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):
July 8, 1996
PROFFITT'S, INC.
(Exact name of registrant as specified in its charter)
TENNESSEE
(State or other jurisdiction of incorporation)
0-15907 62-0331040
(Commission File Number) (IRS Employer Identification 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 July 8, 1996, Proffitt's, Inc. and Parisian, Inc. jointly
announced the signing of an Agreement and Plan of Merger. Pursuant
to General Instruction F to Form 8-K, the following information is
incorporated herein by reference and is attached hereto: (i)
Agreement and Plan of Merger Among Proffitt's, Inc., Casablanca Merger Corp.
and Parisian, Inc. dated July 8, 1996 (Exhibit 2); (ii) press release dated
July 8, 1996 (Exhibit 20); and (iii) Discussion Information prepared for
a July 12, 1996 Financial Analysts'/Investors' Presentation
(Exhibit 99).
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
The following exhibits are filed as a part of this
report:
Exhibit
Number Description
2 Agreement and Plan of Merger Among Proffitt's, Inc., Casablanca
Merger Corp. and Parisian, Inc. dated July 8, 1996.
20 Press release dated July 8, 1996.
99 Discussion Information for Financial Analysts' Presentation
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: July 17, 1996 /s/ R. Brad Martin
R. Brad Martin
(Printed)
Chairman of the Board
and Chief Executive
Officer
(Title)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 8, 1996 (this
"Agreement"), among PROFFITT'S, INC., a Tennessee corporation
("Parent"), CASABLANCA MERGER CORP., an Alabama corporation and a
wholly-owned subsidiary of Parent ("Sub"), and PARISIAN, INC., an
Alabama corporation (the "Company") (Sub and the Company being
hereinafter collectively referred to as the "Constituent
Corporations").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have approved and declared advisable the merger of Sub
and the Company (the "Merger"), upon the terms and subject to the
conditions set forth herein, whereby each issued and outstanding
share of Common Stock, par value $0.01 per share, of the Company
("Company Common Stock") will be converted into cash and shares of
Parent Common Stock, par value $.10 per share ("Parent Common
Stock") as hereinafter provided; and
WHEREAS, the respective Boards of Directors of Parent and the
Company have determined that the Merger is in furtherance of and
consistent with their respective long-term business strategies and
is in the best interest of their respective shareholders;
NOW, THEREFORE, in consideration of the premises,
representations, warranties and agreements herein contained, the
parties agree as follows:
ARTICLE 1.
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions hereof and in accordance with Alabama law, Sub shall be
merged with and into the Company at the Effective Time (as
hereinafter defined). Following the Merger, the separate corporate
existence of Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and shall
succeed to and assume all of the rights and obligations of Sub in
accordance with Alabama law.
Section 1.2 Effective Time. The merger shall become effective
when the articles of merger (the "Articles of Merger"), executed in
accordance with the relevant provisions of Alabama law, are filed
with the Secretary of State of the State of Alabama (the
"Secretary"). Upon issuance of a certificate of merger by the
Secretary in accordance with the relevant provisions of Alabama
law, the Merger shall be effected (the time of such issuance of a
certificate of merger being referred to as the "Effective Time").
The filing of the Articles of Merger shall be made on the date of
the Closing (as defined in Section 1.18), or as promptly thereafter
as practicable.
Section 1.3 Effects of the Merger. The effect of the merger
shall be as provided by Alabama law.
Section 1.4 Articles and Bylaws. At the Effective Time, the
Articles of Incorporation of the Sub, as in effect immediately
prior to the Effective Time, shall be the Articles of Incorporation
of the Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law. At the Effective Time, the
Bylaws of the Sub, as in effect immediately prior to the Effective
Time, shall be the Bylaws of the Surviving Corporation until
thereafter changed or amended as provided therein or by the
Articles of Incorporation of the Surviving Corporation or by
applicable law.
Section 1.5 Conversion of Securities. As of the Effective
Time, by virtue of the Merger and without any action on the part of
Sub, the Company or the holders of any securities of the
Constituent Corporations:
(a) Each issued and outstanding share of common stock,
par value $.01, of Sub shall be converted into one validly
issued, fully paid and nonassessable share of common stock of
the Surviving Corporation.
(b) All shares of Company Common Stock that are held in
the treasury of the Company or by any wholly-owned Subsidiary
of the Company shall be canceled and no capital stock of
Parent or other consideration shall be delivered in exchange
therefor.
(c) Subject to the provisions of Sections 1.10 and 1.15
hereof, each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other
than shares to be canceled in accordance with Section 1.5(b)) shall
be converted into the right to receive $15.00 in cash (the
"Cash Consideration") and .4006 (such number being the
"Conversion Number") validly issued, fully paid and nonassessable
shares of Parent Common Stock (collectively, the "Merger
Consideration"). All such shares of Company Common Stock, when
so converted, shall no longer be outstanding and shall
automatically be canceled and retired and each holder of a
certificate formerly representing any such shares shall cease
to have any rights with respect thereto, except the right to
receive any dividends and other distributions in accordance
with Section 1.7, certificates representing the shares of
Parent Common Stock into which such shares are converted, the Cash
Consideration and any cash, without interest, in lieu of
fractional shares to be issued or paid in consideration
therefor upon the surrender of such certificate in accordance with
Section 1.6.
(d) Each unexpired and unexercised option to purchase
shares of Company Common Stock (a "Company Stock Option")
under the Company Stock Option Plans (including Company Stock
Options which as of the Effective Time have not yet been granted
under the Company Stock Option Plans) will be assumed by Parent
as hereinafter provided. Pursuant to Section 4.4 of each
Company Stock Option Plan, each Company Stock Option will be
automatically converted into an option (the "Parent Stock Option")
to purchase a number of shares of Parent Common Stock equal to
the number of shares of Company Common Stock that could have
been purchased under such Company Stock Option multiplied by
.8, at a price per share of Parent Common Stock equal to the per
share option exercise price specified in the Company Stock
Option divided by .8. Such Parent Stock Option shall otherwise
be subject to the same terms and conditions as such Company Stock
Option. At the Effective Time, (i) the Company Stock Option
Plans shall be amended so that all references in the Company
Stock Option Plans, the applicable stock option or other
awards agreements issued thereunder shall be deemed to refer to
Parent; (ii) Parent shall assume the Company Stock Option
Plans and all of the Company's obligations with respect to the
Company Stock Options; and (iii) Parent shall issue to each holder
of an outstanding Company Stock Option a document evidencing
the foregoing assumption by Parent. If required by law in
addition to the existing Parent Registration Statement on Form S-8
relating to such Parent Stock Options, as soon as practicable
following the Effective Time of the Merger, Parent shall use
its best efforts to file a registration statement on Form S-8
with the Securities and Exchange Commission (the "SEC") with
respect to the Company Stock Options that have been converted
into Parent Stock Options.
Section 1.6 Parent to Make Certificates Available.
(a) Exchange of Certificates. Parent shall authorize a
commercial bank reasonably acceptable to the Company (or such
other person or persons as shall be acceptable to Parent and
the Company) to act as Exchange Agent hereunder (the "Exchange
Agent"). As soon as practicable after the Effective Time,
Parent shall deposit with the Exchange Agent, in trust for the
holders of shares of Company Common Stock converted in the
Merger, the total Cash Consideration, certificates representing the
shares of Parent Common Stock issued pursuant to Section
1.5(c) in exchange for outstanding certificates representing
shares of Company Common Stock and cash required to make payments
in lieu of any fractional shares pursuant to Section 1.8 (such
total Cash Consideration, cash and shares of Parent Common
Stock, together with any dividends or distributions with respect
thereto, being hereinafter referred to as the "Exchange
Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions, deliver the Cash Consideration and certificates
representing the Parent Common Stock contemplated to be
delivered pursuant to Section 1.5(c) out of the Exchange Fund.
Except as contemplated by Sections 1.6, 1.8 and 1.9, the Exchange
Fund shall not be used for any other purpose.
(b) Exchange Procedures. As soon as practicable after
the Effective Time, Parent shall cause the Exchange Agent to
mail to each record holder of a certificate or certificates
which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock converted in the
Merger (the "Certificates") a letter of transmittal (which
shall be in customary form, shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall
pass, only upon actual delivery of the Certificates to the
Exchange Agent, and shall contain instructions for use in effecting
the surrender of the Certificates in exchange for the Merger
Consideration and cash in lieu of fractional shares). Upon
surrender for cancellation to the Exchange Agent of a Certificate,
together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in
exchange therefor the Cash Consideration, a certificate
representing that number of whole shares of Parent Common
Stock into which the shares represented by the surrendered
Certificate shall have been converted at the Effective Time
pursuant to this Article I, cash in lieu of any fractional
share in accordance with Section 1.8 and certain dividends and
other distributions in accordance with Section 1.7.
Section 1.7 Dividends; Transfer Taxes; Withholding. No
dividends or other distributions that are declared on or after the
Effective Time on Parent Common Stock, or are payable to the
holders of record thereof on or after the Effective Time, will be
paid to any person entitled by reason of the Merger to receive the
Merger Consideration and no certificates evidencing Parent Common
Stock, Cash Consideration or cash payment in lieu of fractional
shares will be paid to any such person pursuant to Section 1.8
until such person surrenders the related Certificate or
Certificates, as provided in Section 1.6. Subject to the effect of
applicable law, there shall be paid to each record holder of a new
certificate representing such Parent Common Stock: (i) at the time
of such surrender or as promptly as practicable thereafter, the
amount of any dividends or other distributions theretofore paid
with respect to the shares of Parent Common Stock represented by
such new certificate and having a record date on or after the
Effective Time and a payment date prior to such surrender; (ii) at
the appropriate payment date or as promptly as practicable
thereafter, the amount of any dividends or other distributions
payable with respect to such shares of Parent Common Stock and
having a record date on or after the Effective Time but prior to
such surrender and a payment date on or subsequent to such
surrender; and (iii) at the time of such surrender or as promptly
as practicable thereafter, the amount of any cash payable with
respect to a fractional share of Parent Common Stock to which such
holder is entitled pursuant to Section 1.8. In no event shall the
person entitled to receive such dividends or other distributions be
entitled to receive interest on such dividends or other
distributions. If any cash or certificate representing shares of
Parent Common Stock is to be paid to or issued in a name other than
that in which the Certificate surrendered in exchange therefor is
registered, it shall be a condition of such exchange that the
Certificate so surrendered shall be properly endorsed and otherwise
in proper form for transfer and that the person requesting such
exchange shall pay to the Exchange Agent any transfer or other
taxes required by reason of the issuance of certificates for such
shares of Parent Common Stock in a name other than that of the
registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Exchange Agent that such tax
has been paid or is not applicable. Parent or the Exchange Agent
shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock such amounts as Parent or the
Exchange Agent is required to deduct and withhold with respect to
the making of such payment under the Code or under any provision of
state, local or foreign tax law. To the extent that amounts are so
withheld by Parent or the Exchange Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been
paid to the holder of the shares of Company Common Stock in respect
of which such deduction and withholding was made by Parent or the
Exchange Agent.
Section 1.8 No Fractional Securities. No certificates or
scrip representing fractional shares of Parent Common Stock shall
be issued upon the surrender for exchange of Certificates pursuant
to this Article I, and no Parent dividend or other distribution or
stock split shall relate to any fractional share, and no fractional
share shall entitle the owner thereof to vote or to any other
rights of a security holder of Parent. In lieu of any such
fractional share, each holder of Company Common Stock who would
otherwise have been entitled to a fraction of a share of Parent
Common Stock upon surrender of Certificates for exchange pursuant
to this Article I will be paid an amount in cash (without
interest), rounded to the nearest cent, determined by multiplying
(i) $37.50 by (ii) the fractional interest to which such holder
would otherwise be entitled. As promptly as practicable after the
determination of the amount of cash, if any, to be paid to holders
of fractional share interests, the Exchange Agent shall so notify
the Parent, and the Parent shall deposit such amount with the
Exchange Agent and shall cause the Exchange Agent to forward
payments to such holders of fractional share interests subject to
and in accordance with the terms of Section 1.7 and this Section
1.8.
Section 1.9 Return of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the former
shareholders of the Company for one year after the Effective Time
shall be delivered to Parent, upon demand of Parent, and any such
former shareholders who have not theretofore complied with this
Article I shall thereafter look only to Parent for payment of their
claim for Cash Consideration, Parent Common Stock, any cash in lieu
of fractional shares of Parent Common Stock and any dividends or
distributions with respect to Parent Common Stock. Neither Parent
nor the Surviving Corporation shall be liable to any former holder
of Company Common Stock for any such Cash Consideration, shares of
Parent Common Stock, cash and dividends and distributions held in
the Exchange Fund which is delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
Section 1.10 Adjustment of Conversion Number. In the event
of any reclassification, stock split or stock dividend with respect
to Parent Common Stock, any change or conversion of Parent Common
Stock into other securities, any other dividend or distribution
with respect to the Parent Common Stock other than normal quarterly
cash dividends as the same may be adjusted from time to time
pursuant to the terms of this Agreement (or if a record date with
respect to any of the foregoing should occur), or any issuance of
securities (other than rights) pursuant to the Parent Rights Plan
(as hereinafter defined) prior to the Effective Time, appropriate
and proportionate adjustments, if any, shall be made to the
Conversion Number, and all references to the Conversion Number in
this Agreement shall be deemed to be to the Conversion Number as so
adjusted. For purposes of this Agreement, "Parent Rights Plan"
means the issuance of securities pursuant to the stock purchase
rights declared as a dividend on March 28, 1995 and the rights
agreement dated as of March 28, 1995 between Parent and Union
Planters National Bank.
