
discharge of the Amended and Restated Indenture upon compliance
with certain enumerated conditions, including the Company having paid or
duly provided for the payment of all sums payable by the Company under
the Amended and Restated Indenture and having
delivered to the Trustee an officers' certificate and an opinion of
counsel stating that there has been compliance with all conditions
precedent relating to such satisfaction and discharge.
In addition, the Amended and Restated Indenture provides that the
Company may defease and be discharged from its obligations in respect of
the Notes (except for certain obligations to register the transfer,
substitution or exchange of Notes, to replace stolen, lost or mutilated
Notes, rights of the Holders to receive payments of principal of and
interest on the Notes, and rights of the
Holders of the Notes as beneficiaries of the Amended and Restated
Indenture with respect to the property so deposited with the
Trustee payable to all or any of them and to maintain an office or
agency for payments on and registration of transfer of the Notes and the
rights, obligations and immunities of the Trustee), if the Company has
irrevocably deposited with the Trustee, in trust for such purpose, (a)
money in an amount, (b) U.S. Government
Obligations which through the payment of principal and interest in
accordance with their terms will provide money in an amount, or (c) a
combination thereof, sufficient in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay the principal of
(and premium, if any) and interest on the outstanding Notes on each date
that such principal or interest is due and
payable, together with all other amounts payable by the Company
under the Amended and Restated Indenture. Such defeasance will
become effective 91 days after such deposit and only if, among
other things, (a) no Default or Event of Default with respect to the
Notes has occurred and is continuing on the date of such
deposit or occurs as a result of such deposit or at any time during the
period ending on the 91st day after the date of such deposit; (b) such
defeasance does not result in a breach or violation of, or constitute a
default under, any other agreement or instrument to which the Company is
a party or by which it is bound; (c) the
Company has delivered to the Trustee an officers' certificate and an
opinion of counsel, each stating that all conditions precedent relating
to a defeasance have been complied with; and (d) the
Company has delivered to the Trustee (i) either a private Internal
Revenue Service ruling or an opinion of counsel that Holders of the
Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit, defeasance and discharge and will
be subject to federal income tax with respect to the Notes on the same
amount, in the same manner, and at the same times as would have been the
case if such deposit, defeasance and discharge had not occurred, and
(ii) an opinion of counsel to the effect that (A) the deposit shall not
result in the Company, the Trustee or the trust being deemed to be an
"investment company" under the
Investment Company Act of 1940, as amended, and (B) such deposit creates
a valid trust in which the Holders of the Notes have the sole beneficial
ownership interest or that the Holders of the Notes have a non-avoidable
first priority security interest in such
trust. Notwithstanding the foregoing, the Company's obligations to pay
principal, premium, if any, and interest on the Notes shall
continue until the Internal Revenue Service ruling or opinion of counsel
referred to in clause (i) above is provided with regard to and without
reliance upon such obligations continuing to be
obligations of the Company.
Defeasance of Certain Obligations
The Company will be released from its obligations with respect to
certain covenants contained in the Amended and Restated
Indenture, including, without limitation, those described under
"Certain Covenants of the Company," and any failure to comply with such
covenants will not be an Event of Default, if (a) the Company deposits
or causes to be deposited with the Trustee in trust an
amount of cash or U.S. government securities sufficient to pay and
discharge when due the entire unpaid principal, premium, if any, and
interest on all outstanding Notes and (b) certain other
conditions are met. The obligations of the Company under the
Amended and Restated Indenture with respect to the Notes, other
than with respect to the covenants and Events of Default referred to
above, will remain in full force and effect.
Governing Law
The Amended and Restated Indenture and the Notes will be
governed by and construed in accordance with the laws of the State of
New York.
Concerning the Trustee
AmSouth Bank [N.A.] OF ALABAMA (F/K/A AMSOUTH BANK, N.A.),
Birmingham, Alabama, will be the Trustee under the Amended and
Restated Indenture and has been appointed by the Company as
Registrar and Paying Agent with regard to the Notes. The Company has
from time to time borrowed funds from the Trustee, not in its capacity
as Trustee, under revolving credit agreements and other credit
transactions in the ordinary course of the Company's
business. The Trustee also serves as the Company's principal
depository bank, provides services to the Company with respect to the
Company's proprietary credit card transactions and is one of the lenders
under the [Bank Credit Agreement] COMPANY'S CREDIT
FACILITY. In addition, as described herein, Donald E. Hess, the
President, Chief Executive Officer and a director of the Company, is
also a director of the Trustee and of AmSouth
Bancorporation, the holding company for the Trustee.
Certain Definitions
Set forth below is a summary of certain defined terms used in the
Amended and Restated Indenture. Reference is made to the
Amended and Restated Indenture for the full definition of all such terms
and for the definitions of other defined terms used in this Prospectus
and not defined below.
"Accounts Receivable Subsidiary" means Parisian Services, Inc. or
any other Subsidiary of the [Company] PARENT that is wholly
owned (except for preferred stock not to exceed an aggregate
liquidation preference of $100,000 which may be owned by a Person other
than the [Company)] PARENT) by the [Company] PARENT organized for the
purpose of and engaged in (i) purchasing, financing, and collecting
accounts receivable of, or generated by the sale of
merchandise by, the [Company] PARENT and its Subsidiaries, (ii) the
financing of credit purchases by customers of the [Company] PARENT and
its Subsidiaries of merchandise sold to such customers, (iii) the sale
or financing of such accounts receivable or interests
therein, and (iv) other activities incident thereto.
"Acquired Indebtedness" means Indebtedness of a Person
existing at the time such Person becomes a Subsidiary of the [
Company] PARENT (or such Person is merged into the [Company] PARENT or
one of its Subsidiaries) or assumed in connection with the
acquisition of assets from any such person and not Incurred in
connection with, or in contemplation of, such Person becoming a
Subsidiary or such acquisition.
"ACQUISITION" MEANS THE MERGER OF THE COMPANY AND CASABLANCA MERGER
CORPORATION, A WHOLLY OWNED SUBSIDIARY OF THE PARENT.
"Affiliate" of any Person means any other person directly or
indirectly controlling or controlled by or under direct or indirect
common control with such specified Person, or that beneficially
owns ten percent or more of the outstanding Capital Stock of or
equity interest in such entity. For the purposes of this
definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meaning correlative to the
foregoing.
