PROFFITTS INC, S-3/A, 1996-08-23

PROFFITTS INC
S-3/A, 1996-08-23
DEPARTMENT STORES

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 23, 1996

REGISTRATION NO. 333-09941
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------

AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------

PROFFITT'S, INC.
(Exact Name of Registrant as Specified in its Charter)

<TABLE>
<S> <C>
TENNESSEE 62-0331040
(State or other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification Number)
</TABLE>

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POST OFFICE BOX 9388
ALCOA, TENNESSEE 37701
(423) 983-7000
(Address, including zip code, and telephone number, including area code
of Registrant's Principal Executive Office)
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R. BRAD MARTIN
5810 SHELBY OAKS DRIVE
MEMPHIS, TENNESSEE 38134
(901) 372-4300
(Name, Address, including zip code, and telephone number,
including area code of Agent for Service)
-------------------

COPIES TO:

<TABLE>
<S> <C>
BRIAN J. MARTIN, ESQ. JAMES A. STRAIN
PROFFITT'S, INC. SOMMER & BARNARD
3455 HIGHWAY 80 WEST 4000 BANK ONE TOWER
JACKSON, MISSISSIPPI 39209 111 MONUMENT CIRCLE
(601) 968-5215 INDIANAPOLIS, INDIANA 46204
(317) 630-4000
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: as soon as practicable after the effective date of the Registration
Statement.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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<PAGE>

PROSPECTUS

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PROFFITT'S, INC.
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GUARANTY

Proffitt's, Inc. ("Proffitt's") intends to solicit the consent of holders
(the "Noteholders" or the "Parisian Noteholders") of the $125 million
outstanding principal amount of 9 7/8% Senior Subordinated Notes due 2003 (the
"Notes") of Parisian, Inc. ("Parisian") to a supplemental indenture (the
"Supplemental Indenture") amending and restating the indenture (the "Indenture")
between Parisian and AmSouth Bank of Alabama, as Trustee (the "Trustee"),
pursuant to which the Notes were issued. The Supplemental Indenture, if approved
by the Noteholders, will, among other things, amend the Indenture to make
Proffitt's a party thereto, and to make applicable to Proffitt's certain
covenants which are currently applicable to Parisian, remove certain provisions
which will be rendered obsolete upon the closing of the proposed merger of
Casablanca Merger Corp., a wholly owned subsidiary of Proffitt's ("Casablanca"),
with and into Parisian (the "Merger"), make certain other amendments described
in this Prospectus, and add to the Indenture the full and unconditional
guarantee of Proffitt's, on a senior subordinated and unsecured basis, of the
payment by Parisian of the principal of, and interest and premium, if any, on
the Notes (the "Guaranty").

The Guaranty will be an unsecured senior subordinated obligation of
Proffitt's, ranking pari passu with all other existing and future indebtedness
of Proffitt's that is expressly subordinated to Proffitt's senior indebtedness.
As of August 3, 1996, after giving pro forma effect to the Merger, the amount of
such senior indebtedness outstanding was $119 million. The Guaranty will be
subordinated to senior indebtedness of Proffitt's on the same, or a more
favorable, basis as the Notes are subordinated to senior indebtedness of
Parisian. See "DESCRIPTION OF THE GUARANTY AND THE SUPPLEMENTAL INDENTURE."

There is no established trading market for the Notes. Prior to the date
hereof, Lehman Brothers Inc. ("Lehman Brothers") has made a market in the Notes.
Since the date of the announcement of the Merger, Lehman Brothers has
discontinued making a market in the Notes and will not resume making a market in
the Notes until at least after the consummation of the Merger. However, Lehman
Brothers is under no obligation to resume such market making in the Notes, and,
even if it does resume such market making, it may, at its discretion,
discontinue doing so at any time without notice. Therefore, no assurance can be
given as to the continued liquidity of, or the trading market for, the Notes.

-------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

-------------------

The date of this Prospectus is August 23, 1996.

<PAGE>
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING OF SECURITIES MADE HEREBY AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY PROFFITT'S. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES IN ANY
JURISDICTION TO OR FROM ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH
OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF PROFFITT'S SINCE
THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.

AVAILABLE INFORMATION

Proffitt's is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The reports, proxy
statements and other information filed by Proffitt's with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
should be available at the Commission's Regional Offices at 7 World Trade
Center, 13th Floor, New York, New York 10048, and 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material can also be obtained from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.

Proffitt's has filed with the Commission a Registration Statement on Form
S-3 (together with any amendments thereto, the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Guaranty. This Prospectus does not contain all the information set forth in
the Registration Statement and the exhibits thereto. Such additional information
may be obtained from the Commission's principal office in Washington, D.C.
Statements contained in this Prospectus or in any document incorporated in this
Prospectus by reference as to the contents of any contract or other document
referred to herein or therein are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement or such other document, each such
statement being qualified in all respects by such reference.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed with the Commission by Proffitt's (Commission
File No. 0-15907) pursuant to the Exchange Act are incorporated by reference in
this Prospectus:

1. Proffitt's Annual Report on Form 10-K for the fiscal year ended
February 3, 1996, and Amendment No. 1 thereto dated May 1, 1996;

2. Proffitt's Quarterly Report on Form 10-Q for the quarter ended May 4,
1996;

3. Proffitt's Current Reports on Form 8-K filed with the Commission on
February 16, 1996, April 1, 1996, July 18, 1996, and August 12, 1996,
respectively;

4. The description of Proffitt's Common Stock contained in Proffitt's
Registration Statement on Form 8-A dated May 27, 1987 and Proffitt's
Registration Statement on Form S-3 dated October 19, 1993 (Registration No.
33-70000);

5. Proffitt's Registration Statement on Form 8-A dated April 3, 1995 in
respect of the Proffitt's Share Purchase Rights Plan.

All documents and reports filed by Proffitt's pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the date of the Special Meeting shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the dates of filing of
such documents or reports. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such document so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.

This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. Such documents (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference) are
available, without charge, to any person, including any beneficial owner, to
whom this Prospectus is delivered, on written or oral request, within one
business day of such request, to Proffitt's, Inc., P.O. Box 9388, Alcoa,
Tennessee 37701 (telephone number: (615) 983-7000), attention: Investor
Relations.

2
<PAGE>
SUMMARY

THE COMPANY

Proffitt's is a leading regional specialty department store company offering
a wide selection of fashion apparel, accessories, cosmetics, and decorative home
furnishings, featuring assortments of premier brands and unique specialty
merchandise. Proffitt's stores are primarily anchor stores in leading regional
malls.

THE GUARANTY AND THE SUPPLEMENTAL INDENTURE

Proffitt's intends to solicit the consent of the Noteholders to the
Supplemental Indenture. The Supplemental Indenture, if approved by the
Noteholders, will, among other things, amend and restate the Indenture to make
Proffitt's a party thereto, and to make applicable to Proffitt's certain
covenants which are currently applicable to Parisian, remove certain provisions
which will be rendered obsolete upon the closing of the Merger, make certain
other amendments described in this Prospectus, and add to the Indenture the
Guaranty. The Guaranty will be an unsecured senior subordinated obligation of
Proffitt's, ranking pari passu with all other existing and future indebtedness
of Proffitt's that is expressly subordinated to Proffitt's senior indebtedness.
The Guaranty will be subordinated to senior indebtedness of Proffitt's on the
same basis as the Notes are subordinated to senior indebtedness of Parisian. See
"DESCRIPTION OF THE GUARANTY AND THE SUPPLEMENTAL INDENTURE."

OTHER CONSIDERATIONS

As of August 3, 1996, after giving pro forma effect to the Merger, the
aggregate amount of Parent Senior Indebtedness (as defined in the Supplemental
Indenture) outstanding was $119 million, including $54 million of guaranties of
indebtedness of subsidiaries. On August 3, 1996, after giving pro forma effect
to the Merger, the subsidiaries of Proffitt's (including Parisian and its
subsidiaries) would have had outstanding indebtedness of approximately $209
million, including trade payables (in the case of Parisian, only factored trade
payables are included) and excluding the Notes.

Anticipated non-recurring charges to be incurred by Proffitt's related to
integrating Parisian into Proffitt's are estimated at $4.0 million ($2.4 million
net of tax), which includes the conversion of computer systems and other
expenses of consolidating administrative functions of Proffitt's and Parisian.

The Notes are unsecured and are subordinated in right of payment to the
payment of all existing and future Senior Indebtedness of Parisian, as defined
in the Indenture. Upon approval of the Supplemental Indenture by the
Noteholders, the Guaranty will be subordinated in right of payment to the
payment of all existing and future Parent Senior Indebtedness. See "DESCRIPTION
OF GUARANTY AND THE SUPPLEMENTAL INDENTURE." As a result of the subordination
provisions of the Supplemental Indenture, in the event of the liquidation,
receivership, reorganization, dissolution or insolvency of Proffitt's, creditors
of Proffitt's who are holders of Parent Senior Indebtedness may recover more,
ratably, than the Noteholders and funds that would otherwise be payable to the
Noteholders under the Guaranty will be paid to the holders of Parent Senior
Indebtedness to the extent necessary to pay the Parent Senior Indebtedness in
full, and Proffitt's may thereby be unable to meet its obligations fully with
respect to the Guaranty. In the event of a payment default on Parent Senior
Indebtedness, payment of Proffitt's obligations under the Guaranty may be
prohibited until such payment default is cured or waived. A non-payment default
which results in an acceleration of Parent Senior Indebtedness could give rise
to the prohibition of payments under the Guaranty for an indefinite period after
the expiration of a Parent Payment Blockage Period, as defined in the
Supplemental Indenture. In addition, Proffitt's ability to effect any required
repurchases of Notes upon the occurrence of a Change of Control Triggering Event
may be limited by the terms and conditions of instruments governing Parent
Senior Indebtedness and by the subordination provisions of the Supplemental
Indenture.

3
<PAGE>
Holders of certain Parent Senior Indebtedness outstanding have been granted
security interests in and liens upon a substantial portion of the real property
and fixtures of Proffitt's and certain subsidiaries. If an event of default
should occur under any of the instruments governing such Parent Senior
Indebtedness, subject to any applicable cure periods, the holders thereof will
have the right to foreclose upon such collateral. In a bankruptcy proceeding
involving Proffitt's, Proffitt's assets would be available to pay indebtedness
under the Guaranty only after all Parent Senior Indebtedness has been paid in
full, and, in such event, there may not be sufficient assets to pay amounts due
under the Guaranty.

Proffitt's and Parisian are large retail department store chains, with
operations and sales in several different regions of the United States. Although
management of the companies believes that their respective operations are
complementary and that integration of the companies' operations can be
accomplished promptly and without substantial difficulty, there can be no
assurance that future results of Proffitt's will improve or will not be
adversely affected as a result of the Merger.

There is no established trading market for the Notes and there can be no
assurance that any such market will develop or be available at any time
following the Merger. Prior to the date hereof, Lehman Brothers has made a
market in the Notes. Since the date of the announcement of the Merger, Lehman
Brothers has discontinued making a market in the Notes and will not resume
making a market in the Notes until at least after the consummation of the
Merger. However, Lehman Brothers is under no obligation to resume such market
making in the Notes, and, even if it resumes such market making, it may, at its
discretion, discontinue doing so at any time without notice.

Pursuant to an agreement dated May 13, 1996, Apollo Specialty Retail
Partners agreed to convert its 600,000 shares of Series A Preferred Stock of
Proffitt's, pursuant to the terms of the Series A Preferred Stock and in
consideration of the payment of an inducement payment in the amount of
$3,031,674, into 1,421,801 shares of common stock of Proffitt's. This
transaction was consummated on June 28, 1996.

4
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA
AND
PRO FORMA SELECTED FINANCIAL AND OPERATING DATA

Set forth on the following pages are selected historical financial and
operating data of Proffitt's and Parisian, and selected unaudited pro forma
combined financial and operating data of Proffitt's and Parisian. The historical
data with respect to Proffitt's and Parisian are derived from the respective
historical financial statements of Proffitt's and Parisian and should be read in
conjunction with the financial statements and notes of Proffitt's incorporated
herein by reference and the financial statements and notes of Parisian appearing
elsewhere in this Prospectus.

The selected unaudited pro forma combined financial and operating data
should be read in conjunction with the unaudited pro forma financial statements,
including the notes thereto, appearing elsewhere in this Prospectus. See
"Unaudited Pro Forma Condensed Combined Financial Statements."

5
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA FOR PROFFITT'S, INC. (1)

The selected financial and operating data below should be read in
conjunction with the Consolidated Financial Statements and Notes thereto of
Proffitt's and with Management's Discussion and Analysis of Financial Condition
and Results of Operations incorporated by reference in this Prospectus. The
selected financial and operating data as of and for the three months ended April
29, 1995 and May 4, 1996 are derived from unaudited financial statements as of
such dates and for such periods, but in the opinion of management, include all
adjustments (consisting of only normal recurring accruals) necessary for a fair
presentation of such data.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEAR ENDED (2) (3)
------------------------------------------------------------------- --------------------
FEBRUARY 1, JANUARY 30, JANUARY 29, JANUARY 28, FEBRUARY 3, APRIL 29, MAY 4,
1992 1993 1994 1995 1996 1995 1996
----------- ----------- ----------- ----------- ----------- --------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net Sales (4)......................... $ 435,284 $ 601,677 $ 798,779 $ 1,216,498 $ 1,333,498 $ 287,125 $296,561
Costs and expenses:
Cost of sales........................ 273,040 362,620 520,987 795,353 873,218 187,008 192,892
Selling, general and administrative
expenses.............................. 112,793 158,920 192,028 284,748 324,650 70,891 71,537
Other operating expenses............. 34,934 44,016 66,617 97,821 105,021 24,840 24,398
Expenses related to hostile takeover
defense (5)........................... 3,182 438
Impairment of long-lived assets
(6)................................... 19,121
Merger, restructuring and integration
costs (7)............................. 20,822 2,763
Gain on sale of assets (8)........... (2,260)
----------- ----------- ----------- ----------- ----------- --------- --------
Operating income (loss).......... 14,517 36,121 19,147 38,576 (12,516) 3,948 7,231
Other income (expense):
Finance charge income, net of
allocation to purchasers of
accounts receivable (9)............... 15,194 15,401 19,312 27,934 31,273 7,793 7,160
Interest expense..................... (15,102)(10) (9,445) (9,245) (20,781) (26,098) (6,269) (4,105)
Other income (expense), net.......... 1,817 (380)(11) 2,923 3,865 2,848 656 370
----------- ----------- ----------- ----------- ----------- --------- --------
Income (loss) before provision for
income taxes, extraordinary loss
and cumulative effect of
accounting changes.................... 16,426 41,697 32,137 49,594 (4,493) 6,128 10,656
Provision for income taxes............ 7,045 15,567 12,892 19,850 1,906 2,480 4,402
----------- ----------- ----------- ----------- ----------- --------- --------
Income (loss) before extraordinary
loss and cumulative effect of
accounting changes.................... 9,381 26,130 19,245 29,744 (6,399) 3,648 6,254
Extraordinary loss on extinguishment
of debt (net of tax)................. (1,088) (2,060)
Cumulative effect of accounting
changes (net of tax) (12)............ (1,794) 1,904
----------- ----------- ----------- ----------- ----------- --------- --------
Net income (loss).................... 9,381 24,336 20,061 29,744 (8,459) 3,648 6,254
Preferred stock dividends............. 1,694 1,950 488 488
----------- ----------- ----------- ----------- ----------- --------- --------
Net income (loss) available to common
shares................................ $ 9,381 $ 24,336 $ 20,061 $ 28,050 $ (10,409) $ 3,160 $ 5,766
----------- ----------- ----------- ----------- ----------- --------- --------
----------- ----------- ----------- ----------- ----------- --------- --------
Earnings (loss) per common share
before extraordinary loss and
cumulative effect of accounting
changes............................... $ 1.07 $ 2.06 $ 1.09 $ 1.48 $ (0.43) $ 0.16 $ 0.29
Extraordinary loss.................... (0.06) (0.11)
Cumulative effect of accounting
changes............................... (0.14) 0.11
----------- ----------- ----------- ----------- ----------- --------- --------
Earnings (loss) per common share...... $ 1.07 $ 1.92 $ 1.14 $ 1.48 $ (0.54) $ 0.16 $ 0.29
----------- ----------- ----------- ----------- ----------- --------- --------
----------- ----------- ----------- ----------- ----------- --------- --------
Weighted average common shares
outstanding (in thousands) (13)...... 8,788 12,707 17,667 18,922 19,372 19,182 19,744
Ratio of earnings to fixed charges.... 1.86x 3.86x 2.62x 2.46x -- (17) 1.65x 2.50x
OPERATING DATA:
Comparable store net sales increases
(14).................................. 5% 6% 6% 1% 3% 3% 5%
Stores open at end of period
(14)(15).............................. 40 69 78 106 104 106 103
Capital expenditures (16)............. $ 5,843 $ 39,013 $ 78,475 $ 43,289 $ 49,458 $ 9,668 $ 9,348
BALANCE SHEET DATA:
Working capital....................... $ 126,026 $ 180,091 $ 286,351 $ 283,162 $ 212,122 $203,460
Total assets.......................... $ 274,441 $ 455,295 $ 575,449 $ 878,393 $ 835,666 $825,893
Senior long-term debt, less current
portion............................... $ 106,066 $ 193,555 $ 95,777 $ 190,216 $ 134,255 $113,965
Subordinated debt..................... $ 86,250 $ 100,269 $ 100,505 $100,568
Shareholders' equity.................. $ 101,229 $ 143,107 $ 290,309 $ 360,611 $ 356,852 $363,821
</TABLE>

6
<PAGE>
NOTES TO SELECTED FINANCIAL AND OPERATING DATA FOR PROFFITT'S INC. (IN
THOUSANDS)

(1) Effective February 3, 1996, Proffitt's combined its business with Younkers,
Inc., a publicly-owned retail department store chain. The combination was
structured as a tax-free transaction and has been accounted for as a
pooling of interests and accordingly, the financial statements were
restated for all periods to include the results of operations and financial
position of Younkers. Each share of Younkers, Inc. Common Stock was
converted into ninety eight one-hundredths (.98) shares of Proffitt's
Common Stock, with approximately 8,800 shares issued in the transaction.

(2) Proffitt's's fiscal year ends on the Saturday nearest January 31. Fiscal
years presented consisted of 52 weeks except for the fiscal year ended
February 3, 1996 which consisted of 53 weeks (except for the period ended
January 30, 1993 which includes 53 weeks for Younkers).

(3) The business of Proffitt's is seasonal, and results for any period within a
fiscal year are not necessarily indicative of the results that may be
achieved for a full fiscal year.

(4) Net Sales include leased department sales, which represent sales by retail
vendors that lease store space. Leased department sales accounted for
approximately 6 to 7% of net sales for all periods presented.

(5) Expenses incurred were related to the defense of the attempted hostile
takeover of Younkers by Carson Pirie Scott & Co.

(6) Proffitt's adopted the provisions of Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of" in the fourth quarter of the year
ended February 3, 1996. As a result of adopting this new accounting
standard and as a result of closing certain stores and warehouses,
Proffitt's incurred impairment charges related to the write-down in
carrying value of six operating stores due to poor operating results,
abandonment of duplicate warehouse and leasehold improvements related to
the Parks-Belk acquisition and the Younkers merger, and a loss on
abandonment of leasehold improvements related to closed stores.

(7) In connection with the merger of Proffitt's and Younkers, the two companies
incurred certain costs to effect the merger and other costs to restructure
and integrate the combined operating companies. The costs incurred were
comprised of merger transaction costs, severance and related benefits,
abandonment of duplicate administrative office space and property and
duplicate data processing equipment and software (including leases), and
other costs.

During the three-month period ended May 4, 1996, Proffitt's incurred
additional merger, restructuring and integration costs primarily related to
the termination of the Younkers pension plan, continued conversion of
systems and consolidation of administrative functions.

(8) During the three-month period ended May 4, 1996, Younkers sold two stores
to a third party.

(9) On April 1, 1994, Proffitt's began selling an undivided ownership interest
in its accounts receivable, recognizing no gain or loss on the transaction.
The ownership interest which may be transferred to the purchaser is limited
to $175,000 and is further restricted on a basis of the level of eligible
receivables and a minimum ownership interest to be maintained by
Proffitt's.

Effective with the February 3, 1996 merger, Younkers replaced amounts
borrowed under a securitization program with the sale of (i) a fixed
ownership interest of $75,000 and (ii) a variable ownership interest of up
to $50,000 in its trade receivables.

(10) Includes accruals for interest expense of $1,400 resulting from an Internal
Revenue Service audit of Younkers.

(11) Includes nonrecurring start-up costs of $1,210 connected with the
acquisition of the Prange stores by Younkers.

(12) Effective as of the beginning of the fiscal year ended January 30, 1993,
Younkers recognized a cumulative effect adjustment of $1,794 (net of income
taxes of $1,225) due to the adoption of SFAS 106, under which employers
recognize the cost of retiree health and life insurance benefits over the
employees' period of service.

Effective January 31, 1993, Proffitt's changed its method of accounting for
inventory to include certain purchasing and distribution costs. Previously,
these costs were charged to expense in the period incurred rather than in
the period in which the merchandise was sold. The cumulative effect of this
change was to increase net income $2,273 (net of income taxes of $1,532).

Effective January 31, 1993, Proffitt's also changed its method of
accounting for store preopening costs to expensing such costs when
incurred. The cumulative effect of this change was to decrease net income
$369 (net of income taxes of $236). Previously, these costs were amortized
over the twelve months immediately following the individual store openings.
Younkers has historically expensed such costs as incurred.

In 1992, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard ("SFAS") No. 109, Accounting for Income
Taxes, which requires a change from the deferred method to the asset and
liability method of accounting for income taxes. Proffitt's adopted the new
accounting standard effective January 31, 1993. Adoption of the new
standard had no effect on Proffitt's financial position or
7
<PAGE>
results of operations. There would have been no impact on the year ended
January 30, 1993 had the standard been applied retroactively. Younkers
adopted SFAS 109 prior to the years presented.

Effective January 30, 1994, Proffitt's changed its method of accounting for
inventory to the last-in, first-out (LIFO) method for a substantial portion
of its inventories. Previously, all inventories were valued using the
first-in, first-out (FIFO) method. Younkers has historically valued its
inventories under the LIFO method. The cumulative effect of this change is
not presented because it is not determinable.

(13) In January 1992, April 1992, March 1993 and April 1993, Proffitt's and
Younkers completed public offerings of 2,645, 6,047, 2,395, and 2,371
shares of Common Stock, respectively, the proceeds of which were utilized,
in part, to reduce long-term debt and fund capital expenditures related to
the renovation, acquisition and opening of new stores.

In October 1993, Proffitt's completed a public offering of $86,250 of
Convertible Subordinated Debentures, the proceeds of which were used to
reduce outstanding bank debt, fund capital expenditures related to the
renovation and expansion of stores, and for working capital and general
corporate purposes.

(14) Comparable store data for a fiscal year or a three-month period within a
fiscal year are adjusted so that all amounts relate to a 52-week year. New
stores become comparable stores in the first full month following the
anniversary of the opening of those stores. Renovated, expanded or
relocated stores are classified as comparable stores and not as new stores.
Where operations within a particular shopping mall are divided among two or
more buildings, the combined operation is counted as one store.

(15) Younkers purchased the merchandise inventories, properties and certain
other assets of the Prange department store division of H.C. Prange Company
in September 1992. Additionally, Proffitt's purchased 19 Hess Department
Stores: eight in October 1992, nine in January 1993 (of which one was
subsequently closed) and two in July 1993.

During June 1993, Younkers completed the sale and lease back of the eight
owned store properties acquired from Prange with net proceeds of
approximately $31,000, incurring no gain or loss in the transaction.

On March 31, 1994, Proffitt's acquired all of the common stock of Macco
Investments, Inc. ("Macco"), a privately held corporation and the parent
company of McRae's Inc. ("McRae's"), the owner and operator of 28
department stores in Alabama, Florida, Louisiana and Mississippi, for a
total acquisition price of approximately $212,000.

In March and April 1995, Proffitt's acquired Parks-Belk Company, the owner
and operator of four department stores of which one was subsequently
closed.

(16) Excludes amounts expended in connection with the purchase of the Prange
stores in September 1992, Macco Investments, Inc. in March 1994, and
Parks-Belk Company in March and April 1995.

(17) The deficit of earnings to fixed charges was $4,778 for the fiscal year
ended February 3, 1996. This deficit resulted from certain unusual and
nonrecurring charges due primarily to the combination of the businesses of
Proffitt's and Younkers effective February 3, 1996, and to the adoption of
SFAS 121.

8
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA FOR PARISIAN

The selected financial and operating data below should be read in
conjunction with the Consolidated Financial Statements and Notes thereto of
Parisian and with Parisian Management's Discussion and Analysis of Financial
Condition and Results of Operations included elsewhere in this Prospectus. The
selected financial and operating data as of and for the three months ended April
29, 1995 and May 4, 1996 are derived from unaudited financial statements as of
such dates and for such periods, but, in the opinion of management, include all
adjustments (consisting of only normal recurring accruals) necessary for a fair
presentation of such data.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEAR ENDED (1) (2)
------------------------------------------------------------------- ---------------------
FEBRUARY 1, JANUARY 30, JANUARY 29, JANUARY 28, FEBRUARY 3, APRIL 29, MAY 4,
1992 1993 1994 1995 1996 1995 1996
----------- ----------- ----------- ----------- ----------- --------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net Sales(3).................. $ 368,216 $ 448,969 $ 517,668 $ 606,717 $ 663,828 $ 155,351 $166,047
Costs and expenses:
Cost of sales................ 226,018 275,563 328,506 393,949 419,056 91,874 99,404
Selling, general and
administrative expenses.... 99,221 117,576 137,110 159,987 165,237 40,545 42,472
Other operating expenses..... 26,484 31,602 37,784 47,139 55,948 13,851 14,367
Reengineering costs(4)....... 3,185 304
----------- ----------- ----------- ----------- ----------- --------- --------
Operating income........... 16,493 24,228 14,268 2,457 23,283 9,081 9,804
Other income (expense):
Finance charge income, net of
allocation to purchaser of
accounts receivable........... 12,180 12,621 9,930 8,046 7,125 1,628 2,156
Interest expense............. (30,020) (27,217) (21,617) (18,051) (17,652) (4,439) (4,245)
Other income, net............ 124 465 156 411 2,407 1,110 143
----------- ----------- ----------- ----------- ----------- --------- --------
Income (loss) before
provision for income
taxes......................... (1,223) 10,097 2,737 (7,137) 15,163 7,380 7,858
Provision for income taxes.... 203 4,345 1,705 (1,674) 6,385 2,901 3,307
----------- ----------- ----------- ----------- ----------- --------- --------
Income (loss) before
extraordinary loss......... (1,426) 5,752 1,032 (5,463) 8,778 4,479 4,551
Extraordinary loss on early
retirement of debt (net of
tax).......................... (5,403)
----------- ----------- ----------- ----------- ----------- --------- --------
Net income (loss)............ $ (1,426) $ 5,752 $ (4,371) $ (5,463) $ 8,778 $ 4,479 $ 4,551
----------- ----------- ----------- ----------- ----------- --------- --------
----------- ----------- ----------- ----------- ----------- --------- --------
Earnings (loss) per common
share before extraordinary
loss.......................... $ (0.23) $ 0.93 $ 0.17 $ (0.78) $ 1.19 $ 0.61 $ 0.62
Extraordinary loss............ (0.87)
----------- ----------- ----------- ----------- ----------- --------- --------
Earnings (loss) per common
share......................... $ (0.23) $ 0.93 $ (0.70) $ (0.78) $ 1.19 $ 0.61 $ 0.62
----------- ----------- ----------- ----------- ----------- --------- --------
----------- ----------- ----------- ----------- ----------- --------- --------
Weighted average common shares
outstanding (in
thousands)(5)................. 6,208 6,208 6,208 6,987 7,356 7,356 7,356
Ratio of earnings to fixed
charges(6).................... -- 1.32x 1.10x -- 1.55x 2.09x 2.14x
OPERATING DATA:
Comparable store net sales
increases(7).................. 6% 10% 0% 0% -1% -4% 3%
Stores open at end of
period........................ 22 25 30 35 37 35 38
Capital expenditures.......... $ 886 $ 4,604 $ 14,974 $ 5,730 $ 10,735 $ 305 $ 1,211
BALANCE SHEET DATA:
Working capital............... $ 79,165 $ 85,298 $ 94,797 $ 101,305 $ 128,599 $134,396
Total assets.................. $ 328,422 $ 365,004 $ 304,784 $ 323,122 $ 344,206 $345,694
Senior long-term debt, less
current portion.............. $ 24,200 $ 23,899 $ 23,567 $ 19,258 $ 22,792 $ 22,539
Subordinated debt............. $ 100,000 $ 100,000 $ 125,000 $ 125,000 $ 125,000 $125,000
Shareholders' equity.......... $ 60,316 $ 66,068 $ 61,697 $ 71,153 $ 79,931 $ 84,482
</TABLE>

9
<PAGE>
NOTES TO SELECTED FINANCIAL AND OPERATING DATA FOR PARISIAN (IN THOUSANDS)

(1) Parisian's fiscal year ends on the Saturday nearest January 31. Fiscal years
presented consisted of 52 weeks except for the fiscal year ended February 3,
1996 which consisted of 53 weeks.

(2) The business of Parisian is seasonal, and results for any period within a
fiscal year are not necessarily indicative of the results that may be
achieved for a full fiscal year.

(3) Net Sales include leased department sales, which represent sales by retail
vendors that lease store space. Leased department sales accounted for
approximately 1 to 2% of net sales for all periods presented.

(4) In the fiscal years ended January 28, 1995 and February 3, 1996, Parisian
incurred certain non-recurring charges in connection with a business process
redesign project. Such reengineering costs included implementation of cost
containment measures, primarily directed at payroll, as well as customer
surveys to refine Parisian's market focus.

(5) In May 1994, Parisian completed a private offering of 1,148 shares of
Parisian Common Stock to certain of its shareholders.

(6) The deficit of earnings to fixed charges was $1,223 for 1991 and $7,137 for
1994.

(7) Comparable store growth for 1993 and 1994 does not include sales for
Parisian's Cincinnati stores, since comparable store sales would be
distorted for the periods as a result of the opening of two additional
stores in the market in 1993.

Comparable store sales growth for 1994 does not include sales for
Parisian's Atlanta stores, since comparable store sales would be distorted
for the period as a result of opening one additional store in the market
during each of 1993 and 1994.

Comparable store sales growth for 1995 does not include sales for
Parisian's Keystone Crossing store in Indianapolis, IN, since comparable
sales would be distorted for the period as a result of opening an
additional store in the market during 1995. Additionally, comparable store
sales do not include Parisian's Sarasota, FL, store since comparable store
sales would be distorted for the period due to the closing of the store
during January 1996.

10
<PAGE>
SELECTED PRO FORMA FINANCIAL AND OPERATING DATA

The pro forma selected financial and operating data below have been prepared
on a combined basis based upon the historical financial statements of Proffitt's
and Parisian. The pro forma combined information gives effect to the Merger
accounted for as a purchase. See "Unaudited Pro Forma Condensed Combined
Financial Statements."
<TABLE>
<CAPTION>
FISCAL THREE
YEAR ENDED MONTHS ENDED
FEBRUARY 3, MAY 4,
1996 1996
----------- ------------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
STATEMENT OF INCOME DATA:
Net Sales.......................................................... $ 1,997,326 $462,608
Costs and expenses:
Cost of sales.................................................... 1,292,974 292,596
Selling, general and administrative expenses..................... 488,287 113,609
Other operating expenses......................................... 162,973 39,265
Expenses related to hostile takeover defense..................... 3,182
Impairment of long-lived assets.................................. 19,121
Merger, restructuring and integration costs...................... 20,822 2,763
Gain on sale of assets........................................... (2,260)
----------- ------------
Operating income............................................... 9,967 16,635
----------- ------------
Other income (expense):
Finance charge income, net of allocation to purchasers of
accounts receivable............................................ 38,398 9,316
Interest expense................................................. (53,050) (10,650)
Other income (expense), net...................................... 5,255 513
----------- ------------
Income before provision for income taxes and extraordinary
loss............................................................... 570 15,814
Provision for income taxes......................................... 5,691 7,059
----------- ------------
Income (loss) before extraordinary loss.......................... (5,121) 8,755
Preferred stock dividends.......................................... 1,950 488
----------- ------------
Income (loss) before extraordinary loss after preferred stock
dividends.......................................................... $ (7,071) $ 8,267
----------- ------------
----------- ------------
Earnings (loss) per common share before extraordinary loss......... $ (0.31) $ 0.36
Weighted average common shares outstanding (in thousands).......... 22,474 22,846
Ratio of earnings to fixed charges................................. 1.00x 1.98x
OPERATING DATA:
Comparable store net sales increases............................... 2% 4%
Stores open at end of period....................................... 141 141
Capital expenditures............................................... $ 60,193 $ 10,559
</TABLE>

<TABLE>
<CAPTION>
MAY 4, 1996
-----------
<S> <C>
BALANCE SHEET DATA:
Working capital................................................................ $ 334,856
Total assets................................................................... $ 1,339,429
Senior long-term debt, less current portion.................................... $ 261,804
Subordinated debt.............................................................. $ 225,568
Shareholders' equity........................................................... $ 468,845
</TABLE>

11
<PAGE>
THE MERGER

On July 8, 1996, Proffitt's, Casablanca and Parisian entered into an
Agreement and Plan of Merger (the "Merger Agreement") which provides that,
subject to the satisfaction or waiver of the conditions set forth therein,
Casablanca will be merged with and into Parisian and Parisian will become a
wholly-owned subsidiary of Proffitt's. As soon as practicable after the
satisfaction and waiver of the conditions under the Merger Agreement, Articles
of Merger will be filed with the Secretary of State of the State of Alabama, and
the time of such filing will be the effective time of the Merger (the "Effective
Time"). A meeting of the shareholders of Parisian to consider approval of the
Merger will be held on September 20, 1996.