Section 1.11 No Further Ownership Rights in Company Common
Stock. All Cash Consideration and shares of Parent Common Stock
issued pursuant to the terms hereof (including any cash paid
pursuant to Section 1.8) shall be deemed to have been issued in
full satisfaction of all rights pertaining to the shares of Company
Common Stock represented by such Certificates.
Section 1.12 Closing of Company Transfer Books. At the
Effective Time, the stock transfer books of the Company shall be
closed and no transfer of shares of Company Common Stock shall
thereafter be made on the records of the Company. If, after the
Effective Time, Certificates are presented to the Surviving
Corporation, the Exchange Agent or the Parent, such Certificates
shall be canceled and exchanged as provided in this Article I.
Section 1.13 Lost Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by the Surviving Corporation,
the posting by such person of a bond, in such reasonable amount as
the Surviving Corporation may direct (but consistent with the
practices the Parent applies to its own shareholders), as indemnity
against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Certificate the Cash Consideration,
shares of Parent Common Stock, any cash in lieu of fractional
shares of Parent Common Stock to which the holders thereof are
entitled pursuant to Section 1.8 and any dividends or other
distributions to which the holders thereof are entitled pursuant to
Section 1.7.
Section 1. 14 Legend. Certificates representing shares of
Parent Common Stock issued in accordance with the terms of this
Agreement in exchange for shares of Company Common Stock
surrendered by any "affiliate" of the Company for purposes of Rule
145(c) under the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations promulgated
thereunder, shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED IN
A RULE 145 TRANSACTION, AS THAT TERM IS USED IN RULE 145
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") AND MAY BE OFFERED FOR SALE, SOLD,
TRANSFERRED ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
ENCUMBERED ONLY (1) PURSUANT TO RULE 145, (2) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (3) UPON
RECEIPT OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE ISSUER THAT SUCH TRANSFER IS OTHERWISE EXEMPT FROM
REGISTRATION UNDER THE ACT.
Section 1.15 Dissenters' Rights.
(a) Notwithstanding any provision of this Merger
Agreement to the contrary, each outstanding share of Company
Common Stock held by a holder who has demanded and perfected
his dissenters' rights in accordance with Alabama law and who has
not effectively withdrawn or lost his right to such
dissenters' rights (a "Dissenting Share"), shall not be
converted into, become exchangeable for or represent a right to
receive the Merger Consideration pursuant to Section 1.5
hereof but the holder thereof shall only be entitled to such
rights as are granted by Alabama law and shall not be entitled to
vote or to exercise any other rights of a shareholder of the
Company. Each holder of Dissenting Shares who becomes
entitled to payment therefor pursuant to Alabama law shall receive
such payment from the Surviving Corporation in accordance with
Alabama law.
(b) Notwithstanding the provisions of Section 1.15(a)
hereof if any shareholder who demands dissenters' rights with
respect to a share of his Company Common Stock under Alabama
law shall effectively withdraw or lose (through failure to perfect
or otherwise) his right to appraisal, such share shall cease
to be a Dissenting Share and shall automatically be converted
into, become exchangeable for and represent only the right to
receive the Merger Consideration, without interest thereon,
any cash in lieu of fractional shares pursuant to Section 1.8
hereof and any dividends or other distributions pursuant to Section
1.7 hereof, upon surrender of a Certificate.
Section 1.16 Further Assurances. If at any time after the
Effective Time the Surviving Corporation shall consider or be
advised that any deeds, bills of sale, assignments or assurances or
any other acts or things are necessary, desirable or proper (a) to
vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation its right, title or interest in, to or under any of the
rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (b) otherwise to carry
out the purposes of this Agreement, the Surviving Corporation and
its proper officers and directors or their designees shall be
authorized to execute and deliver, in the name and on behalf of
either of the Constituent Corporations, all such deeds, bills of
sale, assignments and assurances and to do, in the name and on
behalf of either Constituent Corporation, all such other acts and
things as may be necessary, desirable or proper to vest, perfect or
confirm the Surviving Corporation's right, title or interest in, to
or under any of the rights, privileges, powers, franchises,
properties or assets of such Constituent Corporation and otherwise
to carry out the purposes of this Agreement.
Section 1.17 Directors and Officers. The persons who are
directors of Sub immediately prior to the Effective Time, together
with Donald E. Hess, shall, after the Effective Time, comprise the
Board of Directors of the Surviving Corporation. At the Effective
Time, the officers of the Surviving Corporation shall consist of
the officers of Sub immediately prior to the Effective Time. Each
of such directors and officers of the Surviving Corporation shall
hold office until their respective successors have been duly
elected or appointed and qualified or as otherwise provided in the
Articles of Incorporation of the Surviving Corporation, the Bylaws
of the Surviving Corporation or by law.
Section 1.18 Closing. Unless this Merger Agreement shall have
been terminated pursuant to the provisions of Article 7 hereof the
closing of the transactions contemplated by this Agreement (the
"Closing") and all actions specified in this Agreement to occur at
the Closing shall take place on or before October 15, 1996 (the
"Closing Date"); provided, however, that if any of the conditions
provided for in Article 6 hereof shall not have been satisfied or
waived in accordance with the terms hereof by the Closing Date,
then either party to this Merger Agreement shall be entitled to
postpone the Closing by notice to the other party until such
condition or conditions shall have been met or waived.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub jointly and severally represent and warrant to
the Company as follows:
Section 2.1 Organization, Standing and Power. Parent is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Tennessee, and has the requisite
corporate power and authority to carry on its business as now being
conducted. Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of Alabama and has
the requisite corporate power and authority to carry on its
business as now being conducted. Each Subsidiary of Parent is duly
organized, validly existing and in good standing under the laws of
the jurisdiction in which it is organized and has the requisite
corporate power and authority to carry on its business as now being
conducted, except where the failure to be so organized, existing or
in good standing or to have such power or authority would not,
individually or in the aggregate, have a Material Adverse Effect
(as hereinafter defined) on Parent. Parent and each of its
Subsidiaries are duly qualified to do business, and are in good
standing, in each jurisdiction where the character of their
properties owned or held under lease or the nature of their
activities makes such qualification necessary, except where the
failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect on Parent. For purposes
of this Agreement (a) "Material Adverse Change" or "Material
Adverse Effect" means, when used with respect to Parent or the
Company, as the case may be, any change or effect that is
materially adverse to the assets, liabilities, results of operation
or financial condition of Parent and its Subsidiaries, taken as a
whole, or the Company and its Subsidiaries, taken as a whole, as
the case may be, and (b) "Subsidiary" means any corporation,
partnership, joint venture or other legal entity of which Parent or
the Company, as the case may be (either alone or through or
together with any other Subsidiary), owns, directly or indirectly,
50% or more of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the board
of directors or other governing body of such corporation,
partnership, joint venture or other legal entity.
Section 2.2 Capital Structure. As of the Effective Time, the
authorized capital stock of Parent will consist of 100,000,000
shares of Parent Common Stock and 10,000,000 shares of Preferred
Stock, par value $ 1.00 per share (the "Parent Preferred Stock").
At the close of business on July 5, 1996 (i) 20,660,145 shares of
Parent Common Stock were issued and outstanding, all of which were
validly issued, fully paid and nonassessable and free of preemptive
rights; (ii) 3,401,000 shares of Parent Common Stock were reserved
for future issuance pursuant to Parent's 1994 Long-Term Incentive
Plan and the 1987 Stock Option Plan; (iii) 330,000 shares of Parent
Common Stock were reserved for future issuance pursuant to Parent's
1994 Employee Stock Purchase Plan; and (iv) 2,019,906 shares of
Parent Common Stock were reserved for future issuance pursuant to
the terms of the 4 3/4% Convertible Subordinated Debentures Due
2003. No shares of Preferred Stock are issued and outstanding. All
of the shares of Parent Common Stock issuable in exchange for
Company Common Stock at the Effective Time in accordance with this
Agreement will be, when so issued, duly authorized, validly issued,
fully paid and nonassessable and free of preemptive rights. As of
the date of this Agreement, except for (a) this Agreement, (b)
stock options covering not in excess of 2,700,000 shares of Parent
Common Stock (collectively, the "Parent Stock Options"), (c) the
1994 Employee Stock Purchase Plan, (d) the 4 3/4% Convertible
Subordinated Debentures due 2003, (e) contingent stock grants of
38,000 shares of Parent Common Stock to key executives, and (f)
securities issuable pursuant to the stock purchase rights declared
as a dividend on March 28, 1995 (the "Parent Rights") and the
rights agreement dated as of March 28, 1995 between Parent and
Union Planters National Bank (the "Parent Rights Agreement") ( the
Parent Rights and the Parent Rights Agreement are collectively the
"Parent Rights Plan"), there are no options, warrants, calls,
rights or agreements to which Parent or any of its Subsidiaries is
a party or by which any of them is bound obligating Parent or any
of its Subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock of
Parent or any of its Subsidiaries or obligating Parent or any of
its Subsidiaries to grant, extend or enter into any such option,
warrant, call, right or agreement. Each outstanding share of
capital stock of each Subsidiary of Parent is duly authorized,
validly issued, fully paid and nonassessable and, except as
disclosed in the Parent SEC Documents (as hereinafter defined),
each such share is owned by Parent or another Subsidiary of Parent,
free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on voting
rights, charges and other encumbrances of any nature whatsoever.
Section 2.3 Authority. The respective Boards of Directors of
Parent and Sub have on or prior to the date of this Agreement
declared the Merger advisable and approved this Agreement in
accordance with the applicable law. Each of Parent and Sub has all
requisite corporate power and authority to enter into this
Agreement, to issue the Parent Common Stock in connection with the
Merger (the "Share Issuance"), and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement
by Parent and Sub and the consummation by Parent and Sub of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent and Sub, subject
to the filing of appropriate Merger documents as required by
Alabama law. This Agreement has been duly executed and delivered by
Parent and Sub and (assuming the valid authorization, execution and
delivery of this Agreement by the Company) this Agreement
constitutes the valid and binding obligation of Parent and Sub
enforceable against each of them in accordance with its terms
except as enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to creditors rights
generally and except that the availability of equitable remedies,
including specific performance, is subject to judicial discretion.
The Share Issuance and the filing of a registration statement on
Form S-4 with the SEC by Parent under the Securities Act of 1933,
as amended (together with the rules and regulations promulgated
thereunder, the "Securities Act"), for the purpose of registering
the shares of Parent Common Stock and the guarantees to be issued
in connection with the Merger (together with any amendments or
supplements thereto, whether prior to or after the effective date
thereof, the "Registration Statement") have been duly authorized by
Parent's Board of Directors.
Section 2.4 Consents and Approvals; No Violation. Assuming
that all consents, approvals, authorizations and other actions
described in this Section 2.4 have been obtained and all filings
and obligations described in this Section 2.4 have been made,
except as set forth on Schedule 2.4 of the disclosure schedule
delivered contemporaneously herewith (the "Disclosure Schedule")
the execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby and compliance
with the provisions hereof will not, result in any violation of, or
default (with or without notice or lapse of time, or both) under,
or give to others a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit
under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of
Parent or any of its Subsidiaries under, any provision of (i) the
Charter or Bylaws of Parent, (ii) any provision of the comparable
charter or organization documents of any of Parent's Subsidiaries,
(iii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to Parent or any of its
Subsidiaries, or (iv) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Parent or any of its
Subsidiaries or any of their respective properties or assets, other
than, in the case of clauses (ii), (iii) or (iv), any such
violations, defaults, rights, liens, security interests, charges or
encumbrances that, individually or in the aggregate, would not have
a Material Adverse Effect on Parent, or prevent the consummation of
any of the transactions contemplated hereby. No filing or
registration with, or authorization, consent or approval of any
domestic (federal and state), foreign or supranational court,
commission, governmental body, regulatory agency, authority or
tribunal (a "Governmental Entity") is required by or with respect
to Parent or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by Parent or Sub or is
necessary for the consummation of the Merger and the other
transactions contemplated by this Agreement, except for (i) in
connection, or in compliance, with the provisions of the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), the Securities Act and the Securities Exchange Act of
1934, as amended (together with the rules and regulations
promulgated thereunder, the "Exchange Act"), (ii) the filing of
Articles of Merger with the Secretary and appropriate documents
with the relevant authorities of other states in which the Company
or any of its Subsidiaries is qualified to do business, (iii) such
filings and consents as may be required under any environmental,
health or safety law or regulation pertaining to any notification,
disclosure or required approval triggered by the Merger or by the
transactions contemplated by this Agreement, (iv) such filings and
consents as may be required under any state or foreign laws
pertaining to debt collection, the issuance of payment instruments
or money transmission, (v) applicable requirements, if any, of
state securities or "blue sky" laws (the "Blue Sky Laws") and
NASDAQ, and (vi) such other consents, orders authorizations,
registrations, declarations and filings the failure of which to be
obtained or made would not, individually or in the aggregate, have
a Material Adverse Effect on Parent, or prevent or materially delay
the consummation of any of the transactions contemplated hereby.