"Asset Acquisition" means (i) an investment by the [Company]
PARENT or any of its Subsidiaries in any other Person pursuant to which
such Person shall become a Subsidiary of the [Company] PARENT or any of
its Subsidiaries or shall be merged with the [Company] PARENT or any of
its Subsidiaries or (ii) the acquisition by the [ Company] PARENT or any
of its Subsidiaries of (a) the assets of any Person which constitute
substantially all of an operating unit or business of such Person or (b)
one or more stores.
"Asset Sale" means the sale or other disposition by the [
Company] PARENT or any of its Subsidiaries (other than to wholly owned
Subsidiaries) of (i) all or substantially all of the Capital Stock of
any of the [Company's] PARENT'S Subsidiaries, (ii) assets which
constitute substantially all of an operating unit or business of the
[Company] PARENT or any of its Subsidiaries, or (iii) one or more
stores.
"BOARD OF DIRECTORS" OF ANY SPECIFIED PERSON MEANS EITHER THE BOARD
OF DIRECTORS OF SUCH PERSON OR ANY COMMITTEE OF SUCH BOARD DULY
AUTHORIZED TO ACT HEREUNDER.
"Capitalized Lease Obligations" of any Person means the
obligations of such Person to pay rent under a lease that is
required to be capitalized for financial reporting purposes in
accordance with GAAP, and the amount of such obligation shall be the
capitalized amount thereof determined in accordance with GAAP.
"Capital Stock" means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock and any and all
equity, beneficial or ownership interests in, or participations or other
equivalents in, any partnership, association, joint
venture or other business entity.
"Change of Control" means an event or series of events by
which (i)(A) any "person" or "group" (as such terms are defined in
Sections 13(d) and 14(d) of the Exchange Act), [ other than the
Investor Partnerships, Family Shareholders or Management
Shareholders,]is or becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a Person shall be
deemed to have "beneficial ownership" of all shares that any such Person
has the right to acquire without condition, other than the passage of
time, whether such right is exercisable
immediately or only after the passage of time), directly or
indirectly, of more than 50% of the total voting power of the then
outstanding Voting Stock of the [Company] PARENT and (B) such
Person or group succeeds in having its or their nominees constitute a
majority of the [Company's] Board of Directors [or]OF THE PARENT, (ii)
the [Company] PARENT consolidates with or merges into another
corporation or conveys, transfers or leases all or substantially all of
its assets to any Person or any corporation consolidates
with or merges into the [Company] PARENT in a transaction in which the
outstanding Voting Stock of the [Company] PARENT is changed
into or exchanged for cash, securities or other property, other
than a transaction between the [Company] PARENT and a Subsidiary of the
PARENT, OR (III) THE PARENT SHALL CEASE AT ANY TIME AFTER THE
ACQUISITION TO OWN, DIRECTLY OR INDIRECTLY, 100% OF THE TOTAL
VOTING POWER OF THE THEN OUTSTANDING VOTING STOCK OF THE Company. A
Change of Control shall not be deemed to occur if (i) the Holding
Company acquired (by merger, exchange or other transaction of a
similar nature) all of the Voting Stock of the [Company] PARENT or (ii)
the [Company] PARENT merges or consolidates with another
corporation and the principal purpose of such merger or
consolidation is (as determined in good faith by the Board of
Directors of the [Company] PARENT and evidenced by the resolution
thereof) to change the state of incorporation of the [Company]
PARENT, and immediately after such transaction the Voting Stock of the
successor corporation resulting from such merger or
consolidation shall be owned by holders substantially identical to
holders of the Voting Stock of the [Company] PARENT immediately
prior to such transaction.
"Consolidated," whether used with or without GAAP, means
excluding any Accounts Receivable [Subsidiary] SUBSIDIARIES except to
the extent specifically included.
"Consolidated Cash Flow Ratio" means the ratio, on a pro forma
basis, of (i) the aggregate amount of Consolidated EBITDA of any Person
for the four full fiscal quarters immediately prior to the date (the
"Transaction Date") of the transaction giving rise to the need to
calculate the Consolidated Cash Flow Ratio (the "Reference Period") to
(ii) the aggregate Consolidated Interest Expense of
such Person during the Reference Period; provided that for purposes of
such computation, in calculating Consolidated EBITDA and
Consolidated Interest Expense, (1) the Incurrence of the
Indebtedness giving rise to the need to calculate the Consolidated Cash
Flow Ratio and the application of the proceeds therefrom shall be
assumed to have occurred on the first day of the Reference
Period, (2) Asset Sales and Asset Acquisitions which occur during the
Reference Period or subsequent to the Reference Period and
prior to the Transaction Date (including any Asset Acquisition to be
made by application of the proceeds of the Indebtedness Incurred
pursuant to (1) above) shall be assumed to have occurred on the
first day of the Reference Period, (3) the Incurrence of any
Indebtedness during the Reference Period or subsequent to the
Reference Period and prior to the Transaction Date and the
application of the proceeds therefrom shall be assumed to have
occurred on the first day of the Reference Period and (4) there
shall be excluded any Consolidated Interest Expense related to any
amount of Indebtedness which was outstanding during or subsequent to the
Reference Period but is not outstanding on the Transaction Date.
Notwithstanding the provisions of clauses (3) and (4) of the preceding
sentence, (i) with respect to revolving Indebtedness,
only historical Consolidated Interest Expense actually incurred
shall be used and (ii) with respect to Indebtedness Incurred
pursuant to clause (xi) under "Permitted Indebtedness,"
Consolidated Interest Expense shall be included in an amount equal to
the greater of (a) if any such Indebtedness has been Incurred subsequent
to the Reference Period and prior to the Transaction
Date, the amount of Consolidated Interest Expense relating to all
outstanding Indebtedness Incurred under such clause (xi) determined by
application of clause (3) above, and (b) the historical
Consolidated Interest Expense actually incurred with respect to
Indebtedness Incurred pursuant to such clause (xi) and outstanding
during the Reference Period. For the purposes of making the
computation referred to above, Asset Sales and Asset Acquisitions which
have been made by any Person which has become a Subsidiary of the
[Company] PARENT or been merged with or into the [Company]
PARENT or any Subsidiary of the [Company] PARENT during such
Reference Period or subsequent to such Reference Period and prior to the
Transaction Date shall be calculated on a pro forma basis (including all
of the calculations referred to in numbers (1)
through (4) above) assuming such Asset Sales and Asset Acquisitions
occurred on the first day of such Reference Period.