THE CONSENT SOLICITATION

In connection with the consummation of the transactions contemplated by the
Merger Agreement, Proffitt's intends to seek the consent of the Parisian
Noteholders to the Supplemental Indenture. Under the terms of the Indenture,
approval of holders of not less than a majority in aggregate principal amount of
the Notes (with any Notes held by Parisian and its affiliates being considered
as not outstanding for purposes of such calculation) is required to approve the
Supplemental Indenture. Upon receipt by the Trustee of (i) a request from
Parisian accompanied by a certified copy of the resolutions of Parisian's Board
of Directors authorizing the execution of the Supplemental Indenture, and (ii)
the written consents of holders of not less than a majority in aggregate
principal amount of the Notes to the Supplemental Indenture, the Trustee,
Parisian and Proffitt's will execute the Supplemental Indenture. It is expected
that the Supplemental Indenture, if approved by the Noteholders, will be
executed on or before, and will become effective as of, the date of the
Effective Time.

DESCRIPTION OF THE GUARANTY AND THE SUPPLEMENTAL INDENTURE

THE GUARANTY

If the Supplemental Indenture is approved, Proffitt's, Parisian and the
Trustee will execute the Supplemental Indenture which will provide, among other
things, that (i) payment of the principal of, and interest and premium if any,
on the Notes by Parisian and (ii) the due and punctual performance under the
Indenture of all other obligations of Parisian will be guaranteed on a senior
subordinated basis by Proffitt's. The Guaranty will be an unsecured senior
subordinated obligation of Proffitt's, ranking pari passu with all other
existing and future Indebtedness of Proffitt's that is expressly subordinated to
Parent Senior Indebtedness (as defined below).

The Supplemental Indenture, if approved, will also provide that (i)
Proffitt's waives notice of any default under the Notes, (ii) the Guaranty is
not subject to any defense of setoff, (iii) the Guaranty will continue to be
effective, or will be reinstated, as the case may be, in the event of the
bankruptcy or reorganization of Parisian, (iv) Proffitt's will not be entitled
to any right of subrogation in relation to the Noteholders in respect of the
Guaranty until payment in full of all Guaranteed Obligations has been made in
cash or cash equivalents, (v) Profitt's agrees to pay all costs incurred by the
Trustee or any Noteholder in enforcing any rights under the Guaranty and (vi) no
waiver of any provision of the Guaranty shall be effective unless agreed to in
writing by the Trustee.

Subordination of Guaranty. The indebtedness evidenced by the Guaranty will
be subordinated on the same or a more favorable, basis to Parent Senior
Indebtedness as the Notes are subordinated to Senior Indebtedness (as defined in
the Indenture) of Parisian.

Upon any payment or distribution of assets or securities of Proffitt's in
any dissolution, winding up, total or partial liquidation or reorganization of
Proffitt's, payment under the Guaranty will be subordinated, to the extent and
in the manner set forth in the Supplemental Indenture, to the prior payment in
full (in cash or cash equivalents) of all Parent Senior Indebtedness, including
any interest accruing on such Parent Senior Indebtedness subsequent to the
commencement of a bankruptcy, insolvency or similar proceeding. Upon any default
by Proffitt's in the payment of the principal of,

12
<PAGE>
premium, if any, or interest on Parent Senior Indebtedness, when the same
becomes due, no payment may be made under the Guaranty until such default has
been cured or waived by the holders of such Parent Senior Indebtedness. The
Supplemental Indenture also provides that no payment may be made by Proffitt's
under the Guaranty for the period specified below (the "Parent Payment Blockage
Period") during the continuance of any non-payment event of default with respect
to Significant Parent Senior Indebtedness (as defined below) pursuant to which
the maturity thereof may be accelerated. The Parent Payment Blockage Period
shall commence on the earlier of (i) receipt by the Trustee of notice from any
trustee, representative or agent for the holders of any Significant Parent
Senior Indebtedness (or the holders of a least a majority in principal amount of
such Significant Parent Senior Indebtedness then outstanding) or (ii) if such
non-payment event of default results from the acceleration of the Notes, the
date of such acceleration, and end 179 days thereafter unless such Parent
Payment Blockage Period shall be terminated by written notice to the Trustee
from any trustee, representative or agent for the holders of Significant Parent
Senior Indebtedness (or the holders of at least a majority in principal amount
of such Significant Parent Senior Indebtedness then outstanding). Not more than
one Parent Payment Blockage Period with respect to the Guaranty may be commenced
during any period of 360 consecutive days. No event of default that existed or
was continuing on the date of the commencement of any Parent Payment Blockage
Period with respect to Significant Parent Senior Indebtedness initiating such
period shall be, or be made, the basis for the commencement of a second Parent
Payment Blockage Period by the representative for or the holders of such
Significant Parent Senior Indebtedness whether or not within a period of 360
consecutive days unless such event of default shall have been cured or waived
for a period of not less than 90 consecutive days.

As a result of the subordination provisions described above, in the event of
the liquidation, receivership, reorganization, dissolution or insolvency of
Proffitt's, creditors of Proffitt's who are holders of Parent Senior
Indebtedness may recover more, ratably, than the holders of the Notes and funds
that would be otherwise payable to the holders of the Notes under the Guaranty
will be paid to the holders of the Parent Senior Indebtedness to the extent
necessary to pay the Parent Senior Indebtedness in full in cash or cash
equivalents, and Proffitt's may be unable to meet its obligations fully with
respect to the Guaranty.

As of August 3, 1996, after giving pro forma effect to the Merger, the
aggregate amount of Parent Senior Indebtedness outstanding was $119 million,
including $54 million of guaranties of indebtedness of subsidiaries. Certain of
the operations of Proffitt's are conducted through its subsidiaries. On August
3, 1996, after giving pro forma effect to the Merger, the subsidiaries of
Proffitt's (including Parisian and its subsidiaries) had outstanding
indebtedness of approximately $209 million, including trade payables (in the
case of Parisian, only factored trade payables are included) and excluding the
Notes. The indebtedness evidenced by the Guaranty will be structurally
subordinated to indebtedness of the subsidiaries of Proffitt's, including trade
payables. In the future, Proffitt's may issue additional Parent Senior
Indebtedness to refinance existing indebtedness or for other corporate purposes,
subject to applicable restrictions in the debt instruments of Proffitt's and its
subsidiaries, including the Indenture.

"Parent Senior Indebtedness" means, with respect to Proffitt's, the
principal of and premium, if any, and interest on (including interest that, but
for the filing of a petition initiating any proceeding pursuant to any
bankruptcy law with respect to Proffitt's, would accrue on such obligations,
whether or not such claim is allowed in such bankruptcy proceeding) and all
other monetary obligations of every kind or nature due on or in connection with
any Indebtedness of Proffitt's other than the Notes, whether outstanding on the
date hereof or thereafter Incurred, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Notes. Without limiting the generality
of the foregoing, "Parent Senior Indebtedness" shall include the Indebtedness
under the new bank credit facility or facilities of Proffitt's and/or its
subsidiaries (the "Working Capital Facility") and amounts owed to banks or other
financial institutions pursuant to factoring arrangements for goods, materials
or services purchased in the ordinary course of business. Notwithstanding the
foregoing, "Parent Senior Indebtedness" shall not include (i) Indebtedness of
Proffitt's to a subsidiary or (ii)

13
<PAGE>
amounts owed (except to banks and other financial institutions as aforesaid) for
goods, materials or services purchased in the ordinary course of business.

"Significant Parent Senior Indebtedness" means (i) any Parent Senior
Indebtedness incurred under the Working Capital Facility and (ii) any other
issue of Parent Senior Indebtedness having an outstanding principal amount of at
least $25,000,000 which is specifically designated in the instrument evidencing
or agreement governing such Parent Senior Indebtedness as "Significant Parent
Senior Indebtedness".

The foregoing summary of the Guaranty and related subordination provisions
and the following summary of certain provisions of the Supplemental Indenture do
not purport to be complete and are subject, and are qualified in their entirety
by reference, to the Supplemental Indenture, including the definitions therein
of terms not defined in this Prospectus. A copy of the Supplemental Indenture is
filed as an exhibit to the Registration Statement of which this Prospectus is a
part.

SUPPLEMENTAL INDENTURE

Currently, the Indenture contains covenants restricting the ability of
Parisian and its subsidiaries to incur additional indebtedness, make dividends
and other distributions, enter into transactions with affiliates, grant liens on
their assets, enter into business combination transactions and take certain
other specified actions. If the Supplemental Indenture is approved, these
covenants will become applicable to Proffitt's and its subsidiaries (including
Parisian and its subsidiaries). In addition, the Indenture currently requires
Parisian to file periodic reports with the Commission and to make an offer to
repurchase Notes upon the occurrence of a Change of Control Triggering Event (as
defined therein). If the Supplemental Indenture is approved, Proffitt's will be
substituted for Parisian as the entity which is required to file periodic
reports with the Commission and will guarantee the obligations of Parisian to
make a repurchase offer upon the occurrence of a Change of Control Triggering
Event. In addition, if the Supplemental Indenture is approved, a change of
control of Proffitt's may give rise to a Change of Control Triggering Event.
Although the Supplemental Indenture also includes a limited number of other
changes, including a change to the definition of Net Income, in general the
Supplemental Indenture will expand the coverage of the Indenture covenants to
Proffitt's and its subsidiaries without making substantive changes that are
adverse to the holders of Notes in the terms of those covenants currently
applicable to Parisian and its subsidiaries.

Periodic Reports. Proffitt's will be required under the Supplemental
Indenture to file with the Commission quarterly reports containing such
information as required by Form 10-Q (or the then applicable form for quarterly
reports) for the first three quarters of each fiscal year and annual reports
containing such information as required by Form 10-K (or the then applicable
form for annual reports) that it would be required to file under Section 13 of
the Exchange Act if it had a class of securities listed on a national securities
exchange and to cause such reports to be filed with the Trustee and mailed to
the holders of Notes. Currently, the Indenture requires Parisian to make such
filings and mailings.

Limitation on Indebtedness. As a result of the Supplemental Indenture, the
ability of Proffitt's and its subsidiaries to incur Indebtedness will be
restricted, unless the Consolidated Cash Flow Ratio for Proffitt's and its
consolidated subsidiaries, after giving effect to the incurrence of such
Indebtedness and the application of the proceeds thereof, would be equal to or
greater than 2.25 to 1. Currently, such restrictions apply to Parisian and its
subsidiaries.

In addition, the Supplemental Indenture will increase the exception to the
foregoing restrictions for a credit facility or facilities from the current
level of $50 million for Parisian and its subsidiaries to $325 million for
Proffitt's and its subsidiaries.

Limitation on Restricted Payments. As a result of the Supplemental
Indenture, the ability of Proffitt's and its subsidiaries to (i) declare or pay
any dividend on, or make any distribution in respect of or purchase, redeem or
retire for value, any Capital Stock of Proffitt's, (ii) make any principal
payment on, or redeem, repurchase, defease or otherwise acquire or retire for
value, prior to any scheduled principal payment of maturity, Indebtedness of
Proffitt's or any of its subsidiaries that is expressly

14
<PAGE>
subordinate in right of payment to the Notes or the Guaranty or (iii) make any
loan, incur, or suffer to exist any Guarantee of Indebtedness of, or make any
investment in, any Affiliate of Proffitt's, other than Proffitt's or a
subsidiary of Proffitt's, will be restricted on substantially the same terms as
the Indenture currently restricts Parisian and its subsidiaries.

Limitation on Transactions with Affiliates. As a result of the Supplemental
Indenture, the ability of Proffitt's or any of its subsidiaries to enter into or
suffer to exist any transaction or series of related transactions (including,
without limitation, the sale, purchase, exchange or lease of assets, property or
services) with any Affiliate of Proffitt's, will be restricted on substantially
the same terms as the Indenture currently restricts Parisian and its
subsidiaries. However, as a result of the Supplemental Indenture Proffitt's may
engage in a Permitted Drop Down Transaction.

"Permitted Drop Down Transaction" means a transaction in which Proffitt's
contributes a significant portion or all of its operating assets to a wholly
owned subsidiary, provided that the transaction is designed in good faith to
accommodate Proffitt's tax planning, such wholly owned subsidiary guarantees the
Notes on substantially the same terms as the Guaranty, and the transaction is
not disadvantageous to the Noteholders in the good faith opinion of Proffitt's
Board of Directors.

Limitation on Future Senior Subordinated Indebtedness. As a result of the
Supplemental Indenture, the ability of Proffitt's to Incur any Indebtedness,
other than the Guaranty, that is subordinated in right of payment to any other
Indebtedness of Proffitt's will be restricted, unless such Indebtedness, by its
terms or the terms of the instrument creating or evidencing it, is pari passu
with or subordinated to the Notes. Currently, such restrictions apply to
Parisian.

Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. As a result of the Supplemental Indenture, the ability of
Proffitt's or any of its subsidiaries to create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction on the
ability of any subsidiary of Proffitt's to (a) pay dividends or make any other
distributions on its Capital Stock owned by, or pay any Indebtedness owed to,
Proffitt's or another subsidiary of Proffitt's, (b) make loans or advances to
Proffitt's or a subsidiary of Proffitt's or (c) transfer any of its properties
or assets to Proffitt's or a subsidiary of Proffitt's, will be restricted on
substantially the same terms as the Indenture currently restricts Parisian and
its subsidiaries.

Purchase of Notes Upon Change of Control Triggering Event. If a Change of
Control Triggering Event shall occur at any time, each holder of Notes shall
have the right to require Parisian to repurchase such holder's Notes, in whole
or in part, at a purchase price in cash equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of purchase. As a
result of the Supplemental Indenture, Proffitt's will guarantee the obligation
of Parisian to make a repurchase offer to holders of Notes upon the occurrence
of a Change in Control Triggering Event. A Change of Control Triggering Event
means the occurrence of both a Change of Control and a Rating Decline.

Currently, "Change of Control" is defined in the Indenture with reference to
events affecting Parisian. As a result of the Supplemental Indenture, these same
events will refer to Proffitt's instead of Parisian. Accordingly, the Merger
will not constitute a Change of Control if the Supplemental Indenture is
approved. However, as a result of the Supplemental Indenture, a Change of
Control will be deemed to occur if Proffitt's ceases at any time after the
Merger to own, directly or indirectly, 100% of the total voting power of the
then outstanding voting stock of Parisian.

There can be no assurance that sufficient funds will be available at the
time of any Change of Control Triggering Event to make any required purchases.
In addition, the ability of Parisian to repurchase Notes (and of Proffitt's to
guarantee such repurchase) following a Change of Control Triggering Event may be
limited by the terms of the then existing Senior Indebtedness (and Parent Senior
Indebtedness), including, without limitation, the subordination provisions
described above.

Limitation on Liens. As a result of the Supplemental Indenture, the ability
of Proffitt's to incur any Indebtedness (i) which is, by the terms of the
instrument creating or evidencing such Indebtedness or pursuant to which it is
outstanding, subordinated in right of payment to any other Indebtedness
(including the Guaranty) and (ii) which is secured, directly or indirectly, with
a Lien on the property,

15
<PAGE>
assets or any income or profits thereon of Proffitt's or any of its
subsidiaries, will be restricted on substantially the same terms as the
Indenture currently restricts Parisian.

Limitation on Preferred Stock of Subsidiaries. As a result of the
Supplemental Indenture, the ability of any subsidiary of Proffitt's to issue any
preferred stock or permit any Person to own or hold an interest in any preferred
stock of any such subsidiary will be restricted on substantially the same terms
as the Indenture currently restricts subsidiaries of Parisian.

Consolidation, Merger and Sale of Assets. Currently, the ability of Parisian
to consolidate with or merge with or into any Person or sell, convey, assign,
transfer, lease or otherwise dispose of all or substantially all of its
properties and assets (determined on a consolidated basis for Parisian and its
subsidiaries taken as a whole) to any entity is restricted under the Indenture.
As a result of the Supplemental Indenture, the ability of Proffitt's to
consolidate with or merge with or into any Person or sell, convey, assign,
transfer, lease or otherwise dispose of all or substantially all of its
properties and assets (determined on a consolidated basis for Proffitt's and its
subsidiaries taken as a whole) to any entity will also be restricted on
substantially the same terms as currently apply to Parisian. The restrictions on
any such transactions involving Parisian will, in all material respects, remain
in the Supplemental Indenture.

EVENTS OF DEFAULT

As a result of the Supplemental Indenture, a number of "Events of Default"
with respect to the Notes, which are currently defined solely with reference to
Parisian and/or its subsidiaries, will be amended to cover, in addition,
Proffitt's and/or its subsidiaries. Accordingly, the Events of Default under the
Supplemental Indenture will consist of the following: (a) default in the payment
of any installment of interest on any Note for 30 days after becoming due; (b)
default in the payment of the principal of (or premium, if any, on) any Note
when due; (c) subject to the giving of notice and the expiration of a 60-day
grace period, default in the performance by Proffitt's or Parisian of any other
covenant or agreement contained in the Notes or the Supplemental Indenture; (d)
the failure of Proffitt's or of any of its subsidiaries to pay the principal of
any Indebtedness with a principal amount then outstanding in excess of $10
million, individually or in the aggregate, when the same becomes due and payable
at final maturity and such failure shall continue after any applicable cure or
grace period specified in the agreement relating to such Indebtedness; or a
default on any such Indebtedness which results in such Indebtedness becoming due
and payable prior to its stated maturity; (e) Proffitt's or Parisian, pursuant
to or within the meaning of any bankruptcy law, (i) commences a voluntary case
or proceeding, (ii) consents to the entry of an order for relief against it in
an involuntary case or proceeding, (iii) consents to the appointment of a
receiver, trustee, assignee, liquidator, or similar official under any
bankruptcy law (a "Custodian") for it or for any substantial part of its
property; (iv) makes a general assignment for the benefit of its creditors or
(v) generally is unable to pay its debt as the same becomes due; (f) a court of
competent jurisdiction enters an order or decree under any bankruptcy law that
(i) is for relief against Proffitt's, Parisian or a subsidiary of Proffitt's or
Parisian that has assets or revenues aggregating 10% or more of the consolidated
assets or revenues, respectively, of Proffitt's and its subsidiaries taken as a
whole (a "Significant Subsidiary") in an involuntary case, (ii) appoints a
Custodian of Proffitt's, Parisian or a Significant Subsidiary or for any
substantial part of its property or (iii) orders the liquidation of Proffitt's,
Parisian or a Significant Subsidiary, and in any such case the order or decree
remains in effect for 60 days; or (g) Proffitt's or any of its subsidiaries
shall fail to discharge any final judgment or judgments, from which no further
appeal may be taken, to the extent the amount of such judgment or judgments
exceed applicable insurance coverage by more than $5 million, individually or in
the aggregate (treating any deductibles, self insurance or retention as not so
covered), and such judgment or judgments shall remain in force, undischarged,
unsatisfied, unstayed and unbounded for more than 60 days.

16
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS

The following Unaudited Pro Forma Condensed Combined Financial Statements
are based on the consolidated financial statements of Proffitt's, incorporated
by reference herein, and Parisian, included elsewhere in this Prospectus,
adjusted to give effect to the Merger.

The Unaudited Pro Forma Condensed Combined Balance Sheet is derived from the
consolidated balance sheets of Proffitt's, incorporated by reference herein, and
Parisian, included elsewhere in this Prospectus, as of May 4, 1996 and assumes
the Merger was consummated on May 4, 1996. The unaudited Pro Forma Condensed
Combined Income Statements are derived from the consolidated income statements
for the fiscal year ended February 3, 1996 and for the three-month period ended
May 4, 1996 of Proffitt's, incorporated by reference herein, and Parisian,
included elsewhere in this Prospectus, and assume that the Merger was
consummated as of January 29, 1995. These pro forma financial statements are
presented for illustrative purposes only, and therefore are not necessarily
indicative of the operating results and financial position that might have been
achieved had the Merger occurred as of an earlier date, nor are they necessarily
indicative of operating results and financial position which may occur in the
future.

The unaudited pro forma information with respect to the Merger is based on
the historical financial statements of the business acquired. The Merger is and
will be accounted for under the purchase method of accounting. The purchase
price for the Merger, including the related fees and expenses, has been
allocated to the tangible and identifiable intangible assets and liabilities of
the acquired business based on Proffitt's preliminary estimates of their fair
value with the remainder allocated to goodwill and other assets to be
identified. The allocation of purchase price for the Merger is subject to
revision when additional information concerning asset and liability valuation
becomes available. Pro forma adjustments included in the unaudited pro forma
information are those that are directly attributable to the Merger.

The unaudited pro forma condensed combined financial statements should be
read in conjunction with the historical consolidated financial statements and
notes thereto in the Annual Report on Form 10-K for the year ended February 3,
1996 and Quarterly Report on Form 10-Q for the period ended May 4, 1996 for
Proffitt's, incorporated by reference herein, and the financial statements of
Parisian, included elsewhere in this Prospectus. See "AVAILABLE INFORMATION" and
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE" and the Consolidated Financial
Statements of Parisian included herein.

17
<PAGE>
PRO FORMA CONDENSED COMBINED INCOME STATEMENTS (UNAUDITED)
FOR THE YEAR ENDED FEBRUARY 3, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
PRO FORMA
MERGER PRO FORMA
PROFFITT'S PARISIAN ADJUSTMENTS (7) TOTAL
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
Net sales.................................. $1,333,498 $663,828 $1,997,326
Costs and expenses:
Cost of sales............................ 873,218 419,056 700(1) 1,292,974
Selling, general and administrative
expenses............................... 324,650 165,237 (1,600)(1) 488,287
Other operating expenses................. 105,021 56,252 (2,200)(2) 162,973
3,900(6)
Expenses related to hostile takeover
defense................................ 3,182 3,182
Impairment of long-lived assets.......... 19,121 19,121
Merger, restructuring and integration
costs.................................. 20,822 20,822
---------- -------- --------------- ----------
Operating income (loss)................ (12,516) 23,283 (800) 9,967
Other income (expenses):
Finance charge income, net of allocation
to purchasers of accounts receivable... 31,273 7,125 38,398
Interest expense......................... (26,098) (17,652) (9,300)(3) (53,050)
Other income, net........................ 2,848 2,407 5,255
---------- -------- --------------- ----------
Income (loss) before provision for income
taxes and extraordinary loss........... (4,493) 15,163 (10,100) 570
Provision for income taxes................. 1,906 6,385 (2,600)(4) 5,691
---------- -------- --------------- ----------
Net (loss) income before extraordinary
loss................................... (6,399) 8,778 (7,500) (5,121)
Preferred stock dividends.................. 1,950 1,950
---------- -------- --------------- ----------
Net income (loss) available to common
shareholders before extraordinary loss. $ (8,349) $ 8,778 $ (7,500) $ (7,071)
---------- -------- --------------- ----------
---------- -------- --------------- ----------
Loss per common share before extraordinary
loss................................... $ (0.43) $ (0.31)
---------- ----------
---------- ----------
Weighted average common shares............. 19,372 3,102(5) 22,474
---------- --------------- ----------
---------- --------------- ----------
</TABLE>

18
<PAGE>
PRO FORMA CONDENSED COMBINED INCOME STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS ENDED MAY 4, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
PRO FORMA
MERGER PRO FORMA
PROFFITT'S PARISIAN ADJUSTMENTS(7) TOTAL
----------- -------- -------------- ---------
<S> <C> <C> <C> <C>
Net sales.................................... $ 296,561 $166,047 $ 462,608
Costs and expenses:
Cost of sales.............................. 192,892 99,404 300(1) 292,596
Selling, general and administrative
expenses 71,537 42,472 (400)(1) 113,609
Other operating expenses 24,398 14,367 (500)(2) 39,265
1,000(6)
Merger, restructuring and integration
costs.................................... 2,763 2,763
Gain on sale of assets..................... (2,260) (2,260)
----------- -------- ------- ---------
Operating income......................... 7,231 9,804 (400) 16,635
Other income (expense):
Finance charge income, net of allocation to
purchasers of accounts receivable........ 7,160 2,156 9,316
Interest expense........................... (4,105) (4,245) (2,300)(3) (10,650)
Other income, net.......................... 370 143 513
----------- -------- ------- ---------
Income before provision for income
taxes.................................. 10,656 7,858 (2,700) 15,814
Provision for income taxes................... 4,402 3,307 (650)(4) 7,059
----------- -------- ------- ---------
Net income............................... 6,254 4,551 (2,050) 8,755
Preferred stock dividends.................... 488 488
----------- -------- ------- ---------
Net income available to common
shareholders........................... $ 5,766 $ 4,551 $ (2,050) $ 8,267
----------- -------- ------- ---------
----------- -------- ------- ---------
Earnings per common share.................... $ 0.29 $ 0.36
----------- ---------
----------- ---------
Weighted average common shares............... 19,744 3,102(5) 22,846
----------- ------- ---------
----------- ------- ---------
</TABLE>

19
<PAGE>
PROFFITT'S, INC.
NOTES TO PRO FORMA CONDENSED COMBINED INCOME STATEMENTS
(IN THOUSANDS)

(1) To conform Parisian's direct cost method of accounting for inventory to the
full cost method used by Proffitt's and to conform Parisian's presentation
of certain expenses with that of Proffitt's.

(2) To conform Parisian's accounting method for store preopening costs of
deferral and amortization over twelve months to Proffitt's accounting method
of expensing such costs as incurred and to reflect the amortization of the
liability established for unfavorable lease obligations.

(3) To reflect interest expense on acquisition debt of approximately $125,300,
7.4% for the periods ended February 3, 1996 and May 4, 1996, assuming that
the debt was outstanding throughout the periods.

(4) To reflect the income tax impact of the pro forma merger adjustments using
an effective rate of 40%.

(5) To reflect the Proffitt's Common Shares and Equivalents issued to the
Parisian shareholders.

(6) To reflect the increase in depreciation and amortization resulting from the
preliminary purchase price allocation.

(7) Pro Forma adjustments do not include any charges or benefits related to the
integration of the operations of the business.

20
<PAGE>
PRO FORMA CONDENSED COMBINED BALANCE SHEETS (UNAUDITED)
MAY 4, 1996
(IN THOUSANDS)

<TABLE>
<CAPTION>
PRO FORMA
MERGER PRO FORMA
PROFFITT'S PARISIAN ADJUSTMENTS TOTAL
---------- -------- ----------- ----------
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents................. $ 2,014 $ 1,821 $ 3,835
Restricted cash and short term
investments............................. 2,030 2,030
Net trade accounts receivable, less
receivables sold to third parties....... 32,038 36,193 68,231
Merchandise inventories................... 317,004 150,988 8,000(1) 475,992
Other current assets...................... 16,513 3,379 19,892
Deferred income taxes..................... 3,750 3,669 1,000(1) 8,419
---------- -------- ----------- ----------
Total current assets.................. 371,319 198,080 9,000 578,399
Property and equipment, net................... 380,836 71,331 11,000(1) 463,167
Goodwill and other assets to be identified.... 52,450 59,801 159,842(1) 272,093
Other assets.................................. 21,288 16,482 (12,000)(1) 25,770
---------- -------- ----------- ----------
$ 825,893 $345,694 $ 167,842 $1,339,429
---------- -------- ----------- ----------
---------- -------- ----------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable.................... $ 86,234 $ 36,789 $ 123,023
Accrued expenses.......................... 64,725 24,036 12,000(1) 100,761
Current portion of long-term debt and
capital lease obligations..................... 16,900 2,859 19,759
---------- -------- ----------- ----------
Total current liabilities............. 167,859 63,684 12,000 243,543
Real estate and mortgage notes................ 86,211 22,539 108,750
Notes payable................................. 27,754 125,300(2) 153,054
Capital lease obligations..................... 10,715 11,473 22,188
Deferred income taxes......................... 53,957 8,227 (9,000)(1) 53,184
Other long-term liabilities................... 15,008 30,289 19,000(1) 64,297
Subordinated debt............................. 100,568 125,000 225,568
Shareholders' equity.......................... 363,821 84,482 105,024(1) 468,845
(84,482)(1)
---------- -------- ----------- ----------
$ 825,893 $345,694 $ 167,842 $1,339,429
---------- -------- ----------- ----------
---------- -------- ----------- ----------
</TABLE>

21
<PAGE>
PROFFITT'S, INC.
NOTES TO PRO FORMA CONDENSED COMBINED BALANCE SHEET
(IN THOUSANDS)

(1) The Merger will be accounted for as a purchase in accordance with Accounting
Principles Board Opinion No. 16, "Business Combinations." The purchase price
is to be allocated first to tangible assets and identifiable intangible
assets and liabilities of Parisian based on preliminary estimates of their
fair market values, with the remainder allocated to goodwill and other
assets to be identified. The purchase price and the preliminary purchase
price allocation are as follows:

<TABLE>
<CAPTION>
<S> <C>
Cash consideration paid......................................... $110,300
Common Stock and Common Stock Equivalents....................... 105,024
Transaction Expenses............................................ 15,000
--------
Purchase Price.............................................. 230,324
Historical book value of net assets acquired.................... (84,482)
--------
Excess of purchase price over historical book value of assets
acquired........................................................ $145,842
--------
--------
Allocation of excess purchase price:
Increase inventories to fair value.......................... $ 8,000
Increase property and equipment to fair value............... 11,000
Increase in goodwill and other assets to be identified...... 159,842
Write-off duplicate assets to be abandoned and existing
deferred store preopening costs, and decrease other assets
to fair value................................................... (12,000)
Accrue merger costs......................................... (12,000)
Adjust lease commitments to fair value...................... (19,000)
Changes in deferred income taxes for tax effect of the
aforementioned adjustments:
Increase in deferred tax assets--current.................. 1,000
Increase in deferred tax liabilities--noncurrent.......... 9,000
--------
$145,842
--------
--------
</TABLE>

(2) To reflect acquisition debt.

22
<PAGE>
PLAN OF DISTRIBUTION

A copy of this Prospectus will be delivered to the Noteholders as part of
the information forwarded to them in connection with the solicitation of their
consent to the Supplemental Indenture.

LEGAL OPINIONS

Certain legal matters in connection with the Guaranty will be passed upon
for Proffitt's by Sommer & Barnard, Attorneys at Law, PC.

EXPERTS

The consolidated financial statements appearing in Proffitt's Form 10-K as
of February 3, 1996 and January 28, 1995 and for each of the three years in the
period ended February 3, 1996, have been audited by Coopers & Lybrand L.L.P.,
independent accountants, as set forth in their report thereon and included
therein and incorporated by reference herein. Such report, as it relates to the
amounts included for Younkers, Inc., for the years ended January 28, 1995 and
January 29, 1994, is based solely on the reports of Deloitte & Touche, LLP, and
Ernst & Young, LLP, independent accountants, respectively, included in such Form
10-K and incorporated herein by reference. Such consolidated financial
statements are incorporated by reference herein in reliance upon such reports
given upon the authority of such firms as experts in accounting and auditing.

The consolidated financial statements of Parisian as of February 3, 1996 and
January 28, 1995, and for each of the three years in the period ended February
3, 1996, appearing in this Prospectus and the Registration Statement have been
audited by Coopers & Lybrand L.L.P., independent accountants, as set forth in
their report thereon appearing elsewhere herein and in the Registration
Statement. Such consolidated financial statements are included herein and in the
Registration Statement in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.

23
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
OF PARISIAN

Consolidated Financial Statements:

Report of Independent Accountants................................................... F-2

Consolidated Balance Sheets as of January 28, 1995, February 3, 1996 and May 4, 1996
(unaudited)....................................................................... F-3

Consolidated Statements of Operations for the years ended January 29, 1994, January
28, 1995 and February 3, 1996 and for the periods from January 29, 1995 through
April 29, 1995 (unaudited) and February 4, 1996 through May 4, 1996 (unaudited)... F-4

Consolidated Statements of Changes in Shareholders Equity for the years ended
January 29, 1994, January 28, 1995 and February 3, 1996........................... F-5

Consolidated Statements of Cash Flows for the years ended January 29, 1994, January
28, 1995 and February 3, 1996 and for the periods from January 29, 1995 through
April 29, 1995 (unaudited) and February 4, 1996 through May 4, 1994 (unaudited)... F-6

Notes to Consolidated Financial Statements.......................................... F-7
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Directors
Parisian, Inc.