Section 2.5 SEC Documents and Other Reports. Parent has,
since January 29, 1994, filed all documents and reports which it is
required to file with the SEC, including, without limitation, an
Annual Report on Form 10-K for each of the fiscal years ended
January 29, 1994, January 28, 1995 and February 3, 1996, and a
Quarterly Report on Form 10-Q for the quarter ended May 4, 1996
(the "Parent SEC Documents"). As of their respective dates, the
Parent SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case
may be, and, at the respective times they were filed (and as
amended through the date hereof), none of the Parent SEC Documents
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading. The consolidated financial
statements (including, in each case, any notes thereto) of Parent
included in the Parent SEC Documents complied as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto,
were prepared in accordance with generally accepted accounting
principles (except, in the case of the unaudited statements, as
permitted by Form 10-Q) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the
notes thereto) and fairly presented in all material respects the
consolidated financial position of Parent and its consolidated
Subsidiaries as at the respective dates thereof and the
consolidated results of their operations and their consolidated
cash flows for the periods then ended (subject, in the case of
unaudited statements, to any other adjustments described therein
and normal year-end audit adjustments which would not in the
aggregate be material in amount or effect). Except as disclosed in
the Parent SEC Documents or as required by generally accepted
accounting principles, Parent has not, since February 3, 1996, made
any change in the accounting principles, practices, methods or
policies applied in the preparation of financial statements.
Section 2.6 Registration Statement and Prospectus. None of the
information to be supplied by Parent or Sub for inclusion or
incorporation by reference in the Registration Statement or the
prospectus included therein (together with any amendments or
supplements thereto, the "Prospectus") relating to the Company
Shareholder Meeting and the Company Noteholder Approval (as defined
in Section 5.1) will (i) in the case of the Registration Statement,
at the time it becomes effective, contain any untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein
not misleading or (ii) in the case of the Prospectus, at the time
of the mailing of the Prospectus, the time of each of the
Shareholder Meeting and Noteholder Approval, and at the Effective
Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any
time prior to the Effective Time any event with respect to Parent,
its officers and directors or any of its Subsidiaries shall occur
which is required to be described in the Prospectus or the
Registration Statement, such event shall be so described, and an
appropriate amendment or supplement shall be promptly filed with
the SEC and, as required by law, disseminated to the shareholders
and noteholders of the Company. The Registration Statement will
comply (with respect to Parent) as to form in all material respects
with the provisions of the Securities Act.
Section 2.7 Absence of Certain Changes or Events. Except as
disclosed in Parent SEC Documents filed with the SEC prior to the
date of this Agreement, since February 3, 1996, (A) Parent and its
Subsidiaries have not entered into any material oral or written
agreement or other transaction, that is not in the ordinary course
of business or that would result in a Material Adverse Effect on
Parent, excluding any changes and effects resulting from changes in
economic, regulatory or political conditions or changes in
conditions generally applicable to the industries in which Parent
and Subsidiaries of Parent are involved and except for any such
changes or effects resulting from this Agreement, the transactions
contemplated hereby or the announcement thereof; (B) Parent and its
Subsidiaries have not sustained any loss or interference with their
business or properties from fire, flood, windstorm, accident or
other calamity (whether or not covered by insurance) that has had
a Material Adverse Effect on Parent; (C) other than any
indebtedness incurred by Parent after the date hereof as permitted
by Section 4.l(a)(v), there has been no material change in the
consolidated indebtedness of Parent and its Subsidiaries, and no
dividend or distribution of any kind declared, paid or made by
Parent on any class of its stock, except for regular semi-annual
dividends of not more than $ 1.625 per share on Parent Series A
Preferred Stock and an inducement payment of $3,031,674 in
connection with the conversion of Parent Series A Preferred Stock
into Parent Common Stock; and (D) there has been no event causing
a Material Adverse Effect on Parent, excluding any changes and
effects resulting from changes in economic, regulatory or political
conditions or changes in conditions generally applicable to the
industries in which Parent and Subsidiaries of Parent are involved
and except for any such changes or effects resulting from this
Agreement, the transactions contemplated hereby or the announcement
thereof.
Section 2.8 Permits and Compliance. Each of Parent and its
Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any
Governmental Entity which, to the Knowledge of Parent (as
hereinafter defined), are necessary for Parent or any of its
Subsidiaries to own, lease and operate its properties or to carry
on its business as it is now being conducted (the "Parent
Permits"), except where the failure to have any of the Parent
Permits would not, individually or in the aggregate, have a
Material Adverse Effect on Parent, and, as of the date of this
Agreement, no suspension or cancellation of any of the Parent
Permits is pending or, to the Knowledge of Parent, threatened,
except where the suspension or cancellation of any of the Parent
Permits would not, individually or in the aggregate, have a
Material Adverse Effect on Parent. Neither Parent nor any of its
Subsidiaries is in violation of (A) its Charter, Bylaws or other
organizational documents, (B) any applicable law, ordinance,
administrative or governmental rule or regulation or (C) any order,
decree or judgment of any Governmental Entity having jurisdiction
over Parent or any of its Subsidiaries, except, in the case of
clauses (A), (B) and (C), for any violations that, individually or
in the aggregate, would not have a Material Adverse Effect on
Parent. Except as disclosed in the Parent SEC Documents filed prior
to the date of this Agreement there is no contract or agreement
that is material to the business, financial condition or results of
operations of Parent and its Subsidiaries, taken as a whole. Except
as set forth in the Parent SEC Documents, prior to the date of this
Agreement, no event of default or event that, but for the giving of
notice or the lapse of time or both, would constitute an event of
default exists or, upon the consummation by Parent of the
transactions contemplated by this Agreement, will exist under any
indenture, mortgage, loan agreement, note or other agreement or
instrument for borrowed money, any guarantee of any agreement or
instrument for borrowed money or any lease, contractual license or
other agreement or instrument to which Parent or any of its
Subsidiaries is a party or by which Parent or any such Subsidiary
is bound or to which any of the properties, assets or operations of
Parent or any such Subsidiary is subject, other than any defaults
that, individually or in the aggregate, would not have a Material
Adverse Effect on Parent. Set forth on Schedule 2.8 of the
Disclosure Schedule is a description of any material changes to the
amount and terms of the indebtedness of the Company and its
Subsidiaries as described on Parent's Annual Report on Form 10-K.
"Knowledge of Parent" means the actual knowledge of any of the
Chief Executive Officer, Chief Operating Officer, General Counsel
and Chief Financial Officer of the Parent.
Section 2.9 Tax Matters. (a) Each of Parent and its
Subsidiaries has filed all Tax Returns required to have been filed
(or extensions have been duly obtained) and has paid all Taxes
required to have been paid by it, except where failure to file such
Tax Returns or pay such Taxes would not, in the aggregate, have a
Material Adverse Effect on Parent. For purposes of this Agreement:
(i) "Tax" (and, with correlative meaning, "Taxes") means any
federal, state, local or foreign income, gross receipts, property,
sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or added minimum, ad valorem, transfer or
excise tax, or any other tax, custom, duty, governmental fee or
other like assessment or charge of any kind whatsoever, together
with any interest or penalty, imposed by any governmental authority
and (ii) "Tax Return" means any return, report or similar statement
required to be filed with respect to any Tax (including any
attached schedules), including, without limitation, any information
return, claim for refund, amended return or declaration of
estimated Tax.
(b) Neither the Parent's shares of capital stock nor the
shares of capital stock of any of its subsidiaries are "United
States real property interests" within the meaning of Section 897
of the Internal Revenue Code of 1986, as amended (the "Code").
Section 2.10 Actions and Proceedings. Except as set forth in
the Parent SEC Documents, there are no outstanding orders,
judgments, injunctions, awards or decrees of any Governmental
Entity against or involving Parent or any of its Subsidiaries, as
such, any of its properties, assets or business or any Parent Plan
(as hereinafter defined) that, individually or in the aggregate,
would have a Material Adverse Effect on Parent. As of the date of
this Agreement, there are no actions, suits or claims or legal
administrative or arbitrative proceedings or investigations pending
or, to the Knowledge of Parent, threatened against or involving
Parent or any of its Subsidiaries, any of its properties, assets or
business or any Parent Plan that, individually or in the aggregate,
are reasonably likely to have a Material Adverse Effect on Parent.
As of the date hereof there are no actions, suits, labor disputes
or other litigation, legal or administrative proceedings or
governmental investigations pending or, to the Knowledge of Parent,
threatened against or affecting Parent or any of its Subsidiaries,
any of its properties, assets or business relating to the
transactions contemplated by this Agreement.
Section 2.11 Certain Agreements. As of the date of this
Agreement, neither Parent nor any of its Subsidiaries is a party to
any oral or written agreement or plan, including any stock option
plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
Section 2.12 ERISA. Each Parent Plan complies in all material
respects with the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), the Code and all other applicable statutes
and governmental rules and regulations, including but not limited
to the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"), and (i) no "reportable event" (within the
meaning of Section 4043 of ERISA) has occurred with respect to any
Parent Plan, (ii) neither Parent nor any of its ERISA Affiliates
(as hereinafter defined) has withdrawn from any Parent Multi-
employer Plan (as hereinafter defined) or instituted, or is
currently considering taking, any action to do so, except for
Proffitt's of Tri-Cities, Inc.'s withdrawal from Belk Employees'
Group Life Insurance and Medical Plan to the extent that it no
longer pays retiree life benefits (iii) no action has been taken,
or is currently being considered, to terminate any Parent Plan
subject to Title IV of ERISA, except for Younkers, Inc.'s
termination of the Brandeis Employees Pension Plan, and (iv) Parent
and its ERISA Affiliates have complied in all material respects
with the continued medical coverage requirements of COBRA. No
Parent Plan, nor any trust created thereunder, has incurred any
"accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived. With respect to any Parent Plan
which is subject to Title IV of ERISA, except for Younkers, Inc.'s
termination of the Brandeis Employees Pension Plan, the present
value of the liabilities (as determined on a terminated plan basis)
do not exceed the fair market value of the Plan assets as of the
most recent valuation date. With respect to the Parent Plans, no
event has occurred in connection with which Parent or any ERISA
Affiliate would be subject to any liability under the terms of such
Parent Plans, ERISA, the Code or any other applicable law which
would have a Material Adverse Effect on Parent. All Parent Plans
that are intended to be qualified under Section 401(a) of the Code
have been determined by the Internal Revenue Service to be so
qualified, and to the Knowledge of Parent, there is no reason why
any Parent Plan is not so qualified in operation. Neither Parent
nor any of its ERISA Affiliates has been notified by any Parent
Multi-employer Plan that such Parent Multi-employer Plan is
currently in reorganization or insolvency under and within the
meaning of Section 4241 or 4245 of ERISA or that such Parent Multi-
employer Plan intends to terminate or has been terminated under
Section 4041A of ERISA. Neither Parent nor any of its ERISA
Affiliates has any liability or obligation under any welfare plan
to provide benefits after termination of employment to any employee
or dependent other than as required by ERISA or as disclosed in the
Parent SEC Documents. As used herein, (i) "Parent Plan" means a
"pension plan" (as defined in Section 3(2) of ERISA (other than a
Parent Multi-employer Plan)) or a "welfare plan" (as defined in
Section 3(1) of ERISA) established or maintained by Parent or any
of its ERISA Affiliates or as to which Parent or any of its ERISA
Affiliates has contributed or otherwise may have any liability,
(ii) "Parent Multi-employer Plan" means a "Multi-employer plan" (as
defined in Section 4001(a)(3) of ERISA) to which Parent or any of
its ERISA Affiliates is or has been obligated to contribute or
otherwise may have any liability, and (iii) with respect to any
person, "ERISA Affiliate" means any trade or business (whether or
not incorporated) which is under common control or would be
considered a single employer with such person pursuant to Section
414(b), (c), (m) or (o) of the Code and the regulations promulgated
under those sections or pursuant to Section 400l(b) of ERISA and
the regulations promulgated thereunder.
Section 2.13 Compliance with Certain Laws. To the Knowledge of
Parent, the properties, assets and operations of Parent and its
Subsidiaries are in compliance in all material respects with all
applicable federal, state, local and foreign laws, rules and
regulations, orders, decrees, judgments, permits and licenses
relating to public and worker health and safety (collectively,
"Worker Safety Laws") and the protection and clean-up of the
environment and activities or conditions related thereto, including
without limitation, those relating to the generation, handling,
disposal, transportation or release of hazardous materials
(collectively, "Environmental Laws") except for any violations
that, individually or in the aggregate, would not have a Material
Adverse Effect on Parent. The term "hazardous materials" shall mean
those substances that are regulated by or form the basis for
liability under any applicable Environmental Laws.
Section 2.14 Liabilities. Except as fully reflected or
reserved against in the financial statements included in the Parent
SEC Documents, or disclosed in the footnotes thereto, Parent and
its Subsidiaries had no liabilities (including, without limitation,
tax liabilities and workmen's compensation liabilities) at the date
of such financial statements, absolute or contingent, other than
liabilities that, individually or in the aggregate, would not have
a Material Adverse Effect on the Parent, and, to the Knowledge of
Parent, had no liabilities (including, without limitation, tax
liabilities) that were not incurred in the ordinary course of
business other than liabilities that, individually or in the
aggregate, would not have a Material Adverse Effect on the Parent.