"Consolidated EBITDA" means, for any period, on a consolidated
basis for the [Company] PARENT and its Subsidiaries, the sum for such
period of (a) Consolidated Net Income, (b) depreciation and amortization
expense as determined in accordance with GAAP, (c)
Consolidated Interest Expense (other than dividends paid on
preferred or preference stock), (d) without duplication, any
premiums, fees, and expenses and the amortization thereof, in
connection with financings (whether debt or equity) determined in
accordance with GAAP, (e) federal and state income taxes (other
than income taxes (either positive or negative) attributable to
extraordinary gains or losses) as determined in accordance with
GAAP and (f) other non-cash items reducing Consolidated Net Income,
minus non-cash items increasing Consolidated Net Income, as
determined in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, the sum of
(a) the interest expense of the [Company] PARENT and its
Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP, excluding any premiums, fees, and expenses and the
amortization thereof, in connection with financings
(whether debt or equity) determined in accordance with GAAP, and (b)
dividends in respect of preferred or preference stock of a
Subsidiary of the [Company] PARENT held by a Person or Persons
other than the [Company] PARENT or a wholly owned Subsidiary of the
[Company] PARENT. For purposes of clause (b) of the preceding
sentence, dividends shall be deemed to be an amount equal to the actual
dividends paid divided by one minus the applicable actual combined
federal, state and local income tax rate of the [Company] PARENT
(expressed as a decimal), on a consolidated basis, for the fiscal year
immediately preceding the date of the transaction
giving rise to the need to calculate Consolidated Interest Expense.
"Consolidated Net Income" of any Person for any period means the
Net Income of such Person and its Subsidiaries for such period; provided
that there shall be excluded (a) the Net Income of any
Person that is not a Subsidiary, (b) the Net Income of any other Person
accrued prior to the date it becomes a Subsidiary of the
Person with respect to which Consolidated Net Income is calculated, or
is merged into or consolidated with such Person or any of its
Subsidiaries or that other Person's asset are acquired by such
Person or any of its Subsidiaries; provided that this clause (b) shall
not be effective for any calculation of Consolidated EBITDA to be made
in accordance with the definition of Consolidated Cash Flow Ratio, (c)
the Net Income (if positive) of any Subsidiary of such Person to the
extent that the declaration or payment of
dividends or similar distributions by that Subsidiary to such
Person or to any other Subsidiary of such Net Income is not at the time
permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary, (d) without
duplication, any net gains or losses attributable to the sale,
lease, conveyance or other disposition of assets (including without
limitation Capital Stock of any Subsidiary of such Person), whether
owned on the date of issuance of the Notes or thereafter acquired, in
one or more related transactions outside the ordinary course of
business.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Disqualified Stock" of any Person means any Capital Stock of such
Person that, by its terms (or by the terms of any security
into which it is convertible or for which it is exercisable,
redeemable or exchangeable), matures, or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or is
redeemable at the option of the holder thereof, in whole or in
part, on or prior to the stated final maturity of the Notes;
provided that any Capital Stock which would not constitute
Disqualified Stock but for provisions thereof giving holders
thereof the right to require the Company to repurchase or redeem such
Capital Stock upon the occurrence of a change in control
occurring prior to the final maturity of the Notes shall not
constitute Disqualified Stock if the change in control provisions
applicable to such Capital Stock are no more favorable to the
holders of such Capital Stock than the provisions contained under
"Purchase of Notes Upon a Change of Control Triggering Event" above and
such Capital Stock specifically provides that the Company will not
repurchase or redeem any such stock pursuant to such provisions prior to
the Company's repurchase of such Notes as are required to be repurchased
under "Purchase of Notes Upon a Change of Control Triggering Event"
above.
"Fair Market Value" means with respect to any asset or
property, the sale value that would be obtained in an arm's-length
transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board which are applicable to the
circumstances as of the date of determination, except the
calculations made for purposes of determining compliance with the
covenants described above (including, without limitation, the
definitions of terms used herein) shall be made in accordance with the
opinions, pronouncements and statements of the foregoing
organizations that are applicable as of the [date of the Indenture]
ORIGINAL ISSUE DATE.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any
Indebtedness or other obligation of any other Person and, without
limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay
(or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation of such other Person (whether arising
by virtue of partnership arrangements, by agreement to
keepwell, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or
otherwise) or (ii) entered into for the purpose of assuring in any other
manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect
thereof (in whole or in part), provided that the term
Guarantee shall not include endorsements for collection or deposit in
the ordinary course of business. The term "Guarantee" used as a verb
has a corresponding meaning.
"Holder" means the Person in whose name a particular Note
shall be registered on the books of the Company kept for that
purpose in accordance with the terms hereof, and the word
"majority," used in connection with the terms "Holder," "Holder of
Notes," or other similar terms, shall signify the "majority in
principal amount" whether or not so expressed.
"Holding Company" means a corporation (i) formed for the sole
purpose of acquiring by merger, exchange or other transaction of a
similar nature of all of the Voting Stock of the [Company] PARENT, and
(ii) whose Voting Stock is owned immediately after such
transaction by holders substantially identical to the holders of the
Voting Stock of the [Company] PARENT immediately prior to such
transaction.
"Incurrence" means the incurrence, creation, assumption,
Guarantee of the payment of, or in any other manner becoming liable with
respect to, the payment of, any Indebtedness. "Incur" shall have a
comparable meaning.
"Indebtedness" means (i) any liability of any Person (A) for
borrowed money, or under any reimbursement obligation relating to a
letter of credit, (B) evidenced by a bond, note, debenture or
similar instrument (including a purchase money obligation), or (C) under
any Capitalized Lease Obligation, (ii) any liability of
others described in the preceding clause (i) that such Person has
Guaranteed, (iii) Interest Protection Agreements, (iv) all
obligations to purchase, redeem, retire, defease or otherwise
acquire for value any Disqualified Stock or any warrants, rights or
options to acquire such Disqualified Stock valued, in the case of
Disqualified Stock, at the greatest amount payable in respect
thereof on a liquidation (whether voluntary or involuntary) plus accrued
and unpaid dividends, and (v) any amendment, supplement, modification,
deferral, renewal, extension or refunding of any
liability of the types referred to in clauses (i)-(iv) above,
provided that Indebtedness shall not include accounts payable or
liabilities to trade creditors of any Person.