We have audited the accompanying consolidated balance sheets of Parisian,
Inc. and subsidiaries as of January 28, 1995 and February 3, 1996, and the
related consolidated statements of operations, changes in shareholders' equity
and cash flows for the years ended January 29, 1994, January 28, 1995, and
February 3, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Parisian, Inc.
and subsidiaries as of January 28, 1995 and February 3, 1996, and the
consolidated results of their operations and their cash flows for the years
ended January 29, 1994, January 28, 1995 and February 3, 1996, in conformity
with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Birmingham, Alabama
March 22, 1996

F-2
<PAGE>
PARISIAN INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JANUARY 28, 1995, FEBRUARY 3, 1996, AND MAY 4, 1996

<TABLE>
<CAPTION>
JANUARY 28, FEBRUARY 3, MAY 4,
1995 1996 1996
------------ ------------ ------------
<S> <C> <C> <C>
(UNAUDITED)
ASSETS
Cash and cash equivalents....................... $ 394,377 $ 1,858,541 $ 1,821,301
Restricted cash and short-term investments...... 2,190,000 2,020,000 2,030,000
Accounts receivable, net........................ 34,953,764 39,205,613 36,192,716
Merchandise inventory........................... 119,924,513 143,045,118 150,988,075
Prepaid expenses................................ 4,103,356 5,375,343 3,379,182
Deferred income taxes........................... 3,412,662 3,668,660 3,668,660
Federal and state income tax receivable......... 3,876,996
------------ ------------ ------------
Total current assets...................... 168,855,668 195,173,275 198,079,934
------------ ------------ ------------
------------ ------------ ------------
Property and equipment, less accumulated
depreciation and amortization................... 74,479,814 71,469,103 71,331,388
Goodwill, net................................... 62,137,207 60,268,477 59,801,295
Deferred financing costs, net................... 4,239,446 3,686,542 3,497,648
Other........................................... 13,409,614 13,608,883 12,983,642
------------ ------------ ------------
Total assets.............................. $323,121,749 $344,206,280 $345,693,907
------------ ------------ ------------
------------ ------------ ------------

LIABILITIES
Short-term debt, including current portion of
long-term debt................................ $ 8,549,410 $ 2,863,604 $ 2,858,604
Accounts payable................................ 40,949,864 42,305,004 36,788,884
Accrued store rent.............................. 1,026,703 1,842,683 (457,612)
Federal and state income tax payable............ 1,184,949 2,777,595
Sales tax payable............................... 6,188,263 6,476,474 6,185,180
Other........................................... 10,836,673 11,901,969 15,531,306
------------ ------------ ------------
Total current liabilities................. 67,550,913 66,574,683 63,683,957
Long-term debt, less current portion above...... 158,792,902 159,869,298 159,012,006
Deferred income taxes........................... 8,170,795 8,167,214 8,227,214
Store opening reimbursements.................... 14,011,239 26,026,488 25,207,798
Other........................................... 3,443,067 3,637,760 5,080,825
------------ ------------ ------------
Total liabilities......................... 251,968,916 264,275,443 261,211,800
------------ ------------ ------------
SHAREHOLDERS' EQUITY
Convertible preferred stock, par value $.01 per
share, 12,000,000 shares, none issued
Common stock, par value $.01 per share,
authorized 65,000,000 shares, issued and
outstanding 7,355,846 shares at January 28,
1995 and February 3, 1996..................... 73,558 73,558 73,558
Paid-in capital................................. 87,959,792 87,959,792 87,959,792
Accumulated deficit............................. (16,880,517) (8,102,513) (3,551,243)
------------ ------------ ------------
Total shareholders' equity................ 71,152,833 79,930,837 84,482,107
------------ ------------ ------------

Total liabilities and shareholders'
equity.......................................... $323,121,749 $344,206,280 $345,693,907
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-3
<PAGE>
PARISIAN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JANUARY 29, 1994, JANUARY 28, 1995, AND FEBRUARY 3, 1996
AND THE PERIODS FROM JANUARY 29, 1995 THROUGH APRIL 29, 1995
AND FEBRUARY 4, 1996 THROUGH MAY 4, 1996

<TABLE>
<CAPTION>
FOR THE PERIOD FROM:
-----------------------------
FOR THE YEAR ENDED: JANUARY 29, FEBRUARY 4,
------------------------------------------ 1995 1996
JANUARY 29, JANUARY 28, FEBRUARY 3, THROUGH THROUGH
1994 1995 1996 APRIL 29, 1995 MAY 4, 1996
------------ ------------ ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Net sales, including leased
departments.................... $517,667,748 $606,716,896 $663,827,999 $ 155,350,983 $166,047,316

Costs and expenses:
Cost of sales................. 328,505,911 393,948,510 419,055,866 91,874,276 99,403,916
Selling, general, and
administrative expenses........ 137,110,373 159,987,520 165,236,749 40,544,901 42,472,054

Other operating expenses:
Property and equipment
rentals........................ 14,436,483 21,583,330 29,787,936 7,061,165 7,858,391
Depreciation and
amortization................... 12,850,190 12,855,933 12,618,367 3,212,040 2,952,584
Taxes other than income
taxes.......................... 10,497,041 12,699,576 13,542,117 3,577,625 3,556,242
Reengineering costs......... 3,184,725 304,369
------------ ------------ ------------ -------------- ------------
Operating income.......... 14,267,750 2,457,302 23,282,595 9,080,976 9,804,129

Other income (expense):
Finance charge income......... 9,930,691 8,046,347 7,125,115 1,627,616 2,156,027
Interest expense.............. (21,617,385) (18,051,210) (17,651,879) (4,438,687) (4,244,777)
Other, net.................... 155,901 411,194 2,407,349 1,110,111 142,769
------------ ------------ ------------ -------------- ------------
Income (loss) before
provision (benefit) for
income taxes and
extraordinary item............. 2,736,957 (7,136,367) 15,163,180 7,380,016 7,858,148
Provision (benefit) for income
taxes.......................... 1,704,530 (1,673,554) 6,385,176 2,901,380 3,306,879
------------ ------------ ------------ -------------- ------------
Income (loss) before
extraordinary item............. 1,032,427 (5,462,813) 8,778,004 4,478,636 4,551,269
Extraordinary loss from early
retirement of debt (net of
income tax benefit of
$3,092,179).................... (5,402,819)
------------ ------------ ------------ -------------- ------------
Net income (loss)........... $ (4,370,392) $ (5,462,813) $ 8,778,004 $ 4,478,636 $ 4,551,269
------------ ------------ ------------ -------------- ------------
------------ ------------ ------------ -------------- ------------
Income (loss) per common and
common equivalent share before
extraordinary item............. $ .17 $ (.78) $ 1.19 $ 0.61 $ 0.62
Extraordinary loss per common
and common equivalent share... (.87)
------------ ------------ ------------ -------------- ------------
Net income (loss) per common
and common equivalent share... $ (.70) $ (.78) $ 1.19 $ 0.61 $ 0.62
------------ ------------ ------------ -------------- ------------
------------ ------------ ------------ -------------- ------------
Weighted average common and
common equivalent shares....... 6,208,180 6,986,952 7,355,846 7,355,846 7,355,846
------------ ------------ ------------ -------------- ------------
------------ ------------ ------------ -------------- ------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-4
<PAGE>
PARISIAN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED JANUARY 29, 1994, JANUARY 28, 1995, AND FEBRUARY 3, 1996

<TABLE>
<CAPTION>
TOTAL
PREFERRED COMMON PAID-IN ACCUMULATED SHAREHOLDERS'
STOCK STOCK CAPITAL DEFICIT EQUITY
--------- ------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance, January 30, 1993........ $ 0 $62,082 $73,052,973 $(7,047,312) $ 66,067,743

Net loss......................... (4,370,392) (4,370,392)
--------- ------- ----------- ----------- -------------

Balance, January 29, 1994........ 0 62,082 73,052,973 (11,417,704) 61,697,351
Issuance of common stock, net of
$81,705 in issuance costs,
1,147,666 shares................. 11,476 14,906,819 14,918,295
Net loss......................... (5,462,813) (5,462,813)
--------- ------- ----------- ----------- -------------
Balance, January 28, 1995........ 0 73,558 87,959,792 (16,880,517) 71,152,833
Net income....................... 8,778,004 8,778,004
--------- ------- ----------- ----------- -------------
Balance, February 3, 1996........ $ 0 $73,558 $87,959,792 $(8,102,513) $ 79,930,837
--------- ------- ----------- ----------- -------------
--------- ------- ----------- ----------- -------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-5
<PAGE>
PARISIAN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JANUARY 29, 1994, JANUARY 28, 1995, AND FEBRUARY 3, 1996
AND THE PERIODS FROM JANUARY 29, 1995 THROUGH APRIL 29, 1995 AND FEBRUARY 4,
1996 THROUGH MAY 4, 1996
<TABLE>
<CAPTION>
FOR THE PERIOD FROM:
----------------------------
FOR THE YEAR ENDED: JANUARY 29, FEBRUARY 4,
------------------------------------------- 1995 1996
JANUARY 29, JANUARY 28, FEBRUARY 3, THROUGH THROUGH
1994 1995 1996 APRIL 29, 1995 MAY 4, 1996
------------- ------------ ------------ -------------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)................................. $ (4,370,392) $ (5,462,813) $ 8,778,004 $ 4,478,636 $4,551,269
------------- ------------ ------------ -------------- -----------
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization................... 12,850,190 12,855,933 12,618,367 3,212,040 2,952,584
Amortization of deferred financing costs........ 1,022,338 1,099,532 1,191,496 257,334 188,894
Proceeds from the initial sale of accounts
receivable.................................... 90,500,000
Provision for losses on accounts receivable..... 2,869,546 2,827,348 3,986,023 847,167 1,078,437
Loss (gain) on disposal of property and
equipment..................................... 370,174 443,649 (1,814,341) (928,753) (2,461)
Deferred compensation........................... 231,544 114,887 198,091 49,523 50,576
Write-off of unamortized financing costs (net of
tax).......................................... 2,063,819
Loss from redemption of debt (net of tax)....... 3,339,000
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable.......................... (6,301,365) (1,937,633) (8,237,872) 2,887,131 1,934,460
Merchandise inventory........................ (14,002,448) (18,061,935) (23,120,605) (9,655,164) (7,942,957)
Prepaid expenses............................. 1,151,554 (247,182) (1,271,987) 1,552,274 1,996,161
Other........................................ (10,433,472) (7,316,879) (5,294,953) (502,359) (578,564)
Increase (decrease) in:
Accounts payable............................. (3,765,665) 5,037,697 1,551,362 (8,647,673) (5,416,682)
Accrued store rent........................... (234,160) 59,726 815,980 192,210 (2,300,295)
Federal and state income taxes............... (2,850,263) (1,442,785) 5,061,945 3,105,968 1,592,646
Sales tax payable............................ 589,857 152,475 288,211 195,098 (291,294)
Deferred income taxes........................ 439,040 (1,734,382) (259,579) 2,968,063 60,000
Other liabilities............................ 799,686 2,875,671 2,199,993 3,970,548 3,997,868
------------- ------------ ------------ -------------- ----------
Total adjustments.......................... 78,639,375 (5,273,878) (12,087,869) (496,593) (2,680,627)
------------- ------------ ------------ -------------- ----------
Net cash provided by (used in) operating
activities............................... 74,268,983 (10,736,691) (3,309,865) 3,982,043 1,870,642
------------- ------------ ------------ -------------- ----------
Cash flows from investing activities:
(Increase) decrease in restricted cash and
short-term investments............................. 1,711,731 (270,000) 170,000 70,000 (10,000)
Proceeds from sale of property and equipment...... 29,325 1,085 9,937,589 1,585,980 2,461
Increase in cash value of life insurance.......... (338,775) (364,613) (337,110) (90,000) (90,000)
Capital expenditures.............................. (14,974,339) (5,729,644) (10,735,276) (305,245) (1,211,195)
Store opening reimbursements...................... 2,000,000 2,600,000 10,986,827 263,144
------------- ------------ ------------ -------------- ----------
Net cash provided by (used in) investing
activities............................... (11,572,058) (3,763,172) 10,022,030 1,260,735 (1,045,590)
------------- ------------ ------------ -------------- ----------
Cash flows from financing activities:
Borrowings under revolving credit agreements...... 28,200,000 38,500,000 36,905,343 12,000,000
Payments under revolving credit agreements........ (105,200,000) (36,500,000) (38,905,343) (14,000,000)
Principal payments of long-term debt.............. (2,242,248) (2,395,323) (6,549,410) (785,295) (862,292)
Proceeds from the issuance of subordinated
notes........................................... 125,000,000
Redemption of subordinated debentures............. (100,000,000)
Payment of financing costs........................ (5,575,969) (204,361) (638,591) (175,365)
Premium paid on redemption of debentures (net of
tax)............................................ (3,339,000)
Proceeds from issuance of common stock............ 14,918,295
Proceeds from bond refunding...................... 3,940,000
------------- ------------ ------------ -------------- ----------
Net cash provided by (used in) financing
activities............................... (63,157,217) 14,318,611 (5,248,001) (2,960,660) (862,292)
------------- ------------ ------------ -------------- ----------
Net increase (decrease) in cash and cash
equivalents.............................. (460,292) (181,252) 1,464,164 2,282,118 (37,240)
Cash and cash equivalents, beginning of period..... 1,035,921 575,629 394,377 394,377 1,858,541
------------- ------------ ------------ -------------- ----------
Cash and cash equivalents, end of period........... $ 575,629 $ 394,377 $ 1,858,541 $ 2,676,495 $1,821,301
------------- ------------ ------------ -------------- ----------
------------- ------------ ------------ -------------- ----------
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest........................................ $ 23,065,471 $ 17,089,008 $ 17,001,105 $ 1,303,544 $ 980,828
------------- ------------ ------------ -------------- ----------
------------- ------------ ------------ -------------- ----------
Income taxes.................................... $ 2,203,733 $ 2,003,555 $ 4,991,703 $ 192,410 $2,202,175
------------- ------------ ------------ -------------- ----------
------------- ------------ ------------ -------------- ----------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-6
<PAGE>
PARISIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies followed by
the Company.

The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries, Parisian Services, Inc. (Parisian Services),
Parisian Management Company, Inc., Parisian of Tennessee, Inc., and Hess
Specialty Department Store, L.L.C. Parisian Services was formed for the purpose
of financing customer accounts receivable of the Company and financing future
credit purchases by the Company's customers. All material intercompany accounts
and transactions have been eliminated.

The Company currently operates thirty-six specialty department stores
located in Alabama, Florida, Georgia, Tennessee, South Carolina, Ohio, Indiana,
and Michigan and one clearance center in Alabama. The Company sells moderate to
better-priced fashion merchandise including apparel, cosmetics, shoes,
accessories, and gifts for the family. The Company performs ongoing credit
evaluations of its customers and maintains reserves for potential credit losses.

The value of merchandise inventory is determined by the retail inventory
method, using last-in, first-out (LIFO) cost, which is lower than market for
approximately 18% and 17% of the inventory and the lower of average cost or
market for the balance of the inventory for 1995 and 1996, respectively. If
average cost had been used for all inventory, the January 28, 1995 and February
3, 1996 merchandise inventory would have been higher by approximately $2,439,000
and $2,709,000, respectively.

Certain expenditures incurred prior to the opening of new stores are
deferred and charged to income on the straight-line basis over a twelve-month
period following the date the related store is opened.

Property and equipment is recorded at cost and depreciation and amortization
are computed using the straight-line method. All property and equipment, except
improvements to leased premises and land, is depreciated over its estimated
useful life. Improvements to leased premises are amortized over the
noncancelable terms of the leases. Costs for repairs and maintenance are
expensed as incurred.

Expenditures for certain computer software and related customization are
recorded at cost and amortized using the straight-line method over the expected
life of the licensing agreement. Additionally, certain related leased computer
hardware and supporting software are being amortized using the straight-line
method from the beginning amortization dates of the licensing agreement to the
end of the hardware lease term. Such expenditures, included in other assets,
totaled $8,304,722 and $9,885,824 as of January 28, 1995 and February 3, 1996,
respectively. As of January 28, 1995 and February 3, 1996, accumulated
amortization of expenditures related to software systems implemented was
$1,035,794 and $2,542,732, respectively.

Store opening reimbursements represent amounts received from developers in
reimbursement of certain expenses incurred during the opening of a new store.
Store opening reimbursements are amortized over the noncancelable term of the
lease.

Goodwill, the excess of purchase price over the fair value of the net assets
acquired arising from a 1988 leveraged buy-out transaction, is being amortized
on a straight-line basis over 40 years. As of January 28, 1995 and February 3,
1996, the accumulated amortization of goodwill is $12,611,997 and $14,480,727,
respectively.

Deferred financing costs represent fees and costs directly related to the
issuance of debt. These costs are amortized using the straight-line method over
the terms of the specific borrowings or commitments to which they relate and are
included in interest expense.

F-7
<PAGE>
PARISIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
The Company expenses advertising cost when the advertising takes place.
Advertising expense was $10,570,390, $14,814,426, and $19,470,129 in 1994, 1995,
and 1996, respectively.

For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents.

Deferred income taxes are recorded to reflect the tax consequences on future
years of differences between the tax bases of assets and liabilities and their
financial reporting amounts in accordance with Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes.

Reengineering costs include implementation of cost containment measures
primarily directed at payroll as well as customer surveys to refine the
Company's market focus.

Net income (loss) per common and common equivalent share is computed by
dividing net income (loss) by the weighted average number of common and common
equivalent shares outstanding during the periods. The effect of common stock
options on net income (loss) per common and common equivalent share for all
years presented is insignificant or antidilutive.

During the year ended February 3, 1996, the Company adopted SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of. The adoption of this accounting standard had no impact on the
Company's financial statements. SFAS No. 123, Accounting for Stock-Based
Compensation was issued during 1995. The Company anticipates that the adoption
of this accounting standard will not be material to its financial condition.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.

Certain reclassifications have been made in the previously reported
financial statements and accompanying notes to make the prior year amounts
comparable to those of the current year. Such reclassifications had no effect on
previously reported net income, total assets, or stockholders' equity.

In management's opinion, all adjustments are included to fairly present
quarterly results and all such adjustments are of a normal and recurring nature.
The results of the interim periods are not necessarily indicative of the results
for a full year's operations.

2. ACCOUNTS RECEIVABLE

Accounts receivable is shown net of allowances for doubtful accounts and
return sales of $2,805,934 and $3,058,088 for January 28, 1995 and February 3,
1996, respectively. The provision for losses from bad debts, less recoveries, is
included in selling, general, and administrative expenses and amounted to
$2,869,546, $2,827,348, and $3,986,023 for the years ended January 29, 1994,
January 28, 1995, and February 3, 1996, respectively.

On March 31, 1993, the Company entered into an agreement through its
subsidiary, Parisian Services, with Sheffield Receivables Corporation
(Sheffield), whereby Sheffield agreed to provide up to $160 million in capital
against eligible accounts receivable generated by holders of the Company's
proprietary credit card accounts (the Receivables) pursuant to a nonrecourse
facility (the Receivables Facility), which expires in July 1998. As of such
date, Parisian Services sold an undivided interest in the

F-8
<PAGE>
PARISIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

2. ACCOUNTS RECEIVABLE--(CONTINUED)
Receivables to Sheffield and utilized the proceeds from such sale to repay in
full Parisian Services' then outstanding indebtedness under the receivables loan
agreement, which was then terminated. At January 28, 1995 and February 3, 1996,
$109.5 and $101.0 million, respectively, of the available receivables had been
sold to Sheffield and accounted for as a reduction of accounts receivable.
Parisian Services retains a residual undivided interest in the Receivables equal
to the undivided interest not purchased by Sheffield. Sheffield's undivided
interest and, accordingly, Parisian Services' undivided interest fluctuate each
business day based upon the amount of capital invested in relation to the pool
of eligible Receivables. The Company services and collects the Receivables. A
cash reserve equal to 2% of aggregate capital is required under the agreement
and is included in the restricted cash and short-term investments balance.

Sheffield finances the purchase of its undivided interest in the Receivables
primarily through the issuance of commercial paper or, alternatively, the
obtaining of revolving loans from the Liquidity Facility (defined below). The
discount and interest costs are funded from the Receivables. The Receivables
Facility receives liquidity support from a consortium of five banks (the
Liquidity Facility) which have agreed to provide standby funding under certain
specified conditions. Repayment of the amounts due under the commercial paper or
revolving loans is without recourse to Parisian Services and is made solely
through collections of Sheffield's undivided interest in Receivables.

3. PROPERTY AND EQUIPMENT

A summary of property and equipment is as follows:

<TABLE>
<CAPTION>
JANUARY 28, FEBRUARY 3,
1995 1996
------------ ------------
<S> <C> <C>
Land.......................................... $ 920,903 $ 893,474
Buildings..................................... 57,442,129 51,734,084
Furniture, fixtures, and equipment............ 52,297,250 53,018,433
Leasehold improvements........................ 6,088,111 6,585,766
Transportation equipment...................... 2,524,363 268,285
------------ ------------
119,272,756 112,500,042
Less accumulated depreciation and
amortization.................................. 44,792,942 41,030,939
------------ ------------
$ 74,479,814 $ 71,469,103
------------ ------------
------------ ------------
</TABLE>

In November 1995, the Company sold its store location in Sarasota, Florida,
resulting in a gain of $1,725,783. The Sarasota store remained open throughout
most of January 1996 and closed prior to February 3, 1996. In connection with
this sale, the Company acquired the right to assume the lease for a store
location in Columbia, South Carolina and also received certain additional
consideration. The Company airplane was sold in 1995 resulting in a gain of
$1,180,090. In conjunction with the expansion and remodeling of one store, the
Company disposed of furniture, fixtures, and equipment with a net book value of
$893,269.

F-9
<PAGE>
PARISIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

4. SHORT-TERM AND LONG-TERM DEBT

Short-term and long-term debt consist of the following:

<TABLE>
<CAPTION>
JANUARY 28, 1995 FEBRUARY 3, 1996
------------------------ ------------------------

YEAR-END YEAR-END
AMOUNT RATE AMOUNT RATE
------------ -------- ------------ --------
<S> <C> <C> <C> <C>
Short-term debt:
Bank revolving credit agreement............ $ 2,000,000 9.75% $ 0
Tax-exempt promissory note--On April 1,
1995, the note became payable on demand
and was paid in May 1995................. 4,109,749 7.22% 0
Current portion of long-term debt.......... 2,439,661 Various 2,863,604 Various
------------ ------------
Total short-term debt.................. $ 8,549,410 $ 2,863,604
------------ ------------
------------ ------------
Long-term debt:
Senior subordinated notes.................. $125,000,000 9.875% $125,000,000 9.875%
Mortgage loans--five separate loans,
payments due monthly, based on an
original 27-year amortization, principal
payments totaling $18,791,733 due in 1998 19,258,204 10.5% 19,037,150 10.5%
Tax-exempt promissory note--payable in
annual installments ranging from $185,000
to $525,000 through April 1, 2007 plus
interest at a variable rate as determined
on a weekly basis........................ 3,755,000 5.25%
Obligations under capitalized leases:
Headquarters and distribution center--
payable in quarterly installments
aggregating $3,615,288 in the year ended
1996, varying in each year to $3,548,327
in the year ended 2000, including
interest at prime rate within the range
of 4.75% to 15.25%....................... 14,487,900 8.5% 12,072,900 8.25%
Other capitalized leases................... 46,798 Various 4,248 12.05%
------------ ------------
$158,792,902 $159,869,298
------------ ------------
------------ ------------
</TABLE>

Under a bank credit agreement, the Company may borrow through August 31,
1997 up to an amount such that the sum of loans outstanding and certain standby
letters of credit issued thereunder (Total Commitment Amount) may not exceed
$50,000,000. At February 3, 1996, $36,778,879 was available under this agreement
as the Company had $13,221,121 in standby letters of credit outstanding under
this agreement. The agreement requires that there be no aggregate principal
amount outstanding on the loans for a period of thirty consecutive days during
each calendar year. The bank credit loans bear interest at the bank's base rate
plus 1.25%, payable monthly, with the rate adjustable to as low as the base rate
plus .75% if certain debt to equity ratios are met. Bank credit loans may
alternatively bear interest, at the request of the Company, at LIBOR plus a
margin of 2.5% per annum. Certain commitment fees are also payable based upon
unused commitment amounts. The Company has pledged all of the capital stock of
its subsidiaries and certain notes receivable of the Company from Parisian
Services as collateral for the bank credit loans.

F-10
<PAGE>
PARISIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

4. SHORT-TERM AND LONG-TERM DEBT--(CONTINUED)
Under the bank credit agreement, the Company is subject to certain
affirmative and negative covenants. Some of the restrictive covenants are as
follows:

Negative covenants in the bank credit agreement include agreements that
the Company will not permit the current ratio at the end of any fiscal
quarter to be less than a range of 1.75 to 2.25, dependent on the fiscal
quarter, to 1.0; the ratio of long-term debt to equity at the end of any
fiscal quarter to be greater than a range of 2.6-2.15, dependent on the
fiscal quarter, to 1.0; earnings before interest, taxes, depreciation, and
amortization (EBITDA) to total debt service ratio at the end of any fiscal
quarter to be less than a range of 1.10 to 2.00, dependent on the fiscal
quarter, to 1.0; net worth, as defined, at the end of any fiscal quarter to
be less than the sum of (A) $55 million, (B) 80% of net income for each
fiscal year closed subsequent to January 29, 1995 for which net income was
positive, (C) certain capital contributions and (D) certain other
adjustments. Additionally, the Company may not declare, pay, or make any
dividend or distribution of any class of capital stock.

Information concerning the bank revolving credit agreements is as follows:

<TABLE>
<CAPTION>
1994 1995 1996
---------- ----------- ----------
<S> <C> <C> <C>
Bank credit agreement:
Weighted average interest rate based on daily
amounts outstanding............................... 8% 8.63% 10.25%
Average daily borrowings outstanding................ $ 361,000 $ 4,292,000 $ 827,820
Maximum borrowings outstanding at any month end..... $7,500,000 $29,000,000 $9,500,000
</TABLE>

On July 15, 1993, the Company issued $125.0 million of 9.875% Senior
Subordinated Notes due 2003 (the Notes) and notified the holders of its Senior
Subordinated Debentures in the aggregate principal amount of $100.0 million (the
Debentures) of its intention to redeem, as of August 14, 1993, all of its
outstanding Debentures at the stated redemption price of 105.25%. On July 15,
1993, in order to effect such redemption, the Company deposited $107.25 million
representing the $100.0 million principal of Debentures to be redeemed at the
stated redemption price of 105.25% plus accrued and unpaid interest thereon to
August 14, 1993, with AmSouth Bank, as escrow agent. The Company utilized
proceeds from the issuance of the Notes to effect such redemption.

The Company recorded an extraordinary loss of $5.4 million after taxes for
the early retirement of debt. The extraordinary loss consists of the redemption
premium paid to holders of the Debentures and the write-off of the unamortized
portion of deferred financing fees associated with the retired Debentures.

F-11
<PAGE>
PARISIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

4. SHORT-TERM AND LONG-TERM DEBT--(CONTINUED)
On or after July 15, 1998, the Notes are redeemable at the option of the
Company, in whole or in part, at the redemption prices below plus accrued
interest at the redemption date.

<TABLE>
<CAPTION>
IF REDEEMED DURING THE TWELVE-MONTH PERCENTAGE OF
PERIOD BEGINNING JULY 15 PRINCIPAL
- -------------------------------------------------------------- -------------
<S> <C>
1998.......................................................... 104.938%
1999.......................................................... 102.469%
2000 and thereafter........................................... 100.00%
</TABLE>

The Notes are uncollateralized obligations and are subordinated in right of
payment to all senior indebtedness, as defined. Senior indebtedness was
approximately $45,390,540 at February 3, 1996.

The Company is subject to certain covenants set forth in the indenture to
the Notes including, among others, the following: limitations on certain
restricted payments; limitations on certain indebtedness; limitations on liens;
limitations on dividends and other payment restrictions affecting subsidiaries;
limitations on transactions with affiliates; limitations on preferred stock of
subsidiaries; and limitations on future senior subordinated indebtedness.

Indebtedness outstanding under the tax-exempt promissory note bears interest
at a floating rate based on prime, but in no event is the rate to be less than
6% or greater than 10%. During the years ended January 29, 1994, January 28,
1995, and February 3, 1996 the interest rate ranged from 6% per annum to 74.6%
of prime. The interest charged changes within limits to protect the lender's
yield when there is a change in the maximum federal corporate income tax rate.
In May 1995, the Company purchased the tax-exempt bond with funds available
under the Receivables Facility. On October 19, 1995, the bond was re-funded,
with credit enhancement provided by a financial institution. The outstanding
indebtedness bears interest at a floating rate.

At February 3, 1996, property and equipment with a net book value of
approximately $45,085,127 was pledged as collateral on the mortgage loans,
obligations under capitalized leases, equipment loan and security agreement, and
mortgage note. Substantially all of the Company's bank accounts are pledged as
collateral on the bank revolving credit agreement, described above.

The noncurrent portion of long-term debt at February 3, 1996 is payable as
follows:

<TABLE>
<S> <C>
Second succeeding year...................................... $ 445,416
Third succeeding year....................................... 19,016,734
Fourth succeeding year...................................... 245,000
Fifth succeeding year....................................... 270,000
Thereafter.................................................. 127,815,000
------------
147,792,150
Capitalized lease obligations:
Payable in monthly, semi-annual and annual installments... 12,077,148
------------
$159,869,298
------------
------------
</TABLE>

The future minimum lease payments required under capitalized lease
obligations are disclosed in Note 6.

Based on the borrowing rates currently available to the Company for
long-term debt with similar terms and average maturities, the fair value of
long-term debt is approximately $137,359,119 at February 3, 1996.

F-12
<PAGE>
PARISIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5. INCOME TAXES

The components of the current deferred income tax asset are:

<TABLE>
<CAPTION>
JANUARY 28, FEBRUARY 3,
1995 1996
----------- -----------
<S> <C> <C>
Inventory capitalization.......................... $ 1,406,435 $ 1,829,259
Allowances for doubtful accounts and return
sales............................................. 910,319 1,148,056
Compensation accruals............................. 633,794 622,579
Other............................................. 462,114 68,766
----------- -----------
$ 3,412,662 $ 3,668,660
----------- -----------
----------- -----------
</TABLE>

The components of the noncurrent deferred income tax liability are:

<TABLE>
<CAPTION>
JANUARY 28, FEBRUARY 3,
1995 1996
----------- -----------
<S> <C> <C>
Property and equipment............................ $ 7,094,128 $ 6,095,988
Computer software costs........................... 2,318,070 2,567,467
Store pre-opening costs........................... 734,011 477,852
Compensation accruals............................. (632,739) (727,915)
Alternative minimum tax credit.................... (1,330,723)
Other............................................. (11,952) (246,178)
----------- -----------
$ 8,170,795 $ 8,167,214
----------- -----------
----------- -----------
</TABLE>

The provision (benefit) for income taxes is comprised of the following:

<TABLE>
<CAPTION>
JANUARY 29, JANUARY 28, FEBRUARY 3,
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Federal:
Current............................................. $ 727,846 $ (58,003) $ 5,646,129
Deferred............................................ 1,055,992 (1,929,800) (243,627)
----------- ----------- -----------
1,783,838 (1,987,803) 5,402,502
----------- ----------- -----------
State:
Current............................................. 537,644 118,831 998,626
Deferred............................................ (616,952) 195,418 (15,952)
----------- ----------- -----------
(79,308) 314,249 982,674
----------- ----------- -----------
Provision for income taxes............................ $ 1,704,530 $(1,673,554) $ 6,385,176
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

In addition, an income tax benefit of $3,092,179 was recognized during the
year ended January 29, 1994 related to the extraordinary loss from early
retirement of debt.

F-13
<PAGE>
PARISIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5. INCOME TAXES--(CONTINUED)
The provision (benefit) for income taxes is different from the amount
computed by applying the federal income tax statutory rate to income (loss)
before provision (benefit) for income taxes. The reasons for this difference, as
a percentage of pretax income (loss), are as follows:

<TABLE>
<CAPTION>
JANUARY 29, JANUARY 28, FEBRUARY 3,
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Federal income tax statutory rate.......................... 34% (34)% 35%
Amortization of goodwill................................... 23 9 5
State income taxes......................................... (3) 3 3
Other...................................................... 8 (1) (1)
-- --- --

Effective income tax rate............................ 62% (23)% 42%
-- --- --
-- --- --

</TABLE>

Details of the deferred tax provision (benefit) are as follows:

<TABLE>
<CAPTION>
JANUARY 29, JANUARY 28, FEBRUARY 3,
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Inventory capitalization.............................. $ (41,639) $ (256,801) $ (422,824)
Property and equipment................................ (722,505) (210,083) (998,140)
Computer software costs............................... 583,534 249,397
Store pre-opening costs............................... 1,309,414 (154,624) (256,159)
Compensation accruals................................. (291,515) (6,076) (83,961)
Alternative minimum tax credit........................ (1,330,723) 1,330,723
Other, net............................................ 185,285 (359,609) (78,615)
----------- ----------- -----------
Deferred tax provision (benefit)................ $ 439,040 $(1,734,382) $ (259,579)
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

6. LEASES

The Company leases its headquarters and distribution center and another
facility under capitalized leases which expire in 2001 and 1996, respectively.
At expiration, the Company has the option to purchase the leased properties for
nominal amounts. In addition, the Company leases computer equipment under
capitalized leases expiring over the next three years.