Section 2.15 Labor Matters. Neither Parent nor any of its
Subsidiaries is a party to any collective bargaining agreement or
labor contract except as set forth on Schedule 2.15 of the
Disclosure Schedule. To the Knowledge of Parent, neither Parent nor
any of its Subsidiaries has engaged in any unfair labor practice
with respect to any persons employed by or otherwise performing
services primarily for Parent or any of its Subsidiaries (the
"Parent Business Personnel"), and there is no unfair labor practice
complaint or grievance against Parent or any of its Subsidiaries by
the National Labor Relations Board or any comparable state agency
pending or, to the Knowledge of Parent, threatened in writing with
respect to the Parent Business Personnel, except where such unfair
labor practice, complaint or grievance would not have a Material
Adverse Effect on Parent. There is no labor strike, dispute,
slowdown or stoppage pending or, to the Knowledge of Parent,
threatened against or affecting Parent or any of its Subsidiaries
which may interfere with the respective business activities of
Parent or any of its Subsidiaries, except where such dispute,
strike or work stoppage would not have a Material Adverse Effect on
Parent.
Section 2.16 Intellectual Property. Parent and its
Subsidiaries have all patents, trademarks, trade names, service
marks, trade secrets, copyrights and other proprietary intellectual
property rights (collectively, "Intellectual Property Rights") that
are necessary in connection with the business of the Parent and its
Subsidiaries, taken as a whole, except where the failure to have
such Intellectual Property Rights would not have a Material Adverse
Effect on the Parent. To the Knowledge of the Parent, neither the
Parent nor any of its Subsidiaries has infringed any Intellectual
Property Rights of any third party other than any infringements
that, individually or in the aggregate, would not have a Material
Adverse Effect on the Company.
Section 2.17 Operations of Sub. Sub is a direct, wholly-owned
subsidiary of Parent, was formed solely for the purpose of engaging
in the transactions contemplated hereby, has engaged in no other
business activities and has conducted its operations only as
contemplated hereby.
Section 2.18 Financing. Parent has, or will have prior to the
Closing Date, sufficient funds available to fund the total Cash
Consideration contemplated by this Agreement and to pay all related
fees and expenses in connection with the consummation of the
transactions contemplated hereby.
Section 2.19 Brokers. Except as set forth on Schedule 2.19 of
the Disclosure Schedule, no broker, investment banker or other
person is entitled to any broker's, finder's or other similar fee
or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of
Parent.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as
follows:
Section 3.1 Organization, Standing and Power. The Company is
a corporation duly organized, validly existing and in good standing
under the laws of the State of Alabama and has the requisite
corporate power and authority to carry on its business as now being
conducted. Each Subsidiary of the Company is duly organized,
validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite
corporate (in the case of a Subsidiary that is a corporation) or
other power and authority to carry on its business as now being
conducted, except where the failure to be so organized, existing or
in good standing or to have such power or authority would not,
individually or in the aggregate, have a Material Adverse Effect on
the Company. The Company and each of its Subsidiaries are duly
qualified to do business, and are in good standing, in each
jurisdiction where the character of their properties owned or held
under lease or the nature of their activities makes such
qualification necessary, except where the failure to be so
qualified would not, individually or in the aggregate, have a
Material Adverse Effect on the Company.
Section 3.2 Capital Structure. As of the Effective Time, the
authorized capital stock of the Company will consist of 65,000,000
shares of Company Common Stock, par value $.01 per share, and
12,000,000 shares of Preferred Stock, par value $.01 per share
("Company Preferred Stock"). As of the date hereof (i)
7,355,846.189 shares of Company Common Stock were issued and
outstanding, all of which were validly issued, fully paid and
nonassessable and free of preemptive rights, except as set forth on
Schedule 3.2 of the Disclosure Schedule and (ii) no shares of
Preferred Stock are issued or outstanding and no shares are held in
the Company's treasury. Except as set forth on Schedule 3.2 of the
Disclosure Schedule, there are no options, warrants, calls, rights
or agreements to which the Company or any of its Subsidiaries is a
party or by which any of them is bound obligating the Company or
any of its Subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock of
the Company or any of its Subsidiaries or obligating the Company or
any of its Subsidiaries to grant, extend or enter into any such
option, warrant, call, right or agreement. Except as set forth on
Schedule 3.2 of the Disclosure Schedule, each outstanding share of
capital stock of each Subsidiary of the Company that is a
corporation is duly authorized, validly issued, fully paid and
nonassessable and each such share is owned by the Company or
another Subsidiary of the Company, free and clear of all security
interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on voting rights, charges and
other encumbrances of any nature whatsoever.
Section 3.3 Authority. The Board of Directors of the Company
has on or prior to the date of this Agreement (a) adopted this
Agreement in accordance with Alabama law, (b) resolved to recommend
the approval of this Agreement by the Company's shareholders and
(c) directed that this Agreement be submitted to the Company's
shareholders for approval. The Company has all requisite corporate
power and authority to enter into this Agreement and, subject to
approval by the shareholders of the Company of this Agreement, to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the
Company, subject to (x) approval of this Agreement by the
shareholders of the Company and (y) the filing of appropriate
Merger documents as required by Alabama law. This Agreement has
been duly executed and delivered by the Company and (assuming the
valid authorization, execution and delivery of this Agreement by
Parent and Sub) constitutes the valid and binding obligation of the
Company enforceable against the Company in accordance with its
terms except as enforcement may be limited by bankruptcy,
insolvency, moratorium or other similar laws relating to creditors
rights generally and except that the availability of equitable
remedies, including specific performance, is subject to judicial
discretion.
Section 3.4 Consents and Approvals: No Violation. Assuming
that all consents, approvals, authorizations and other actions
described in this Section 3.4 have been obtained and all filings
and obligations described in this Section 3.4 have been made,
except as set forth on Schedule 3.4 of the Disclosure Schedule, the
execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby and compliance
with the provisions hereof will not, result in any violation of or
default (with or without notice or lapse of time, or both) under,
or give to others a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit
under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the
Company or any of its Subsidiaries under, any provision of (i) the
Articles of Incorporation or Bylaws of the Company, (ii) any
provision of the comparable charter or organization documents of
any of the Company's Subsidiaries, (iii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license
applicable to the Company or any of its Subsidiaries (iv) any
shareholder agreement, or (v) any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to the Company or any
of its Subsidiaries or any of their respective properties or
assets, other than, in the case of clauses (ii), (iii) (iv) or (v),
any such violations, defaults, rights, liens, security interests,
charges or encumbrances that, individually or in the aggregate,
would not have a Material Adverse Effect on the Company, or prevent
the consummation of any of the transactions contemplated hereby. No
filing or registration with, or authorization, consent or approval
of, any Governmental Entity is required by or with respect to the
Company or any of its Subsidiaries in connection with the execution
and delivery of this Agreement by the Company or is necessary for
the consummation of the Merger and the other transactions
contemplated by this Agreement, except for (i) in connection, or in
compliance, with the provisions of the HSR Act, (ii) the filing of
the Articles of Merger with the Secretary and appropriate documents
with the relevant authorities of other states in which the Company
or any of its Subsidiaries is qualified to do business, (iii) such
filings and consents as may be required under any environmental,
health or safety law or regulation pertaining to any notification,
disclosure or required approval triggered by the Merger or by the
transactions contemplated by this Agreement, (iv) such filings and
consents as may be required under any state or foreign laws
pertaining to debt collection, the issuance of payment instruments
or money transmission, (v) applicable requirements, if any, of
Blue Sky Laws, and (vi) such other consents, orders,
authorizations, registrations, declarations and filings the failure
of which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect on the Company or prevent
the consummation of any of the transactions contemplated hereby.
Section 3.5 SEC Documents and Other Reports. The Company has,
since January 29, 1994, filed all documents and reports which it is
required to file with the SEC including, without limitation, an
Annual Report on Form 10-K for the fiscal years ended January 29,
1994, January 28, 1995 and February 3, 1996, and a Quarterly Report
on Form 10-Q for the quarter ended May 4, 1996 (the "Company SEC
Documents"). As of their respective dates, the Company SEC
Documents complied in all material respects with the requirements
of the Securities Act or the Exchange Act, as the case may be, and,
at the respective times they were filed (and as amended through the
date hereof), none of the Company SEC Documents contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading. The consolidated financial statements
(including, in each case, any notes thereto) of the Company
included in the Company SEC Documents complied as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto,
were prepared in accordance with generally accepted accounting
principles (except, in the case of the unaudited statements, as
permitted by Form 10-Q) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the
notes thereto) and fairly presented in all material respects the
consolidated financial position of the Company and its consolidated
Subsidiaries as at the respective dates thereof and the
consolidated results of their operations and their consolidated
cash flows for the periods then ended (subject, in the case of
unaudited statements, to any adjustments described therein and to
adjustments for inventories, receivables and other normal year-end
audit adjustments consistent with past practices). Except as
disclosed in the Company SEC Documents or as required by generally
accepted accounting principles, the Company has not, since February
3, 1996, made any change in the accounting principles, practices,
methods or policies applied in the preparation of financial
statements.
Section 3.6 Absence of Certain Changes or Events. Except as
set forth on Schedule 3.6 of the Disclosure Schedule, since
February 3, 1996, (A) the Company and its Subsidiaries have not
entered into any material oral or written agreement or other
transaction, that is not in the ordinary course of business or that
would result in a Material Adverse Effect on the Company, excluding
any changes and effects resulting from changes in economic,
regulatory or political conditions or changes in conditions
generally applicable to the industries in which the Company and
Subsidiaries of the Company are involved and except for any such
changes or effects resulting from this Agreement, the transactions
contemplated hereby or the announcement thereof; (B) the Company
and its Subsidiaries have not sustained any loss or interference
with their business or properties from fire, flood, windstorm,
accident or other calamity (whether or not covered by insurance)
that has had a Material Adverse Effect on the Company; (C) other
than any indebtedness incurred by the Company after the date hereof
as permitted by Section 4. l(b)(v), there has been no material
change in the consolidated indebtedness of the Company and its
Subsidiaries, and no dividend or distribution of any kind declared,
paid or made by the Company on any class of its stock; and (D)
there has been no event causing a Material Adverse Effect on the
Company, excluding any changes and effects resulting from changes
in economic, regulatory or political conditions or changes in
conditions generally applicable to the industries in which the
Company and Subsidiaries of the Company are involved and except for
any such changes or effects resulting from this Agreement, the
transactions contemplated hereby or the announcement thereof.
Section 3.7 Registration Statement and Prospectus. None of the
information to be supplied by the Company for inclusion or
incorporation by reference in the Registration Statement or the
Prospectus will (i) in the case of the Registration Statement, at
the time it becomes effective, contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein
not misleading or (ii) in the case of the Prospectus, at the time
of the mailing of the Prospectus, the time of each of the Company
Shareholder Meeting and the Company Noteholder Approval, and at the
Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any
time prior to the Effective Time any event with respect to the
Company, its officers and directors or any of its Subsidiaries
shall occur which is required to be described in the Prospectus or
the Registration Statement, such event shall be so described, and
an appropriate amendment or supplement shall be promptly filed with
the SEC and, as required by law, disseminated to the shareholders
and noteholders of the Company. The Registration Statement will
comply (with respect to the Company) as to form in all material
respects with the provisions of the Securities Act.
Section 3.8 Permits and Compliance. Each of the Company and
its Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any
Governmental Entity which, to the Knowledge of the Company (as
hereinafter defined), are necessary for the Company or any of its
Subsidiaries to own, lease and operate its properties or to carry
on its business as it is now being conducted (the "Company
Permits") except where the failure to have any of the Company
Permits would not, individually or in the aggregate, have a
Material Adverse Effect on the Company, and, as of the date of this
Agreement, no suspension or cancellation of any of the Company
Permits is pending or, to the Knowledge of the Company threatened,
except where the suspension or cancellation of any of the Company
Permits would not, individually or in the aggregate, have a
Material Adverse Effect on Company. Neither the Company nor any of
its Subsidiaries is in violation of (A) its Articles of
Incorporation, Bylaws or other organizational document, (B) any
applicable law, ordinance, administrative or governmental rule or
regulation or (C) any order, decree or judgment of any Governmental
Entity having jurisdiction over the Company or any of its
Subsidiaries, except, in the case of clauses (A), (B) and (C), for
any violations that, individually or in the aggregate, would not
have a Material Adverse Effect on the Company. Except as disclosed
in the Company SEC Documents filed prior to the date of this
Agreement, as of the date hereof there is no contract or agreement
that is material to the business, financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole.
Except as set forth in the Company SEC Documents, prior to the date
of this Agreement, no event of default or event that, but for the
giving of notice or the lapse of time or both, would constitute an
event of default exists or, upon the consummation by the Company of
the transactions contemplated by this Agreement, will exist under
any indenture, mortgage, loan agreement, note or other agreement or
instrument for borrowed money, any guarantee of any agreement or
instrument for borrowed money or any lease, contractual license or
other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any such
Subsidiary is bound or to which any of the properties, assets or
operations of the Company or any such Subsidiary is subject, other
than any defaults that, individually or in the aggregate, would not
have a Material Adverse Effect on the Company. Set forth on
Schedule 3.8 to this Agreement is a description of (i) all store
leases and leases for leased departments to which the Company or
any of its Subsidiaries is a party or by which the Company or any
such Subsidiary is bound or to which any of the properties, assets
or operations of the Company or any such Subsidiary is subject and
all amendments thereto, and (ii) any material changes to the amount
and terms of the indebtedness of the Company and its Subsidiaries
as described in the Company's Annual Report on Form 10-K.
"Knowledge of the Company" means the actual knowledge of any of the
Chief Executive Officer, Chief Operating Officer, General Counsel
and Chief Financial Officer of the Company.