"Interest Protection Agreement" of any Person means any
interest rate swap agreement, interest rate collar agreement,
option or future contract or other similar agreement or arrangement
designed to protect such Person or any of its Subsidiaries against
fluctuations in interest rates.
"Investment Grade" means with respect to the Notes, (i) in the case
of Standard & Poor's [Corporation] RATINGS GROUP, a rating of at least
BBB-, (ii) in the case of Moody's Investor Service, Inc., a rating of at
least Baa3, and (iii) in the case of a Rating Agency other than Standard
& Poor's [Corporation] RATINGS GROUP or Moody's Investor Service, Inc.,
the equivalent rating, or in each case, any successor, replacement or
equivalent definition as promulgated by Standard and Poor's
[Corporation] RATINGS GROUP, Moody's Investor Service, Inc. or other
Rating Agency as the case may be.
"Lien" means any lien, mortgage, pledge, assignment (including any
assignment of rights to receive payments of money), security interest,
charge or encumbrance of any kind (including any
conditional sale or other title retention agreement or any lease in the
nature thereof), and any agreement to give a lien, mortgage, pledge,
assignment (including any assignment of rights to receive payments of
money), security interest, charge or other encumbrance of any kind.
"Net Income" of any Person for any period means the
consolidated net income or loss, as the case may be, of such Person and
its Subsidiaries for such period determined in accordance with GAAP,
except that (i) extraordinary gains and losses as determined in
accordance with GAAP shall be excluded [and] (ii) with respect to the
Company OR THE PARENT, dividends, distributions, or
repayment of principal of Indebtedness owed to the Company[, by] OR the
PARENT BY ANY Accounts Receivable Subsidiary actually paid not to exceed
the Net Income of such Subsidiary for such period as
determined in accordance with GAAP, shall be included.
"ORIGINAL ISSUE DATE" MEANS JULY 15, 1993.
"PARENT GUARANTEE" SHALL MEAN THE GUARANTEE GIVEN BY THE
PARENT THAT UNCONDITIONALLY AND IRREVOCABLY GUARANTEES TO EACH
HOLDER AND TO THE TRUSTEE AND ITS SUCCESSORS AND ASSIGNS, SUBJECT TO THE
"SUBORDINATION OF PARENT GUARANTEE" PROVISIONS, (A) THE DUE AND
PUNCTUAL PAYMENT OF THE PRINCIPAL OF AND, WITHIN APPLICABLE GRACE
PERIODS, INTEREST ON THE NOTES WHEN DUE, WHETHER AT STATED
MATURITY, BY ACCELERATION, BY REDEMPTION, UPON REPURCHASE OR
OTHERWISE, AND ALL OTHER MONETARY OBLIGATIONS OF THE COMPANY UNDER THIS
AMENDED AND RESTATED INDENTURE AND THE NOTES AND (B) THE DUE AND
PUNCTUAL PERFORMANCE WITHIN APPLICABLE GRACE PERIODS OF ALL
OTHER OBLIGATIONS OF THE COMPANY UNDER THIS AMENDED AND RESTATED
INDENTURE AND THE NOTES.
"PARENT SENIOR INDEBTEDNESS" MEANS, WITH RESPECT TO THE
PARENT, THE PRINCIPAL OF AND PREMIUM, IF ANY, AND INTEREST ON
(INCLUDING INTEREST THAT, BUT FOR THE FILING OF A PETITION
INITIATING ANY PROCEEDING PURSUANT TO ANY BANKRUPTCY LAW WITH
RESPECT TO THE PARENT, WOULD ACCRUE ON SUCH OBLIGATIONS, WHETHER OR NOT
SUCH CLAIM IS ALLOWED IN SUCH BANKRUPTCY PROCEEDING) AND ALL OTHER
MONETARY OBLIGATIONS OF EVERY KIND OR NATURE DUE ON OR IN
CONNECTION WITH ANY INDEBTEDNESS OF THE PARENT (INCLUDING
GUARANTEES BY THE PARENT OF INDEBTEDNESS OF SUBSIDIARIES, BUT
EXCLUDING THE PARENT GUARANTEE), WHETHER OUTSTANDING ON THE DATE HEREOF
OR HEREAFTER INCURRED, UNLESS, IN THE CASE OF ANY PARTICULAR
INDEBTEDNESS, THE INSTRUMENT CREATING OR EVIDENCING THE SAME OR
PURSUANT TO WHICH THE SAME IS OUTSTANDING EXPRESSLY PROVIDES THAT SUCH
INDEBTEDNESS SHALL NOT BE SENIOR IN RIGHT OF PAYMENT TO THE PARENT
GUARANTEE. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, "PARENT SENIOR INDEBTEDNESS" SHALL INCLUDE THE
INDEBTEDNESS UNDER THE WORKING CAPITAL FACILITY AND AMOUNTS OWED TO
BANKS OR OTHER FINANCIAL INSTITUTIONS PURSUANT TO FACTORING
ARRANGEMENTS FOR GOODS, MATERIALS OR SERVICES PURCHASED IN THE
ORDINARY COURSE OF BUSINESS. NOTWITHSTANDING THE FOREGOING, PARENT
SENIOR INDEBTEDNESS SHALL NOT INCLUDE (I) INDEBTEDNESS OF THE
PARENT TO A SUBSIDIARY, (II) AMOUNTS OWED (EXCEPT TO BANKS AND
OTHER FINANCIAL INSTITUTIONS AS AFORESAID) FOR GOODS, MATERIALS OR
SERVICES PURCHASED IN THE ORDINARY COURSE OF BUSINESS OR (III) ANY OTHER
OBLIGATIONS TO WHICH ANY OTHER SUBORDINATED INDEBTEDNESS OF THE PARENT
IS NOT SUBORDINATED.