The following is a summary of the leased property under capitalized leases
by major classes of property:

<TABLE>
<CAPTION>
JANUARY 28, FEBRUARY 3,
1995 1996
----------- -----------
<S> <C> <C>
Classes of Property
Buildings..................................... $17,218,881 $17,219,894
Transportation equipment...................... 145,028
Furniture, fixtures, and equipment............ 10,772,832 10,593,735
----------- -----------
28,136,741 27,813,629
Less accumulated amortization................. 10,871,026 11,119,920
----------- -----------
17,265,715 16,693,709
Land.......................................... 711,507 711,507
----------- -----------
$17,977,222 $17,405,216
----------- -----------
----------- -----------
</TABLE>

F-14
<PAGE>
PARISIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

6. LEASES--(CONTINUED)
Future minimum lease payments required under capitalized lease obligations
together with the present value of the net minimum lease payments at February 3,
1996 are as follows:

<TABLE>
<S> <C>
First succeeding year......................................... $ 3,619,446
Second succeeding year........................................ 3,616,481
Third succeeding year......................................... 3,658,634
Fourth succeeding year........................................ 3,707,527
Fifth succeeding year......................................... 3,503,255
Thereafter....................................................
-----------
18,105,343
Less amount representing interest............................. 3,577,443
-----------
Present value of net minimum lease payments................... $14,527,900
-----------
-----------
Current portion of above...................................... $ 2,455,000
-----------
-----------
Noncurrent portion of above................................... $12,072,900
-----------
-----------
</TABLE>

In addition, the Company conducts a substantial portion of its operations
from thirty-one leased stores. The leases are operating leases and expire at
various times during the next 20 years. The Company can, at its option, renew
most of these leases at predetermined fair rental values for periods of five to
fifteen years. The rental payments under the store leases are based on a minimum
rental plus a percentage of the stores' sales in excess of stipulated amounts.

The Company also leases certain computer equipment, vehicles, and loss
prevention equipment under operating leases. The future minimum rental payments
under operating leases having initial or remaining noncancelable lease terms in
excess of one year as of February 3, 1996 are as follows:

<TABLE>
<S> <C>
First succeeding year....................................... $ 26,705,012
Second succeeding year...................................... 26,335,196
Third succeeding year....................................... 24,720,623
Fourth succeeding year...................................... 23,539,730
Fifth succeeding year....................................... 22,210,711
Thereafter.................................................. 251,487,144
------------
Total minimum payments required....................... $374,998,416
------------
------------
</TABLE>

The following schedule shows total rental expense for all operating leases:

<TABLE>
<CAPTION>
JANUARY 29, JANUARY 28, FEBRUARY 3,
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Minimum rentals..................................... $12,548,820 $20,319,741 $27,553,590
Contingent rentals.................................. 1,785,982 1,270,191 2,231,259
----------- ----------- -----------
$14,334,802 $21,589,932 $29,784,849
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

The Company leases one of its stores from a limited partnership which
includes certain officers of the Company. Rental expense related to the lease
amounted to $568,213 for the year ended January 29, 1994, $565,574 for the year
ended January 28, 1995 and $556,453 for the year ended February 3, 1996. The
future minimum lease payments required under the lease as of February 3, 1996
are $8,917,082.

F-15
<PAGE>
PARISIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

6. LEASES--(CONTINUED)
In addition, the Company has entered into a lease for a future store
opening. The future minimum rental payments under this operating lease having an
initial noncancelable lease term in excess of one year as of February 3, 1996 is
as follows:

<TABLE>
<S> <C>
First succeeding year......................................... $ 0
Second succeeding year........................................ 875,160
Third succeeding year......................................... 875,160
Fourth succeeding year........................................ 875,160
Fifth succeeding year......................................... 875,160
Thereafter.................................................... 15,590,700
-----------
Total minimum payments required......................... $19,091,340
-----------
-----------
</TABLE>

7. EMPLOYEE BENEFIT PLANS

The Company has a combined profit-sharing and Section 401(k) plan which
provides death, disability, termination, and retirement benefits to its eligible
employees who are at least 21 years of age and have completed one year and 1,000
hours of service with the Company. The profit-sharing portion and the Section
401(k) portion of the plan provides for discretionary contributions by the
Company as determined by resolutions of the Board of Directors.

Beginning in 1993, the Company's contribution to the profit-sharing portion
of the plan was terminated. With the Company's growth, the number of
participants in the plan had grown and the amount allocated to each participant
became diluted. Existing accounts will remain and continue to be invested.

The Company contribution to the Section 401(k) plan totaled $700,000 for the
year ended January 29, 1994. No company contribution was made to the plan for
the year ended January 28, 1995. The Company contribution to the Section 401(k)
plan totaled $600,000 for the year ended February 3, 1996.

8. STOCK OPTION PLANS

The Company's stock option plan for officers, as amended, allows for the
grant of options to purchase 405,882 shares of common stock to certain officers.
During April 1988 and March 1992, 345,000 and 20,000 options to purchase common
shares were granted, respectively. An additional 17,037 options to purchase
common shares were granted during September 1995. The exercise price for all
such options is $20.40 per share. These options were granted at an exercise
price that was equal to or above fair value as determined by a committee
consisting of the Participant Representatives under the plan. As of February 3,
1996, 324,667 of these options were outstanding; 57,370 options have been
forfeited in accordance with the provisions of the Plan. The options generally
began to vest at the rate of 20% per year from February 3, 1990. Participants
may exercise their vested options following the date such options become fully
vested. At February 3, 1996, 314,445 options are vested and became exercisable
during the month of May 1994. In the case of certain specified events, the
options would become immediately fully vested and exercisable subject to certain
regulatory requirements.

The Company's Management Incentive Plan allows for the grant of options to
purchase 101,471 shares of common stock to certain managers of the Company.
During July 1990 and March 1992, 60,250 and 5,750 options to purchase common
shares were granted, respectively, at an exercise price of

F-16
<PAGE>
PARISIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

8. STOCK OPTION PLANS--(CONTINUED)
$20.40 per share. These options were granted at an exercise price that was equal
to or above fair value as determined by a committee consisting of the
Participant Representatives under the plan. The options generally began to vest
at the rate of 20% per year from February 2, 1991. Participants may exercise
their vested options following the date such options become fully vested. At
February 3, 1996, 56,850 options are vested and became exercisable during the
month of May 1994. In the case of certain specified events, the options would
become immediately fully vested and exercisable subject to certain regulatory
requirements. Since the year ended February 2, 1991 grant, 9,150 nonvested
options have been forfeited in accordance with the provisions of the Plan;
consequently, as of January 28, 1995 and February 3, 1996, 57,050 and 56,850,
respectively, of these options were outstanding.

F-17
<PAGE>
TABLE OF CONTENTS

PAGE
AVAILABLE INFORMATION............. 2
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE........... 2
SUMMARY........................... 3 PROFFITT'S, INC.
THE MERGER........................ 12
THE CONSENT SOLICITATION.......... 12 -------------------
DESCRIPTION OF THE GUARANTY
AND THE SUPPLEMENTAL
INDENTURE........................ 12 Guaranty
UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL
STATEMENTS....................... 17
PLAN OF DISTRIBUTION.............. 23
LEGAL OPINIONS.................... 23
EXPERTS........................... 23
INDEX TO CONSOLIDATED
FINANCIAL STATEMENTS OF
PARISIAN......................... F-1

<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

<TABLE>
<S> <C>
Registration Fee.............................................. $ 43,103.45
Accounting Fees............................................... 75,000.00
Legal Fees.................................................... 50,000.00
Miscellaneous................................................. 20,000.00
-----------
TOTAL..................................................... $188,103.45
-----------
-----------
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The ByLaws of Proffitt's provide that Proffitt's shall indemnify to the full
extent authorized or permitted by the Tennessee Business Corporation Act any
person made, or threatened to be made, a party to any threatened, pending or
completed action, suit or proceeding (whether civil, criminal, administrative or
investigative) by reason of the fact that such person, or such person's testate
or intestate, is or was an officer or director of Proffitt's or serves or served
as an officer or director of any other enterprise at the request of Proffitt's.

Section 48-18-503 of the Tennessee Business Corporation Act provides for
"mandatory indemnification," unless limited by the charter, by a corporation
against reasonable expenses incurred by a director who is wholly successful, on
the merits or otherwise, in the defense of any proceeding to which the director
was a party by reason of the director being or having been a director of the
corporation. Section 48-18-504 of the Tennessee Business Corporation Act states
that a corporation may, in advance of the final disposition of a proceeding,
reimburse reasonable expenses incurred by a director who is a party to a
proceeding if the director furnishes the corporation with a written affirmation
of the director's good faith belief that the director has met the standard of
conduct required by Section 48-18-502 of the Tennessee Business Corporation Act,
that the director will repay the advance if it is ultimately determined that
such director did not meet the standard of conduct required by Section 48-18-502
of the Tennessee Business Corporation Act, and that those making the decision to
reimburse the director determine that the facts then known would not preclude
indemnification under the Tennessee Business Corporation Act. Section 48-18-507
of the Tennessee Business Corporation Act provides for mandatory
indemnification, unless limited by the charter, of officers pursuant to the
provisions of Section 48-18-503 of the Tennessee Business Corporation Act
applicable to mandatory indemnification of directors.

Proffitt's ByLaws further provide that Proffitt's may purchase and maintain
insurance on behalf of any person who is or was or has agreed to become a
director or officer of Proffitt's, or is or was serving at the request of
Proffitt's as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against such
person and incurred by such person or on such person's behalf in any such
capacity, or arising out of such person's status as such, whether or not
Proffitt's would have the power to indemnify such person against such liability
under the ByLaws, provided that such insurance is available on acceptable terms
as determined by a majority of Proffitt's Board of Directors.

ITEM 16. EXHIBITS.

(a) The following exhibits are filed as part of this Registration Statement
or incorporated by reference herein:

<TABLE>
<S> <C>
(3)(a) Charter, as amended, of Proffitt's, Inc. (Incorporated by reference from
Exhibits to the Form S-1 Registration Statement No. 33-13548 dated June 3,
1987)
</TABLE>

II-1
<PAGE>

<TABLE>
<S> <C>
(3)(b) Articles of Amendment to the Charter of Proffitt's, Inc. designating the
rights, preferences and limitations of its Series A Cumulative Convertible
Exchangeable Preferred Stock (Incorporated by reference from Exhibits to
the Form 8-K dated April 14, 1994)

(3)(c) Articles of Amendment to the Charter of Proffitt's, Inc. designating the
rights, preferences and limitations of its Series B Cumulative Junior
Perpetual Preferred Stock (Incorporated by reference from Exhibits to the
Form 8-K dated April 14, 1994)

(3)(d) Articles of Amendment to the Charter of Proffitt's Inc. designating the
rights, preferences and limitations of its Series C Junior Preferred Stock
(Incorporated by reference from Exhibits to the Form 8-K dated April 3,
1995)

(3)(e) Articles of Amendment to the Charter of Proffitt's Inc. designating the
maximum number of shares of all stock which the corporation shall have the
authority to issue (Incorporated by reference from Exhibits to the
Quarterly Report on Form 10-Q for the quarterly period ended July 29,
1995)

(3)(f) Articles of Amendment to the Charter of Proffitt's Inc. designating
special meeting of shareholders (Incorporated by reference from Exhibits
to the Quarterly Report on Form 10-Q for the quarterly period ended July
29, 1995)

(3)(g) Articles of Amendment to the Charter of Proffitt's, Inc. increasing the
number of authorized shares of Series C Junior Preferred stock
(Incorporated by reference from Exhibits to Form 10-K dated May 1, 1996)

(3)(h) Amended and Restated Bylaws of Proffitt's, Inc. (Incorporated by reference
from Exhibits to the Quarterly Report on Form 10-Q for the quarterly
period ended July 29, 1995)

(4)(a) Form of 7.5% Junior Subordinated Debentures due 2004 (Incorporated by
reference from Exhibits to the Form 8-K dated April 14, 1994)

(4)(b) Form of 4.75% Convertible Subordinated Debentures due 2003 (Incorporated
by reference from Exhibits to the Form S-3 Registration Statement No.
33-70000 dated October 19, 1993)

(4)(c) Form of Rights Certificate (Incorporated by reference from Exhibits to the
Form 8-K dated April 3, 1995)

(4)(d) Form of Supplemental Indenture

(5) Opinion of Sommer & Barnard, Attorneys at Law, PC

(12)(a)* Computation of ratios of earnings to fixed charges (Proffitt's)

(12)(b)* Computation of ratios of earnings to fixed charges (Parisian)

(12)(c)* Computation of ratios of earnings to fixed charges (pro forma)

(23)(a) Consent of Coopers & Lybrand L.L.P. (re: Proffitt's)

(23)(b) Consent of Deloitte & Touche LLP

(23)(c) Consent of Ernst & Young LLP

(23)(d) Consent of Coopers & Lybrand L.L.P. (re: Parisian)

(23)(e) Consent of Sommer & Barnard (in Exhibit 5)

(25)* Statement of Eligibility under the Trust Indenture Act of 1939 on Form T-1
of AmSouth Bank of Alabama
</TABLE>

- ------------

*previously filed

II-2
<PAGE>
ITEM 17. UNDERTAKINGS.

(1) The undersigned Registrant hereby undertakes to file, during any period
in which offers or sales are being made, a post-effective amendment to this
registration statement:

<TABLE>
<S> <C>
(i) to include any prospectus required by Section 10(a)(3) of the Securities Act of
1933;

(ii) to reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental
change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;

(iii) to include any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material change
to such information in the registration statement; that, for the purpose of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof; and
to remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
</TABLE>

Provided, however, That paragraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.

(2) The undersigned Registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(3) The undersigned Registrant hereby undertakes to remove from registration
by means of a post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.

(4) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934, as amended (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934, as amended) that is incorporated
by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(5) Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy expressed in
the Securities Act of 1933, as amended, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a

II-3
<PAGE>
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

(6) The undersigned Registrant hereby undertakes that: (i) for the purposes
of determining any liability under the Securities Act of 1933, the information
omitted from the form of prospectus filed as part of this registration statement
in reliance upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this registration statement as of the time it was
declared effective; and (ii) for the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

(7) The undersigned Registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of section 310 of the Trust Indenture Act ("Act") in accordance
with the rules and regulations prescribed by the Commission under section
305(b)(2) of the Act.

II-4
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment to its
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, on August 22, 1996.

PROFFITT'S, INC.

By: /s/ BRIAN W. BENDER
............................
Brian W. Bender
Executive Vice President and
Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed on August 22, 1996 by the
following persons in the capacities indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>

/s/ R. BRAD MARTIN Chairman of the Board and Chief Executive Officer
......................................
R. Brad Martin

/s/ W. THOMAS GOULD Vice Chairman of the Board
......................................
W. Thomas Gould

/s/ JAMES A. COGGIN President
......................................
James A. Coggin

/s/ BERNARD E. BERNSTEIN Director
......................................
Bernard E. Bernstein

/s/ EDMOND D. CICALA Director
......................................
Edmond D. Cicala

...................................... Director
Ronald De Waal

/s/ GERARD K. DONNELLY Director
......................................
Gerard K. Donnelly

/s/ DONALD F. DUNN Director
......................................
Donald F. Dunn

/s/ G. DAVID HURD Director
......................................
G. David Hurd

/s/ MICHAEL A. GROSS Director
......................................
Michael A. Gross

/s/ RICHARD D. MCRAE Director
......................................
Richard D. Mcrae

/s/ C. WARREN NEEL Director
......................................
C. Warren Neel

/s/ HARWELL W. PROFFITT Director
......................................
Harwell W. Proffitt
</TABLE>

II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ GERALD TSAI, JR. Director
......................................
Gerald Tsai, Jr.
/s/ MARGUERITE W. SALLEE
...................................... Director
Marguerite W. Sallee

/s/ JULIA A. BENTLEY Senior Vice President and Secretary
......................................
Julia A. Bentley

/s/ BRIAN W. BENDER Executive Vice President, Chief Financial Officer
...................................... and Treasurer
Brian W. Bender
</TABLE>

II-6

<PAGE>

EXHIBIT INDEX
-------------

Item Description
- ---- -----------

<TABLE>
<S> <C>
(3)(a) Charter, as amended, of Proffitt's, Inc. (Incorporated by reference from
Exhibits to the Form S-1 Registration Statement No. 33-13548 dated June 3,
1987)

(3)(b) Articles of Amendment to the Charter of Proffitt's, Inc. designating the
rights, preferences and limitations of its Series A Cumulative Convertible
Exchangeable Preferred Stock (Incorporated by reference from Exhibits to
the Form 8-K dated April 14, 1994)

(3)(h) Amended and Restated Bylaws of Proffitt's, Inc. (Incorporated by reference
from Exhibits to the Quarterly Report on Form 10-Q for the quarterly
period ended July 29, 1995)

(4)(a) Form of 7.5% Junior Subordinated Debentures due 2004 (Incorporated by
reference from Exhibits to the Form 8-K dated April 14, 1994)

(4)(b) Form of 4.75% Convertible Subordinated Debentures due 2003 (Incorporated
by reference from Exhibits to the Form S-3 Registration Statement No.
33-70000 dated October 19, 1993)

(4)(c) Form of Rights Certificate (Incorporated by reference from Exhibits to the
Form 8-K dated April 3, 1995)

(4)(d) Form of Supplemental Indenture

(5) Opinion of Sommer & Barnard, Attorneys at Law, PC

(12)(a)* Computation of ratios of earnings to fixed charges (Proffitt's)

(12)(b)* Computation of ratios of earnings to fixed charges (Parisian)

(12)(c)* Computation of ratios of earnings to fixed charges (pro forma)

(23)(a) Consent of Coopers & Lybrand L.L.P. (re: Proffitt's)

(23)(b) Consent of Deloitte & Touche LLP

(23)(c) Consent of Ernst & Young LLP

(23)(d) Consent of Coopers & Lybrand L.L.P. (re: Parisian)

(23)(e) Consent of Sommer & Barnard (in Exhibit 5)

(25)* Statement of Eligibility under the Trust Indenture Act of 1939 on Form T-1
of AmSouth Bank of Alabama
</TABLE>

- ------------

*previously filed

Exhibit 4(d)

- -------------------------------------------------------------------------------

SUPPLEMENTAL INDENTURE

dated as of _________________, 1996

to the Indenture

dated as of July 15, 1993

between

PARISIAN, INC.

and

AMSOUTH BANK OF ALABAMA,
as Trustee

- -------------------------------------------------------------------------------

<PAGE>
SUPPLEMENTAL INDENTURE, dated as of , 1996 (the
--------------------------
"Supplemental Indenture"), among PROFFITT'S, INC., a Tennessee corporation (the
"Parent"), PARISIAN, INC., an Alabama corporation (the "Company), and AMSOUTH
BANK OF ALABAMA (f/k/a AmSouth Bank, N.A.), as trustee (the "Trustee"), to the
Indenture dated as of July 15, 1993 (as amended to the date hereof, the
"Original Indenture") between the Company and the Trustee.

RECITALS

The Company duly authorized the creation of an issue of 9-7/8% Senior
Subordinated Notes due July 15, 2003 (the "Securities"), of substantially the
tenor and amount set forth in the Original Indenture, and to provide therefor
the Company duly authorized the execution and delivery of the Original
Indenture;

All acts and things necessary were done to make the Securities, when
executed by the Company and authenticated and delivered under the Original
Indenture and duly issued by the Company, the valid obligations of the Company
and to make the Original Indenture a valid agreement of the Company in
accordance with the terms of the Original Indenture;

The Parent acquired the Company on , 1996 by means of a
------------------
merger of the Company and Casablanca Merger Corp. ("Casablanca"), a wholly owned
subsidiary of the Parent (the "Merger"). Upon consummation of the Merger, the
Company became a wholly-owned subsidiary of the Parent;

The Parent has solicited consents (the "Consents") from holders of
Securities to certain proposed amendments to the Original Indenture (the
"Consent Solicitation");

The holders of at least a majority in aggregate principal amount of the
outstanding Securities, calculated as provided in Section 6.4 of the Original
Indenture, have delivered Consents in the Consent Solicitation;

This Supplemental Indenture incorporates the amendments to which such
holders of Securities have consented; and

All acts and things necessary have been done to make this Supplemental
Indenture a valid agreement of the Parent and the Company in accordance with the
terms of the Original Indenture.

NOW THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:

ARTICLE I. Amended and Restated Indenture. The parties hereto mutually
------------------------------
covenant and agree to, and do hereby, amend and restate the Original Indenture
in its entirety in the form attached hereto as Exhibit A.

ARTICLE II. Effectiveness. This Supplemental Indenture shall become
-------------
effective on the later of (a) the date first above written and (b) the date of
the consummation of the Merger.

<PAGE>
ARTICLE III. Miscellaneous.
-------------

(a) The Original Indenture, as amended and restated in accordance
herewith, is hereby ratified, approved and confirmed.

(b) This Supplemental Indenture shall be governed by and construed in
accordance with the laws of the State of New York.

(c) This Supplemental Indenture may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract.

(d) This Supplemental Indenture shall terminate upon termination of the
Agreement and Plan of Merger, dated as of July 8, 1996, among the Parent,
Casablanca and the Company, if the Merger has not been consummated prior to
such termination.

<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed by their respective authorized officers as of the
day and year first above written.

PROFFITT'S, INC.

By:______________________________
Name:
Title:

PARISIAN, INC.

By:______________________________
Name:
Title:

AMSOUTH BANK OF ALABAMA,
as Trustee

By:_____________________________
Name:
Title:

iii

<PAGE>

EXHIBIT A

- --------------------------------------------------------------------------------

PROFFITT'S, INC.,

PARISIAN, INC.

AND

AMSOUTH BANK OF ALABAMA, Trustee

AMENDED AND RESTATED INDENTURE

Dated as of _____________, 1996

___________________

$125,000,000

9-7/8% Senior Subordinated Notes

- --------------------------------------------------------------------------------

<PAGE>
TABLE OF CONTENTS

Article Section Page
- ------- ------- ----

ARTICLE ONE DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 1.1 Certain Terms Defined . . . . . . . . . . . . . . . . . . 6

ARTICLE TWO ISSUE, EXECUTION, FORM AND REGISTRATION OF NOTES . . . . . . . 18
SECTION 2.1 Authentication and Delivery of Notes . . . . . . . . . . 18
SECTION 2.2 Execution of Notes . . . . . . . . . . . . . . . . . . . 18
SECTION 2.3 Certificate of Authentication . . . . . . . . . . . . . . 19
SECTION 2.4 Form, Denomination and Date of Notes; Payments of
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.5 Registration, Transfer and Exchange . . . . . . . . . . . 20
SECTION 2.6 Mutilated, Defaced, Destroyed, Lost and Stolen Notes . . 20
SECTION 2.7 Cancellation of Notes; Destruction Thereof . . . . . . . 21
SECTION 2.8 Temporary Notes . . . . . . . . . . . . . . . . . . . . . 21

ARTICLE THREE COVENANTS OF THE PARENT, THE COMPANY AND THE TRUSTEE . . . . 22
SECTION 3.1 Payment of Principal and Interest . . . . . . . . . . . . 22
SECTION 3.2 Offices for Payments, etc . . . . . . . . . . . . . . . . 22
SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee . . . 22
SECTION 3.4 Paying Agents . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.5 Certificate to Trustee . . . . . . . . . . . . . . . . . 23
SECTION 3.6 Holders Lists . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.7 Reports by the Parent . . . . . . . . . . . . . . . . . . 24
SECTION 3.8 Reports by the Trustee . . . . . . . . . . . . . . . . . 24
SECTION 3.9 Limitation on Indebtedness . . . . . . . . . . . . . . . 24
SECTION 3.10 Limitation on Restricted Payments . . . . . . . . . . . 25
SECTION 3.11 Limitation on Transactions with Affiliates . . . . . . . 27
SECTION 3.12 Limitation on Future Senior Subordinated Indebtedness . 28
SECTION 3.13 Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries . . . . . . . . . . . . . . . . 28
SECTION 3.14 Purchase of Notes Upon Change of Control Triggering
Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 3.15 Limitation on Liens . . . . . . . . . . . . . . . . . . 30
SECTION 3.16 Limitation on Preferred Stock of Subsidiaries . . . . . 30

ARTICLE FOUR REMEDIES OF THE TRUSTEE AND HOLDERS ON EVENT OF DEFAULT . . . 30
SECTION 4.1 Event of Default Defined; Acceleration of Maturity;
Waiver of
Default . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.2 Collection of Indebtedness by Trustee; Trustee May Prove
Debt . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.3 Application of Proceeds . . . . . . . . . . . . . . . . . 34
SECTION 4.4 Suits for Enforcement . . . . . . . . . . . . . . . . . . 34
SECTION 4.5 Restoration of Rights on Abandonment of Proceedings . . . 35
SECTION 4.6 Limitations on Suits by Holders . . . . . . . . . . . . . 35

<PAGE>
SECTION 4.7 Powers and Remedies Cumulative, Delay or Omission Not
Waiver of Default . . . . . . . . . . . . . . . . . . 35
SECTION 4.8 Control by Holders . . . . . . . . . . . . . . . . . . . 35
SECTION 4.9 Waiver of Past Defaults . . . . . . . . . . . . . . . . . 36

ARTICLE FIVE CONCERNING THE TRUSTEE . . . . . . . . . . . . . . . . . . . 36
SECTION 5.1 Duties and Responsibilities of the Trustee; During
Default; Prior
to Default . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.2 Certain Rights of the Trustee . . . . . . . . . . . . . . 37
SECTION 5.3 Trustee Not Responsible for Recitals, Disposition of
Notes or
Application of Proceeds Thereof . . . . . . . . . . . 39
SECTION 5.4 Trustee and Agents May Hold Notes; Collections, etc . . . 39
SECTION 5.5 Moneys Held by Trustee . . . . . . . . . . . . . . . . . 39
SECTION 5.6 Compensation and Indemnification of Trustee and Its Prior
Claim . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 5.7 Right of Trustee to Rely on Officers' Certificate . . . . 39
SECTION 5.8 Persons Eligible for Appointment as Trustee . . . . . . . 40
SECTION 5.9 Resignation and Removal; Appointment of Successor
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.10 Acceptance of Appointment by Successor Trustee . . . . . 41
SECTION 5.11 Merger, Conversion, Consolidation or Succession to
Business
of Trustee . . . . . . . . . . . . . . . . . . . . . . 42

ARTICLE SIX CONCERNING THE HOLDERS . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.1 Evidence of Action Taken by Holders . . . . . . . . . . . 42
SECTION 6.2 Proof of Execution of Instruments and of Holding of
Notes;
Record Date . . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.3 Holders to be Treated as Owners . . . . . . . . . . . . . 43
SECTION 6.4 Notes Owned by Company Deemed Not Outstanding . . . . . . 43
SECTION 6.5 Right of Revocation of Action Taken . . . . . . . . . . . 43

ARTICLE SEVEN SUPPLEMENTAL INDENTURES; WAIVERS . . . . . . . . . . . . . . 44
SECTION 7.1 Supplemental Indentures Without Consent of Holders . . . 44
SECTION 7.2 Supplemental Indentures and Waivers With Consent of
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.3 Effect of Supplemental Indenture . . . . . . . . . . . . 46
SECTION 7.4 Documents to Be Given to Trustee . . . . . . . . . . . . 46
SECTION 7.5 Notation on Notes in Respect of Supplemental Indentures . 46

ARTICLE EIGHT SUCCESSOR ENTITY . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.1 When Company May Merge, Convey Substantially All Assets . 47
SECTION 8.2 Company Successor Entity Substituted . . . . . . . . . . 47
SECTION 8.3 When Parent May Merge, Convey Substantially All Assets . 48
SECTION 8.4 Parent Successor Entity Substituted . . . . . . . . . . . 49
SECTION 8.5 Opinion of Counsel to Trustee . . . . . . . . . . . . . . 49

ARTICLE NINE SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE OF
CERTAIN OBLIGATIONS; UNCLAIMED MONEYS . . . . . . . . . . . . . . . . 49
SECTION 9.1 Satisfaction and Discharge of Indenture . . . . . . . . . 49

<PAGE>
SECTION 9.2 Application by Trustee of Funds Deposited for Payment of
Notes . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.3 Repayment of Moneys Held by Paying Agent . . . . . . . . 52
SECTION 9.4 Return of Moneys Held by Trustee and Paying Agent
Unclaimed for Three Years . . . . . . . . . . . . . . . 53

ARTICLE TEN SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.1 Notes Subordinated to Senior Indebtedness . . . . . . . 53
SECTION 10.2 Priority and Payment Over of Proceeds in Certain Events 53
SECTION 10.3 Payments May Be Made Prior to Dissolution . . . . . . . 55
SECTION 10.4 Rights of Holders of Senior Indebtedness Not to Be
Impaired . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.5 Authorization to Trustee to Take Action to Effectuate
Subordination . . . . . . . . . . . . . . . . . . . . 56
SECTION 10.6 Subrogation . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 10.7 Obligations of Company Unconditional . . . . . . . . . . 56
SECTION 10.8 Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice . . . . . . . . . . . . . . . . . . 57
SECTION 10.9 Right of Trustee to Hold Senior Indebtedness . . . . . . 57

ARTICLE ELEVEN REDEMPTION OF NOTES . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.1 Right of Optional Redemption; Prices . . . . . . . . . . 57
SECTION 11.2 Notice of Redemption; Partial Redemptions . . . . . . . 58
SECTION 11.3 Payment of Notes Called for Redemption . . . . . . . . . 59
SECTION 11.4 Exclusion of Certain Notes from Eligibility for
Selection for Redemption.. . . . . . . . . . . . . . . 59

ARTICLE TWELVE MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . 59
SECTION 12.1 Incorporators, Stockholders, Officers and Directors
Exempt from Individual Liability . . . . . . . . . 59
SECTION 12.2 Provisions of Indenture for the Sole Benefit of Parties
and Holders . . . . . . . . . . . . . . . . . . . . 60
SECTION 12.3 Successors and Assigns Bound by Indenture . . . . . . . 60
SECTION 12.4 Notices and Demands on Parent, Company, Trustee and
Holders . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 12.5 Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein . . . . . . . . . 61
SECTION 12.6 Payments Due on Saturdays, Sundays and Holidays . . . . 62
SECTION 12.7 Conflict of Any Provision of Indenture with Trust
Indenture Act of 1939 . . . . . . . . . . . . . . . . 62
SECTION 12.8 New York Law to Govern . . . . . . . . . . . . . . . . . 62
SECTION 12.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 12.10 Effect of Headings . . . . . . . . . . . . . . . . . . 62

ARTICLE THIRTEEN PARENT GUARANTEE . . . . . . . . . . . . . . . . . . . . 62
SECTION 13.1 Parent Guarantee . . . . . . . . . . . . . . . . . . . . 62
SECTION 13.2 Successors and Assigns . . . . . . . . . . . . . . . . . 64
SECTION 13.3 No Waiver, etc . . . . . . . . . . . . . . . . . . . . . 64

iii

<PAGE>
SECTION 13.4 Modification, etc . . . . . . . . . . . . . . . . . . . 64
SECTION 13.5 Subordination of Parent Guarantee . . . . . . . . . . . 64

ARTICLE FOURTEEN SUBORDINATION OF PARENT GUARANTEE . . . . . . . . . . . . 65
SECTION 14.1 Parent Guarantee Subordinated to Parent Senior
Indebtedness . . . . . . . . . . . . . . . . . . . . 65
SECTION 14.2 Priority and Payment Over of Proceeds in Certain Events 65
SECTION 14.3 Payments May Be Made Prior to Dissolution . . . . . . . 67
SECTION 14.4 Rights of Holders of Parent Senior Indebtedness Not to
Be Impaired . . . . . . . . . . . . . . . . . . . . . 67
SECTION 14.5 Authorization to Trustee to Take Action to Effectuate
Subordination . . . . . . . . . . . . . . . . . . . . 67
SECTION 14.6 Subrogation . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 14.7 Obligations of Parent Unconditional . . . . . . . . . . 68
SECTION 14.8 Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice . . . . . . . . . . . . . . . . . . 68
SECTION 14.9 Right of Trustee to Hold Parent Senior Indebtedness . . 69

<PAGE>
THIS AMENDED AND RESTATED INDENTURE (this "Indenture"), dated as of
, 1996 among Proffitt's, Inc., a Tennessee corporation (the
- --------------------
"Parent"), Parisian, Inc., an Alabama corporation (the "Company"), and AmSouth
Bank of Alabama, f/k/a AmSouth Bank, N.A., (the "Trustee").