Section 3.9 Tax Matters. Except as set forth on Schedule 3.9,
each of the Company and its Subsidiaries has filed all Tax Returns
required to have been filed (or extensions have been duly obtained)
and has paid all Taxes required to have been paid by it, except
where failure to file such Tax Returns or pay such Taxes would not,
in the aggregate, have a Material Adverse Effect on the Company.
Section 3.10 Actions and Proceedings. Except as set forth on
the Company SEC Documents, there are no outstanding orders,
judgments, injunctions, awards or decrees of any Governmental
Entity against or involving the Company or any of its Subsidiaries,
that, individually or in the aggregate, would have a Material
Adverse Effect on the Company. Except as set forth on Schedule 3.10
of the Disclosure Schedule, as of the date of this Agreement, there
are no actions, suits or claims or legal, administrative or
arbitrative proceedings or investigations pending or, to the
Knowledge of the Company, threatened against or involving the
Company or any of its Subsidiaries or any of its properties, assets
or business or any Company Plan that, individually or in the
aggregate, would have a Material Adverse Effect on the Company. As
of the date hereof there are no actions, suits, labor disputes or
other litigation, legal or administrative proceedings or
governmental investigations pending or, to the Knowledge of the
Company, threatened against or affecting the Company or any of its
Subsidiaries or any of its properties, assets or business relating
to the transactions contemplated by this Agreement.
Section 3.11 Certain Agreements. As of the date of this
Agreement, except as set forth on Schedule 3.11 of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a
party to any oral or written agreement or plan, including any stock
option plan, stock appreciation rights plan, restricted stock plan
or stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. No holder of any option to
purchase shares of Company Common Stock, or shares of Company
Common Stock granted in connection with the performance of services
for the Company or its Subsidiaries, is or will be entitled to
receive cash from the Company or any Subsidiary in lieu of or in
exchange for such option or shares as a result of the transactions
contemplated by this Agreement. Neither the Company nor any
Subsidiary is a party to any termination benefits agreement or
severance agreement or employment agreement one trigger of which
would be the consummation of the transactions contemplated by this
Agreement, except as set forth on Schedule 3.11 of the Disclosure
Schedule.
Section 3.12 ERISA. Each Company Plan complies in all
material respects with the Code and all other applicable statutes
and governmental rules and regulations, including but not limited
to COBRA, and (i) no "reportable event" (within the meaning of
Section 4043 of ERISA) has occurred with respect to any Company
Plan, (ii) neither the Company nor any of its ERISA Affiliates has
withdrawn from any Company Multi-employer Plan or instituted, or is
currently considering taking, any action to do so, (iii) no action
has been taken, or is currently being considered, to terminate any
Company Plan subject to Title IV of ERISA, and (iv) the Company and
its ERISA Affiliates have complied in all material respects with
the continued medical coverage requirements of COBRA. No Company
Plan, nor any trust created thereunder, has incurred any
"accumulated funding deficiency" (as defined in Section 302 of
ERISA, whether or not waived. With respect to any Company Plan
which is subject to Title IV of ERISA, the present value of the
liabilities (as determined on a terminated plan basis) do not
exceed the fair market value of the Plan assets as of the most
recent valuation date. With respect to the Company Plans, no event
has occurred in connection with which Company or any ERISA
Affiliate would be subject to any liability under the terms of such
Company Plans, ERISA, the Code or any other applicable law which
would have a Material Adverse Effect on Company. All Company Plans
that are intended to be qualified under Section 401(a) of the Code
have been determined by the Internal Revenue Service to be so
qualified, and to the Knowledge of Company, there is no reason why
any Company Plan is not so qualified in operation. Neither Company
nor any of its ERISA Affiliates has been notified by any Company
Multi-employer Plan that such Company Multi-employer Plan is
currently in reorganization or insolvency under and within the
meaning of Section 4241 or 4245 of ERISA or that such Company
Multi-employer Plan intends to terminate or has been terminated
under Section 4041A of ERISA. Neither Company nor any of its ERISA
Affiliates has any liability or obligation under any welfare plan
to provide benefits after termination of employment to any employee
or dependent other than as required by ERISA or as disclosed in the
Company SEC Documents. As used herein, (i) "Company Plan" means a
"pension plan" (as defined in Section 3(2) of ERISA (other than a
Company Multi-employer Plan)) or a "welfare plan" (as defined in
Section 3(1) of ERISA) established or maintained by Company or any
of its ERISA Affiliates or as to which Company or any of its ERISA
Affiliates has contributed or otherwise may have any liability and
(ii) "Company Multi-employer Plan" means a "Multi-employer plan"
(as defined in Section 4001(a)(3) of ERISA) to which Company or any
of its ERISA Affiliates is or has been obligated to contribute or
otherwise may have any liability.
Section 3.13 Compliance with Certain Laws. To the Knowledge
of the Company, the properties, assets and operations of the
Company and its Subsidiaries are in compliance in all material
respects with all applicable Worker Safety Laws, except for any
violations that, individually or in the aggregate, would not have
a Material Adverse Effect on the Company.
Section 3.14 Liabilities. Except as fully reflected or
reserved against in the financial statements included in the
Company SEC Documents, or disclosed in the footnotes thereto, the
Company and its Subsidiaries had no liabilities (including, without
limitation, tax liabilities and workmen's compensation liabilities)
at the date of such financial statements, absolute or contingent,
other than liabilities that, individually or in the aggregate,
would not have a Material Adverse Effect on the Company, and, to
the Knowledge of the Company, had no liabilities (including,
without limitation, tax liabilities) that were not incurred in the
ordinary course of business other than liabilities that,
individually or in the aggregate, would not have a Material Adverse
Effect on the Company.
Section 3.15 Labor Matters. Neither the Company nor any of
its Subsidiaries is a party to any collective bargaining agreement
or labor contract. To the Knowledge of the Company, neither the
Company nor any of its Subsidiaries has engaged in any unfair labor
practice with respect to any persons employed by or otherwise
performing services primarily for the Company or any of its
Subsidiaries (the "Company Business Personnel"), and there is no
unfair labor practice complaint or grievance against the Company or
any of its Subsidiaries by the National Labor Relations Board or
any comparable state agency pending or, to the Knowledge of the
Company, threatened in writing with respect to the Company Business
Personnel, except where such unfair labor practice, complaint or
grievance would not have a Material Adverse Effect on the Company.
There is no labor strike, dispute, slowdown or stoppage pending or,
to the Knowledge of the Company, threatened against or affecting
the Company or any of its Subsidiaries which may interfere with the
respective business activities of the Company or any of its
Subsidiaries, except where such dispute, strike or work stoppage
would not have a Material Adverse Effect on the Company.
Section 3.16 Intellectual Property. The Company and its
Subsidiaries have all Intellectual Property Rights that are
necessary in connection with the business of the Company and its
Subsidiaries, taken as a whole, except where the failure to have
such Intellectual Property Rights would not have a Material Adverse
Effect on the Company. To the Knowledge of the Company, neither the
Company nor any of its Subsidiaries has infringed any Intellectual
Property Rights of any third party other than any infringements
that, individually or in the aggregate, would not have a Material
Adverse Effect on the Company.
Section 3.17 Environmental Matters.
(a) Except as disclosed on Schedule 3.17 of the
Disclosure Schedule and except for matters which will not,
individually or in the aggregate, have a Material Adverse Effect,
the Company has not received any oral or written notice of,
nor, to the Knowledge of the Company, is there any existing or
pending violation, citation, claim or complaint relating to
the business of the Company or any facility now or previously owned
or operated by the Company arising under any federal laws
relating to environmental protection, including without
limitation, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response Compensation and
Liability Act, the Superfund Amendments and Reauthorization
Act, the Toxic Substances Control Act, the Safe Drinking Water Act,
the Federal Water Pollution Control Act (Clean Water Act), the
Clean Air Act, and antipollution, waste control and disposal
and environmental provisions of similar statutes or ordinances of
any state or local governmental authorities, and all
regulations, standards and guidelines enacted or promulgated
pursuant thereto and all permits and authorizations issued in
connection therewith (collectively, "Environmental Matters").
(b) Except as set forth in Schedule 3.17 of the
Disclosure Schedule: to the Knowledge of the Company (i) no
underground tanks are now or have been located at any facility
now or previously owned or operated by the Company, and (ii) except
for matters which will not, individually or in the aggregate,
have a Material Adverse Effect, no toxic or hazardous
substances have been generated, transported, treated, stored,
disposed of on or from or otherwise deposited in or on or
allowed to emanate from any such facility (irrespective of
whether such substances remain at the facility or were transferred
to or otherwise disposed of off site), including, without
limitation, the surface waters and subsurface waters thereof,
which may support a claim or cause of action under any federal,
state or local environmental statutes, ordinances, regulations or
guidelines.
Section 3.18 Required Vote or Consent of Company Shareholders
and Noteholders. The affirmative vote of the holders of not less
than two-thirds of the outstanding shares of Company Common Stock
is required to approve the transactions contemplated by this
Agreement. No other vote of the shareholders of the Company is
required by law, the Articles of Incorporation or By-laws of the
Company or otherwise in order for the Company to consummate the
Merger and the transactions contemplated hereby. The affirmative
vote of the holders of not less than a majority in aggregate
principal amount of the Company's 9 7/8 Senior Subordinated Notes
(the "Senior Notes") is required to approve a Supplemental
Indenture to the Indenture dated as of July 15, 1993, between
Parisian, Inc. and AmSouth Bank N.A., Trustee (the "Indenture") to
allow the transactions contemplated by this Agreement to be
consummated without triggering the right of the Noteholders to
require the repurchase of the Senior Notes.
Section 3.19 Brokers. Except as set forth on Schedule 3.19 of
the Disclosure Schedule, no broker, investment banker or other
person is entitled to any broker's, finder's or other similar fee
or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the
Company.
ARTICLE 4.
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business Pending the Merger.
(a) Actions by Parent. Except as expressly permitted by
clauses (i) through (x) of this Section 4.1(a), during the
period from the date of this Agreement through the Effective Time,
Parent shall, and shall cause each of its Subsidiaries to, in
all material respects carry on its business in the ordinary
course of its business as currently conducted and, to the extent
consistent therewith, use reasonable good faith efforts to
preserve intact its current business organizations, keep
available the services of its current officers and employees and
preserve its relationships with customers, suppliers and
others having business dealings with it to the end that its
goodwill and ongoing business shall be unimpaired at the Effective
Time. Without limiting the generality of the foregoing, and
except as otherwise expressly contemplated by or necessary to
effect this Agreement, Parent shall not, and shall not permit
any of its Subsidiaries to, without the prior written consent of
the Company:
(i) (w) declare, set aside or pay any dividends on, or
make any other actual, constructive or deemed
distributions in respect of, any of its capital stock, or
otherwise make any payments to its shareholders in their capacity
as such (other than dividends and other distributions by
Subsidiaries), (x) other than in the case of any
Subsidiary, split, combine or reclassify any of its capital stock
or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for
shares of its capital stock or (y) purchase, redeem or otherwise
acquire any shares of capital stock of Parent or any
other securities thereof or those of any Subsidiary or
any other securities thereof or any rights, warrants or options to
acquire any such shares or other securities;
(ii) issue, deliver, sell pledge, dispose of or otherwise
encumber any shares of its capital stock, any other
voting securities or equity equivalent or any securities
convertible into, or any rights, warrants or options to acquire any
such shares, voting securities, equity equivalent or
convertible securities, other than (A) the issuance of
stock options and shares of Parent Common Stock to employees of
Parent or any of its Subsidiaries in the ordinary course
of business consistent with past practice, (B) the
issuance of Parent securities pursuant to the Parent Rights Plan,
and (C) the issuance by any wholly-owned Subsidiary of
Parent of its capital stock to Parent or another wholly-
owned Subsidiary of Parent;
(iii) amend its Charter or Bylaws;
(iv) alter (through merger, liquidation, reorganization,
restructuring or in any other fashion) the corporate
structure or ownership of the Parent or any Subsidiary;
(v) incur any indebtedness for borrowed money, guarantee
any such indebtedness or make any loans, advances or
capital contributions to, or other investments in, any
other person, other than (A) in the ordinary course of business
consistent with past practice, (B) indebtedness, loans,
advances, capital contributions and investments between
Company and any of its wholly-owned Subsidiaries or between any of
such wholly-owned Subsidiaries (C) in connection with the
consummation of the transactions contemplated hereby, and
(D) as necessary in connection with any acquisition
permitted in Section 4.1(a)(vi) hereof ;
(vi) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial
portion of the assets of or equity in, or by any other manner, any
business or any corporation, partnership, association or
other business organization or division thereof or
otherwise acquire or agree to acquire any assets, unless (i) the
entering into a definitive agreement relating to or the
consummation of such acquisition, merger, consolidation
or purchase would not (A) impose any material delay in
the obtaining of, or significantly increase the risk of not
obtaining, any authorizations, consents, orders,
declarations or approvals of any Governmental Entity
necessary to consummate the Merger or the expiration or termination
of any applicable waiting period, (B) significantly
increase the risk of any Governmental Entity entering an
order prohibiting the consummation of the Merger or (C)
significantly increase the risk of not being able to remove any
such order on appeal or otherwise, and (ii) in the case
of any acquisitions, mergers, consolidations or
purchases, the asset purchase price or equity purchase price for
which Parent is responsible does not exceed $125 million
in the aggregate and which does not materially change the
ratio of debt to total capitalization of Parent;
(vii) knowingly violate or knowingly fail to perform any
material obligation or duty imposed upon it or any
Subsidiary by any applicable material federal, state or local
law, rule, regulation, guideline or ordinance;
(viii) take any action, other than reasonable and usual
actions in the ordinary course of business consistent
with past practice, with respect to accounting policies or
procedures (other than actions required to be taken by generally
accepted accounting principles);
(ix) take any action or knowingly omit to take any action
which would cause any of its representations or warrants
contained in this Agreement to be untrue or result in a
breach of any covenant made by it in this Agreement; or
(x) authorize, recommend or announce an intention to do
any of the foregoing, or enter into any contract,
agreement, commitment or arrangement to do any of the
foregoing.