"PERMITTED DROP DOWN TRANSACTION" SHALL MEAN A TRANSACTION IN WHICH
THE PARENT CONTRIBUTES A SIGNIFICANT PORTION OR ALL OF ITS OPERATING
ASSETS TO A WHOLLY OWNED SUBSIDIARY; PROVIDED THAT SUCH TRANSACTION (A)
IS DESIGNED IN GOOD FAITH TO ACCOMMODATE THE
PARENT'S TAX PLANNING, (B) SUCH WHOLLY OWNED SUBSIDIARY ENTERS INTO A
SUPPLEMENTAL INDENTURE CONTAINING A SENIOR SUBORDINATED GUARANTEE OF THE
NOTES IN FAVOR OF THE HOLDERS ON SUBSTANTIALLY THE TERMS
PROVIDED IN ARTICLES 13 AND 14 OF THE INDENTURE AND (C) SUCH
TRANSACTION IS NOT DISADVANTAGEOUS IN ANY MATERIAL RESPECT TO THE
HOLDERS IN THE GOOD FAITH OPINION OF THE BOARD OF DIRECTORS OF THE
PARENT, EVIDENCED BY A RESOLUTION OF ITS BOARD OF DIRECTORS
DELIVERED TO THE TRUSTEE.
"Permitted Indebtedness" means (i) Indebtedness of the [
Company] PARENT or any Subsidiary outstanding at any time under or in
respect of the Working Capital Facility in an aggregate
principal amount not to exceed [$50] $325 million; (ii)
Indebtedness represented by standby letters of credit or trade
letters of credit Incurred in the ordinary course of business;
(iii) Indebtedness of the [Company] PARENT to any of its wholly
owned Subsidiaries, or of a Subsidiary to the [Company] PARENT or to a
wholly owned Subsidiary of the [Company] PARENT except that any transfer
of such Indebtedness by the [Company] PARENT or a
wholly owned Subsidiary (other than to another wholly owned
Subsidiary) will be deemed to be an Incurrence; provided, however, that
the obligations of the [Company] PARENT to any of its
Subsidiaries with respect to such Indebtedness shall be subject to a
subordination agreement between the [Company] PARENT and its
Subsidiaries providing for the subordination of such obligations in
right of payment from and after such time as all Notes issued and
outstanding shall become due and payable (whether at stated
maturity, by acceleration or otherwise) to the payment and
performance of the [Company's] PARENT'S obligations under the
Amended and Restated Indenture and the Notes; (iv) the Notes; (v)
Capitalized Lease Obligations with respect to any assets acquired or
constructed after the date of the Amended and Restated
Indenture; (vi) Indebtedness secured by Purchase Money Mortgages; (vii)
Indebtedness of the [Company] PARENT and its Subsidiaries pursuant to
Interest Protection Agreements; (viii) Indebtedness
Incurred in respect of agreements providing for indemnification,
adjustment or purchase price or similar obligations or from
Guarantees securing any obligations of the [Company] PARENT or any
Subsidiary pursuant to such agreements, in each case incurred or assumed
in connection with the disposition of any business, assets or Subsidiary
of the [ Company] PARENT, other than Guarantees of Indebtedness incurred
by any Person acquiring all or any portion of such business, assets or
Subsidiary for the purpose of financing such acquisition, provided that
the maximum aggregate liability in respect of all such Indebtedness in
the nature of such Guarantees shall at no time exceed the gross proceeds
actually received in
connection with such dispositions; (ix) Indebtedness arising from
Guarantees to suppliers, lessors, licensees, contractors,
franchisees, or customers Incurred in the ordinary course of
business; (x) Indebtedness in respect of performance bonds provided by
the [ Company] PARENT or its Subsidiaries in the ordinary course of
business and refinancings thereof; (xi) other Indebtedness of the
[Company] PARENT or its Subsidiaries, the aggregate principal amount of
which does not exceed $25 millon less the liquidation
preference of any Subsidiary Preferred Stock issued pursuant to the
"Limitation on Preferred Stock of Subsidiaries" covenant in
reliance on this Clause (xi); (xii) Indebtedness arising from the
honoring by a bank or other financial institution of a check, draft or
similar instrument drawn against insufficient funds in the
ordinary course of business, provided that such Indebtedness is
extinguished within two Business Days of its incurrence; (xiii)
other Indebtedness outstanding as of the date [of the Indenture] HEREOF;
and (xiv) Refinancing Indebtedness, provided that (A) the original issue
amount of the Refinancing Indebtedness shall not
exceed the maximum principal amount and accrued interest of the
Indebtedness to be repaid (or if such Indebtedness was issued at an
original issue discount, the original issue price plus amortization of
the original issue discount at the time of the repayment of the
Indebtedness to be repaid), plus the reasonable fees and expenses
directly Incurred in connection with such Refinancing Indebtedness
except that Refinancing Indebtedness Incurred pursuant to a
revolving facility replacing another revolving facility may have
availability equal to the facility being replaced, (B) Refinancing
Indebtedness Incurred by any Subsidiary shall not be used to repay or
refund outstanding Indebtedness of the [Company] PARENT and (C) with
respect to any Refinancing Indebtedness that refinances the Notes in
part or other Indebtedness ranking pari passu or junior in right of
payment to the Notes, (1) either (a) the Refinancing Indebtedness
provides for payments of principal, by way of sinking fund, mandatory
redemption or otherwise (including defeasance) by the [Company] PARENT
(including, without limitation, at the option of the holder thereof
other than an option given pursuant to a
"change of control" covenant which is no more favorable to the
holders of the Refinancing Indebtedness than any similar covenant
contained in the Indebtedness being refinanced) at times no earlier
than, and in each case in amounts not greater than, the schedule of
principal payments provided for by the Indebtedness being
refinanced, or (b) the Refinancing Indebtedness does not require any
payments of principal of such Indebtedness by way of sinking fund,
mandatory redemption or otherwise (including defeasance) by the
[Company] PARENT (including, without limitation, at the option of the
holder thereof other than an option given to a holder
pursuant to a "change of control" covenant which is no more
favorable to the holders of such Indebtedness than the provisions
contained under "Purchase of Notes Upon Change of Control
Triggering Event" above, and such Refinancing Indebtedness provides that
the Company will not repurchase such Refinancing Indebtedness pursuant
to such provisions prior to the Company's repurchase of the Notes
required to be repurchased [by the company] under
"Purchase of Notes Upon Change of Control Triggering Event" above) at
any time prior to the final scheduled maturity date of the Notes and has
an average weighted life that is equal to or greater than the remaining
life of the Notes (2) if the Notes are exchanged or refinanced in part,
such Refinancing Indebtedness by its terms or by the terms of any
agreement or instrument pursuant to which such Refinancing Indebtedness
is issued is expressly made pari passu or subordinated in right of
payment to the remaining Notes, (3) if
such Indebtedness being refinanced is pari passu in right of
payment to the Notes, such Refinancing Indebtedness does not rank senior
in right of payment to the payment of principal of and
interest on the Notes, as the case may be, and (4) if such
Indebtedness being refinanced is subordinated to the Notes, such
Refinancing Indebtedness is subordinated to the Notes to the same extent
or greater and on substantially the same terms or terms more favorable
to the Holder of the Notes.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or
instrumentality thereof.