W I T N E S E T H :

WHEREAS, the Company has duly authorized the issue of its 9-7/8% Senior
Subordinated Notes (the "Notes") and, to provide, among other things, for the
authentication, delivery and administration thereof, the Company has duly
authorized the execution and delivery of this Indenture; and

WHEREAS, the Notes and the Trustee's certificate of authentication shall be
in substantially the following form:

[FORM OF FACE OF NOTE]

No. $

Parisian, Inc.
9-7/8% Senior Subordinated Notes

Parisian, Inc., an Alabama corporation (the "Company"), for value received
hereby promises to pay to ____________________________ or registered assigns the
principal sum of _________________________ Dollars at the Company's office or
agency for said purpose in Birmingham, Alabama, on July 15, 2003, in such coin
or currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, and to pay interest,
semi-annually on January 15 and July 15 of each year, on said principal sum in
like coin or currency at the rate per annum set forth above at said office or
agency from the January 15 or the July 15, as the case may be, next preceding
the date of this Note to which interest on the Notes has been paid or duly
provided for, unless the date hereof is a date to which interest on the Notes
has been paid or duly provided for, in which case from the date of this Note, or
unless no interest has been paid or duly provided for on the Notes, in which
case from July 15, 1993 until payment of said principal sum has been made or
duly provided for. Notwithstanding the foregoing, if the date hereof is after
January 1 or July 1, as the case may be, and before the following January 15 or
July 15, this Note shall bear interest from such January 15 or July 15;
provided, that if the Company shall default in the payment of interest due on
- --------
such January 15 or July 15, then this Note shall bear interest from the next
preceding January 15 or July 15 to which interest on the Notes has been paid or
duly provided for, or, if no interest has been paid or duly provided for on the
Notes since the original issue date of this Note, from July 15, 1993. The
interest so payable on any January 15 or July 15 will, except as otherwise
provided in the Indenture referred to on the reverse hereof, be paid to the
Person in whose name this Note is registered at the close of business on the
January 1 or July 1 preceding such January 15 or July 15, whether or not such
day is a Business Day; provided that interest may be paid, at the option
--------

<PAGE>
of the Company, by mailing a check therefor payable to the registered holder
entitled thereto at his last address as it appears on the Note register.

Reference is made to the further provisions set forth on the reverse
hereof, including without limitation provisions subordinating the payment of
principal of, premium, if any, and interest on the Notes to the payment in full
of all Senior Indebtedness as defined in said Indenture.

Such further provisions shall for all purposes have the same effect as
though fully set forth at this place.

This Note shall not be valid or obligatory until the certificate of
authentication hereon shall have been duly signed by the Trustee acting under
the Indenture.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.

Dated:

[Seal]

Parisian, Inc.

By
------------------------------------------------
Title:

[FORM OF REVERSE OF NOTE]

Parisian, Inc.

9-7/8% Senior Subordinated Notes

This Note is one of a duly authorized issue of debt securities of the
Company, limited to the aggregate principal amount of $125,000,000 (except as
otherwise provided in the Indenture mentioned below), issued or to be issued
pursuant to an indenture dated as of July 15, 1993 (the "Indenture"), duly
executed and delivered by the Company to AmSouth Bank, N.A., Trustee (herein
called the "Trustee"). Reference is hereby made to the Indenture and all
indentures supplemental thereto for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Trustee, the
Company and the

<PAGE>
Holders (the words "Holders" or "Holder" meaning the registered holders or
registered holder) of the Notes.

In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all the Notes may be declared due
and payable, in the manner and with the effect, and subject to the conditions,
provided in the Indenture. The Indenture provides that in certain events such a
declaration and its consequences may be waived by the Holders of a majority in
aggregate principal amount of the Notes then outstanding and that, prior to any
such declaration, such Holders may waive any past default under the Indenture
and its consequences except a default in the payment of principal of, premium
on, or interest on any of the Notes. Any such consent or waiver by the Holder
of this Note (unless revoked as provided in the Indenture) shall be conclusive
and binding upon such holder and upon all future Holders and owners of this Note
and any Note which may be issued in exchange or substitution herefor, whether or
not any notation thereof is made upon this Note or such other Notes.

The Indenture permits the Company and the Trustee, with the consent of the
Holders of not less than a majority in aggregate principal amount of the Notes
at the time outstanding, evidenced as provided in the Indenture, to execute
supplemental indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental
indenture or modifying in any manner the rights of the Holders of the Notes.
The Indenture also permits the Holders of a majority in aggregate principal
amount of the Notes at the time outstanding to waive compliance by the Company
with any provision of the Indenture. Notwithstanding the foregoing, no such
supplemental indenture or waiver shall (a) change the Stated Maturity of the
principal of, or any installment of interest on, any Note or alter the
provisions with respect to redemption, (b) reduce the principal amount of, or
the premium or interest on, any Note, (c) change the place or currency of
payment of principal of, or premium or interest on, any Note, (d) impair the
right to institute suit for the enforcement of any payment on or with respect to
any Note on or after the Stated Maturity thereof, (e) reduce the percentage of
aggregate principal amount of outstanding Notes necessary for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults or (f) change any provision of Article Ten (Subordination) of the
Indenture that adversely affects the rights of any Holder of a Note. The
Company and the Trustee may modify, amend or supplement the Indenture without
consent of any Holders to, among other things, cure ambiguities, defects and
inconsistencies or make any change that does not materially adversely affect the
interests of any Holder under the Indenture as then in effect.

The Holders of a majority in aggregate principal amount of the outstanding
Notes may waive any past default under the Indenture except a default in the
payment of principal, premium or interest.

The indebtedness evidenced by the Notes is, to the extent and in the manner
provided in the Indenture, expressly subordinated and subject in right of
payment to the prior payment in full of all Senior Indebtedness of the Company
as defined in the Indenture, whether outstanding at the date of the Indenture or
thereafter incurred, and this Note is issued subject to the provisions of the
Indenture with respect to such subordination. Each Holder of this

<PAGE>
Note, by accepting the same, agrees to and shall be bound by such provisions and
authorizes the Trustee in his behalf to take such actions as may be necessary or
appropriate to effectuate the subordination so provided and appoints the Trustee
his attorney-in-fact for such purpose.

No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the place, times, and rate, and in the currency, herein prescribed.

The Notes are issuable only as registered Notes without coupons in
denominations of $1,000 and any multiple of $1,000.

At the office or agency of the Company referred to on the face hereof and
in the manner and subject to the limitations provided in the Indenture, the
Notes may be exchanged for a like aggregate principal amount of Notes of other
authorized denominations.

Upon due presentment for registration of transfer of this Note at the
above-mentioned office or agency of the Company, a new Note or Notes of
authorized denominations, for a like aggregate principal amount, will be issued
to the transferee as provided in the Indenture. No service charge shall be made
for any such transfer, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto.

The Notes may not be redeemed prior to July 15, 1998. The Company at its
option may, at any time on or after July 15, 1998, redeem all or, from time to
time, any part of the Notes, upon mailing a notice of such redemption not less
than 30 nor more than 60 days prior to the date fixed for redemption to the
Holders of Notes to be redeemed, all as provided in the Indenture, at the
following redemption prices (expressed in percentages of the principal amount)
together in each case with accrued and unpaid interest to the date fixed for
redemption:

If redeemed during the
12-month period beginning
on July 15 of the years
indicated below:
- -------------------------

Year Percentage
---- ----------

1998 104.938%
1999 102.469%
2000 and thereafter 100.000%

provided that if the date fixed for redemption is January 15 or July 15, then
- --------
the interest payable on such date shall be paid to the Holder of record on the
next preceding January 1 or July 1.

<PAGE>
In the event that the Company consummates a public offering of its common
stock on or before July 15, 1996, the Company may, at its option, no later than
90 days following the consummation of such offering, redeem up to 20% of the
initially outstanding principal amount of Notes at a redemption price of 110% of
the principal amount thereof, plus accrued and unpaid interest to the redemption
date, with the net proceeds of such offering; provided, however, that at least
$100.0 million aggregate principal amount of the Notes remain outstanding
immediately after the occurrence of such redemption.

Subject to payment by the Company, as provided in the Indenture, of a sum
sufficient to pay the amount due on redemption, interest on this Note (or
portion hereof if this Note is redeemed in part) shall cease to accrue upon the
date duly fixed for redemption of this Note (or portion hereof if this Note is
redeemed in part).

The Company, the Trustee, and any authorized agent of the Company or the
Trustee, may deem and treat the registered Holder hereof as the absolute owner
of this Note (whether or not this Note shall be overdue and notwithstanding any
notation of ownership or other writing hereon made by anyone other than the
Company or the Trustee or any authorized agent of the Company or the Trustee),
for the purpose of receiving payment of, or on account of, the principal hereof
and, subject to the provisions on the face hereof, interest hereon and for all
other purposes, and neither the Company nor the Trustee nor any authorized agent
of the Company or the Trustee shall be affected by any notice to the contrary.

No recourse shall be had for the payment of the principal of or the
interest on this Note, for any claim based hereon, or otherwise in respect
hereof, or based on or in respect of the Indenture or any indenture supplemental
thereto, against any incorporator, shareholder, officer or director, as such,
past, present or future, of the Company or of any successor corporation, either
directly or through the Note or any successor corporation, whether by virtue of
any constitution, statute or rule of law or by the enforcement of any assessment
or penalty or otherwise, all such liability being, by the acceptance hereof and
as part of the consideration for the issue hereof, expressly waived and
released.

[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]

This is one of the Notes described in the within-mentioned Indenture.

AmSouth Bank, N.A., as Trustee

---------------------------------------------
Authorized Officer

AND WHEREAS, all things necessary to make the Notes, when executed by the
Company and authenticated and delivered by the Trustee as in this Indenture
provided, the valid, binding and legal obligations of the Company, and to
constitute these presents a valid indenture and agreement according to its
terms, have been done;

<PAGE>
AND WHEREAS, the Parent, the Company and the Trustee have agreed to amend
and restate this Indenture in its entirety as hereinafter provided;

NOW, THEREFORE:

In consideration of the premises and the purchases of the Notes by the
Holders thereof, the Parent, the Company and the Trustee mutually covenant and
agree for the equal and proportionate benefit of the respective Holders from
time to time of the Notes as follows:

ARTICLE ONE

DEFINITIONS
-----------

SECTION 1.1 Certain Terms Defined. The following terms (except as
---------------------
otherwise expressly provided or unless the context otherwise clearly requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section. All other terms
used in this Indenture which are defined in the Trust Indenture Act of 1939 or
the definitions of which in the Securities Act of 1933 are referred to in the
Trust Indenture Act of 1939 (except as herein otherwise expressly provided or
unless the context otherwise clearly requires), shall have the meanings assigned
to such terms in said Trust Indenture Act and in said Securities Act as in force
at the Original Issue Date. All accounting terms used herein and not expressly
defined shall have the meanings given to them in accordance with GAAP (as
defined herein). The words "herein", "hereof" and "hereunder" and other words
------ ------ ---------
of similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision. The terms defined in this Article
include the plural as well as the singular.

"Accounts Receivable Subsidiary" means Parisian Services, Inc., or any
------------------------------
other subsidiary of the Parent that is wholly owned (except for preferred stock
not to exceed an aggregate liquidation preference of $100,000 which may be owned
by a Person other than the Parent) by the Parent organized for the purpose of
and engaged in (i) purchasing, financing, and collecting accounts receivable of,
or generated by the sale of merchandise by, the Parent and its Subsidiaries,
(ii) the financing of credit purchases by customers of the Parent and its
Subsidiaries of merchandise sold to such customers, (iii) the sale or financing
of such accounts receivable or interests therein, and (iv) other activities
incident thereto.

"Acquired Indebtedness" means Indebtedness of a Person existing at the time
---------------------
such Person becomes a Subsidiary of the Parent (or such Person is merged into
the Parent or one of its Subsidiaries) or assumed in connection with the
acquisition of assets from any such Person and not Incurred in connection with,
or in contemplation of, such Person becoming a Subsidiary or such acquisition.

"Acquisition" means the merger of the Company and Casablanca Merger
-----------
Corporation, a wholly owned subsidiary of the Parent.

<PAGE>
"Affiliate" of any specified Person means any other Person directly or
---------
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person, or that owns or beneficially owns ten
percent or more of the outstanding Capital Stock of or equity interest in such
Person. For the purposes of this definition, "control" when used with respect
to any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

"Asset Acquisition" means (i) an investment by the Parent or any of its
-----------------
Subsidiaries in any other Person pursuant to which such Person shall become a
Subsidiary of the Parent or any of its Subsidiaries or shall be merged with the
Parent or any of its Subsidiaries or (ii) the acquisition by the Parent or any
of its Subsidiaries of (a) the assets of any Person which constitute
substantially all of an operating unit or business of such Person or (b) one or
more stores.

"Asset Sale" means the sale or other disposition by the Parent or any of
----------
its Subsidiaries (other than to wholly owned Subsidiaries) of (i) all or
substantially all of the Capital Stock of any of the Parent's Subsidiaries, (ii)
assets which constitute substantially all of an operating unit or business of
the Parent or any of its Subsidiaries, or (iii) one or more stores.

"Board of Directors" of any specified Person means either the Board of
------------------
Directors of such Person or any committee of such Board duly authorized to act
hereunder.

"Business Day" means a day which in the city (or in any of the cities, if
------------
more than one) where amounts are payable in respect of the Notes, as specified
on the face of the form of Note recited above, is neither a legal holiday nor a
day on which banking institutions are authorized by law or regulation to close.

"Capital Stock" means any and all shares, interests, rights to purchase,
-------------
warrants, options, participations or other equivalents of or interests in
(however designated) corporate stock and any and all equity, beneficial or
ownership interests in, or participations or other equivalents in, any
partnership, association, joint venture or other business entity.

"Capitalized Lease Obligations" of any Person means the obligations of such
-----------------------------
Person to pay rent under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP and the amount of such
obligation shall be the capitalized amount thereof determined in accordance with
GAAP.

"Change of Control" means an event or series of events by which (i)(A) any
-----------------
"person" or "group" (as such terms are defined in Sections 13(d) and 14(d) of
the Exchange Act), is or becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to
have "beneficial ownership" of all shares that any such Person has the right to
acquire without condition, other than the passage of time, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 50% of the total voting power of the then outstanding
Voting Stock of the Parent and (B) such Person or group succeeds in having its
or their nominees constitute a majority of the Board of Directors of the Parent,
(ii) the Parent consolidates with or merges into another corporation or conveys,
transfers or leases all or substantially all of its assets to any Person, or any
corporation consolidates with or merges into the Parent in a transaction in
which the outstanding Voting Stock of the Parent is changed into or exchanged
for cash, securities or other property, other than a transaction between the
Parent and a Subsidiary of the Parent, or (iii) the Parent shall cease at any
time after the Acquisition to own, directly or indirectly, 100% of the total
voting power of the then outstanding Voting Stock of the Company. A Change of
Control shall not be deemed to occur if (i) the Holding Company acquires (by
merger, exchange or other transaction of a similar nature) all of the Voting
Stock of the Parent or (ii) the Parent merges or consolidates with another
corporation and the principal purpose of such merger or consolidation is (as
determined in good faith by the Board of Directors of the Parent and evidenced
by the resolution thereof) to change the state of incorporation of the Parent,
and immediately after such transaction the Voting Stock of the successor
corporation resulting from such merger or consolidation shall be owned by
holders substantially identical to holders of the Voting Stock

<PAGE>
of the Parent immediately prior to such merger or consolidation.

"Change of Control Triggering Event" means the occurrence of both a Change
----------------------------------
of Control and a Rating Decline.

"Company Successor Entity" has the meaning set forth in Section 8.1.
------------------------

"Consolidated", whether used with or without GAAP, means excluding any
------------
Accounts Receivable Subsidiaries except to the extent specifically included.

"Consolidated Cash Flow Ratio" means the ratio, on a pro forma basis, of
----------------------------
(i) the aggregate amount of Consolidated EBITDA of any Person for the four full
fiscal quarters immediately prior to the date (the "Transaction Date") of the
transaction giving rise to the need to calculate the Consolidated Cash Flow
Ratio (the "Reference Period") to (ii) the aggregate Consolidated Interest
Expense of such Person during the Reference Period; provided that for purposes
--------
of such computation, in calculating Consolidated EBITDA and Consolidated
Interest Expense, (1) the Incurrence of the Indebtedness giving rise to the need
to calculate the Consolidated Cash Flow Ratio and the application of the
proceeds therefrom shall be assumed to have occurred on the first day of the
Reference Period, (2) Asset Sales and Asset Acquisitions which occur during the
Reference Period or subsequent to the Reference Period and prior to the
Transaction Date (including any Asset Acquisition to be made by application of
the proceeds of the Indebtedness Incurred pursuant to (1) above) shall be
assumed to have occurred on the first day of the Reference Period, (3) the
Incurrence of any Indebtedness during the Reference Period or subsequent to the
Reference Period and prior to the Transaction Date and the application of the
proceeds therefrom shall be assumed to have occurred on the first day of the
Reference Period and (4) there shall be excluded any Consolidated Interest
Expense related to any amount of Indebtedness which was outstanding during or
subsequent to the Reference Period but is not outstanding on the Transaction
Date. Notwithstanding the provisions of clauses (3) and (4) of the preceding
sentence, (i) with respect to revolving Indebtedness, only historical
Consolidated Interest Expense actually incurred shall be used and (ii) with
respect to Indebtedness Incurred pursuant to clause (xi)

<PAGE>
under "Permitted Indebtedness", Consolidated Interest Expense shall be included
in an amount equal to the greater of (a) if any such Indebtedness has been
Incurred subsequent to the Reference Period and prior to the Transaction Date,
the amount of Consolidated Interest Expense relating to all outstanding
Indebtedness Incurred under such clause (xi) determined by application of clause
(3) above, and (b) the historical Consolidated Interest Expense actually
incurred with respect to Indebtedness Incurred pursuant to such clause (xi) and
outstanding during the Reference Period. For the purposes of making the
computation referred to above, Asset Sales and Asset Acquisitions which have
been made by any Person which has become a Subsidiary of the Parent or been
merged with or into the Parent or any Subsidiary of the Parent during such
Reference Period or subsequent to such Reference Period and prior to the
Transaction Date shall be calculated on a pro forma basis (including all of the
calculations referred to in numbers (1) through (4) above) assuming such Asset
Sales and Asset Acquisitions occurred on the first day of such Reference Period.

"Consolidated EBITDA" means, for any period, on a consolidated basis for
-------------------
the Parent and its Subsidiaries, the sum for such period of (a) Consolidated Net
Income, (b) depreciation and amortization expense as determined in accordance
with GAAP, (c) Consolidated Interest Expense (other than dividends paid on
preferred or preference stock), (d) without duplication, any premiums, fees, and
expenses and the amortization thereof, in connection with financings (whether
debt or equity) determined in accordance with GAAP, (e) federal and state income
taxes (other than income taxes (either positive or negative) attributable to
extraordinary gains or losses) as determined in accordance with GAAP and (f)
other non-cash items reducing Consolidated Net Income, minus non-cash items
increasing Consolidated Net Income, as determined in accordance with GAAP.

"Consolidated Interest Expense" means, for any period, the sum of (a) the
-----------------------------
interest expense of the Parent and its Subsidiaries for such period, determined
on a consolidated basis in accordance with GAAP, excluding any premiums, fees,
and expenses and the amortization thereof, in connection with financings
(whether debt or equity) determined in accordance with GAAP, and (b) dividends
in respect of preferred or preference stock of a Subsidiary of the Parent held
by a Person or Persons other than the Parent or a wholly owned Subsidiary of the
Parent. For purposes of clause (b) of the preceding sentence, dividends shall
be deemed to be an amount equal to the actual dividends paid divided by one
minus the applicable actual combined federal, state and local income tax rate of
the Parent (expressed as a decimal), on a consolidated basis, for the fiscal
year immediately preceding the date of the transaction giving rise to the need
to calculate Consolidated Interest Expense.

"Consolidated Net Income" of any Person for any period means the Net Income
-----------------------
of such Person and its Subsidiaries for such period; provided that there shall
--------
be excluded (a) the Net Income of any Person that is not a Subsidiary, (b) the
Net Income of any other Person accrued prior to the date it becomes a Subsidiary
of the Person with respect to which Consolidated Net Income is calculated, or is
merged into or consolidated with such Person or any of its Subsidiaries or that
other Person's assets are acquired by such Person or any of its Subsidiaries;
provided that this clause (b) shall not be effective for any calculation of
- --------
Consolidated EBITDA to be made in accordance with the definition of Consolidated
Cash Flow Ratio, (c) the Net Income (if positive) of any Subsidiary of such
Person to the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary to

<PAGE>
such Person or to any other Subsidiary of such Net Income is not at the time
permitted by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Subsidiary, and (d) without duplication, any net gains or losses
attributable to the sale, lease, conveyance or other disposition of assets
(including without limitation Capital Stock of any Subsidiary of such Person),
whether owned on the date of issuance of the Notes or thereafter acquired, in
one or more related transactions outside the ordinary course of business.

"Default" means any event which is, or after notice or passage of time or
-------
both would be, an Event of Default.

"Disqualified Stock" of any Person means any Capital Stock of such Person
------------------
that, by its terms (or by the terms of any security into which it is convertible
or for which it is exercisable, redeemable or exchangeable), matures, or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the stated final maturity of the Notes, provided that any Capital Stock
--------
which would not constitute Disqualified Stock but for provisions thereof giving
holders thereof the right to require the Company to repurchase or redeem such
Capital Stock upon the occurrence of a change in control occurring prior to the
final maturity of the Notes shall not constitute Disqualified Stock if the
change in control provisions applicable to such Capital Stock are no more
favorable to the holders of such Capital Stock than the provisions contained in
Section 3.14 and such Capital Stock specifically provides that the Company will
not repurchase or redeem any such stock pursuant to such provisions prior to the
Company's repurchase of such Notes as are required to be repurchased under
Section 3.14.

"Fair Market Value" means with respect to any asset or property, the sale
-----------------
value that would be obtained in an arm's-length transaction between an informed
and willing seller under no compulsion to sell and an informed and willing
buyer.

"GAAP" means generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination, except the calculations made for
purposes of determining compliance with the covenants set forth in Article Three
(including, without limitation, the definitions of terms used therein) shall be
made in accordance with the opinions, pronouncements and statements of the
foregoing organizations that are applicable as of the Original Issue Date.

"Guarantee" by any Person means any obligation, contingent or otherwise, of
---------
such Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such other Person (whether
arising by virtue of partnership arrangements, by agreement to keepwell, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other

<PAGE>
manner the obligee of such Indebtedness or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part), provided that the term Guarantee shall not include endorsements for
--------
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.

"Guaranteed Obligations" has the meaning set forth in Section 13.1.
----------------------

"Holder" means the Person in whose name a particular Note shall be
------
registered on the books of the Company kept for that purpose in accordance with
the terms hereof, and the word "majority," used in connection with the terms
"Holder," "Holder of Notes," or other similar terms, shall signify the "majority
in principal amount" whether or not so expressed.

"Holding Company" means a corporation (i) formed for the sole purpose of
---------------
acquiring by merger, exchange or other transaction of a similar nature all of
the Voting Stock of the Parent, and (ii) whose Voting Stock is owned immediately
after such transaction by holders substantially identical to the holders of the
Voting Stock of the Parent immediately prior to such transaction.

"Incurrence" means the incurrence, creation, assumption, Guarantee of the
----------
payment of, or in any other manner becoming liable with respect to, the payment
of, any Indebtedness. "Incur" shall have a comparable meaning.

"Indebtedness" means (i) any liability of any Person (A) for borrowed
------------
money, or under any reimbursement obligation relating to a letter of credit, (B)
evidenced by a bond, note, debenture or similar instrument (including a purchase
money obligation), or (C) under any Capitalized Lease Obligation, (ii) any
liability of others described in the preceding clause (i) that such Person has
Guaranteed, (iii) Interest Protection Agreements, (iv) all obligations to
purchase, redeem, retire, defease or otherwise acquire for value any
Disqualified Stock or any warrants, rights or options to acquire such
Disqualified Stock valued, in the case of Disqualified Stock, at the greatest
amount payable in respect thereof on a liquidation (whether voluntary or
involuntary) plus accrued and unpaid dividends, and (v) any amendment,
supplement, modification, deferral, renewal, extension or refunding of any
liability of the types referred to in clauses (i)-(iv) above, provided that
--------
Indebtedness shall not include accounts payable or liabilities to trade
creditors of any Person.

"Initial Public Offering" means the public offering by the Company of up to
-----------------------
4,950,000 shares of its Common Stock, par value $.01 per share, pursuant to the
registration statement on Form S-1 (registration number 33-60416) filed under
the Securities Act of 1933 on April 1, 1993, as amended.

"Interest Protection Agreement" of any Person means any interest rate swap
-----------------------------
agreement, interest rate collar agreement, option or future contract or other
similar agreement or arrangement designed to protect such Person or any of its
Subsidiaries against fluctuations in interest rates.

"Investment Grade" means with respect to the Notes, (i) in the case of
----------------
Standard & Poor's Ratings Group, a rating of at least BBB-; (ii) in the case of
Moody's Investor Service,

<PAGE>
Inc., a rating of at least Baa3, and (iii) in the case of a Rating Agency other
than Standard & Poor's Ratings Group or Moody's Investor Service, Inc., the
equivalent rating, or in each case, any successor, replacement or equivalent
definition as promulgated by Standard & Poor's Ratings Group, Moody's Investor
Service, Inc. or other Rating Agency as the case may be.

"Lien" means any lien, mortgage, pledge, assignment (including any
----
assignment of rights to receive payments of money), security interest, charge or
encumbrance of any kind (including any conditional sale or other title retention
agreement or any lease in the nature thereof), and any agreement to give a lien,
mortgage, pledge, assignment (including any assignment of rights to receive
payments of money), security interest, charge or other encumbrance of any kind.

"Net Income" of any Person for any period means the consolidated net income
----------
or loss, as the case may be, of such Person and its Subsidiaries for such period
determined in accordance with GAAP, except that (i) extraordinary gains and
losses as determined in accordance with GAAP shall be excluded and (ii) with
respect to the Company or the Parent, dividends, distributions or payments in
repayment of Indebtedness owed to the Company or the Parent by any Accounts
Receivable Subsidiary actually paid not to exceed the net income of such
Subsidiary for such period as determined in accordance with GAAP, shall be
included.

"Note" or "Notes" means any of the 9-7/8% Senior Subordinated Notes due
---- -----
2003, as the case may be, authenticated and delivered under this Indenture.

"Officer" of any Specified Person means the Chairman of the Board, Vice
-------
Chairman of the Board, President, any Vice President (whether or not designated
by a number or numbers or a word or words added before or after the title "Vice
President"), Chief Financial Officer, Secretary, Treasurer or Controller of such
Person.

"Officers' Certificate" for the Parent or the Company means a certificate
---------------------
signed by two Officers or by an Officer and an Assistant Treasurer or any
Assistant Secretary of the Parent or the Company, as the case may be, and
delivered to the Trustee. Each such certificate shall comply with Section 314
of the Trust Indenture Act of 1939 and include the statements provided for in
Section 12.5 hereunder.

"Opinion of Counsel" means an opinion in writing signed by legal counsel
------------------
satisfactory to the Trustee. Each such opinion shall comply with Section 314 of
the Trust Indenture Act and include the statements provided for in Section 12.5
hereunder, if and to the extent required hereby.

"Original Issue Date" means July 15, 1993.
-------------------

<PAGE>
"Outstanding", when used with reference to Notes, shall, subject to the
-----------
provisions of Section 6.4, mean, as of any particular time, all Notes
authenticated and delivered by the Trustee under this Indenture, except

(a) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;

(b) Notes, or portions thereof, for the payment or redemption of
which moneys in the necessary amount shall have been deposited in trust
with the Trustee or with any paying agent (other than the Company) or shall
have been set aside, segregated and held in trust by the Company (if the
Company shall act as its own paying agent), provided that if such Notes are
--------
to be redeemed prior to the maturity thereof, notice of such redemption
shall have been given as herein provided, or provision satisfactory to the
Trustee shall have been made for giving such notice; and

(c) Notes in substitution for which other Notes shall have been
authenticated and delivered, or which shall have been paid, pursuant to the
terms of Section 2.6 (unless proof satisfactory to the Trustee is presented
that any of such Notes is held by a Person in whose hands such Note is a
legal, valid and binding obligation of the Company).

"Parent Guarantee" has the meaning set forth in Section 13.1.
----------------

"Parent Payment Blockage Period" has the meaning set forth in Section
------------------------------
14.2(b).

"Parent Senior Indebtedness" means, with respect to the Parent, the
--------------------------
principal of and premium, if any, and interest on (including interest that, but
for the filing of a petition initiating any proceeding pursuant to any
bankruptcy law with respect to the Parent, would accrue on such obligations,
whether or not such claim is allowed in such bankruptcy proceeding) and all
other monetary obligations of every kind or nature due on or in connection with
any Indebtedness of the Parent (including Guarantees by the Parent of
Indebtedness of Subsidiaries, but excluding the Parent Guarantee), whether
outstanding on the date hereof or hereafter Incurred, unless, in the case of any
particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Parent Guarantee.
Without limiting the generality of the foregoing, "Parent Senior Indebtedness"
shall include the Indebtedness under the Working Capital Facility and amounts
owed to banks or other financial institutions pursuant to factoring arrangements
for goods, materials or services purchased in the ordinary course of business.
Notwithstanding the foregoing, Parent Senior Indebtedness shall not include (i)
Indebtedness of the Parent to a Subsidiary, (ii) amounts owed (except to banks
and other financial institutions as aforesaid) for goods, materials or services
purchased in the ordinary course of business or (iii) any other obligations to
which any other Subordinated Indebtedness of the Parent is not subordinated.

"Parent Successor Entity" has the meaning set forth in Section 8.3.
-----------------------

"Payment Blockage Period" has the meaning set forth in section 10.2(b).
-----------------------

"Permitted Drop Down Transaction" shall mean a transaction in which the
Parent contributes a significant portion or all of its operating assets to a
wholly owned Subsidiary; provided that such transaction (a) is designed in good
faith to accommodate the Parent's tax planning, (b) such wholly owned Subsidiary
enters into a Supplemental Indenture Containing a senior subordinated guarantee
of the Notes in favor of the Holders on substantially the terms provided in
Articles 13 and 14 hereof and (c) such transaction is not disadvantageous in any
material respect to the Holders in the good faith opinion of the Board of
Directors of the Parent, evidenced by a resolution of its Board of Directors
delivered to the Trustee.

<PAGE>
"Permitted Indebtedness" means (i) Indebtedness of the Parent or any
----------------------
Subsidiary outstanding at any time under or in respect of the Working Capital
Facility in an aggregate principal amount not to exceed $ million; (ii)
Indebtedness represented by standby letters of credit or trade letters of credit
Incurred in the ordinary course of business; (iii) Indebtedness of the Parent to
any of its wholly owned Subsidiaries, or of a Subsidiary to the Parent or to a
wholly owned Subsidiary of the Parent, except that any transfer of such
Indebtedness by the Parent or a wholly owned Subsidiary (other than to another
wholly owned Subsidiary) will be deemed to be an Incurrence; provided however,
-------- -------
that the obligations of the Parent to any of its Subsidiaries with respect to
such Indebtedness shall be subject to a subordination agreement between the
Parent and its Subsidiaries providing for the subordination of such obligations
in right of payment from and after such time as all Notes issued and outstanding
shall become due and payable (whether at stated maturity, by acceleration or
otherwise) to the payment and performance of the Parent's obligations under this
Indenture and the Notes; (iv) the Notes; (v) Capitalized Lease Obligations with
respect to any assets acquired or constructed after the date hereof; (vi)
Indebtedness secured by Purchase Money Mortgages; (vii) Indebtedness of the
Parent and its Subsidiaries pursuant to Interest Protection Agreements; (viii)
Indebtedness Incurred in respect of agreements providing for indemnification,
adjustment of purchase price or similar obligations or from Guarantees securing
any obligations of the Parent or any Subsidiary pursuant to such agreements, in
each case incurred or assumed in connection with the disposition of any
business, assets, or Subsidiary of the Parent, other than Guarantees of
Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or Subsidiary for the purpose of financing such acquisition,
provided that the maximum aggregate liability in respect of all such
- --------
Indebtedness in the nature of such Guarantees shall at no time exceed the gross
proceeds actually received in connection with such dispositions;
(ix) Indebtedness arising from Guarantees to suppliers, lessors, licensees,
contractors, franchisees, or customers incurred in the ordinary course of
business; (x) Indebtedness in respect of performance bonds provided by the
Parent or its Subsidiaries in the ordinary course of business and refinancings
thereof; (xi) other Indebtedness of the Parent or its Subsidiaries, the
aggregate principal amount of which does not exceed $25 million less the
liquidation preference of any Subsidiary Preferred Stock issued pursuant to
Section 3.16 in reliance on this clause (xi); (xii) Indebtedness arising from
the honoring by a bank or other financial institution of a check, draft or
similar instrument drawn against insufficient funds in the ordinary course of
business, provided that such Indebtedness is extinguished within two Business
--------
Days of its incurrence; (xiii) other Indebtedness outstanding as of the date
hereof; and (xiv) Refinancing Indebtedness, provided that (A) the original issue
--------
amount of the Refinancing Indebtedness shall not exceed the maximum principal
amount and accrued interest of the Indebtedness to be repaid (or if such
Indebtedness was issued at an original issue discount, the original issue price
plus amortization of the original issue discount at the time of the repayment of
the Indebtedness to be repaid), plus the reasonable fees and expenses directly
Incurred in connection with such Refinancing Indebtedness, except that
Refinancing Indebtedness Incurred pursuant to a revolving facility replacing
another revolving facility may have availability equal to the facility being
replaced, (B) Refinancing Indebtedness Incurred by any Subsidiary shall not be
used to repay or refund outstanding Indebtedness of the Parent and (C) with
respect to any Refinancing Indebtedness that refinances the Notes in part or
other Indebtedness ranking pari passu or junior in right of payment to the
Notes, (1) either (a) the Refinancing Indebtedness provides for payments of

<PAGE>
principal, by way of sinking fund, mandatory redemption or otherwise (including
defeasance) by the Parent (including, without limitation, at the option of the
holder thereof other than an option given pursuant to a "change of control"
covenant which is no more favorable to the holders of the Refinancing
Indebtedness than any similar covenant contained in the Indebtedness being
refinanced) at times no earlier than, and in each case in amounts not greater
than, the schedule of principal payments provided for by the Indebtedness being
refinanced, or (b) the Refinancing Indebtedness does not require any payments of
principal of such Indebtedness by way of sinking fund, mandatory redemption or
otherwise (including defeasance) by the Parent (including, without limitation,
at the option of the holder thereof other than an option given to a holder
pursuant to a "change of control" covenant which is no more favorable to the
holders of such Indebtedness than the provisions contained in Section 3.14, and
such Refinancing Indebtedness provides that the Company will not repurchase such
Refinancing Indebtedness pursuant to such provisions prior to the Company's
repurchase of the Notes required to be repurchased by the Company under Section
3.14) at any time prior to the final scheduled maturity date of the Notes, (2)
if the Notes are exchanged or refinanced in part, such Refinancing Indebtedness
by its terms or by the terms of any agreement or instrument pursuant to which
such Refinancing Indebtedness is issued is expressly made pari passu or
subordinated in right of payment to the remaining Notes, (3) if such
Indebtedness being refinanced is pari passu in right of payment to the Notes,
such Refinancing Indebtedness does not rank senior in right of payment to the
payment of principal of and interest on the Notes, as the case may be, and (4)
if such Indebtedness being refinanced is subordinated to the Notes, such
Refinancing Indebtedness is subordinated to the Notes to the same extent or
greater and on substantially the same terms or terms more favorable to the
Holder of the Notes.