(b) Actions by the Company. Except as expressly
permitted by clauses (i) through (xiii) of this Section
4.l(b), during the period from the date of this Agreement through
the Effective Time, the Company shall, and shall cause each of
its Subsidiaries to, in all material respects, carry on its
business in, the ordinary course of its business as currently
conducted and, to the extent consistent therewith, use
reasonable good faith efforts to preserve intact its current
business organizations, keep available the services of its current
officers and employees and preserve its relationships with
customers, suppliers and others having business dealings with
it to the end that its goodwill and ongoing business shall be
unimpaired at the Effective Time. Without limiting the generality
of the foregoing, and except as otherwise expressly
contemplated by or necessary to effect this Agreement, the
Company shall not, and shall not permit any of its Subsidiaries to,
without the prior written consent of Parent:
(i) (w) declare, set aside or pay any dividends on, or
make any other actual, constructive or deemed
distributions in respect of, any of its capital stock, or
otherwise make any payments to its shareholders in their capacity
as such, (x) other than in the case of any Subsidiary,
split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its
capital stock or (y) purchase, redeem or otherwise
acquire any shares of capital stock of the Company or any other
securities thereof or any rights, warrants or options to
acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge, dispose of or
otherwise encumber any shares of its capital stock, any
other voting securities or equity equivalent or any securities
convertible into, or any rights, warrants or options to
acquire any such shares, voting securities, equity
equivalent or convertible securities;
(iii) amend its Articles of Incorporation or Bylaws;
(iv) sell, lease or otherwise dispose of or agree to
sell, lease or otherwise dispose of, any of its assets,
other than (A) transactions that are in the ordinary course of
business consistent with past practice and not material to
the Company and its Subsidiaries taken as a whole and (B)
as may be required by any Governmental Entity;
(v) incur any indebtedness for borrowed money, guarantee
any such indebtedness or make any loans, advances or
capital contributions to, or other investments in, any
other person, other than (A) in the ordinary course of business
consistent with past practice, and (B) indebtedness,
loans, advances, capital contributions and investments
between Company and any of its wholly-owned Subsidiaries or between
any of such wholly-owned Subsidiaries;
(vi) alter (through merger, liquidation, reorganization,
restructuring or in any other fashion) the corporate
structure or ownership of the Company or any Subsidiary;
(vii) knowingly violate or knowingly fail to perform any
material obligation or duty imposed upon it or any
Subsidiary by any applicable material federal, state or local
law, rule, regulation, guideline or ordinance;
(viii) enter into or adopt, or amend any existing,
severance plan, agreement or arrangement or enter into or
amend any Company Plan or employment or consulting
agreement, except one that can be terminated on 30-days' notice
without cost, the payment of any penalty, or termination
fee, other than as required by law;
(ix) increase the compensation payable or to become
payable to its officers or employees, except for
increases in the ordinary course of business consistent with
past practice in salaries or wages of employees of the Company
or any of its Subsidiaries who are not officers of the
Company or any of its Subsidiaries, or, except pursuant
to existing plans or policies, grant any severance or termination
pay to, or enter into any employment or severance
agreement with, any director or officer of the Company or
any of its Subsidiaries, or establish, adopt, enter into, or,
except as may be required to comply with applicable law,
amend or take action to enhance or accelerate any rights
or benefits under, any labor, collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of
any director, officer or employee;
(x) take any action, other than reasonable and usual
actions in the ordinary course of business consistent
with past practice, with respect to accounting policies or
procedures (other than actions required to be taken by generally
accepted accounting principles);
(xi) take any action or knowingly omit to take any action
which would cause any of its representations or warrants
contained in this Agreement to be untrue or result in a
breach of any covenant made by it in this Agreement;
(xii) except for state and federal tax returns due for
the Company's fiscal year-ended February 3, 1996, make
any tax election or settle or compromise any material federal,
state, local or foreign income tax liability; provided,
however, that Parent shall not unreasonably withhold its
consent to the Company's settlement or compromise of any
issues raised in connection with the pending IRS audit of the
Company's federal income tax returns for its fiscal years
ending in 1993, 1994 and 1995; or
(xiii) authorize, recommend, or announce an intention to
do any of the foregoing, or enter into any contract,
agreement, commitment or arrangement to do any of the
foregoing.
Section 4.2 No Solicitation. From and after the date hereof,
neither the Company, nor any members of the Company's Board of
Directors will, and each will use its best efforts to cause any of
its officers, employees, affiliates, attorneys, financial advisors,
agents or other representatives or those of any of its Subsidiaries
not to, directly or indirectly, solicit, initiate or encourage
(including by way of furnishing information) any takeover proposal
or offer from any person, or engage in or continue discussions or
negotiations relating thereto; provided, however, that the Company
may engage in discussions or negotiations with, or furnish
information concerning itself and its Subsidiaries, business,
properties or assets to, any third party which makes a Takeover
Proposal (as hereinafter defined) if the Board of Directors of the
Company concludes in good faith on the basis of a written opinion
of its outside counsel, Berkowitz, Lefkovits, Isom & Kushner, a
Professional Corporation, that the failure to take such action
would violate the fiduciary obligations of such Board under
applicable law. The Company will promptly (but in no case later
than 24 hours) notify the Parent of any Takeover Proposal,
including the material terms and conditions thereof (provided that
neither need disclose the identity of the person or group making
such Takeover Proposal). As used in this Agreement, "Takeover
Proposal" shall mean any proposal or offer, or any expression of
interest by any third party relating to the Company's willingness
or ability to receive or discuss a proposal or offer, other than a
proposal or offer by Parent or any of its Subsidiaries or as
permitted under this Agreement, for a tender or exchange offer, a
merger, consolidation or other business combination involving the
Company or any of its Subsidiaries or any proposal to acquire in
any manner a substantial equity interest in, or a substantial
portion of the assets of, the Company or any of its Subsidiaries.
Section 4.3 Third Party Standstill Agreements. During the
period from the date of this Agreement through the Effective Time,
the Company shall not terminate, amend, modify or waive any
provision of any confidentiality or standstill agreement, entered
into in connection with any potential business combination, sale of
all or substantially all of the assets, merger or transaction of
comparable character involving the Company or any of its
Subsidiaries, to which the Company or any of its Subsidiaries is
a party (other than any involving Parent), unless the Board of
Directors of the Company concludes in good faith on the basis of
the advice of its outside counsel (who may be its regularly engaged
outside counsel), that the failure to terminate, amend, modify or
waive any such confidentiality or standstill agreement would
violate the fiduciary obligations of the Board under applicable
law. Subject to such fiduciary duties, during such period, the
Company agrees to enforce, to the fullest extent permitted under
applicable law, the provisions of any such agreements, including,
but not limited to, obtaining injunctions to prevent any breaches
of such agreements and to enforce specifically the terms and
provisions thereof in any court of the United States or any state
thereof having jurisdiction.
Section 4.4 Tax Certification. Within thirty days prior to
the Effective Time, the Company shall provide to Parent a
certificate signed by an Officer of the Company to the effect that
the Company is not, nor has it been within five years of the date
thereof, a "United States real property holding corporation" as
defined in Section 897 of the Code.
ARTICLE 5.
ADDITIONAL AGREEMENTS
Section 5.1 Shareholder and Noteholder Approvals. The Company
shall call a meeting of its shareholders (the "Company Shareholder
Meeting") to be held as promptly as practicable for the purpose of
considering the approval of this Agreement. The Company shall
participate in the process seeking approval (the "Company
Noteholder Approval") by the Noteholders of modifications to the
Indenture as provided in Section 5.11 (the modified Indenture being
hereinafter referred to as the "Supplemental Indenture"). The
Company will, through its Board of Directors, recommend to its
shareholders approval of such Agreement and shall not withdraw such
recommendation; provided, however, that the Board of Directors
shall not be required to make, and shall be entitled to withdraw,
such recommendation if such Board concludes in good faith on the
basis of the written opinion of Berkowitz, Lefkovits, Isom &
Kushner, a Professional Corporation, that the making of, or the
failure to withdraw, such recommendation would violate the
fiduciary obligations of such Board under applicable law. The Board
of Directors of the Company will not rescind its declaration that
the Merger is advisable, fair to and in the best interests of the
Company and its shareholders unless the Board concludes in good
faith on the basis of the written opinion of Berkowitz, Lefkovits,
Isom & Kushner, a Professional Corporation, that the failure to
rescind such determination would violate the fiduciary obligations
of such Board under applicable law.
Section 5.2 Preparation of the Registration Statement and the
Prospectus. The Company and Parent shall promptly prepare and file
with the SEC the Prospectus and Parent shall prepare and file with
the SEC the Registration Statement, in which the Prospectus will be
included as a prospectus. Each of Parent and the Company shall use
its reasonable best efforts to have the Registration Statement
declared effective under the Securities Act as promptly as
practicable after such filing. As promptly as practicable after the
Registration Statement shall have become effective, each of Parent
and the Company shall mail the Prospectus to the Company's
shareholders and Noteholders. Parent shall also take any action
(other than qualifying to do business in any jurisdiction in which
it is now not so qualified) required to be taken under any
applicable federal or state securities laws in connection with the
issuance of Parent Common Stock in the Merger, and the Company
shall furnish all information concerning the Company and the
holders of Company Common Stock as may be reasonably requested in
connection with any such action. No amendment or supplement to the
Prospectus or the Registration Statement will be made by Parent or
the Company without the prior approval of the other party. Parent
and the Company each will advise the other, promptly after it
receives notice thereof, of the time when the Registration
Statement has become effective or any supplement or amendment has
been filed, of the issuance of any stop order, of the suspension of
the qualification of the Parent Common Stock issuable in connection
with the Merger for offering or sale in any jurisdiction, or of any
request by the SEC for amendment of the Prospectus or the
Registration Statement or comments thereon and responses thereto or
requests by the SEC for additional information.
Section 5.3 Access to Information. Subject to currently
existing contractual and legal restrictions applicable to Parent or
to the Company or any of their Subsidiaries, each of Parent and the
Company shall, and shall cause each of its Subsidiaries to, afford
to the accountants, counsel, financial advisors and other
representatives of the other party hereto reasonable access to, and
permit them to make such inspections as they may reasonably require
of, during normal business hours during the period from the date of
this Agreement through the Effective Time, all their respective
properties, books, contracts, commitments and records. All such
information obtained by the parties pursuant to this Section 5.1
shall be subject to the terms of the Confidentiality Agreements
dated May 2, 1996 and June 6, 1996 (the "Confidentiality
Agreements").
Section 5.4 Fees and Expenses.
(a) Except as otherwise provided herein, whether or not
the transactions contemplated herein shall be consummated,
each party shall pay its own expenses in connection with this
Agreement and the transactions contemplated herein.
(b) If:
(i) any event referred to in Section 7.1(h) occurs,
this Agreement is terminated thereafter by the Company or
Parent (whether or not pursuant to such clause) and prior to
such termination the stockholders of the Company did not approve
this Agreement;
(ii) (y) this Agreement is terminated by the
Company or Parent at a time when Parent is entitled to
terminate this Agreement pursuant to Section 7.1(e), and (z) prior
to the Company Shareholder Meeting but after the date of this
Agreement a Company Third Party Acquisition Event has
occurred;
(iii) this Agreement is terminated by the Company or
Parent pursuant to Section 7.1(g); or
(iv) this Agreement is terminated by Parent pursuant
to Section 7.1(h) following the occurrence of a Company Third
Party Acquisition Event;
then, in each case, the Company shall (without prejudice to
any other rights of Parent against the Company) pay in cash to
Parent all of its expenses reasonably incurred in connection
with the transactions contemplated pursuant to this Agreement, but
excluding "in-house" expenses such as compensation paid to
Parent's Officers and employees in connection herewith (the
"Parent Expenses"), which Parent Expenses shall not exceed $2.5
million, such payment to be made promptly, but in no event
later than the later of the second business day following, (i)
such termination or (ii) the receipt by the Company of reasonable
substantiation of such Parent Expenses. In the event that a
Company Clause D event (as hereinafter defined) occurs within
twelve (12) months following such termination, and is
thereafter consummated, then the Company shall pay Parent an
aggregate fee of $5.5 million in cash less the actual amount
of Parent Expenses previously paid. Such payment shall be
made within two (2) business days following consummation of the
Clause D Event.