"Purchase Money Mortgage" means any Liens (including
extensions and renewals thereof) upon real or tangible personal
property acquired after the [date hereof] ORIGINAL ISSUE DATE,
provided that (a) any such Lien is created solely for the purpose of
securing Indebtedness representing, or Incurred to finance,
refinance or refund, the cost (including the cost of construction) of
the item of property subject thereto, (b) the principal amount of the
Indebtedness secured by such Liens does not exceed 100% of such cost and
(c) such Lien does not extend to or cover any other property other than
such item of property and any improvements on or rights appurtenant to
such item.
"RATING AGENCIES" means (i) Standard & Poor's [Corporation]
RATINGS GROUP and (ii) Moody's Investor Service, Inc. or (iii) if
Standard & Poor's [Corporation] RATINGS GROUP or Moody's Investor
Service, Inc. or both shall not make a rating of the Notes publicly
available, a nationally recognized securities rating agency or
agencies, as the case may be, selected by the [Company] PARENT, which
shall be substituted for Standard & Poor's [ Corporation]
RATINGS GROUP, Moody's Investor Service, Inc. or both, as the case may
be.
"Rating Category" means (i) with respect to Standard & Poor's
[Corporation] RATINGS GROUP, any of the following categories: BB, B,
CCC, CC, C and D (or equivalent successor categories); (ii) with respect
to Moody's Investor Service, Inc., any of the following
categories: Ba, B, Caa, Ca, C and D (or equivalent successor
categories); and (iii) the equivalent of any such category of
Standard & Poor's [Corporation] RATINGS GROUP or Moody's Investor
Service, Inc. used by another Rating Agency. In determining
whether the rating of the Notes has decreased by one or more
gradations, gradations within Rating Categories (+ and - for
Standard & Poor's [Corporation] RATINGS GROUP; 1, 2 and 3 for
Moody's Investor Service, Inc.; or the equivalent gradations for another
Rating Agency) shall be taken into account (e.g., with
respect to Standard & Poor's [Corporation] RATINGS GROUP, a decline in
a rating from BB+ to BB, as well as from BB- to B+, will
constitute a decrease of one gradation).
"Rating Date" means the date which is 90 days prior to the
earlier of (i) a Change of Control and (ii) public notice of the
occurrence of a Change of Control or of the intention by the [
Company] PARENT to effect a Change of Control.
"Rating Decline" means the occurrence of the following on, or
within 90 days after, the earlier of (i) the occurrence of a Change of
Control and (ii) the date of public notice of the occurrence of a Change
of Control or of the public notice of the intention of the [Company]
PARENT to effect a Change of Control (which period shall be extended so
long as the rating of the Notes is under publicly announced
consideration for possible downgrading by any of the
Rating Agencies): (a) in the event that the Notes are rated by
either Rating Agency on the Rating Date as Investment Grade, the rating
of the Notes by both such Rating Agencies shall be reduced below
Investment Grade, or (b) in the event the Notes are rated
below Investment Grade by both such Rating Agencies on the Rating Date,
the rating of the Notes by either Rating Agency shall be
decreased by one or more gradations (including gradations within Rating
Categories as well as between Rating Categories).
"Refinancing Indebtedness" means any renewals, extensions,
substitutions, refundings, refinancings or replacements of any
Indebtedness described in each of the clauses under "Permitted
Indebtedness" or Incurred pursuant to the Consolidated Cash Flow Ratio
test described under "Limitation on Indebtedness."
"Senior Indebtedness" means, with respect to the Company, the
principal of and premium, if any, and interest on (including
interest that, but for the filing of a petition initiating any
proceeding pursuant to any bankruptcy law with respect to the
Company, would accrue on such obligations, whether or not such
claim is allowed in such bankruptcy proceeding) and all other
monetary obligations of every kind or nature due on or in
connection with any Indebtedness of the Company other than the
Notes[ and the Debentures], whether outstanding on the [date of the
Indenture] ORIGINAL ISSUE DATE or thereafter Incurred, unless, in the
case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall not be senior in right
of payment to the Notes. [The Notes are pari passu with the Debentures.
] Without limiting the generality of the foregoing,
"Senior Indebtedness" shall include the Indebtedness under the
Working Capital Facility and amounts owed to banks or other
financial institutions pursuant to factoring arrangements for
goods, materials or services purchased in the ordinary course of
business. Notwithstanding the foregoing, Senior Indebtedness shall not
include (i) Indebtedness of the Company to a Subsidiary or (ii) amounts
owed (except to banks and other financial institutions as aforesaid) for
goods, materials or services purchased in the
ordinary course of business.
"SIGNIFICANT PARENT SENIOR INDEBTEDNESS" MEANS (I) ANY PARENT
SENIOR INDEBTEDNESS INCURRED UNDER THE WORKING CAPITAL FACILITY AND (II)
ANY OTHER ISSUE OF PARENT SENIOR INDEBTEDNESS HAVING AN
OUTSTANDING PRINCIPAL AMOUNT OF AT LEAST $25 MILLION WHICH IS
SPECIFICALLY DESIGNATED IN THE INSTRUMENT EVIDENCING OR AGREEMENT
GOVERNING SUCH PARENT SENIOR INDEBTEDNESS AS "SIGNIFICANT PARENT Senior
Indebtedness".
"Significant Senior Indebtedness" means (i) any Senior
Indebtedness Incurred under the Working Capital Facility and (ii) any
other issue of Senior Indebtedness having an outstanding
principal amount of at least $25 million which is specifically
designated in the instrument evidencing or agreement governing such
Senior Indebtedness as "Significant Senior Indebtedness".