"Person" means an individual, a corporation, a partnership, an association,
------
a trust or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.

"Purchase Money Mortgage" means any Liens (including extensions and
-----------------------
renewals thereof) upon real or tangible personal property acquired after the
Original Issue Date, provided that (a) any such Lien is created solely for the
--------
purpose of securing Indebtedness representing, or Incurred to finance, refinance
or refund, the cost (including the cost of construction) of the item of property
subject thereto, (b) the principal amount of the Indebtedness secured by such
Liens does not exceed 100% of such cost, and (c) such Lien does not extend to or
cover any other property other than such item of property and any improvements
on or rights appurtenant to such item.

"Rating Agencies" means (i) Standard & Poor's Ratings Group and (ii)
---------------
Moody's Investor Service, Inc. or (iii) if Standard & Poor's Ratings Group or
Moody's Investor Service, Inc. or both shall not make a rating of the Notes
publicly available, a nationally recognized securities rating agency or
agencies, as the case may be, selected by the Parent, which shall be substituted
for Standard & Poor's Ratings Group, Moody's Investor Service, Inc. or both, as
the case may be.

"Rating Category" means (i) with respect to Standard & Poor's Ratings
---------------
Group, any of the following categories: BB, B, CCC, CC, C and D (or equivalent
successor categories);

<PAGE>
(ii) with respect to Moody's Investor Service, Inc., any of the following
categories: Ba, B, Caa, Ca, C and D (or equivalent successor categories); and
(iii) the equivalent of any such category of Standard & Poor's Ratings Group or
Moody's Investor Service, Inc. used by another Rating Agency. In determining
whether the rating of the Notes has decreased by one or more gradations,
gradations within Rating Categories (+ and - for Standard & Poor's Ratings
Group; 1, 2 and 3 for Moody's Investor Service, Inc.; or the equivalent
gradations for another Rating Agency) shall be taken into account (e.g., with
respect to Standard & Poor's Ratings Group, a decline in a rating from BB+ to
BB, as well as from BB- to B+, will constitute a decrease of one gradation).

"Rating Date" means the date which is 90 days prior to the earlier of (i) a
-----------
Change of Control and (ii) public notice of the occurrence of a Change of
Control or of the intention by the Parent to effect a Change of Control.

"Rating Decline" means the occurrence of the following on, or within 90
--------------
days after, the earlier of (i) the occurrence of a Change of Control and (ii)
the date of public notice of the occurrence of a Change of Control or of the
public notice of the intention of the Parent to effect a Change of Control
(which period shall be extended so long as the rating of the Notes is under
publicly announced consideration for possible downgrading by any of the Rating
Agencies): (a) in the event that the Notes are rated by either Rating Agency on
the Rating Date as Investment Grade, the rating of the Notes by both such Rating
Agencies shall be reduced below Investment Grade, or (b) in the event the Notes
are rated below Investment Grade by both such Rating Agencies on the Rating
Date, the rating of the Notes by either Rating Agency shall be decreased by one
or more gradations (including gradations within Rating Categories as well as
between Rating Categories).

"Refinancing Indebtedness" means any renewals, extensions, substitutions,
------------------------
refundings, refinancing (in whole or in part) or replacements of any
Indebtedness described in clauses (i) through (xiii) of the definition of
"Permitted Indebtedness" or Incurred pursuant to Section 3.9.

"Restricted Payments" has the meaning set forth in Section 3.10.
-------------------

"Senior Indebtedness" means, with respect to the Company, the principal of
-------------------
and premium, if any, and interest on (including interest that, but for the
filing of a petition initiating any proceeding pursuant to any bankruptcy law
with respect to the Company, would accrue on such obligations, whether or not
such claim is allowed in such bankruptcy proceeding) and all other monetary
obligations of every kind or nature due on or in connection with any
Indebtedness of the Company other than the Notes, whether outstanding on the
Original Issue Date or thereafter Incurred, unless, in the case of any
particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Notes. Without
limiting the generality of the foregoing, "Senior Indebtedness" shall include
the Indebtedness under the Working Capital Facility and amounts owed to banks
or other financial institutions pursuant to factoring arrangements for goods,
materials or services purchased in the ordinary course of

<PAGE>
business. Notwithstanding the foregoing, Senior Indebtedness shall not include
(i) Indebtedness of the Company to a Subsidiary or (ii) amounts owed (except to
banks and other financial institutions as aforesaid) for goods, materials or
services purchased in the ordinary course of business.

"Significant Senior Indebtedness" means (i) any Senior Indebtedness
-------------------------------
incurred under the Working Capital Facility and (ii) any other issue of Senior
Indebtedness having an outstanding principal amount of at least $25,000,000
which is specifically designated in the instrument evidencing or agreement
governing such Senior Indebtedness as "Significant Senior Indebtedness".

"Significant Parent Senior Indebtedness" means (i) any Parent Senior
--------------------------------------
Indebtedness incurred under the Working Capital Facility and (ii) any other
issue of Parent Senior Indebtedness having an outstanding principal amount of at
least $25,000,000 which is specifically designated in the instrument evidencing
or agreement governing such Parent Senior Indebtedness as "Significant Parent
Senior Indebtedness".

"16-3/4% Senior Subordinated Debentures" means the Company's 16-3/4% Senior
--------------------------------------
Subordinated Debentures due 2000 issued pursuant to an indenture dated as of
June 30, 1988, as amended and supplemented between the Company and AmSouth Bank
of Alabama (f/k/a AmSouth Bank, N.A.), as Trustee.

"Stated Maturity," when used with respect to any Note or any installment of
---------------
interest thereon, means the date specified in such Note as the final date on
which the principal of such Note or such installment of interest is due and
payable.

"Subsidiary" of any specified Person means a corporation (or other business
----------
entity), the majority of whose Voting Stock (or other equity interests) is owned
by such Person or one or more Subsidiaries or by such Person and one or more
Subsidiaries; provided that, unless specifically included, the Accounts
--------
Receivable Subsidiaries shall not be deemed to be Subsidiaries of the Parent for
purposes of this Indenture. No Accounts Receivable Subsidiary shall be deemed
to be consolidated into the Parent. All intercompany transactions shall be
reflected on the books and records of the Parent and any Accounts Receivable
Subsidiary in accordance with GAAP, as if they were not consolidated. Unless
the context expressly indicates otherwise, a "Subsidiary" means a Subsidiary of
the Parent.

"Subsidiary Preferred Stock" means any series of preferred stock issued by
--------------------------
a Subsidiary of the Parent.

"Trust Indenture Act of 1939" means the Trust Indenture Act of 1939 as in
---------------------------
force at the Original Issue Date.

"Trustee" means the entity identified as "Trustee" in the first paragraph
-------
hereof and, subject to the provisions of Article Five, shall also include any
successor trustee.

"U.S. Government Obligations" means securities which are (i) direct
---------------------------
obligations of the United States of America for the payment of which its full
faith and credit is pledged or

<PAGE>
(ii) obligations of a Person controlled or supervised by and acting as an agency
or instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case are not callable or redeemable at the
option of the issuer thereof, and shall also include a depository receipt issued
by a bank or trust company as custodian with respect to any such U.S. Government
Obligations or a specific payment of interest on or principal of any such U.S.
Government Obligation held by such custodian for the account of the holder of a
depository receipt, provided that (except as required by law) such custodian is
--------
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the U.S. Government Obligation or the specific payment of interest on or
principal of the U.S. Government Obligation evidenced by such depository
receipt.

"Voting Stock" means stock of the class or classes pursuant to which the
------------
holders thereof have the general voting power under ordinary circumstances to
elect at least a majority of the board of directors, managers or trustees of a
corporation (irrespective of whether or not at the time stock of any other class
or classes shall have or might have voting power by reason of the happening of
any contingency).

"Working Capital Facility" means any credit agreement or credit agreements
------------------------
among the Parent, and/or any subsidiaries of the Parent, certain financial
institutions and NationsBank, N.A. (South), as Agent, and any and all
amendments, renewals, extensions, substitutions, refunding, refinancings (in
whole or in part) or replacements thereof.

ARTICLE TWO

ISSUE, EXECUTION, FORM AND REGISTRATION OF NOTES
------------------------------------------------

SECTION 2.1 Authentication and Delivery of Notes. Upon the execution and
------------------------------------
delivery of this Indenture, or from time to time thereafter, Notes in an
aggregate principal amount not in excess of the amount specified in the form of
Note hereinabove recited (except as otherwise provided in Section 2.6) may be
executed by the Company and delivered to the Trustee for authentication, and the
Trustee shall thereupon authenticate and deliver said Notes to or upon the
written order of the Company, signed by two Officers or by an Officer and an
Assistant Treasurer or Assistant Secretary of the Company without any further
action by the Company.

SECTION 2.2 Execution of Notes. The Notes shall be signed on behalf of
------------------
the Company by two Officers or by an Officer and an Assistant Treasurer or
Assistant Secretary of the Company, under its corporate seal which may, but need
not, be attested. Such signatures may be the manual or facsimile signatures of
the present or any future such officers. The seal of the Company may be in the
form of a facsimile thereof and may be impressed, affixed, imprinted or
otherwise reproduced on the Notes. Typographical and other minor errors or
defects in any such reproduction of the seal or any such signature shall not
affect the validity or enforceability of any Note which has been duly
authenticated and delivered by the Trustee.

<PAGE>
In case any officer of the Company who shall have signed any of the Notes
shall cease to be such officer before the Note so signed shall be authenticated
and delivered by the Trustee or disposed of by the Company, such Note
nevertheless may be authenticated and delivered or disposed of as though the
person who signed such Note had not ceased to be such officer of the Company;
and any Note may be signed on behalf of the Company by such Persons as, at the
actual date of the execution of such Note, shall be the proper officers of the
Company, although at the date of the execution and delivery of this Indenture
any such Person was not such officer.

SECTION 2.3 Certificate of Authentication. Only such Notes as shall bear
-----------------------------
thereon a certificate of authentication substantially in the form hereinbefore
recited, executed by the Trustee by manual signature of one of its authorized
officers, shall be entitled to the benefits of this Indenture or be valid or
obligatory for any purpose. Such certificate by the Trustee upon any Note
executed by the Company shall be conclusive evidence that the Note so
authenticated has been duly authenticated and delivered hereunder and that the
holder is entitled to the benefits of this Indenture.

SECTION 2.4 Form, Denomination and Date of Notes; Payments of Interest.
----------------------------------------------------------
The Notes and the Trustee's certificates of authentication shall be
substantially in the form recited above. The Notes shall be issuable as
registered securities without coupons and in denominations provided for in the
form of Note above recited. The Notes shall be numbered, lettered, or otherwise
distinguished in such manner or in accordance with such plans as the officers of
the Company executing the same may determine with the approval of the Trustee.

Any of the Notes may be issued with appropriate insertions, omissions,
substitutions and variations, and may have imprinted or otherwise reproduced
thereon such legend or legends, not inconsistent with the provisions of this
Indenture, as may be required to comply with any law or with any rules or
regulations pursuant thereto, or with the rules of any securities market in
which the Notes are admitted to trading, or to conform to general usage.

Each Note shall be dated the date of its authentication and shall be
payable on the dates specified on the face of the form of Note recited above.

The person in whose name any Note is registered at the close of business on
any record date with respect to any interest payment date shall, subject to
Section 11.3, be entitled to receive the interest, if any, payable on such
interest payment date notwithstanding any transfer or exchange of such Note
subsequent to the record date and prior to such interest payment date, except if
and to the extent the Company shall default in the payment of the interest due
on such interest payment date, in which case such defaulted interest shall be
paid to the Persons in whose names outstanding Notes are registered at the close
of business on a subsequent record date (which shall be not less than five
Business Days prior to the date of payment of such defaulted interest)
established by notice given by mail by or on behalf of the Company to the
holders of Notes not less than 15 days preceding such subsequent record date.
The term "record date" as used with respect to any interest payment date (except
a date for payment of defaulted interest) shall mean the January 1 or July 1, as

<PAGE>
the case may be, next preceding such interest payment date, whether or not such
record date is a Business Day.

SECTION 2.5 Registration, Transfer and Exchange. The Company will keep at
-----------------------------------
each office or agency to be maintained for the purpose as provided in Section
3.2 a register or registers in which, subject to such reasonable regulations as
it may prescribe, it will register, and will register the transfer of, Notes as
in this Article provided. Such register shall be in written form in the English
language or in any other form capable of being converted into such form within a
reasonable time. At all reasonable times such register or registers shall be
open for inspection by the Trustee.

Upon due presentation for registration of transfer of any Note at each such
office or agency, the Company shall execute and the Trustee shall authenticate
and deliver in the name of the transferee or transferees a new Note or Notes in
authorized denominations for a like aggregate principal amount.

Any Note or Notes may be exchanged for a Note or Notes in other authorized
denominations, in an equal aggregate principal amount. Notes to be exchanged
shall be surrendered at each office or agency to be maintained by the Company
for the purpose as provided in Section 3.2, and the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor the Note or
Notes which the Holder making the exchange shall be entitled to receive, bearing
numbers not contemporaneously outstanding.

All Notes presented for registration of transfer, exchange, redemption or
payment shall (if so required by the Company or the Trustee) be duly endorsed
by, or be accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company and the Trustee duly executed by, the holder or his
attorney duly authorized in writing.

The Company may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any exchange or
registration of transfer of Notes. No service charge shall be made for any such
transaction.

The Company shall not be required to exchange or register a transfer of (a)
any Notes for a period of 15 days next preceding the first mailing of notice of
redemption of Notes to be redeemed, or (b) any Notes selected, called or being
called for redemption except, in the case of any Note where public notice has
been given that such Note is to be redeemed in part, the portion thereof not so
to be redeemed.

All Notes issued upon any transfer or exchange of Notes shall be valid
obligations of the Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Notes surrendered upon such transfer or
exchange.

SECTION 2.6 Mutilated, Defaced, Destroyed, Lost and Stolen Notes. In case
----------------------------------------------------
any temporary or definitive Note shall become mutilated, defaced or be
apparently destroyed, lost or stolen, the Company in its discretion may execute,
and upon the written request of any Officer the Trustee shall authenticate and
deliver, a new Note, bearing a number not contemporaneously outstanding, in
exchange and substitution for the mutilated or defaced

<PAGE>
Note, or in lieu of and substitution for the Note so apparently destroyed, lost
or stolen. In every case the applicant for a substitute Note shall furnish to
the Company and to the Trustee and any agent of the Company or the Trustee such
security or indemnity as may be required by them to indemnify and defend and to
save each of them harmless and, in every case of destruction, loss or theft
evidence to their satisfaction of the apparent destruction, lose or theft of
such Note and of the ownership thereof.

Upon the issuance of any substitute Note, the Company may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee) connected therewith. In case any Note which has
matured or is about to mature shall become mutilated or defaced or be apparently
destroyed, lost or stolen, the Company may, instead of issuing a substitute
Note, pay or authorize the payment of the same (without surrender thereof except
in the case of a mutilated or defaced Note), if the applicant for such payment
shall furnish to the Company and to the Trustee and any agent of the Company or
the Trustee such security or indemnity as any of them may require to save each
of then harmless from all risks, however remote, and, in every case of apparent
destruction, loss or theft, the applicant shall also furnish to the Company and
the Trustee and any agent of the Company or the Trustee evidence to their
satisfaction of the apparent destruction, loss or theft of such Note and of the
ownership thereof.

Every substitute Note issued pursuant to the provisions of this Section by
virtue of the fact that any Note is apparently destroyed, lost or stolen shall
constitute an additional contractual obligation of the Company, whether or not
the apparently destroyed, lost or stolen Note shall be at any time enforceable
by anyone and shall be entitled to all the benefits of (but shall be subject to
all the limitations of rights set forth in) this Indenture equally and
proportionately with any and all other Notes duly authenticated and delivered
hereunder. All Notes shall be held and owned upon the express condition that,
to the extent permitted by law, the foregoing provisions are exclusive with
respect to the replacement or payment of mutilated, defaced, or apparently
destroyed, lost or stolen Notes and shall preclude any and all other rights or
remedies notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment of negotiable instruments or
other securities without their surrender.

SECTION 2.7 Cancellation of Notes; Destruction Thereof. All Notes
------------------------------------------
surrendered for payment, redemption, registration of transfer or exchange, if
surrendered to the Company or any agent of the Company or the Trustee, shall be
delivered to the Trustee for cancellation or, if surrendered to the Trustee,
shall be canceled by it; and no Notes shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture. The Trustee
shall destroy canceled Notes held by it and deliver a certificate of destruction
to the Company. If the Company shall acquire any of the Notes, such acquisition
shall not operate as a redemption or satisfaction of the indebtedness
represented by such Notes unless and until the same are delivered to the Trustee
for cancellation.

SECTION 2.8 Temporary Notes. Pending the preparation of definitive Notes,
---------------
the Company may execute and the Trustee shall authenticate and deliver temporary
Notes (printed, lithographed, typewritten or otherwise reproduced, in each case
in form satisfactory

<PAGE>
to the Trustee). Temporary Notes shall be issuable as registered Notes without
coupons, of any authorized denomination, and substantially in the form of the
definitive Notes but with such omissions, insertions and variations as may be
appropriate for temporary Notes, all as may be determined by the Company with
the concurrence of the Trustee. Temporary Notes may contain such reference to
any provisions of this Indenture as may be appropriate. Every temporary Note
shall be executed by the Company and be authenticated by the Trustee upon the
same conditions and in substantially the same manner, and with like effect, as
the definitive Notes. Without unreasonable delay the Company shall execute and
shall furnish definitive Notes and thereupon temporary Notes may be surrendered
in exchange therefor without charge at each office or agency to be maintained by
the Company for the purpose pursuant to Section 3.2, and the Trustee shall
authenticate and deliver in exchange for such temporary Notes a like aggregate
principal amount of definitive Notes of authorized denominations. Until so
exchanged the temporary Notes shall be entitled to the same benefits under this
Indenture as definitive Notes.

ARTICLE THREE

COVENANTS OF THE PARENT, THE COMPANY AND THE TRUSTEE
----------------------------------------------------

SECTION 3.1 Payment of Principal and Interest. The Company covenants and
---------------------------------
agrees that it will duly and punctually pay or cause to be paid the principal
of, and interest on, each of the Notes at the place or places, at the respective
times and in the manner provided in the Notes. Each installment of interest on
the Notes may be paid by mailing checks for such interest payable to or upon the
written order of the Holders entitled thereto as they shall appear on the
registry books of the Company.

SECTION 3.2 Offices for Payments, etc. So long as any of the Notes remain
-------------------------
outstanding, the Company will maintain the following: (a) an office or agency
where the Notes may be presented for payment, (b) an office or agency where the
Notes may be presented for registration of transfer and for exchange as in this
Indenture provided and (c) an office or agency where notices and demands to or
upon the Company in respect of the Notes or of this Indenture may be served.
The Company will give to the Trustee written notice of the location of any such
office or agency and of any change of location thereof. The Company hereby
initially designates the corporate trust office of the Trustee as the office or
agency for each such purpose. In case the Company shall fail to maintain any
such office or agency or shall fail to give such notice of the location or of
any change in the location thereof, presentations and demands may be made and
notices may be served at the corporate trust office.

SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee. The
--------------------------------------------------
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 5.9, a Trustee, so that there
shall at all times be a Trustee hereunder.

SECTION 3.4 Paying Agents. Whenever the Company shall appoint a paying
-------------
agent other than the Trustee, it will cause such paying agent to execute and
deliver to the Trustee

<PAGE>
an instrument in which such agent shall agree with the Trustee, subject to the
provisions of this Section,

(a) that it will hold all sums received by it as such agent for the
payment of the principal of or interest on the Notes (whether such sums
have been paid to it by the Company on the Notes) in trust for the benefit
of the holders of the Notes or of the Trustee,

(b) that it will give the Trustee notice of any failure by the
Company to make any payment of the principal of or interest on the Notes
when the same shall be due and payable, and

(c) pay any such sums so held in trust by it to the Trustee upon the
Trustee's written request at any time during the continuance of the failure
referred to in clause (b) above.

The Company will, on or before each due date of the principal of or
interest on the Notes, deposit with the paying agent a sum sufficient to pay
such principal or interest, and (unless such paying agent is the Trustee) the
Company will promptly notify the Trustee of any failure to take such action.

If the Company shall act as its own paying agent, it will, on or before
each due date of the principal of or interest on the Notes, set aside, segregate
and hold in trust for the benefit of the holders of the Notes a sum sufficient
to pay such principal or interest so becoming due. The Company will promptly
notify the Trustee of any failure to take such action.

Anything in this Section to the contrary notwithstanding, the Company may
at any time, for the purpose of obtaining a satisfaction and discharge of this
Indenture or for any other reason, pay or cause to be paid to the Trustee all
sums held in trust by the Company or any paying agent hereunder, as required by
this Section, such sums to be held by the Trustee upon the trusts herein
contained.

Anything in this Section to the contrary notwithstanding, the agreement to
hold sums in trust as provided in this Section are subject to the provisions of
Sections 9.3 and 9.4.

SECTION 3.5 Certificate to Trustee. (a) Each of the Company and the
----------------------
Parent will furnish to the Trustee within 120 days after the end of each fiscal
year (beginning with the fiscal year commencing January 31, 1993) a brief
certificate (which need not comply with Section 12.5) from the principal
executive, financial or accounting officer of such party as to his or her
knowledge of the compliance by such party with all conditions and covenants
under this Indenture (such compliance to be determined without regard to any
period of grace or requirement of notice provided under this Indenture).

(b) Each of the Company and the Parent shall deliver to the Trustee as
soon as possible and in any event within 10 days after such party becomes aware
of any Default or

<PAGE>
Event of Default an Officers' Certificate specifying such Default or Event of
Default and what action such party is taking or proposes to take with respect
thereto.

SECTION 3.6 Holders Lists. If and so long as the Trustee shall not be the
-------------
Note registrar, the Company will furnish or cause to be furnished to the Trustee
a list in such form as the Trustee may reasonably require of the names and
addresses of the Holders pursuant to Section 312 of the Trust Indenture Act of
1939 (a) semi-annually not more than 15 days after each record date for the
payment of semi-annual interest on the Notes, as hereinabove specified, as of
such record date, and (b) at such other times as the Trustee may request in
writing, within 30 days after receipt by the Company of any such request as of a
date not more than 15 days prior to the time such information is furnished.

SECTION 3.7 Reports by the Parent. (a) The Parent covenants to file with
---------------------
the Trustee, within 15 days after the Parent is required to file the same with
the Commission, copies of the annual reports and of the information, documents,
and other reports which the Parent may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
(the "Exchange Act"), and, shall cause such reports to be mailed to the Holders
------------
within 30 days, in the case of the annual reports, and within 15 days, in the
case of any quarterly report, of when such report is required to be filed under
Section 13 or Section 15(d) of the Exchange Act.

(b) So long as the Notes remain outstanding, the Parent shall file with
the Commission quarterly reports containing such information as required by Form
10-Q (or the then applicable form for quarterly reports) for the first three
quarters of each fiscal year and annual reports containing such information as
required by Form 10-K (or the then applicable form for annual reports) that it
would be required to file under Section 13 of the Exchange Act if it had a class
of securities listed on a national securities exchange and shall cause such
reports to be filed with the Trustee and mailed to the Holders within 30 days,
in the case of the annual reports, and within 15 days, in the case of any
quarterly report, of when such report would have been required to be filed under
Section 13 of the Exchange Act.

SECTION 3.8 Reports by the Trustee. Any Trustee's report required under
----------------------
Section 313(a) of the Trust Indenture Act of 1939 shall be transmitted on or
before each July 15 (commencing July 15, 1994), and shall be dated as of a date
convenient to the Trustee no more than 60 days prior thereto.

SECTION 3.9 Limitation on Indebtedness. (a) The Parent will not, and
--------------------------
will not permit any Subsidiary to, Incur any Indebtedness, including Acquired
Indebtedness, other than Permitted Indebtedness, unless, after giving effect to
the Incurrence thereof and the application of the proceeds thereof, the
Consolidated Cash Flow Ratio would be equal to or greater than 2.25 to 1.

(b) Notwithstanding the foregoing, no Subsidiary of the Parent shall
Guarantee any Indebtedness of the Parent which is expressly by its terms
subordinate or junior in right of payment to any other Indebtedness of the
Parent unless such Subsidiary also Guarantees the Notes on a substantially
similar basis; provided that if any such Subsidiary no longer Guarantees such
--------
Indebtedness, such Subsidiary shall also no longer be required to Guarantee

<PAGE>
the Notes on a substantially similar basis; provided, further, that if such
-------- -------
subordinated Indebtedness is expressly by its terms subordinate or junior in
right of payment to the Notes or to the Parent Guarantee, any such Guarantee of
such Subsidiary with respect to such subordinated Indebtedness shall be
subordinated to such Subsidiary's Guarantee with respect to the Notes to the
same extent as such subordinated Indebtedness is subordinated to the Notes or to
the Parent Guarantee.

(c) For purposes of determining any particular amount of Indebtedness (i)
Guarantees of (or obligations with respect to letters of credit supporting)
Indebtedness otherwise included in the determination of such amount shall not
also be included, and (ii) the amount of Indebtedness issued at a price which is
less than the principal amount thereof shall be equal to the amount of the
liability in respect thereof determined in accordance with GAAP.

(d) For the purpose of determining compliance with this Section 3.9, in
the event that an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness permitted by this Section 3.9, the Parent in its sole
discretion shall classify such item of Indebtedness and only be required to
include the amount of such Indebtedness as one of such types.

SECTION 3.10 Limitation on Restricted Payments. The Parent will not, and
---------------------------------
will not permit any of its Subsidiaries to, directly or indirectly, (i) declare
or pay any dividend on, or make any distribution in respect of, or purchase,
redeem or retire for value, any Capital Stock of the Parent, other than through
the issuance solely of the Parent's own Capital Stock, or rights thereto, (ii)
make any principal payment on, or redeem, repurchase, defease or otherwise
acquire or retire for value, prior to any scheduled principal payment or
maturity, Indebtedness of the Parent or any Subsidiary that is expressly
subordinate in right of payment to the Notes or to the Parent Guarantee
("Subordinated Indebtedness") or (iii) make any loan, Incur, or suffer to exist
any Guarantee of Indebtedness of, or make any investment in, any Affiliate of
the Parent, other than the Parent or a Subsidiary of the Parent (such payments
or any other actions described in (i), (ii) and (iii), collectively, "Restricted
Payments") unless (a) at the time of and after giving effect to the Restricted
Payment, no Default or Event of Default shall have occurred and be continuing,
(b) at the time of and after giving effect to the Restricted Payment, the
Consolidated Cash Flow Ratio would be at least 2.25 to 1 and (c) at the time of
and after giving effect to such Restricted Payment (the value of any such
Restricted Payment, if other than cash, to be determined by the Board of
Directors of the Parent, whose determination shall be conclusive and evidenced
by a board resolution), the aggregate amount of all Restricted Payments
(together with any amounts paid pursuant to clauses (i), (ii), and (iv) in the
following paragraph) declared or made after the Original Issue Date shall not
exceed the sum of (A)(I) 50% of the Company's Consolidated Net Income accrued on
a cumulative basis during the period (taken as one accounting period) beginning
on the first day of the first full fiscal quarter following the issuance of the
Notes and ending on the last day of the Company's last fiscal quarter ending
prior to or on the date of the

<PAGE>

Acquisition (or, if such cumulative Consolidated Net Income for such period
shall be a loss, minus 100% of such loss) and (II) 50% of the Parent's
Consolidated Net Income accrued on a cumulative basis during the period (taken
as one accounting period) beginning on the first day of the Parent's fiscal
quarter commencing closest to the date of the Acquisition and ending on the last
day of the Parent's last fiscal quarter ending prior to the date of such
Restricted Payment (or if such cumulative Consolidated Net Income for such
period shall be a loss, minus 100% of such loss), (B)(I) an amount equal to the
aggregate net proceeds (including the Fair Market Value of property other than
cash, as determined by the Board of Directors of the Company, whose
determination shall be conclusive and evidenced by a board resolution) received
by the Company as capital contributions to the Company (other than from a
Subsidiary or any Accounts Receivable Subsidiary) after the Original Issue Date
and prior to the Acquisition or from the issuance and sale (other than to a
Subsidiary or any Accounts Receivable Subsidiary) after the Original Issue Date
and prior to the Acquisition of Capital Stock (excluding Disqualified Stock
and proceeds from the Initial Public Offering) and (II) an amount equal to the
aggregate net proceeds (including the Fair Market Value of property other than
cash, as determined by the Board of Directors of the Parent, whose determination
shall be conclusive and evidenced by a board resolution) received by the Parent
as capital contributions to the Parent (other than from a Subsidiary or any
Accounts Receivable Subsidiary) after the Acquisition or from the issuance and
sale (other than to a Subsidiary or any Accounts Receivable Subsidiary) after
the Acquisition of Capital Stock (other than Disqualified Stock), plus (C) $15
million.

The foregoing provision shall not be violated by reason of (i) the payment
of any dividend within 60 days of declaration thereof, if at such date of
declaration such payment would comply with the foregoing provision; (ii) the
acquisition, redemption or retirement of Disqualified Stock or Subordinated
Indebtedness of the Parent in exchange for Capital Stock of the Parent that is
not Disqualified Stock and is not exchangeable for or convertible into
Disqualified Stock or Indebtedness of the Parent or any of its Subsidiaries;
(iii) refinancing of Subordinated Indebtedness as permitted under clause (xiv)
of the definition of "Permitted Indebtedness"; (iv) the repurchase or other
acquisition or retirement for value of any share of the Parent's Capital Stock
or Subordinated Indebtedness by exercise for, or upon conversion into, or out of
the proceeds of the substantially concurrent sale for cash (other than to a
Subsidiary or any Accounts Receivable Subsidiary) of, other shares of Capital
Stock (other than Disqualified Stock) of the Parent; (v) the redemption of the
16-3/4% Senior Subordinated Debentures, provided that such redemption is
--------
consummated by payment of the required redemption amount to the trustee in
accordance with the terms of the indenture for the 16-3/4% Senior Subordinated
Debentures, not later than 45 days after the last day of the fiscal quarter of
the Company following the Original Issue Date; (vi) transactions entered into in
the ordinary course of business in a manner consistent with past practice
between the Parent or any Subsidiary and any Accounts Receivable Subsidiary or
between Subsidiaries of the Parent including, without limitation, the sale,
contribution or other transfer of accounts receivable or any undivided interest
therein or other similar transactions relating to financing for the Parent's or
any Subsidiary's proprietary credit card transactions and transactions or
arrangements reasonably incident thereto; (vii) equity contributions in an
aggregate amount not to exceed $10 million to Accounts Receivable Subsidiaries
for the purpose, as determined by the Board of Directors of the Parent, of
maintaining, extending, renewing, refinancing, amending or replacing any
facility or arrangement relating to the sale or transfer of accounts receivable
or any undivided interest therein or other similar transactions relating to
financing for the Parent's or any Subsidiary's proprietary credit card
transactions and transactions or arrangements reasonably incident thereto;
(viii) the repurchase or other acquisition or retirement for value of any
Disqualified Stock of the Parent with the proceeds of, or

<PAGE>
exchange for, the substantially concurrent issuance of Disqualified Stock,
provided that the Disqualified Stock so issued shall not require any payments
- --------
(other than dividend payments) by way of sinking fund, mandatory redemption or
otherwise prior to the final scheduled maturity of the Disqualified Stock being
refinanced and (ix) the acquisition, redemption, or repurchase of shares of the
Parent's Capital Stock or options to purchase such shares for payment either
with the proceeds of life insurance or, to the extent not covered by insurance,
an aggregate amount not to exceed $2 million with respect to the acquisition,
redemption or repurchase of such shares or options from current or former
officers, directors and employees or their families or the estates thereof.