A "Company Third Party Acquisition Event" means any of the
following events: (A) any Person other than Parent or its
Affiliates, acquires or becomes the beneficial owner of 30% or more
of the outstanding shares of Company Common Stock; (B) any new
group is formed which, at the time of formation, beneficially owns
30% or more of the outstanding shares of Company Common Stock
(other than a group which includes or may reasonably be deemed to
include Parent or any of its Affiliates); (C) any Person (other
than Parent or its Affiliates) shall have publicly proposed any
bona fide merger, consolidation or acquisition of all or
substantially all the assets of the Company, or other similar
business combination involving the Company; (D) the Company enters
into, or announces that it proposes to enter into, an agreement,
including, without limitation, an agreement in principle, providing
for a merger or other business combination involving the Company or
the acquisition of a substantial interest in, or a substantial
portion of the assets, business or operations of, the Company
(other than the transactions contemplated by this Agreement) (a
"Company Clause D Event"); (E) any Person (other than Parent or its
Affiliates) is granted any option or right, conditional or
otherwise, to acquire or otherwise become the beneficial owner of
shares of Company Common Stock which, together with all shares of
Company Common Stock beneficially owned by such Person, results or
would result in such Person being the beneficial owner of 30% or
more of the outstanding shares of Company Common Stock; or (F)
there is a public announcement with respect to a plan or intention
by the Company or any Person, other than Parent and its Affiliates,
to effect any of the foregoing transactions. For purposes of this
Section 5.4, the terms "group" and "beneficial owner" shall be
defined by reference to Section 13(d) of the Exchange Act even
though Section 13(d) of the Exchange Act may not apply to the
Company.
A "Superior Company Acquisition Transaction" means the event
referred to in clause (D) of Company Third Party Acquisition Event
provided that the financial and other terms of the transaction
referred to therein are, when considered in the aggregate, more
favorable to the Company's shareholders than the financial and
other terms of the Merger.
(c) Parent and the Company acknowledge that the
agreements contained in Section 5.4(b) are an integral part of
the transactions contemplated by this Agreement, and that,
without these agreements, Parent and Sub and the Company would not
enter into this Agreement. Accordingly, if the Company fails
promptly to pay the amount due pursuant to Section 5.4(b),
and, to obtain such payment, Parent or Sub commences a suit which
results in a judgment for the fee set forth in Section 5.4(b),
the Company shall pay to Parent or Sub its costs and expenses
(including attorneys' fees) in connection with such suit together
with interest on the amount of the fee at the prime rate of
NationsBank of North Carolina, N.A., in effect on the date
such payment was required to be made.
Section 5.5 Reasonable Good Faith Efforts.
(a) Upon the terms and subject to the conditions set
forth in this Agreement, each of the parties agrees to use
reasonable good faith efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Merger and the
other transactions contemplated by this Agreement, including,
but not limited to: (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from all
Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental
Entities) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity (including those
in connection with the HSR Act and State Takeover Approvals,
if any), (ii) the obtaining of all necessary consents,
approvals or waivers from third parties, (iii) the obtaining of any
requisite shareholder and Noteholder votes or consents,
shareholder investor consents, or other necessary corporate
approvals, and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions
contemplated by this Agreement. No party to this Agreement
shall consent to any voluntary delay of the consummation of the
Merger at the behest of any Governmental Entity without the
consent of the other parties to this Agreement, which consent
shall not be unreasonably withheld.
(b) Public Announcements. The initial press release
relating to this Agreement shall be a joint press release and
thereafter the Company and Parent each shall consult with the
other prior to issuing any press releases or otherwise making
public announcements with respect to the Merger and the other
transactions contemplated by this Agreement and prior to
making any filings with any third party and/or any Governmental
Entity (including any national securities interdealer
quotation service) with respect thereto, except as may be
required by law or by obligations pursuant to any listing agreement
with or rules of NASDAQ.
Section 5.6 Securities Filings. From the date hereof to the
Effective Time and thereafter, each of Parent and Company shall
timely file all reports required to be filed by it under the
Exchange Act, including, without limitation, the timely filing of
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Section 5.7 Indemnification. From and after the Effective
Time, Parent agrees to, and to cause the Surviving Corporation to,
indemnify and hold harmless all past and present officers and
directors of the Company and of its Subsidiaries to the same extent
such persons are indemnified as of the date of this Agreement by
the Company pursuant to the Company's Articles of Incorporation and
By-Laws in existence on the date hereof for acts or omissions
occurring at or prior to the Effective Time. Parent shall cause
the Surviving Corporation to provide, for an aggregate period of
not more than two years from the Effective Time, the Company's
current directors and officers an insurance and indemnification
policy that provides coverage for events occurring prior to the
Effective Time (the "D&O Insurance") that is no less favorable than
the Company's existing policy or, if substantially equivalent
insurance coverage is unavailable, the best available coverage;
provided, however, that the Surviving Corporation shall not be
required to pay an annual premium for the D&O Insurance in excess
of 125 percent of the last annual premium paid prior to the date
hereof.
Section 5.8 Employee Benefits. Parent agrees to cause the
Surviving Corporation to provide to the current employees of the
Company employee benefits (including, without limitation, health,
life and disability insurance, retirement benefits and other
employee benefits) which are no less favorable to such employees
than those provided by either (i) the Company currently or (ii)
the Parent for employees in similar positions, as such employee
benefits may be provided generally from time to time, the choice of
which set of benefits to be in Parent's sole discretion.
Section 5.9 State Takeover Laws. If any "fair price,"
"business combination" or "control share acquisition" statute or
other similar statute or regulation shall become applicable to the
transactions contemplated hereby, Parent and the Company and their
respective Boards of Directors shall use their reasonable best
efforts to grant such approvals and take such actions as are
necessary so that the transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated
hereby and otherwise act to minimize the effects of any such
statute or regulation on the transactions contemplated hereby.
Section 5.10 Notification of Certain Matters. Parent shall use
its reasonable best efforts to give prompt notice to the Company,
and the Company shall use its reasonable best efforts to give
prompt notice to Parent, of: (i) the occurrence, or non-occurrence,
of any event the occurrence, or non-occurrence, of which it is
aware and which would be reasonably likely to cause (x) any
representation or warranty contained in this Agreement to be untrue
or inaccurate in any material respect or (y) any covenant,
condition or agreement contained in this Agreement not to be
complied with or satisfied in all material respects, (ii) any
failure of Parent or the Company, as the case may be, to comply in
a timely manner with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder or (iii)
any change or event which would be reasonably likely to have a
Material Adverse Effect on Parent or the Company, as the case may
be; provided, however, that the delivery of any notice pursuant to
this Section 5.10 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
Section 5.11 Cooperative Efforts. Parent and the Company
shall work together to obtain the requisite Noteholder vote or
consent. Parent shall not solicit, directly or indirectly,
Noteholder vote or consent without first notifying the Company and
obtaining the Company's agreement with the form of solicitation,
which agreement shall not be unreasonably withheld.
ARTICLE 6.
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the
Merger shall be subject to the fulfillment at or prior to the
Effective Time of the following conditions:
(a) Shareholder Approval. This Agreement shall have been
duly approved by the requisite vote of shareholders of the
Company in accordance with Alabama law and the Articles of
Incorporation and Bylaws of the Company.
(b) HSR and Other Approvals.
(i) The waiting period (and any extension thereof)
applicable to the consummation of the Merger under the
HSR Act shall have expired or been terminated.
(ii) All authorizations, consents, orders,
declarations or approvals of or filings with, or
terminations or expirations of waiting periods imposed by, any
Governmental Entity (including State Takeover Approvals, if
any), which the failure to obtain, make or occur would
have the effect of making the Merger or any of the
transactions contemplated hereby illegal or would have a Material
Adverse Effect on Parent (assuming the Merger had taken
place), shall have been obtained, shall have been made or
shall have occurred.
(c) No Order. No court or other Governmental Entity
having jurisdiction over the Company or Parent, or any of
their respective Subsidiaries, shall have enacted, issued,
promulgated, enforced or entered any law, rule, regulation,
executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) which is then in effect
and has the effect of making the Merger or any of the transactions
contemplated hereby illegal.
(d) Litigation. There shall not be instituted or pending
any suit, action or proceeding by a Governmental Entity or any
other person as a result of this Agreement or any of the
transactions contemplated herein which, in the opinion of either
party's counsel, would have a Material Adverse Effect on the
Parent or the Company, as the case may be.
(e) Registration Statement or Exemption. Either the
Registration Statement shall have become effective in
accordance with the provisions of the Securities Act or there shall
be an effective exemption from the registration requirements of
the Securities Act. If the Registration Statement shall have
become effective, no stop order suspending the effectiveness
of the Registration Statement shall have been issued by the SEC and
no proceedings for that purpose shall have been initiated or,
to the Knowledge of Parent or the Company, threatened by the
SEC. All necessary state securities or blue sky authorizations
shall have been received.
Section 6.2 Conditions to Obligation of the Company to Effect
the Merger. The obligations of the Company to effect the Merger
shall be subject to the fulfillment at or prior to the Effective
Time of the following additional conditions:
(a) Performance of Obligations; Representations and
Warranties. Each of Parent and Sub shall have performed in all
material respects each of its agreements contained in this
Agreement required to be performed on or prior to the Effective
Time, each of the representations and warranties of Parent and
Sub contained in this Agreement shall be true and correct in
all material respects on and as of the Effective Time as if made on
and as of such date (other than representations and warranties
which address matters only as of a certain date which shall be
true and correct in all material respects as of such certain date),
in each case except as contemplated or permitted by this
Agreement, and the Company shall have received a certificate
signed on behalf of each of Parent and Sub by its Chief Executive
Officer, its Chief Operating Officer and its Chief Financial
Officer to such effect.
(b) Legal Opinion. The Company shall have received an opinion
of Sommer & Barnard, counsel to Parent, dated the Closing
Date, in reasonable form and of the character typical for
transactions of the character of those contemplated hereby.
Section 6.3 Conditions to Obligations of Parent and Sub to
Effect the Merger. The obligations of Parent and Sub to effect the
Merger shall be subject to the fulfillment at or prior to the
Effective Time of the following additional conditions:
(a) Performance of Obligations; Representations and
Warranties. The Company shall have performed in all material
respects each of its agreements contained in this Agreement
required to be performed on or prior to the Effective Time and,
each of the representations and warranties of the Company
contained in this Agreement shall be true and correct in all
material respects on and as of the Effective Time as if made on and
as of such date (other than representations and warranties
which address matters only as of a certain date which shall be
true and correct in all material respects as of such certain date),
in each case except as contemplated or permitted by this
Agreement, and Parent shall have received a certificate signed
on behalf of the Company by its Chief Executive Officer, its Chief
Operating Officer and its Chief Financial Officer to such
effect.
(b) Legal Opinion. The Parent shall have received an
opinion of Berkowitz, Lefkovits, Isom & Kushner, A
Professional Corporation, dated the Closing Date, in
reasonable form and of the character typical for transactions of
the character of those contemplated hereby.
(c) Noteholder Approval. The Noteholders shall have
approved the Supplemental Indenture in accordance with the
terms of the Indenture and it shall have been executed.
(d) Dissenting Shareholders. Holders of no more than 5%
of the issued and outstanding shares of the Company shall have
dissented under applicable law.
(e) Financing Agreement and Other Consents. All
consents necessary under the Company's and its Subsidiaries'
financing agreements shall have been obtained so that
obligations of the Company and its Subsidiaries will not be
affected by the transactions contemplated by this Agreement.
All third-party consents and consents necessary under any
shareholder agreements applicable to the Company and its
Subsidiaries shall have been obtained.
ARTICLE 7.
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after any
approval of the matters presented in connection with the Merger by
the shareholders of the Company or Parent:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if the other party
shall have failed to comply in any material respect with any
of its covenants or agreements contained in this Agreement
required to be complied with prior to the date of such termination,
which failure to comply has not been cured within five
business days following receipt by such other party of written
notice of such failure to comply; provided, however, that if any
such breach is curable by the breaching party through the
exercise of the breaching party's best efforts and for so long as
the breaching party shall be so using its best efforts to cure
such breach, the non-breaching party may not terminate this
Agreement pursuant to this paragraph;
(c) by either Parent or the Company if there has been
(i) a breach by the other party (in the case of Parent,
including any material breach by Sub) of any representation or
warranty that is not qualified as to materiality which has the
effect of making such representation or warranty not true and
correct in all material respects or (ii) a breach by the other
party (in the case of Parent, including any material breach by Sub)
of any representation or warranty that is qualified as to
materiality, in each case which breach has not been cured
within five business days following receipt by the breaching party
of written notice of the breach; provided, however, that if
any such breach is curable by the breaching party through the
exercise of the breaching party's best efforts and for so long as
the breaching party shall be so using its best efforts to cure
such breach, the non-breaching party may not terminate this
Agreement pursuant to this paragraph;
(d) by the Parent or the Company if any order, decree or
other order has been entered by a court or other Governmental
Entity which has the effect of making the Merger or any of the
transactions contemplated hereby illegal;
(e) by Parent or the Company if the Merger has not been
effected on or prior to the close of business on November 30,
1996 (the "Termination Date"); provided, however, that the
right to terminate this Agreement pursuant to this Section 7.l(e)
shall not be available to any party whose failure to fulfill
any of its obligations contained in this Agreement has been
the cause of or resulted in, the failure of the Merger to have
occurred on or prior to the aforesaid date;
(f) by Parent or the Company if the shareholders of the
Company do not approve this Agreement;
(g) by Parent or the Company if the Board of Directors
of the Company reasonably determines that a Takeover Proposal
constitutes a "Superior Proposal" (as hereinafter defined);
provided, however, that the Company may not terminate this
Agreement pursuant to this Section 7.1(g) unless and until
three business days have elapsed following delivery to Parent
of a written notice of such determination by the Board of Directors
of the Company (which written notice shall inform Parent of
the material terms and conditions of the Takeover Proposal but
need not include the identity of such third party);
(h) by Parent if the Board of Directors of the Company
shall not have recommended, or shall have resolved not to
recommend, or shall have modified or withdrawn its
recommendation of the Merger or declaration that the Merger is
advisable and fair to and in the best interests of the
Company, its shareholders and its Noteholders, or shall have
resolved to do so; or
(i) by Parent if the Noteholders of the Company do not
approve the Supplemental Indenture.