"Stated Maturity," when used with respect to any Note or any
installment of interest thereon, means the date specified in such Note
as the final date on which the principal of such Note or such
installment of interest is due and payable.
"Subsidiary" OF ANY SPECIFIED PERSON means a corporation (or other
business entity), the majority of whose Voting Stock (or
other equity interests) is owned by [the Company] SUCH PERSON or one or
more Subsidiaries or by [the Company] SUCH PERSON and one or more
Subsidiaries; provided that, unless specifically included, the Accounts
Receivable [Subsidiary] SUBSIDIARIES shall not be deemed to be [a
Subsidiary] SUBSIDIARIES of the [Company] PARENT for
purposes of the Amended and Restated Indenture. No Accounts
Receivable Subsidiary shall be deemed to be consolidated into the
[Company] PARENT. All intercompany transactions shall be reflected on
the books and records of the [Company] PARENT and any Accounts
Receivable Subsidiary in accordance with GAAP, as if they were not
consolidated. UNLESS THE CONTEXT EXPRESSLY INDICATES OTHERWISE, A
"SUBSIDIARY" MEANS A SUBSIDIARY OF THE PARENT.
"Subsidiary Preferred Stock" means any series of preferred
stock issued by a Subsidiary of the [Company] PARENT.
"Voting Stock" means stock of the class or classes pursuant to
which the holders thereof have the general voting power under
ordinary circumstances to elect at least a majority of the board of
directors managers or trustees of a corporation (irrespective of whether
or not at the time stock of any other class or classes
shall have or might have voting power by reason of the happening of any
contingency).
"Working Capital Facility" means [the Company's Amended and
Restated Credit Agreement, as amended as of the date hereof, among the
Company, certain commercial banking institutions and The Bank of Nova
Scotia] ANY CREDIT AGREEMENT OR CREDIT AGREEMENTS AMONG THE PARENT
AND/OR ANY SUBSIDIARIES OF THE PARENT, CERTAIN FINANCIAL
INSTITUTIONS AND NATIONSBANK, N.A. (SOUTH), as Agent, and any and all
amendments, renewals, extensions, substitutions, refundings,
refinancings (in whole or in part) or replacements [of such
facility] THEREOF.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of certain anticipated
federal income tax consequences under present law to holders of the
Notes if the Proposed Amendments are approved and Proffitt's pays the
Consent Payment to holders entitled thereto. This discussion is based
on the provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), final, temporary, and proposed Treasury
regulations thereunder, and administrative and judicial
interpretations thereof, all as in effect as of the date hereof and all
of which are subject to change (possibly on a retroactive
basis). Legislative, judicial, or administrative changes or
interpretations could alter or modify the tax discussion set forth
below. This discussion does not purport to deal with all aspects of
federal income taxation that may be relevant to holders of
Notes. No attempt is made to consider any aspects of state, local or
foreign taxation. Finally, substantial uncertainties resulting from the
lack of definitive judicial or administrative authority and
interpretations apply to various tax issues addressed herein.
Proffitt's has not sought, nor does it intend to seek, any rulings from
the Internal Revenue Service (the "IRS") relating to such
issues or any other issues.
This discussion does not attempt to address all issues that may be
relevant to a particular holder of Notes in light of such holder's
personal investment circumstances and does not apply to holders subject
to special treatment under the federal income tax laws such as financial
institutions, broker-dealers, insurance
companies, foreign persons and entities, tax-exempt organizations or
taxpayers subject to the alternative minimum tax, and does not discuss
any aspect of state, local or foreign tax laws. This
discussion assumes that holders hold their Notes as a "capital
asset" (generally, property held for investment) within the meaning of
Section 1221 of the Code.
UNCERTAINTIES EXIST WITH RESPECT TO CERTAIN TAX CONSEQUENCES
ARISING IN CONNECTION WITH THIS SOLICITATION. THEREFORE, THE
FOLLOWING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES IS
INCLUDED HEREIN FOR GENERAL INFORMATION ONLY. THE TAX TREATMENT OF A
HOLDER OF THE NOTES MIGHT BE SUBJECT TO SPECIAL RULES NOT
DISCUSSED BELOW. ACCORDINGLY, EACH HOLDER OF THE NOTES SHOULD
CONSULT SUCH HOLDER'S OWN TAX ADVISOR AS TO THE SPECIFIC FEDERAL, STATE
AND FOREIGN TAX CONSEQUENCES TO SUCH HOLDER THAT MAY ARISE IN CONNECTION
WITH THIS SOLICITATION.
Tax Consequences to Holders of Notes
Final Treasury Regulations (the "Treasury Regulations") under
Section 1001 of the Code, providing rules for determining whether a
modification of the terms of a debt instrument results in an
exchange for federal income tax purposes were published in the
Federal Register on June 26, 1996. Although the Treasury
Regulations are not generally effective for alterations of the
terms of a debt instrument before September 24, 1996, the Treasury
Department has stated that taxpayers may rely on the new rules for
alterations of the terms of a debt instrument after December 2,
1992, and before September 24, 1996. These recently issued
Treasury Regulations have not yet been interpreted or applied in any
published ruling, notice, or other administrative guidance from the IRS,
nor have they been interpreted or applied in any reported judicial
decisions. The following discussion is, therefore, based on a reasoned
reading of the text of the Treasury Regulations
themselves, the Preamble accompanying the Treasury Regulations as
published in the Federal Register, and the other sources of
guidance set forth in the first paragraph of this section.
Although the result is not entirely free from doubt,
Proffitt's believes that, under the Treasury Regulations, the
addition of the Parent Guarantee, the modification of the existing
covenants and the addition of certain Proffitt's covenants to the Notes
in connection with the consummation of the Solicitation will not result
in a "significant modification" of the Notes that would be treated as an
exchange for federal income tax purposes. In
reaching this conclusion, Proffitt's has considered the application of
the Treasury Regulations to the several amendments to the Notes and the
addition of the Parent Guarantee that would be effected by the
consummation of the Solicitation, considered both separately and with
regard to their combined effect. With respect to the
addition of the Parent Guarantee and certain Proffitt's covenants,
Proffitt's believes that these changes will not result in a "change in
payment expectations" constituting a significant modification under the
Treasury Regulations. Proffitt's bases this belief on its expectation
that the consummation of the Solicitation will not result in a
"substantial enhancement" of Parisian's capacity to
meet its payment obligations under the Notes combined with a change in
that capacity from "primarily speculative" to "adequate." In addition,
Proffitt's believes that its guarantee of the right of the holders of
Notes to require Parisian to repurchase the Notes in the event of
certain changes of control of Proffitt's or Parisian would not be
treated as a significant modification under the
Treasury Regulations because the exercise of such right would not result
in a deferral of, or a reduction in, any scheduled payment of interest
or principal. Under the Treasury Regulations, receipt of the Consent
Payment by holders of the Notes will result in a
significant modification of the Notes only if the annual yield of the
amended Notes, taking the Consent Payment into account in
determining the yield of the amended Notes, varies from the annual yield
of the unmodified Notes (determined as of the effective date of the
Proposed Amendments), by more than the greater of (i) one-quarter of one
percent (25 basis points), or (ii) five percent of the annual yield of
the unmodified Notes.