SECTION 3.11 Limitation on Transactions with Affiliates. The Parent will
------------------------------------------
not, and will not permit any of its Subsidiaries to, directly or indirectly,
enter into or suffer to exist any transaction or series of related transactions
(including, without limitation, the sale, purchase, exchange or lease of assets,
property or services) with any Affiliate of the Parent unless (i) any such
transaction or series of related transactions is on terms that are no less
favorable to the Parent (in the case of any transaction between the Parent and
any Subsidiary or any Affiliate of the Parent) or such Subsidiary (in the case
of any transaction between such Subsidiary and any Affiliate of the Parent other
than another Subsidiary) than would be available in a comparable transaction
made on an arm's length basis with an unrelated third party and (ii) with
respect to a transaction or series of related transactions during any fiscal
year involving aggregate consideration in excess of $5 million, such transaction
or series of transactions is approved by a majority of the Board of Directors of
the Parent. Notwithstanding the foregoing, (a) this provision will not apply to
any transaction or agreement entered into in the ordinary course of business
including any actions undertaken to operate and maintain, in a manner consistent
with past practice, retail specialty department stores, between the Parent and
any Subsidiary or between Subsidiaries and shall not restrict the Parent or any
of its Subsidiaries from (i) entering into transactions between the Parent or
any Subsidiary and an Accounts Receivable Subsidiary, including the sale,
contribution or other transfer of accounts receivable or any undivided interest
therein or other similar transactions relating to financing for the Parent's
or any Subsidiary's proprietary credit card transactions and transactions or
arrangements reasonably incident thereto, in each case in the ordinary course
of business and consistent in purpose with past practice, (ii) paying reasonable
and customary regular fees to directors of the Parent who are not employees of
the Parent, (iii) paying reasonable compensation to senior executive officers
of the Parent, (iv) paying reasonable and customary fees for investment banking
services provided by Shearson Lehman Brothers Inc. (or such corporation as shall
succeed to the business of Shearson Lehman Brothers Inc. by purchase, merger,
consolidation, change of charter or name, or otherwise) or its Affiliates and
(v) sub-leasing property to a Subsidiary on substantially the same terms as
those negotiated on an arm's length basis with a third party with respect to
such property and (b) this provision will not apply to any Permitted Drop Down
Transaction. Transactions and agreements by the Company or any Subsidiary of
the Company with Affiliates in existence on the Original Issue Date as well as
any subsequent renewals, extensions, amendments or replacements to agreements
by the Company or any Subsidiary of the Company with Affiliates in existence
on the Original Issue Date that are no less favorable in the aggregate to the
Company than terms already in existence on the Original Issue Date are expressly
permitted.

<PAGE>
SECTION 3.12 Limitation on Future Senior Subordinated Indebtedness. The
-----------------------------------------------------
Parent will not Incur any Indebtedness, other than the Parent Guarantee and the
Notes, that is subordinated in right of payment to any other Indebtedness of the
Parent unless such Indebtedness, by its terms or the terms of the instrument
creating or evidencing it, is pari passu with or subordinated to the Parent
Guarantee or the Notes, as the case may be.

SECTION 3.13 Limitation on Dividend and Other Payment Restrictions
-----------------------------------------------------
Affecting Subsidiaries. The Parent will not, and will not permit any of its
- ----------------------
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction on the
ability of any Subsidiary of the Parent to (a) pay dividends or make any other
distributions on its Capital Stock, or any other interest or participation in or
measured by its profits, owned by, or pay any Indebtedness owed to, the Parent
or another Subsidiary of the Parent, (b) make loans or advances to the Parent or
a Subsidiary of the Parent or (c) transfer any of its properties or assets to
the Parent or a Subsidiary of the Parent, except for such encumbrances or
restrictions existing under or by reason of (i) any encumbrances or restrictions
pursuant to an agreement in effect at or entered into on the Original Issue
Date, (ii) any restrictions, with respect to a Person that is not a Subsidiary
on the Original Issue Date, under any agreement in existence at the time such
Person becomes a Subsidiary (unless such agreement was entered into in
connection with, or in contemplation of, such entity becoming a Subsidiary on or
after the Original Issue Date), (iii) any restrictions existing under any
agreement that amends, refinances or replaces the agreements containing
restrictions described in the foregoing clauses (i) and (ii) and this clause
(iii), provided that the terms and conditions of any such restrictions are no
--------
less favorable to the Holders of the Notes than those under the agreement so
amended, refinanced or replaced, (iv) customary non-assignment or sublease
provisions of any lease governing a leasehold interest of any of the Parent's
Subsidiaries or customary nonassignment provisions contained in operating or
other similar agreements entered into in the ordinary course of business with
respect to stores owned by any Subsidiary, (v) those imposed by applicable law,
(vi) any restrictions with respect to a Subsidiary imposed pursuant to an
agreement which has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Subsidiary, (vii)
Purchase Money Mortgages, and (viii) Capitalized Lease Obligations permitted by
clause (v) of the definition of "Permitted Indebtedness".

SECTION 3.14 Purchase of Notes Upon Change of Control Triggering Event.
---------------------------------------------------------
(a) If a Change of Control Triggering Event shall occur at any time, each
Holder shall have the right to require the Company to repurchase such Holder's
Notes, in whole or in part, in integral multiples of $1,000, at a purchase price
in cash equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase, which date (the "Repurchase Date")
shall be no earlier than 60 days nor more than 90 days from the date the Company
notifies the Holders and any trustee, representative or agent for the holders of
any Significant Senior Indebtedness of the occurrence of a Change of Control
Triggering Event.

<PAGE>
(b) Within 30 days following any Change of Control Triggering Event, the
Company shall mail a notice to each Holder with a copy to the Trustee stating:

(1) that a Change of Control Triggering Event has occurred and that
such Holder has the right to require the Company to repurchase such
Holder's Notes at a repurchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
purchase;

(2) the circumstances and relevant facts regarding the Change of
Control giving rise to the Change of Control Triggering Event (including
information with respect to pro forma historical income, cash flow and
capitalization after giving effect to such Change of Control);

(3) the date designated as the "Repurchase Date" pursuant to Section
3.14(a);

(4) that any Note not tendered will continue to accrue interest;

(5) that any Note accepted for payment shall cease to accrete or
accrue interest after the Repurchase Date;

(6) that Holders electing to have a Note purchased will be required
to surrender the Note, with the form entitled "Option of Holder to Elect
Purchase" (which form shall be provided by the Trustee or the Company)
completed, to the paying agent at the address specified in the notice prior
to the close of business on the Repurchase Date;

(7) that such election is irrevocable; and

(8) that Holders who elect to have their Notes purchased only in part
will be issued new Notes in a principal amount equal to the unpurchased
portion of the Notes surrendered.

(c) On the Repurchase Date, the Company shall (i) accept for payment Notes
or portions thereof validly tendered, (ii) deposit with the Trustee money
sufficient to pay the purchase price of all Notes or portions thereof so
tendered and (iii) deliver or cause to be delivered to the Trustee Notes so
accepted together with an Officers' Certificate stating the Notes or portions
thereof tendered to the Company. The Trustee shall promptly mail to the Holders
of the Notes so accepted payment in an amount equal to the purchase price, and
promptly authenticate and mail to such Holders a new Note in a principal amount
equal to any unpurchased portion of the Note surrendered.

(d) The Company shall comply with all applicable rules and regulations,
including without limitation Rule 14e-1 under the Securities Exchange Act of
1934, in connection with the performance of its obligations under this Section
3.14.

<PAGE>
SECTION 3.15 Limitation on Liens. The Parent may not Incur any
-------------------
Indebtedness (i) which is, by the terms of the instrument creating or evidencing
such Indebtedness or pursuant to which it is outstanding, subordinated in right
of payment to any other Indebtedness (including the Parent Guarantee) and (ii)
which is secured, directly or indirectly, with a Lien on the property, assets or
any income or profits thereon of the Parent or any Subsidiary unless
contemporaneously therewith or prior thereto the Parent Guarantee is equally and
ratably secured; provided that if any such Lien securing such subordinated
--------
Indebtedness ceases to exist, such equal and ratable Lien for the benefit of the
Holders of the Notes shall cease to exist, and provided further that if such
-------- -------
Indebtedness is Subordinated Indebtedness, the Lien securing such Subordinated
Indebtedness shall be subordinate and junior to the Lien securing the Parent
Guarantee with the same relative priority as such Subordinated Indebtedness
shall have with respect to the Parent Guarantee. The provisions of this Section
3.15 shall not apply to (a) any such Indebtedness secured by Liens on the assets
of any entity existing at the time such assets are acquired by the Parent or any
of its Subsidiaries, whether by merger, consolidation, purchase of assets or
otherwise; provided that such Liens (x) are not created, incurred or assumed in
--------
connection with, or in contemplation of, such assets being acquired by the
Parent or any of its Subsidiaries and (y) do not extend to any other property or
assets of the Parent or any of its Subsidiaries or (b) any other Indebtedness
required to be equally and ratably secured as a result of the Incurrence of such
Indebtedness.

SECTION 3.16 Limitation on Preferred Stock of Subsidiaries. The Parent
---------------------------------------------
shall not permit any of its Subsidiaries to issue any preferred stock (other
than to the Parent or a wholly owned Subsidiary of the Parent), or permit any
Person (other than the Parent or a wholly owned Subsidiary of the Parent) to own
or hold an interest in any preferred stock of any such Subsidiary, unless such
Subsidiary would be entitled to Incur Indebtedness pursuant to the provisions of
Section 3.9 in the aggregate principal amount equal to the aggregate liquidation
value of such preferred stock on the date of issuance.

ARTICLE FOUR

REMEDIES OF THE TRUSTEE AND HOLDERS ON EVENT OF DEFAULT
-------------------------------------------------------

SECTION 4.1 Event of Default Defined; Acceleration of Maturity; Waiver of
-------------------------------------------------------------
Default. The following shall constitute Events of Default (whatever the reason
- -------
for such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):

(a) default in the payment of any installment of interest upon any of
the Notes as and when the same shall become due and payable, and
continuance of such default for a period of 30 days; or

(b) default in the payment of all or any part of the principal of (or
premium, if any, on) any of the Notes as and when the same shall become due
and payable either at maturity, by declaration or otherwise; or

<PAGE>
(c) subject to the first paragraph immediately following clause (g)
below, failure on the part of the Parent or the Company duly to observe or
perform any other of the covenants or agreements on the part of the Parent or
the Company contained in the Notes or in this Indenture; or

(d) failure on the part of the Parent or of any of its Subsidiaries
to pay the principal of any Indebtedness with a principal amount then
outstanding in excess of $10 million, individually or in the aggregate,
when the same becomes due and payable at final maturity and such failure
shall continue after any applicable cure or grace period specified in the
agreement relating to such Indebtedness; or a default on any such
Indebtedness which results in such Indebtedness becoming due and payable
prior to its stated maturity; or

(e) the Parent or the Company, pursuant to or within the meaning of
any applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, shall (i) commence a voluntary case or proceeding, (ii) consent
to the entry of an order for relief in an involuntary case or proceeding,
(iii) consent to the appointment or taking possession by a receiver,
trustee, assignee, liquidator (or similar official) of the Parent or the
Company or for any substantial part of its property, (iv) make any general
assignment for the benefit of creditors, or (v) be generally unable to pay
its debts as the same become due; or

(f) a court of competent jurisdiction shall enter a decree or order
for relief in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, that (i) is for
relief against the Parent, the Company or a Subsidiary of the Parent or the
Company that has assets or revenues aggregating 10% or more of the
consolidated assets or revenues, respectively, of the Parent and its
Subsidiaries taken as a whole (a "Significant Subsidiary") in an
----------------------
involuntary case, (ii) appoints a receiver, trustee, assignee, liquidator
(or other similar official) of the Parent, the Company or a Significant
Subsidiary or for any substantial part of its property or (iii) orders the
liquidation of the Parent, the Company or a Significant Subsidiary; and in
any such case such order or decree remains in effect for 60 days; or

(g) the Parent or any Subsidiary shall fail to discharge any final
judgment or judgments from which no further appeal may be taken to the
extent the amount of such judgment or judgments exceed applicable insurance
coverage by more than $5 million individually or in the aggregate (treating
any deductibles, self-insurance or retention as not so covered) and such
judgment or judgments shall remain in force, undischarged, unsatisfied,
unstayed and unbonded for more than 60 days.

A Default under clause (c) above will not be an Event of Default until the
Holders of at least 25% in principal amount of the Notes then outstanding notify
the Parent, the Company and the Trustee of the default and the Parent and the
Company do not cure the Default within 60 days after receipt of the notice.
Such notice must specify the default, demand that it be remedied and state that
such notice is a "Notice of Default".

<PAGE>
If an Event of Default (other than an Event of Default specified in clause
(e) or (f) above) occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the then outstanding Notes by notice to the
Parent and the Company (and to the Trustee if such notice is given by the
Holders of the Notes) may declare the principal amount of the Notes plus accrued
and unpaid interest to be immediately due and payable.

If an Event of Default specified in clause (e) or (f) occurs, the principal
amount of the Notes plus accrued and unpaid interest shall automatically become
and be immediately due and payable on all outstanding Notes without any
declaration or other act on the part of the Trustee or any Holder. Upon payment
of such principal amount of the Notes plus accrued and unpaid interest, all of
the Parent's and the Company's obligations with respect to the Notes and under
this Indenture shall terminate. The Holders of a majority in principal amount
of then outstanding Notes by notice to the Trustee may rescind an acceleration
and its consequences if (a) all existing Events of Default, other than the
nonpayment of the principal of the Notes that have become due solely by such
declaration of acceleration, have been cured or waived, and (b) the rescission
would not conflict with any judgment or decree of a court of competent
jurisdiction.

SECTION 4.2 Collection of Indebtedness by Trustee; Trustee May Prove Debt.
-------------------------------------------------------------
The Company covenants that (a) in case default shall be made in the payment of
any installment of interest on any of the Notes when such interest shall have
become due and payable, and such default shall have continued for a period of 30
days or (b) in case default shall be made in the payment of all or any part of
the principal of any of the Notes when the same shall have become due and
payable, whether upon maturity or upon any redemption or by declaration or
otherwise, then upon demand of the Trustee, the Company will pay to the Trustee
for the benefit of the Holders the whole amount that then shall have become due
and payable on all such Notes for principal or interest, as the case may be
(with interest to the date of such payment upon the overdue principal and, to
the extent that payment of such interest is enforceable under applicable law, on
overdue installments of interest at the same rate as the rate of interest
specified in the Notes); and in addition thereto, such further amount as shall
be sufficient to cover the costs and expenses of collection, including
reasonable compensation to the Trustee and each predecessor Trustee, their
respective agents, attorneys and counsel, and any liabilities and reasonable
expenses incurred, and all advances made, by the Trustee and each predecessor
Trustee except as a result of its negligence or bad faith. Until such demand is
made by the Trustee, the Company may pay the principal of and interest on the
Notes to the registered Holders, whether or not the Notes are overdue.

In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any action or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceedings to judgment or final decree, and may enforce any such
judgment or final decree against the Company upon the Notes and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company upon the Notes.

In case there shall be pending proceedings relative to the Parent or the
Company under Title 11 of the United States Code or any other applicable Federal
or state bankruptcy,

<PAGE>
insolvency or other similar law, or in case a receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, sequestrator or similar official shall
have been appointed for or taken possession of the Parent or the Company or its
property, or in case of any other comparable judicial proceedings relative to
the Parent or the Company upon the Notes or the Parent Guarantee, or to the
creditors or property of the Parent or the Company, the Trustee, irrespective of
whether the principal of the Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such proceedings or otherwise:

(a) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes, and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for reasonable
compensation to the Trustee and each predecessor Trustee, and their
respective agents, attorneys and counsel, and for reimbursement of all
liabilities and reasonable expenses incurred, and all advances made, by the
Trustee and each predecessor Trustee, except as a result of negligence or
bad faith) and of the Holders allowed in any judicial proceedings relative
to the Parent or the Company, or to the creditors or property of the Parent
or the Company,

(b) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders in any election of a trustee or a standby trustee in
arrangement, reorganization, liquidation or other bankruptcy or insolvency
proceedings or Person performing similar functions in comparable
proceedings, and

(c) to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute all amounts received with
respect to the claims of the Holders and of the Trustee on their behalf;
and any trustee, receiver, or liquidator, custodian or other similar
official is hereby authorized by each of the Holders to make payments to
the Trustee, and, in the event that the Trustee shall consent to the making
of payments directly to the Holders, to pay to the Trustee such amounts as
shall be sufficient to cover reasonable compensation to the Trustee, each
predecessor Trustee and their respective agents, attorneys and counsel, and
all other liabilities and reasonable expenses incurred, and all advances
made, by the Trustee and each predecessor Trustee except as a result of
negligence or bad faith.

Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any Holder
any plan or reorganization, arrangement, adjustment or composition affecting the
Notes or the rights of any Holder thereof, or to authorize the Trustee to vote
in respect of the claim of any Holder in any such proceeding except, as
aforesaid, to vote for the election of a trustee in bankruptcy or similar
person.

All rights of action and of asserting claims under this Indenture, or under
any of the Notes, may be enforced by the Trustee without the possession of any
of the Notes or the production thereof on any trial or other proceedings
relative thereto, and any such action or proceedings instituted by the Trustee
shall be brought in its own name as trustee of an

<PAGE>
express trust, and any recovery of judgment, subject to the payment of the
reasonable expenses, disbursements and compensation of the Trustee, each
predecessor Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders.

In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the
Holders, and it shall not be necessary to make any Holders parties to any such
proceedings.

SECTION 4.3 Application of Proceeds. Any moneys collected by the Trustee
-----------------------
pursuant to this Article shall, subject to the subordination provisions of
Article 10 and Article 14, be applied in the following order at the date or
dates fixed by the Trustee and, in case of the distribution of such moneys on
account of principal or interest, upon presentation of the Notes and stamping
(or otherwise noting) thereon the payment, or issuing Notes in reduced principal
amounts in exchange for the presented Notes if only partially paid, or upon
surrender thereof if fully paid:

FIRST: To the payment of reasonable costs and expenses, including
reasonable compensation to the Trustee and each predecessor Trustee and
their respective agents and attorneys and of all liabilities and reasonable
expenses incurred, and all advances made, by the Trustee and each
predecessor Trustee except as a result of negligence or bad faith;

SECOND: In case the principal of the Notes shall not have become and
be then due and payable, to the payment of interest in default in the order
of the maturity of the installments of such interest, with interest (to the
extent that such interest has been collected by the Trustee) upon the
overdue installments of interest at the same rate as the rate of interest
specified in the Notes, such payments to be made ratably to the persons
entitled thereto, without discrimination or preference;

THIRD: In case the principal of the Notes shall have become and shall
be then due and payable, to the payment of the whole amount then owing and
unpaid upon all the Notes for principal and interest, with interest upon
the overdue principal, and (to the extent that such interest has been
collected by the Trustee) upon overdue installments of interest at the same
rate as the rate of interest specified in the Notes; and in case such
moneys shall be insufficient to pay in full the whole amount so due and
unpaid upon the Notes, then to the payment of such principal and interest,
without preference or priority of principal over interest, or of interest
over principal, or of any installment of interest over any other
installment of interest, or of any Note over any other Note, ratably to the
aggregate of such principal and accrued and unpaid interest; and

FOURTH: To the payment of the remainder, if any, to the Company or
any other person lawfully entitled thereto.

SECTION 4.4 Suits for Enforcement. In case an Event of Default has
---------------------
occurred, has not been waived and is continuing, the Trustee may in its
discretion proceed to protect and

<PAGE>
enforce the rights vested in it by this Indenture by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
of such rights, either at law or in equity or in bankruptcy or otherwise,
whether for the specific enforcement of any covenant or agreement contained in
this Indenture or in aid of the exercise of any power granted in this Indenture
or to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.

SECTION 4.5 Restoration of Rights on Abandonment of Proceedings. In case
---------------------------------------------------
the Trustee shall have proceeded to enforce any right under this Indenture and
such proceedings shall have been discontinued or abandoned for any reason, or
shall have been determined adversely to the Trustee, then and in every such case
the Parent, the Company and the Trustee shall be restored respectively to their
former positions and rights hereunder, and all rights, remedies and powers of
the Parent, the Company, the Trustee and the Holders shall continue as though no
such proceedings had been taken.

SECTION 4.6 Limitations on Suits by Holders. No Holder of a Note may
-------------------------------
pursue any remedy with respect to this Indenture or the Notes unless (a) the
Holder gives to the Trustee written notice of a continuing Event of Default, (b)
the Holders of at least 25% in principal amount of the Notes then outstanding
make a written request to the Trustee to pursue the remedy, (c) such Holder or
Holders offer to the Trustee indemnity satisfactory to the Trustee against any
loss, liability or expense, (d) the Trustee does not comply with the request
within 60 days after receipt of the request and the offer of indemnity and
(e) no direction inconsistent with such written request has been given to the
Trustee during such 60-day period by the Holders of a majority in principal
amount of the Notes then outstanding.

SECTION 4.7 Powers and Remedies Cumulative, Delay or Omission Not Waiver
------------------------------------------------------------
of Default. Except as provided in Section 4.6, no right or remedy herein
- ----------
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.

No delay or omission of the Trustee or of any Holder to exercise any right
or power accruing upon any Event of Default occurring and continuing as
aforesaid shall impair any such right or power or shall be construed to be a
waiver of any such Event of Default or an acquiescence therein; and, subject to
Section 4.6, every power and remedy given by this Indenture or by law to the
Trustee or to the Holders may be exercised from time to time, and as often as
shall be deemed expedient, by the Trustee or by the Holders.

SECTION 4.8 Control by Holders. The Holders of a majority in aggregate
------------------
principal amount of the Notes at the time outstanding shall have the right to
direct the time, method, and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee by this Indenture; provided that such direction shall not be otherwise
--------
than in accordance with law and the provisions of this Indenture and provided
--------
further that (subject to the provisions of Section 5.1) the Trustee shall
- -------

<PAGE>
have the right to decline to follow any such direction if the Trustee, being
advised by counsel, shall determine that the action or proceeding so directed
may not lawfully be taken or if the Trustee in good faith by its board of
directors, the executive committee, or a trust committee of directors or
responsible officers of the Trustee shall determine that the action or
proceedings so directed would involve the Trustee in personal liability or if
the Trustee in good faith shall so determine that the actions or forbearances
specified in or pursuant to such direction shall be unduly prejudicial to the
interests of Holders not joining in the giving of said direction, it being
understood that (subject to Section 5.1) the Trustee shall have no duty to
ascertain whether or not such actions or forbearances are unduly prejudicial to
such Holders.

Nothing in this Indenture shall impair the right of the Trustee in its
discretion to take any action deemed proper by the Trustee and which is not
inconsistent with such direction by Holders.

SECTION 4.9 Waiver of Past Defaults. Prior to the declaration of the
-----------------------
maturity of the Notes as provided in Section 4.1, the Holders of a majority in
aggregate principal amount of the Notes at the time outstanding may on behalf of
the Holders of all the Notes waive any past Default or Event of Default
hereunder and its consequences, except a Default in the payment of principal of
or interest on any of the Notes. In the case of any such waiver, the Parent,
the Company, the Trustee and the Holders shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend to
any subsequent or other Default or impair any right consequent thereon.

Upon any such waiver, such Default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured, and not to have occurred for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.

ARTICLE FIVE

CONCERNING THE TRUSTEE
----------------------

SECTION 5.1 Duties and Responsibilities of the Trustee; During Default;
-----------------------------------------------------------
Prior to Default. The Trustee, prior to the occurrence of an Event of Default
- ----------------
and after the curing or waiving of all Events of Default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. In case an Event of Default has
occurred, has not been waived and is continuing, the Trustee shall exercise such
of the rights and powers vested in it by this Indenture, and use the same degree
of care and skill in their exercise, as a prudent man would exercise or use
under the circumstances in the conduct of his own affairs.

No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own wilful misconduct, except that

<PAGE>
(a) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default which may have occurred:

(i) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Indenture, and the
Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Indenture, and
no implied covenants or obligations shall be read into this Indenture
against the Trustee; and

(ii) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
statements, certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but in the case of
any such statements, certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Indenture;

(b) the Trustee shall not be liable for any error of judgment made in
good faith by a responsible officer or responsible officers of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining
the pertinent facts; and

(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Holders of not less than a majority in principal amount of the Notes
at the time outstanding relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture.

None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there shall be reasonable ground for believing that the
repayment of such funds or adequate indemnity against such liability is not
reasonably assured to it.

This Section 5.1 is in furtherance of and subject to Sections 315 and 316
of the Trust Indenture Act of 1939.

SECTION 5.2 Certain Rights of the Trustee. In furtherance of and subject
-----------------------------
to the Trust Indenture Act of 1939, and subject to Section 5.1:

(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate or any
other certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture, note, coupon, security or other paper or
document reasonably believed by it to be genuine and to have been signed or
presented by the proper party or parties;

<PAGE>
(b) any request, direction, order or demand of the Parent or the
Company mentioned herein shall be sufficiently evidenced by an Officers'
Certificate for such party (unless other evidence in respect thereof be
herein specifically prescribed); and any resolution of the Board of
Directors of the Parent or the Board of Directors of the Company may be
evidenced to the Trustee by a copy thereof certified by the Secretary or an
Assistant Secretary of such party;

(c) the Trustee may consult with counsel and any advice or Opinion of
Counsel shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted to be taken by it hereunder in
good faith and in accordance with such advice or Opinion of Counsel;

(d) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which
might be incurred therein or thereby;

(e) the Trustee shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture;

(f) prior to the occurrence of an Event of Default hereunder and
after the curing or waiving of all Events of Default, the Trustee shall not
be bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, appraisal, bond, debenture, note,
coupon, security, or other paper or document unless requested in writing so
to do by the Holders of not less than a majority in aggregate principal
amount of the Notes then outstanding; provided that, if the payment within
--------
a reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Indenture, the Trustee may
require such Holders to provide reasonable indemnity against such expenses
or liabilities as a condition to proceeding; the reasonable expenses of
every such examination shall be paid by the Holders or, if paid by the
Trustee or any predecessor trustee, shall be repaid by the Holders upon
demand, as the case may be, provided further that if such investigation
reveals the existence of a Default then the Company shall repay any
payments made by the Holders pursuant to this paragraph and the Company
shall assume all obligations described in the preceding proviso; and

(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys not regularly in its employ and the Trustee shall not be
responsible for any misconduct or negligence on the part of any such agent
or attorney appointed with due care by it hereunder.

<PAGE>
SECTION 5.3 Trustee Not Responsible for Recitals, Disposition of Notes or
-------------------------------------------------------------
Application of Proceeds Thereof. The recitals contained herein and in the
- -------------------------------
Notes, except the Trustee's certificates of authentication, shall be taken as
the statements of the Company, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representation as to the validity
or sufficiency of this Indenture or of the Notes. The Trustee shall not be
accountable for the use or application by the Company of any of the Notes or of
the proceeds thereof.

SECTION 5.4 Trustee and Agents May Hold Notes; Collections, etc. The
---------------------------------------------------
Trustee or any agent of the Parent, the Company or the Trustee, in its
individual or any other capacity, may become the owner or pledgee of Notes with
the same rights it would have if it were not the Trustee or such agent and may
otherwise deal with the Parent and the Company and receive, collect, hold and
retain collections from the Parent and the Company with the same rights it would
have if it were not the Trustee or such agent.

SECTION 5.5 Moneys Held by Trustee. Subject to the provisions of Section
----------------------
9.4 hereof, all moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received.

SECTION 5.6 Compensation and Indemnification of Trustee and Its Prior
---------------------------------------------------------
Claim. The Company covenants and agrees to pay to the Trustee from time to
- -----
time, and the Trustee shall be entitled to, reasonable compensation (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust, but shall be limited by any agreement between the
Company and the Trustee) and the Company covenants and agrees to pay or
reimburse the Trustee and each predecessor Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by or on behalf
of it in accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all agents and other persons not regularly in its employ) except any such
expense, disbursement or advance as may arise from its negligence or bad faith.
The Company also covenants to indemnify the Trustee and each predecessor Trustee
for, and to hold it harmless against, any loss, liability or reasonable expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of this Indenture or the trusts
hereunder and its duties hereunder, including the costs and expenses of
defending itself against or investigating any claim of liability in the
premises. The obligations of the Company under this Section to compensate and
indemnify the Trustee and each predecessor Trustee and to pay or reimburse the
Trustee and each predecessor Trustee for expenses, disbursements and advances
shall constitute additional indebtedness hereunder and shall survive the
satisfaction and discharge of this Indenture. Such additional indebtedness
shall be a senior claim to that of the Notes upon all property and funds held or
collected by the Trustee as such, except funds held in trust for the benefit of
the Holders of particular Notes, and the Notes are hereby subordinated to such
senior claim.

SECTION 5.7 Right of Trustee to Rely on Officers' Certificate, etc.
------------------------------------------------------
Subject to Sections 5.1 and 5.2, whenever in the administration of the trusts of
this Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or suffering or omitting any action
hereunder, such matter (unless other evidence in

<PAGE>
respect thereof be herein specifically prescribed) may, in the absence of
negligence or bad faith on the part of the Trustee, be deemed to be conclusively
proved and established by an Officers' Certificate delivered to the Trustee, and
such certificate, in the absence of negligence or bad faith on the part of the
Trustee, shall be full warrant to the Trustee for any action taken, suffered or
omitted by it under the provisions of this Indenture upon the faith thereof.

SECTION 5.8 Persons Eligible for Appointment as Trustee. The Trustee
-------------------------------------------
hereunder shall at all times be a corporation having a combined capital and
surplus of at least $50,000,000, and which is eligible in accordance with the
provisions of Section 310(a) of the Trust Indenture Act of 1939. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of a Federal, State or District of Columbia supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.

SECTION 5.9 Resignation and Removal; Appointment of Successor Trustee.
---------------------------------------------------------
(a) The Trustee may at any time resign by giving written notice of resignation
to the Company and by mailing notice thereof by first-class mail to Holders at
their last addresses as they shall appear on the Note register. Upon receiving
such notice of resignation, the Company shall promptly appoint a successor
Trustee by written instrument in duplicate, executed by authority of the Board
of Directors of the Company, one copy of which instrument shall be delivered to
the resigning Trustee and one copy to the successor Trustee. If no successor
Trustee shall have been so appointed and have accepted appointment within 30
days after the mailing of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee, or any Holder who has been a bona fide Holder of a Note or Notes for at
least six months may, on behalf of himself and all others similarly situated,
petition any such court for the appointment of a successor Trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor Trustee.

(b) In case at any time any of the following shall occur:

(i) the Trustee shall fail to comply with the provisions of Section
310(b) of the Trust Indenture Act of 1939, after written request therefor
by the Company or by any Holder who has been a bona fide Holder of a Note
or Notes for at least six months; or

(ii) the Trustee shall cease to be eligible in accordance with the
provisions of Section 5.8 and shall fail to resign after written request
therefor by the Company or by any such Holder; or

(iii) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver or liquidator of the
Trustee or of its property shall be appointed, or any public officer shall
take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation;

<PAGE>
then, in any such case, the Company may remove the Trustee and appoint a
successor Trustee by written instrument, in duplicate, executed by order of the
Board of Directors of the Company, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor Trustee, or,
subject to Section 315(e) of the Trust Indenture Act of 1939, any Holder who has
been a bona fide Holder of a Note or Notes for at least six months may on behalf
of himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, remove the Trustee and appoint a successor Trustee.

(c) The Holders of a majority in aggregate principal amount of the Notes
at the time outstanding may at any time remove the Trustee and appoint a
successor Trustee by delivering to the Trustee so removed, to the successor
Trustee so appointed and to the Company the evidence provided for in Section 6.1
of the action in that regard taken by the Holders.

(d) Any resignation or removal of the Trustee and any appointment of a
successor trustee pursuant to any of the provisions of this Section 5.9 shall
become effective upon acceptance of appointment by the

<PAGE>
successor trustee as provided in Section 5.10.

SECTION 5.10 Acceptance of Appointment by Successor Trustee. Any
----------------------------------------------
successor Trustee appointed as provided in Section 5.9 shall execute and deliver
to the Company and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named an trustee herein; but, nevertheless, on the written request
of the Company or of the successor Trustee, upon payment of its charges then
unpaid, the trustee ceasing to act shall, subject to Section 9.4, pay over to
the successor Trustee all moneys at the time held by it hereunder and shall
execute and deliver an instrument transferring to such successor trustee all
such rights, powers, duties and obligations. Upon request of any such successor
trustee, the Company shall execute any and all instruments in writing for more
fully and certainly vesting in and confirming to such successor trustee all such
rights and powers. Any trustee ceasing to act shall, nevertheless, retain a
prior claim upon all property or funds held or collected by such trustee to
secure any amounts then due it pursuant to the provisions of Section 5.6. The
successor Trustee shall not be liable to the Company or the Holders for the acts
of the predecessor Trustee, and any liability which the predecessor Trustee may
have to the Company or the Holders shall survive the resignation or removal of
the predecessor Trustee.