"Superior Proposal" shall mean a bona fide proposal or offer
made by a third party to acquire the Company pursuant to a stock
purchase, tender or exchange offer, a merger, consolidation or
other business combination or a sale of all or substantially all of
the assets of the Company and its Subsidiaries on terms which a
majority of the members of the Board of Directors of the Company
determines in their good faith reasonable judgment (based on the
advice of a nationally recognized investment banking firm) to be
more favorable to the Company and to its shareholders and/or
Noteholders than the transactions contemplated hereby, provided
that in making such determination the Board considers the
likelihood that such third party is able to consummate such
proposed transaction.
Section 7.2 Effect of Termination. In the event of
termination of this Agreement by either Parent or the Company, as
provided in Section 7.1, this Agreement shall forthwith terminate
and there shall be no liability hereunder on the part of the
Company, Parent, Sub or their respective officers or directors
(except for Section 5.4, Article 8 and the obligations of the
parties under the Confidentiality Agreements which shall survive
the termination); provided, however, that nothing contained in this
Section 7.2 shall relieve any party hereto from any liability for
any willful breach of a representation or warranty contained in
this Agreement or the breach of any covenant contained in this
Agreement.
Section 7.3 Amendment. This Agreement may be amended by the
parties hereto, by or pursuant to action taken by their respective
Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the shareholders
and Noteholders of the Company, but, after any such approval, no
amendment shall be made which by law requires further approval by
such shareholders without such further approval. This Agreement may
not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
Section 7.4 Waiver. At any time prior to the Effective Time,
the parties hereto may (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions
contained herein which may legally be waived. Any agreement on the
part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE 8.
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement
shall terminate at the Effective Time or upon the termination of
this Agreement pursuant to Section 7.1, as the case may be, except
that the agreements set forth in Article I, Sections 1.5 (d), 5.2,
5.3, 5.4, 5.5, 5.6, 5.7 and 5.8, and this Article 8 shall survive
the Effective Time, and those set forth in Section 5.4, this
Article 8 and the Confidentiality Agreements shall survive
termination.
Section 8.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given when
delivered personally, three days after mailing by United States
certified mail, return receipt requested, one day after being
delivered to an overnight courier or when telecopied (with a
confirmatory copy sent by overnight courier) to the parties at the
following addresses (or at such other address for a party as shall
be specified by like notice):
(a) if to Parent or Sub:
Proffitt's, Inc.
5810 Shelby Oaks Drive
Memphis, Tennessee 38134
Attn: Mr. R. Brad Martin
Facsimile Number: (901) 386-4594
Proffitt's, Inc.
3455 Highway 80 West
Jackson, Mississippi 39209
Attn: Brian J. Martin, Esquire
Facsimile Number: (601) 968-5216
with copies to:
James A. Strain, Esquire
Sommer & Barnard
Professional Corporation
4000 Bank One Tower
Indianapolis, Indiana 46204
Facsimile Number: (317) 236-9802
(b) if to the Company:
Parisian, Inc.
750 Lakeshore Parkway
Birmingham, Alabama 35211
Attn: Donald E. Hess
Facsimile Number: (205) 940-4984
with copies to:
Berkowitz, Lefkovits, Isom & Kushner,
A Professional Corporation
1600 SouthTrust Tower
Birmingham, Alabama 35203
Attn: Harold B. Kushner, Esquire
Facsimile Number: (205) 322-8007
Section 8.3 Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of
this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation
of this Agreement. Whenever the words "include, " "includes" or
"including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation. "
Section 8.4 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other
parties.
Section 8.5 Entire Agreement; No Third-Party Beneficiaries.
This Agreement, including the Exhibits and Schedules attached
hereto or referred to herein, and the Confidentiality Agreements
constitute the entire agreement of the parties and supersede all
prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof. This
Agreement is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
Section 8.6 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of
Tennessee, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
Section 8.7 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties.
Section 8.8 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced
by any rule of law, or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic and legal substance of the
transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that
the transactions contemplated by this Agreement may be consummated
as originally contemplated to the fullest extent possible.
Section 8.9 Enforcement of this Agreement. The parties hereto
agree that irreparable damage would occur in the event that any of
the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and
to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, such
remedy being in addition to any other remedy to which any party is
entitled at law or in equity. Each party hereto irrevocably waives
right to trial by jury.
Section 8.10 Litigation Costs. In the event it becomes
necessary for any party hereto to initiate litigation for the
purpose of enforcing any of its rights hereunder or for the purpose
of seeking damages for any violation hereof then, in addition to
any and all other judicial remedies that may be granted, the
prevailing party shall be entitled to recover attorneys' fees and
all other costs sustained by it in connection with such litigation.<PAGE>
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto
duly authorized as of the date first written above.
ATTEST: PROFFITT'S, INC.
By: _____________________ By:__________________________
Its: _____________________ Its: ________________________
ATTEST: CASABLANCA MERGER CORP.
By: _____________________ By:_______________________
Its: _____________________ Its:______________________
ATTEST: PARISIAN, INC.
By: ______________________ By:_______________________
Its: ______________________ Its:______________________
PROFFITT'S, INC.
PROFFITT'S, INC. AND PARISIAN, INC. ANNOUNCE MERGER AGREEMENT
Contacts: Proffitt's: Julia Bentley
(423) 983-7000
(423) 981-6243
Parisian: Michael Green
(205) 940-4000
(205) 940-4830
Proffitt's, Inc. has scheduled a conference call at 10:00 a.m.
Eastern Time on Tuesday, July 9, 1996 to discuss the proposed
business combination with Parisian, Inc. To participate, please
call (816) 650-0775 (10 minutes prior to the call).
Proffitt's, Inc. will host a luncheon in New York at the St. Regis
Hotel on Friday, July 12, 1996 at 12:00 noon to discuss the
proposed merger. For luncheon reservations, please call Julissa
Gonzalez (212) 816-8329.
Knoxville, Tennessee and Birmingham, Alabama (July 8, 1996) --
Proffitt's, Inc. (NASDAQ: PRFT) and Parisian, Inc., two of the
nation's leading regional specialty department store companies,
jointly announced today that they have entered into an agreement
with respect to a merger in which the two companies will be
combined. Parisian, headquartered in Birmingham, Alabama, will
become a division of Proffitt's, Inc. The Boards of Directors of
Proffitt's, Inc. and Parisian, Inc. approved the merger
unanimously.
Under the terms of the transaction, Proffitt's, Inc. will pay
Parisian's shareholders approximately $110 million in cash and
issue approximately 2.9 million shares of Proffitt's, Inc. Common
Stock. Outstanding options to purchase shares of Parisian, Inc.
Common Stock will be converted into options to purchase
approximately 406,000 shares of Proffitt's, Inc. Common Stock. The
total transaction equity value (based on Proffitt's, Inc. July 2,
1996 closing stock price of $35.75 per share) will be approximately
$221 million, net of approximately $243 million of Parisian, Inc.
indebtedness (which includes approximately $84 million of off-
balance sheet receivables financing). The merger is expected to be
completed by the end of October 1996, subject to certain conditions
including approval of the shareholders of Parisian, Inc. The
combination will be accounted for as a purchase.
Proffitt's, Inc. currently operates three 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 49 stores in Iowa, Wisconsin, Nebraska, Michigan,
Illinois, Minnesota, and South Dakota. For the latest twelve
months ended May 4, 1996, Proffitt's, Inc. achieved record sales of
$1.343 billion and record net income and fully diluted earnings per
share (prior to non-recurring items) of $39.6 million and $1.83,
respectively.
Parisian, Inc. currently operates 38 stores in Alabama, Florida,
Georgia, Indiana, Michigan, Ohio, South Carolina, and Tennessee.
For the latest twelve months ended May 4, 1996, Parisian's sales
totaled $674.5 million.
On a combined basis, the company will operate 141 department stores
in nineteen states with annualized revenues in excess of $2
billion.
R. Brad Martin, Chairman and Chief Executive Officer of Proffitt's,
Inc. and Donald E. Hess, President and Chief Executive Officer of
Parisian, Inc., expressed their enthusiasm for the combination of
the two businesses. Mr. Martin stated, "We are excited about the
combination of these two well-positioned, leading companies and the
opportunities to complement our respective strengths, which will
enhance value for our shareholders and opportunities for our
associates. Parisian is one of the premier retail enterprises in
the United States, with a great heritage and an exceptional record
for serving its customers and its communities. Our firms share
common cultures and values, and our organizations are privileged to
be comprised of thousands of talented and friendly associates
dedicated to customer satisfaction and shareholder value. This
transaction is a significant step in achieving our strategic growth
plans and will enhance our competitive position in the
consolidating department store industry."
Mr. Martin continued, "The merger with Parisian is a complement to
our dynamic organization and our strategy of operating stores in
both smaller markets and larger metropolitan areas. Consistent
with our customary structure, Parisian will operate as a separate
division of Proffitt's, Inc. with its own management team,
providing the flexibility to serve our customers effectively on a
market by market basis. As one of the finest specialty stores in the United
States, the Parisian affiliation will afford Proffitt's, Inc. an additional
vehicle for growth similar to the rates which the Lord & Taylor and
Bloomingdale's Divisions play in the May Company and Federated organizations.
We intend to expand Parisian's presence in both existing and new markets. To
support this growth, I will maintain an office at the Parisian headquarters
in Birmingham and be directly involved in this process."
Mr. Hess stated, "With its superior performance standards and
proven track record, Proffitt's is a perfect partner for Parisian.
Its operating philosophy and organizational structure will allow
our organization to operate as a separate division within
Proffitt's, Inc., while enjoying the benefits of shared resources
and economies of scale. I believe the merger represents a unique
opportunity for Parisian to join one of the best companies in the
retail industry, and Proffitt's growth orientation will create
further opportunities for members of the Parisian team."
Mr. Hess further commented, "I will continue as President and Chief
Executive Officer of the Parisian Division, and my family will have
a substantial equity interest in Proffitt's, Inc."
Mr. Martin also said, "The business combination is expected to be
accretive to the earnings of Proffitt's, Inc. upon the realization
of modest synergies in the combined business. Upon completion of
the transaction, we will continue to maintain appropriate financial
leverage and a strong capital structure, giving us considerable
flexibility for the consideration of additional strategic growth
opportunities."
Upon the closing of this merger, Mr. Martin will continue as
Chairman and Chief Executive Officer of Proffitt's, Inc. Mr. Hess,
in his role as President and Chief Executive Officer of the
Parisian Division, will report to Mr. Martin and will join the
Board of Directors of Proffitt's, Inc.
This announcement is neither an offer of securities nor a
solicitation of proxies. An offering will only be made by means of
a prospectus which is part of an effective registration statement,
and proxies will only be solicited pursuant to a definitive proxy
statement.
Discussion Information for Financial Analysts'/Investors'
Presentation
<TABLE>
<CAPTION>
MERCHANDISE MIX - 1995
Proffitt's McRae's Younkers Proffitt's, Inc. Parisian,
Division Division Division (Combined) Inc.
<C> <S> <S> <S> <S> <S>
Leased 1.6% 4.5% 8.1% 5.5% 1.9%
Lingerie 4.4 3.9 4.6 4.3 2.9
Accessories 6.8 6.7 6.3 6.6 7.3
Shoes 7.1 7.8 0 4.0 11.8
Children's Apparel 8.5 7.6 7.0 7.5 11.4
Home Furnishings 10.6 14.9 15.7 14.4 0
Men's Apparel 13.7 16.6 15.6 15.6 21.9
Cometics 14.8 11.3 10.8 11.8 10.2
Women's Apparel 32.5 26.7 31.9 30.3 32.6
</TABLE>
Transaction Structure -- Valuation Multiplies
Enterprise Value/Revenue (1) .7x
Enterprise Value/EBITDA (2) 9.2x
(1) Calculation based on revenues for latest twelve months ended
May 4, 1996.
(2) Calculation based on EBITDA (earnings before interest, taxes,
depreciation and amortization) for latest twelve months ended May
4, 1996.
Pro forma sales for the Latest Twelve Months Ended May 4, 1996
(Proffitt's, Inc. and Younkers, Inc. combined): $2.017 billion
Targeted Internal Growth: 1997-1999
Total
Net Units 15-20
New Unit Footage 1.8-2.8
(gross sq. ft. in millions)
Expansions/Remodels 10-15
Expansion Footage .4-.6
(gross sq. ft. in millions)
Total Footage Growth 2.2-3.4
(gross sq. ft. in millions)
New Footage Growth as a 16%-24%
% of Current Gross Footage
STORE INFORMATION
Number of Gross sq. ft. Ave. Store Size
Stores (millions) (gross sq. ft.)
Proffitt's Division 25 2.3 90,000
McRae's Division 29 2.9 101,000
Younkers Division 49 4.7 97,000
Proffitt's, Inc.
(Combined) 103 9.9 N/A
Parisian, Inc. 38 4.1 108,000
Pro forma combined 141 14.0 N/A