Consequently, although not entirely free from doubt,
Proffitt's believes that the consummation of the Solicitation will not
result in a deemed exchange of the Notes under Section 1001 of the Code
and, therefore, that the holders of Notes will not
recognize any gain or loss as a result of the consummation of the
Solicitation. Proffitt's intends to report the consummation of the
Solicitation in a manner consistent with this position. If,
however, it was finally determined that the consummation of the
Solicitation or the payment of the Consent Payment constituted a
significant modification of the Notes resulting in a deemed
exchange of the Notes for "new" Notes (the Notes as amended) for federal
income tax purposes, it is possible that a holder of Notes might
recognize gain or loss as a result thereof, although
Proffitt's believes that the better view in such a case would be that
the deemed exchange would be a tax-free recapitalization under Section
368(a)(1)(E) of the Code. Notwithstanding recapitalization treatment,
however, depending upon the deemed "issue price"
assigned to the Notes (as amended) under Section 1273 of the Code, which
would differ from the stated principal amount of the Notes, a deemed
exchange could result in the holders of Notes having to include original
issue discount, in addition to stated interest, in income during the
period they held the Notes after the consummation of the Solicitation.
Tax Consequences to Proffitt's and Parisian
Assuming the consummation of the Solicitation does not
constitute a significant modification of the Notes resulting in a deemed
exchange for federal income tax purposes of Notes for "new" Notes (the
Notes as amended), neither Proffitt's nor Parisian will recognize any
gain or loss on the consummation of the Solicitation. If it were
finally determined that a deemed exchange did occur,
Proffitt's believes the better view is that such an exchange would
constitute a tax-free recapitalization under IRC Section 368(a)(1)(E).
If, as discussed above, the amended Notes bore original issue
discount as a result of the deemed exchange, Parisian would have
additional interest deductions available to it by reason of such
original issue discount.
HOLDERS OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISOR TO
DETERMINE THE SPECIFIC TAX CONSEQUENCES TO SUCH HOLDERS OF THE
SOLICITATION, INCLUDING THE LIKELIHOOD THAT CONSUMMATION OF THE
SOLICITATION WILL RESULT IN A DEEMED EXCHANGE OF THE NOTES, AS WELL AS
THE APPLICATION AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
Receipt of Consent Payment
Although there is no authority on point, assuming the
consummation of the Solicitation does not constitute a significant
modification of the Notes resulting in a deemed exchange for
federal income tax purposes, holders of Notes should be required to
treat the Consent Payment as a fee and to recognize ordinary income for
federal income tax purposes in an amount equal to the Consent Payment to
which they are entitled, when the Consent Payment is
received or accrued, in accordance with their method of accounting. If
it were finally determined that a deemed exchange did occur,
Proffitt's believes the better view is that such an exchange would
constitute a tax-free recapitalization under IRC Section 368(a)(1)(E),
in which case the holders receiving Consent Payments would
generally recognize taxable gain to the extent of the lesser of (i) the
Consent Payment received or (ii) the gain realized by the
holder on the exchange.
Backup Withholding
Proffitt's will be required to backup withhold in an amount equal
to 31 percent of the Consent Payment payable to a particular holder of
a Note unless (i) the holder is a corporation or comes within certain
other exempt categories and, when required,
demonstrates this fact, or (ii) the holder provides a taxpayer
identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable
requirements of the backup withholding rules.
MISCELLANEOUS
The Solicitation is not being made to (nor will Consents be
accepted from or on behalf of) holders of Notes in any jurisdiction in
which the making or acceptance of the Solicitation would not be in
compliance with the laws of such jurisdiction. However,
Proffitt's, in its sole discretion, may take such action as it may deem
necessary to make the Solicitation in any such jurisdiction, and may
extend the Solicitation to holders of Notes in such
jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of Proffitt's which is not contained in this
Consent Solicitation Statement or in the Consent, and, if given or made,
such information or representation should not be
relied upon.
The delivery of this Consent Solicitation Statement shall not under
any circumstances create any implication that the information contained
herein is correct as of any time subsequent to the date hereof or that
there has been no change in the information set
forth herein or in the affairs of Proffitt's since the date hereof.
Facsimile copies of Consents (confirmed by the Expiration Date by
physical delivery), properly completed and validly executed,
will be accepted. Consents and any other required documents should be
sent or delivered by each holder of Notes or such holder's
broker, dealer, commercial bank or trust company to the Depositary at
one of its addresses set forth below.
The Depositary for the Solicitation is:
Amsouth Bank Of Alabama
Corporate Trust Administration
7th Floor
1901 Sixth Avenue North
Birmingham, AL 35203
Fax: (205) 581-7661
Requests for assistance should be directed to the Information Agent
or the Solicitation Agent. Requests for additional copies of this
Consent Solicitation Statement and/or the form of Consent
should be directed to the Information Agent. You may also contact your
broker, dealer, commercial bank, trust company or nominee for assistance
concerning the Solicitation.
The Information Agent for the Solicitation is:
Georgeson & Company, Inc.
Wall Street Plaza
88 Pine Street
New York, NY 10005
Collect: (212) 440-9800
Toll Free: 1-800-223-2064
The Solicitation Agent for the Solicitation is:
NationsBanc Capital Markets, Inc.
100 North Tryon Street
NCI-007-06-07
Charlotte, North Carolina 28255
(704) 388-3651
(Collect) (704) 388-3651
The date of this Consent Solicitation Statement is August 23, 1996.