Upon acceptance of appointment by a successor trustee as provided in this
Section 5.10, the Company shall mail notice thereof by first-class mail to the
Holders at their last addresses as they shall appear in the Note register. If
the acceptance of appointment is substantially contemporaneous with the
resignation, then the notice called for by the preceding sentence may be
combined with the notice called for by Section 5.9. If the Company fails to mail
such notice within 10 days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Company.

SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business
-----------------------------------------------------------
of Trustee. Any corporation into which the Trustee may be merged or converted
- ----------
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to the corporate trust business of the Trustee, shall
be the successor of the Trustee hereunder, provided that such corporation shall
--------
be eligible under the provisions of Section 5.8, without the execution or filing
of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.

In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Notes shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor Trustee and deliver such Notes so
authenticated; and, in case at that time any of the Notes shall not have been
authenticated, any successor to the Trustee may authenticate such Notes either
in the name of any predecessor hereunder or in the name of the successor
Trustee; and in all such cases such certificate shall have the full force which
it is anywhere in the Notes or in this Indenture provided that the certificate
of the Trustee shall have; provided, that the right to adopt the certificate of
--------
authentication of any predecessor Trustee or to authenticate Notes in the name
of any predecessor Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.

ARTICLE SIX

CONCERNING THE HOLDERS
----------------------

SECTION 6.1 Evidence of Action Taken by Holders. Any request, demand,
-----------------------------------
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders may be embodied in and evidenced
by one or more instruments of substantially similar tenor signed by such Holders
in person or by agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee. Proof of execution of any instrument
or of a writing appointing any such agent shall be sufficient for any purpose of
this Indenture and (subject to Sections 5.1 and 5.2) conclusive in favor of the
Trustee, the Company and the Parent, if made in the manner provided in this
Article.

SECTION 6.2 Proof of Execution of Instruments and of Holding of Notes;
----------------------------------------------------------
Record Date. Subject to Sections 5.1 and 5.2, the execution of any instrument
- -----------
by a Holder or his agent or proxy may be proved in accordance with such
reasonable rules and regulations as may be prescribed by the Trustee or in such
manner as shall be satisfactory to the Trustee. The holding of Notes shall be
proved by the Note register or by a certificate of the registrar thereof. The
Company may set a record date for purposes of determining the identity of
Holders entitled to vote or consent to any action referred to in Section 6.1,
which record date may be set at any time or from time to time by notice to the
Trustee, for any date or dates

<PAGE>
(in the case of any adjournment or resolicitation) not more than 60 days nor
less than five days prior to the proposed date of such vote or consent, and
thereafter, notwithstanding any other provisions hereof, only Holders of record
on such record date shall be entitled to so vote or give such consent or to
withdraw such vote or consent.

SECTION 6.3 Holders to be Treated as Owners. The Parent, the Company, the
-------------------------------
Trustee and any agent of the Parent, the Company or the Trustee may deem and
treat the person in whose name any Note shall be registered upon the Note
register as the absolute owner of such Note (whether or not such Note shall be
overdue and notwithstanding any notation of ownership or other writing thereon)
for the purpose of receiving payment of or on account of the principal of and,
subject to the provisions of this Indenture, interest on such Note and for all
other purposes; and neither the Parent, nor the Company nor the Trustee nor any
agent of the Parent or the Company or the Trustee shall be affected by any
notice to the contrary. All such payments so made to any such person, or upon
his order, shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for moneys payable upon any
such Note.

SECTION 6.4 Notes Owned by Company Deemed Not Outstanding. In determining
---------------------------------------------
whether the Holders of the requisite aggregate principal amount of Notes have
concurred in any direction, consent or waiver under this Indenture, Notes which
are owned by the Company or by any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company shall
be disregarded and deemed not to be outstanding for the purpose of any such
determination, except that for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, consent or waiver only
Notes which the Trustee knows are so owned shall be so disregarded. Notes so
owned which have been pledged in good faith may be regarded as outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Notes and that the pledgee is not the Company or
any person directly or indirectly controlling or controlled by or under direct
or indirect common control with the Company. In case of a dispute as to such
right, the advice of counsel shall be full protection in respect of any decision
made by the Trustee in accordance with such advice. Upon request of the
Trustee, the Company shall furnish to the Trustee promptly an Officers'
Certificate listing and identifying all Notes, if any, known by the Company to
be owned or held by or for the account of any of the above-described persons;
and, subject to Sections 5.1 and 5.2, the Trustee shall be entitled to accept
such Officers' Certificate as conclusive evidence of the facts therein set forth
and of the fact that all Notes not listed therein are outstanding for the
purpose of any such determination.

SECTION 6.5 Right of Revocation of Action Taken. At any time prior to
-----------------------------------
(but not after) the evidencing to the Trustee, as provided in Section 6.1, of
the taking of any action by the Holders of the percentage in aggregate principal
amount of the Notes specified in this Indenture in connection with such action,
any Holder of a Note the serial number of which is shown by the evidence to be
included among the serial numbers of the Notes the Holders of which have
consented to such action may, by filing written notice at the Corporate Trust
Office and upon proof of holding as provided in this Article, revoke such action
so far as concerns such Note. Except as aforesaid any such action taken by the
Holder of any Note shall be conclusive and binding upon such Holder and upon all
future holders and owners of

<PAGE>
such Note and of any Notes issued in exchange or substitution therefor,
irrespective of whether or not any notation in regard thereto is made upon any
such Note. Any action taken by the Holders of the percentage in aggregate
principal amount of the Notes specified in this Indenture in connection with
such action shall be conclusively binding upon the Parent, the Company, the
Trustee and the Holders of all the Notes.

ARTICLE SEVEN

SUPPLEMENTAL INDENTURES; WAIVERS
--------------------------------

SECTION 7.1 Supplemental Indentures Without Consent of Holders. The
--------------------------------------------------
Company, when authorized by a resolution of its Board of Directors (or the
equivalent governing body of the Company Successor Entity, in the event of any
action taken in accordance with clause (a) below), the Parent, when authorized
by a resolution of its Board of Directors (or the equivalent governing body of
the Parent Successor Entity, in the event of any action taken in accordance with
clause (a) below) and the Trustee may from time to time and at any time amend or
supplement this Indenture by entering into an indenture or indentures
supplemental hereto for one or more of the following purposes:

(a) to evidence the succession of a Company Successor Entity to the
Company or a Parent Successor Entity to the Parent, or successive
successions, and the assumption by the Company Successor Entity or Parent
Successor Entity of the covenants, agreements and obligations of the
Company or the Parent, as the case may be, pursuant to Article Eight;

(b) to add to the covenants of the Company or the Parent such further
covenants, restrictions, conditions or provisions as its Board of Directors
and the Trustee shall consider to be for the protection of the Holders, and
to make the occurrence, or the occurrence and continuance, of a Default in
any such additional covenants, restrictions, conditions or provisions an
Event of Default permitting the enforcement of all or any of the several
remedies provided in this Indenture as herein set forth; provided, that in
--------
respect of any such additional covenant, restriction, condition or
provision such supplemental indenture may provide for a particular period
of grace after Default (which period may be shorter or longer than that
allowed in the case of other Defaults) or may provide for an immediate
enforcement upon such an Event of Default or may limit the remedies
available to the Trustee upon such an Event of Default or may limit the
right of the Holders of a majority in aggregate principal amount of the
Notes to waive such an Event of Default;

(c) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any
supplemental indenture; to comply with the requirements of the Commission
in order to effect or maintain the qualification of the Indenture under the
Trust Indenture Act of 1939; or to make such other provisions in regard to
matters or questions arising under this Indenture or under any supplemental
indenture as the Board of Directors of the Parent

<PAGE>
and the Board of Directors of the Company may deem necessary or desirable
and which shall not materially and adversely affect the interests of the
Holders; and

(d) to provide for the issuance under this Indenture of
uncertificated Notes in addition to or in place of certificated Notes, or
of Notes in coupon form (including Notes registrable as to principal only)
and to provide for exchangeability of such Notes with Notes issued
hereunder in fully registered form, and to make all appropriate changes for
such purpose.

The Trustee is hereby authorized to join in the execution of any such
supplemental indenture, to make any further appropriate agreements and
stipulations which may be therein contained and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Trustee shall not be obligated to enter into any such supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.

Any supplemental indenture authorized by the provisions of this Section may
be executed without the consent of the Holders of any of the Notes at the time
outstanding, notwithstanding any of the provisions of Section 7.2.

SECTION 7.2 Supplemental Indentures and Waivers With Consent of Holders.
-----------------------------------------------------------
With the consent (evidenced as provided in Article Six) of the Holders of not
less than a majority in aggregate principal amount of the Notes at the time
outstanding, the Company, when authorized by a resolution of its Board of
Directors, the Parent, when authorized by a resolution of its Board of
Directors, and the Trustee may, from time to time and at any time, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of any supplemental indenture or of modifying in any manner
the rights of the Holders. The Holders of a majority in aggregate principal
amount of the outstanding Notes (evidenced as provided in Article Six) may in a
particular instance waive compliance by the Company or the Parent with any
provision of this Indenture. Notwithstanding the foregoing, without the consent
of the Holder of each outstanding Note affected thereby, no such supplemental
indenture or waiver shall (a) change the Stated Maturity of the principal of, or
any installment of interest on, any Note, or alter any of the provisions of
Article Eleven, (b) reduce the principal amount of, or the premium or interest
on, any Note, (c) change the place or currency of payment of principal of, or
premium or interest on, any Note, (d) impair the right to institute suit for the
enforcement of any payment on or with respect to any Note on or after the Stated
Maturity thereof, (e) reduce the percentage of aggregate principal amount of
outstanding Notes necessary for consent to any supplemental indenture or for
waiver of compliance with the provisions of this Indenture or for waiver of
defaults, (f) change any provision of Article Ten of this Indenture in any
manner that adversely affects the rights of any Holder or (g) change any
provision of this sentence.

Upon the request of each of the Company and the Parent, accompanied by a
copy of a resolution of its Board of Directors certified by the Secretary or an
Assistant Secretary of such party authorizing the execution of any such
supplemental indenture, and upon the filing with the Trustee of evidence of the
consent of Holders and other documents, if any, required

<PAGE>
by Section 6.1 the Trustee shall join with the Company and the Parent in the
execution of such supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.

It shall not be necessary for the consent of the Holders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such consent shall approve the substance thereof.

Promptly after the execution by the Company, the Parent and the Trustee of
any supplemental indenture or the giving of any waiver pursuant to the
provisions of this Section, the Company shall mail a notice thereof by first-
class mail to the Holders at their addresses as they shall appear on the
registry books of the Company, setting forth in general terms the substance of
such supplemental indenture or waiver. Any failure of the Company to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture or waiver.

SECTION 7.3 Effect of Supplemental Indenture. Upon the execution of any
--------------------------------
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith and the
respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Parent, the Company and the Holders
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.

SECTION 7.4 Documents to Be Given to Trustee. The Trustee, subject to the
--------------------------------
provisions of Sections 5.1 and 5.2, may receive an Officers' Certificate and an
Opinion of Counsel as conclusive evidence that any such supplemental indenture
complies with the applicable provisions of this Indenture.

SECTION 7.5 Notation on Notes in Respect of Supplemental Indentures.
-------------------------------------------------------
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to the provisions of this Article may bear a notation in form
approved by the Trustee as to any matter provided for by such supplemental
indenture or as to any action taken at any such meeting. If the Company or the
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Trustee and the Board of Directors of the Company, to any modification of
this Indenture contained in any such supplemental indenture may be prepared by
the Company, authenticated by the Trustee and delivered in exchange for the
Notes then outstanding.

<PAGE>

ARTICLE EIGHT

SUCCESSOR ENTITY
----------------

SECTION 8.1 When Company May Merge, Convey Substantially All Assets, etc.
------------------------------------------------------------
The Company may not consolidate with or merge with or into any Person or permit
any Person to merge with or into the Company or sell, convey, assign, transfer,
lease or otherwise dispose of, as an entirety, all or substantially all of its
properties and assets, determined on a Consolidated basis for the Company to any
Person, unless:

(a) either (i) the Company shall be the continuing corporation, or
(ii) the entity (if other than the Company) formed by such consolidation or
into which the Company is merged or the entity that acquires, by sale,
assignment, conveyance, transfer, lease or disposition, all or
substantially all of the properties and assets of the Company as an
entirety shall be a corporation, limited liability company or partnership
organized and existing under the laws of the United States or any State
thereof or the District of Columbia and shall expressly assume by an
indenture supplemental hereto, executed and delivered to the Trustee, in
form reasonably satisfactory to the Trustee, the due and punctual payment
of the principal of and premium, if any, and interest on all the Notes and
the performance and observance of every covenant of this Indenture on the
part of the Company to be performed or observed (such entity is referred to
herein as the "Company Successor Entity");

(b) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing; and

(c) after giving effect to such transaction, the Parent could Incur
at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to Section 3.9.

Notwithstanding the foregoing, this provision shall not prohibit a transaction
the principal purpose of which is (as determined in good faith by the Board of
Directors of the Company and evidenced by the resolution thereof) to change the
state of incorporation of the Company, and such transaction does not have as one
of its purposes the evasion of the limitations imposed by this Section 8.1.

SECTION 8.2 Company Successor Entity Substituted. In case of any such
------------------------------------
consolidation, merger, sale or conveyance, and following such an assumption by
the Company Successor Entity, such Company Successor Entity shall succeed to and
be substituted for the Company, with the same effect as if it had been named
herein.

The Company Successor Entity may cause to be signed, and may issue either
in its own name or in the name of the Company prior to such succession any or
all of the Notes issuable hereunder which theretofore shall not have been signed
by the Company and delivered to the Trustee; and, upon the order of such Company
Successor Entity, instead of the Company, and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee shall
authenticate and shall deliver any Notes which previously shall

<PAGE>
have been signed and delivered by the Officers to the Trustee for
authentication, and any Notes which such Company Successor Entity thereafter
shall cause to be signed and delivered to the Trustee for that purpose. All of
the Notes so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Notes theretofore or thereafter issued in accordance
with the terms of this Indenture as though all of such Notes had been issued at
the Original Issue Date.

In case of any such consolidation, merger, sale, lease or conveyance such
changes in phraseology and form (but not in substance) may be made in the Notes
thereafter to be issued as may be appropriate.

In the event of any such sale or conveyance (other than a conveyance by way
of lease) the Company or any Company Successor Entity which shall theretofore
have become such in the manner described in this Article shall be discharged
from all obligations and covenants under this Indenture and the Notes and may be
liquidated and dissolved.

SECTION 8.3 When Parent May Merge, Convey Substantially All Assets, etc.
-----------------------------------------------------------
The Parent may not consolidate with or merge with or into any Person or permit
any Person to merge with or into the Parent or sell, convey, assign, transfer,
lease or otherwise dispose of, as an entirety, all or substantially all of its
properties and assets, determined on a Consolidated basis for the Parent to any
Person, unless:

(a) either (i) the Parent shall be the continuing corporation, or
(ii) the entity (if other than the Parent) formed by such consolidation or
into which the Parent is merged or the entity that acquires, by sale,
assignment, conveyance, transfer, lease or disposition, all or
substantially all of the properties and assets of the Parent as an entirety
shall be a corporation, limited liability company or partnership organized
and existing under the laws of the United States or any State thereof or
the District of Columbia and shall expressly assume by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
reasonably satisfactory to the Trustee, the due and punctual payment,
performance and observance of all obligations of the Parent under this
Indenture (such entity is referred to herein as the "Parent Successor
Entity");

(b) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;

(c) after giving effect to such transaction, either (a) the Parent or
the Parent Successor Entity could Incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to Section 3.9 or
(b) in the event of a consolidation or merger with any Person with no
outstanding Indebtedness, the Consolidated Cash Flow Ratio of the Parent or
the Parent Successor Entity, as the case may be, is not less than the
Consolidated Cash Flow Ratio of the Parent immediately prior to such
transaction but in no such case shall the Consolidated Cash Flow Ratio of
the Parent or the Parent Successor Entity, as the case may be, be less than
1.5 to 1.

<PAGE>
Notwithstanding the foregoing, this provision shall not prohibit a transaction
the principal purpose of which is (as determined in good faith by the Board of
Directors of the Parent and evidenced by the resolution thereof) to organize the
Holding Company or to change the state of incorporation of the Parent, and such
transaction does not have as one of its purposes the evasion of the limitations
imposed by this Section 8.3.

SECTION 8.4 Parent Successor Entity Substituted. In case of any such
-----------------------------------
consolidation, merger, sale or conveyance, and following such an assumption by
the Parent Successor Entity, such Parent Successor Entity shall succeed to and
be substituted for the Parent, with the same effect as if it had been named
herein.

In the event of any such sale or conveyance (other than a conveyance by way
of lease and other than a Permitted Drop Down Transaction) the Parent or any
Parent Successor Entity which shall theretofore have become such in the manner
described in this Article shall be discharged from all obligations and covenants
under this Indenture and may be liquidated and dissolved.

SECTION 8.5 Opinion of Counsel to Trustee. The Trustee, subject to the
-----------------------------
provisions of Sections 5.1 and 5.2, may receive an Opinion of Counsel as
conclusive evidence that any such consolidation, merger, sale, lease or
conveyance, and any such assumption, and any such liquidation or dissolution,
complies with the applicable provisions of this Indenture.

ARTICLE NINE

SATISFACTION AND DISCHARGE OF INDENTURE;
DEFEASANCE OF CERTAIN OBLIGATIONS;
UNCLAIMED MONEYS
----------------

SECTION 9.1 Satisfaction and Discharge of Indenture. (a) If at any time
---------------------------------------
(i) the Company shall have paid or caused to be paid the principal of and
interest on all the Notes outstanding hereunder, as and when the same shall have
become due and payable, or (ii) the Company shall have delivered to the Trustee
for cancellation all Notes theretofore authenticated (other than any Notes which
shall have been destroyed, lost or stolen and which shall have been replaced or
paid as provided in Section 2.6) or (iii) (A) all such Notes not theretofore
delivered to the Trustee for cancellation shall have become due and payable or
are by their terms to become due and payable within one year or are to be called
for redemption under arrangements satisfactory to the Trustee for the giving of
notice of redemption, and (B) the Company shall have irrevocably deposited or
caused to be deposited with the Trustee, as trust funds, (i) the entire amount
in cash (other than moneys repaid by the Trustee or any paying agent to the
Company in accordance with Section 9.4), (ii) U.S. Government Obligations
maturing as to principal and interest at such times and in such amounts as will
insure the availability of cash or (iii) a combination thereof sufficient to pay
at maturity or upon redemption, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, all such Notes not theretofore delivered to the
Trustee for cancellation, including principal and interest due or to become due
to such date of maturity or redemption, as the case may be,

<PAGE>
and if, in any such case, the Company shall also pay or cause to be paid all
other sums payable hereunder by the Company, then this Indenture shall cease to
be of further effect (except as to (1) rights of registration of transfer,
substitution and exchange of Notes, (2) replacement of apparently mutilated,
defaced, destroyed, lost or stolen Notes, (3) rights of Holders to receive
payments of principal thereof and interest thereon, (4) rights of the Holders as
beneficiaries hereof with respect to the property so deposited with the Trustee
payable to all or any of them, (5) the obligation of the Company to maintain an
office or agency for payments on and registration of transfer of the Notes and
(6) the rights, obligations and immunities of the Trustee hereunder) and the
Trustee, on demand of the Company accompanied by an Officers' Certificate and an
Opinion of Counsel and at the cost and expense of the Company, shall execute
proper instruments acknowledging such satisfaction of and discharging this
Indenture, if:

(A) such deposit will not result in a breach or violation of, or
constitute a default under, any agreement or instrument to which the
Company is a party or by which it is bound; and

(B) the Company has delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel, each stating that all conditions precedent
relating to the defeasance contemplated by this provision have been
complied with.

The Company agrees to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred and to compensate the Trustee for
any services thereafter reasonably and properly rendered by the Trustee in
connection with this Indenture or the Notes.

(b) The Company shall be deemed to have paid and discharged the entire
indebtedness on all Notes outstanding on the 91st day after the date of the
deposit referred to in subparagraph (A) below, and the provisions of this
Indenture with respect to the Notes shall no longer be in effect (except as to
(1) rights of registration of transfer, substitution and exchange of Notes,
(2) replacement of apparently mutilated, defaced, destroyed, lost or stolen
Notes, (3) rights of Holders to receive payments of principal thereof and
interest thereon, (4) rights of the Holders as beneficiaries hereof with respect
to the property so deposited with the Trustee payable to all or any of them, (5)
the obligation of the Company to maintain an office or agency for payments on
and registration of transfer of the Notes and (6) the rights, obligations and
immunities of the Trustee hereunder) and the Trustee, at the expense of the
Company, shall at the Company's request, execute proper instruments
acknowledging the same, if

(A) with reference to this provision the Company has irrevocable
deposited or caused to be irrevocable deposited with the Trustee as trust
funds in trust, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders (i) cash in an amount, or (ii) U.S.
Government Obligations, maturing as to principal and interest at such times
and in such amounts as will insure the availability of cash or (iii) a
combination thereof, sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay the principal of (and premium if
any) and interest on

<PAGE>
all Notes outstanding on each date that such principal or interest is due
and payable, together with all other amounts payable by the Company
hereunder;

(B) no Default or Event of Default with respect to the Notes has
occurred and is continuing on the date of such deposit or occurs as a
result of such deposit or at any time during the period ending on the 91st
day after the date of such deposit;

(C) such deposit will not result in a breach or violation of, or
constitute a default under, any agreement or instrument to which the
Company is a party or by which is bound;

(D) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
relating to the defeasance contemplated by this provision have been
complied with; and

(E) the Company has delivered to the Trustee (i) either a private
Internal Revenue Service ruling or an Opinion of Counsel to the effect that
the Holders will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit, defeasance and discharge and will be
subject to federal income tax on the same amount and in the manner and at
the same times as would have been the case if such deposit, defeasance and
discharge had not occurred, and (ii) and Opinion of Counsel to the effect
that (A) the deposit shall not result in the Company, the Trustee or the
trust being deemed to be an "investment company" under the Investment
Company Act of 1940, as amended, and (B) such deposit creates a valid trust
in which the Holders of the Notes have the sole beneficial ownership
interest or that the Holders of the Notes have a nonavoidable first
priority security interest in such trust. Notwithstanding the foregoing,
the Company's obligations to pay principal, premium, if any, and interest
on the Notes shall continue until the Internal Revenue Service ruling or
Opinion of Counsel referred to in clause (i) above is provided with regard
to and without reliance upon such obligations continuing to be obligations
of the Company.

(c) Each of the Parent and the Company shall be released from its
obligations under Sections 3.5, 3.7 and 3.9 through 3.16, 8.1 and 8.3 hereof
with respect to the Notes outstanding on and after the date the conditions set
forth below are satisfied (hereinafter, "covenant defeasance"). For this
purpose, such covenant defeasance means that, with respect to the Notes
outstanding, the Parent and the Company may omit to comply with and shall have
no liability in respect of any term, condition or limitation set forth in such
Section, whether directly or indirectly by reason of any reference elsewhere
herein to such Sections or by reason of any reference in such Sections to any
other provision herein or in any other document, and such omission to comply
shall not constitute an Event of Default under Section 4.1, but the remainder of
this Indenture and the Notes shall be unaffected thereby. The following shall
be the conditions to application of this subsection (c) of this Section 9.1:

(A) The Company has irrevocably deposited or caused to be deposited
with the Trustee as trust funds in trust for the purposes of making the
following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders

<PAGE>
(i) cash in an amount, or (ii) U.S. Government Obligations maturing as to
principal and interest at such times and in such amounts as will insure the
availability of cash or (iii) a combination thereof, sufficient, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to
pay the principal of (and premium, if any) and interest on all Notes
outstanding on each date that such principal or interest is due and
payable, together with all other amounts payable by the Company hereunder;

(B) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit;

(C) Such covenant defeasance shall not cause the Trustee to have a
conflicting interest as defined in Section 310 of the Trust Indenture Act
of 1939 with respect to any securities of the Company;

(D) Such covenant defeasance shall not result in a breach or
violation of, or constitute a Default under, this Indenture or any other
agreement or instrument to which the Company is a party or by which it is
bound;

(E) The Company shall have delivered to the Trustee an Officers'
Certificate and Opinion of Counsel to the effect that the Holders will not
recognize income, gain or loss for Federal income tax purposes as a result
of such covenant defeasance and will be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such covenant defeasance had not occurred; and

(F) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent relating to the covenant defeasance contemplated by this
provision have been complied with.

SECTION 9.2 Application by Trustee of Funds Deposited for Payment of
--------------------------------------------------------
Notes. Subject to Section 9.4, and to the subordination provisions of this
- -----
Indenture, all moneys deposited with the Trustee pursuant to Section 9.1 shall
be held in trust and applied by it to the payment, either directly or through
any paying agent (including the Company acting as its own paying agent), to the
Holders of the particular Notes for the payment or redemption of which such
moneys have been deposited with the Trustee, of all sums due and to become due
thereon for principal and interest; but such money need not be segregated from
other funds except to the extent required by law.

SECTION 9.3 Repayment of Moneys Held by Paying Agent. In connection with
----------------------------------------
the satisfaction and discharge of this Indenture all moneys then held by any
paying agent under the provisions of this Indenture shall, upon demand of the
Company, be repaid to it or paid to the Trustee and thereupon such paying agent
shall be released from all further liability with respect to such moneys.

<PAGE>
SECTION 9.4 Return of Moneys Held by Trustee and Paying Agent Unclaimed
-----------------------------------------------------------
for Three Years. Any moneys deposited with or paid to the Trustee or any paying
- ---------------
agent for the payment of the principal, premium, if any or interest on any Note
and not applied but remaining unclaimed for three years after the date upon
which such principal, premium, if any or interest shall have become due and
payable, shall, upon the written request of the Company and unless otherwise
required by mandatory provisions of applicable escheat or abandoned or unclaimed
property law, be repaid to the Company by the Trustee or such paying agent, and
the Holder of such Note shall, unless otherwise required by mandatory provisions
of applicable escheat or abandoned or unclaimed property laws, thereafter look
only to the Company for any payment which such Holder may be entitled to
collect, and all liability of the Trustee or any paying agent with respect to
such moneys shall thereupon cease.

ARTICLE TEN

SUBORDINATION
-------------

SECTION 10.1 Notes Subordinated to Senior Indebtedness. Notwithstanding
-----------------------------------------
the provisions of Section 4.1 hereof or any other provision herein or in the
Notes, the Company covenants and agrees, and the Trustee and each Holder by his
acceptance thereof likewise (a) covenants and agrees, that all payments of the
principal of and interest on the Notes by the Company shall be subordinated in
accordance with the provisions of this Article Ten to the prior payment in full,
in cash or cash equivalents, of all amounts payable on, under or in connection
with Senior Indebtedness and (b) acknowledges that holders of Senior
Indebtedness are or shall be relying on the provisions of this Article Ten.

SECTION 10.2 Priority and Payment Over of Proceeds in Certain Events. (a)
-------------------------------------------------------
Upon any payment or distribution of assets or securities of the Company, as the
case may be, of any kind or character, whether in cash, property or securities,
upon any dissolution or winding up or total or partial liquidation or
reorganization of the Company, whether voluntary or involuntary, or in
bankruptcy, insolvency, receivership or other proceedings, all amounts payable
on, under or in connection with Senior Indebtedness shall first be paid in full
in cash, or payment provided for in cash or cash equivalents, before the Holders
or the Trustee on behalf of the Holders shall be entitled to receive from the
Company any payment of principal of or interest on or any other amounts in
respect of the Notes or distribution of any assets or securities. Before any
payment may be made by the Company of the principal of or interest on the Notes
and upon any such dissolution or winding up or liquidation or reorganization,
any payment or distribution of assets or securities of the Company of any kind
or character, whether in cash, property or securities, to which the Holders or
the Trustee on their behalf would be entitled, except for the provisions of this
Article 10, shall be made by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, first directly to the holders of the Significant Senior
Indebtedness or their representatives to the extent necessary to pay

<PAGE>
all such Significant Senior Indebtedness in full after giving effect to any
concurrent payment or distribution to the holders of such Significant Senior
Indebtedness and second directly to the holders of all other Senior Indebtedness
or their representatives to the extent necessary to pay all such Senior
Indebtedness in full after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness.

(b) (i) No direct or indirect payment by or on behalf of the Company of
principal of or interest on the Notes whether pursuant to the terms of the Notes
or upon acceleration or otherwise shall be made if, at the time of such payment
there exists a default in the payment of all or any portion of any Senior
Indebtedness (and the Trustee has received written notice thereof from the
Company, one or more holders of Senior Indebtedness or from any trustee,
representative or agent therefor), and such default shall not have been cured or
waived or the benefits of this sentence waived by or on behalf of the holders of
such Senior Indebtedness; and (ii) during the continuance of a default (other
than a default of the nature described in clause (i) of this subsection (b))
pursuant to which the maturity of such Significant Senior Indebtedness may be
accelerated, upon the earlier to occur of (A) receipt by the Trustee of written
notice from any trustee, representative or agent for the holders of any
Significant Senior Indebtedness (or the holders of at least a majority in
principal amount of such Significant Senior Indebtedness then outstanding), or
(B) if such default results from acceleration of the Notes, the date of such
acceleration, no such payment may be made by the Company upon or in respect of
the Notes for a period ("Payment Blockage Period") commencing on the earlier of
the date of receipt of such notice or the date of such acceleration and ending
179 days thereafter unless such Payment Blockage Period shall be terminated by
written notice to the Trustee from any trustee, representative or agent for the
holders of any Significant Senior Indebtedness (or the holders of at least a
majority in principal amount of such Significant Senior Indebtedness then
outstanding). Not more than one Payment Blockage Period with respect to the
Notes may be commenced during any period of 360 consecutive days. For all
purposes of this Section 10.2(b) and subject to the foregoing, no event of
default which existed or was continuing on the date of the commencement of any
Payment Blockage Period with respect to the Significant Senior Indebtedness
initiating such Payment Blockage Period shall be, or be made, the basis for the
commencement of a second Payment Blockage Period by the representative for or
the holders of such Significant Senior Indebtedness whether or not within a
period of 360 consecutive days unless such event of default shall have been
cured or waived for a period of not less than 90 consecutive days.

(c) In the event that, notwithstanding the foregoing provision prohibiting
such payment or distribution, the Trustee or any Holder shall have received any
payment on account of the principal of or interest on the Notes (other than as
permitted by subsections (a) and (b) of this Section 10.2) at a time when such
payment is prohibited by this Section 10.2 and before all amounts payable on,
under or in connection with Senior Indebtedness are paid in full in cash or cash
equivalents, then and in such event (subject to the provisions of Section 10.8)
such payment or distribution shall be received and held in trust for the holders
of Senior Indebtedness and shall be paid over or delivered first to the holders
of the Significant Senior Indebtedness remaining unpaid to the extent necessary
to pay in full in cash or cash equivalents such Significant Senior Indebtedness
and second to the holders of all other Senior Indebtedness to the extent
necessary to pay in full such other Senior Indebtedness both in accordance with
their respective terms after giving effect to any concurrent payment or
distribution to such holders.

<PAGE>
Nothing contained in this Article 10 shall limit the right of the Trustee
or the Holders of Notes to take any action to accelerate the maturity of the
Notes pursuant to Section 4.1 or to pursue any rights or remedies hereunder
against the Company; provided that all Senior Indebtedness shall first be paid
--------
in accordance with this Article 10 before the Holders or the Trustee are
entitled to receive any payment from the Company of principal of or interest on
the Notes.

Upon any payment or distribution of assets or securities referred to in
this Article 10, the Trustee and the Holders shall be entitled to rely upon any
order or decree of a court of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings are pending, and upon a
certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent
or other Person making any such payment or distribution, delivered to the
Trustee for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of Senior Indebtedness and other Indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
10.

SECTION 10.3 Payments May Be Made Prior to Dissolution. Nothing contained
-----------------------------------------
in this Article 10 or elsewhere in this Indenture shall prevent (i) the Company,
except under the conditions described in Section 10.2, from making payments at
any time for the purpose of making such payments of principal of and interest on
the Notes or from depositing with the Trustee any monies for such payments, or
(ii) the application by the Trustee of any monies deposited with it for the
purpose of making such payments of principal of and interest on the Notes, to
the Holders entitled thereto, unless at least one day prior to the date upon
which such payment would otherwise (except for the prohibitions contained in
Section 10.2) become due and payable, the Trustee shall have received the
written notice provided for in Section 10.2(b)(ii). The Company shall give
prompt notice to the Trustee of any dissolution, winding up, liquidation or
reorganization of the Company and, for purposes of Section 10.2(b) hereof,
acceleration of the Notes is deemed to be sufficient notice to the Trustee for
all purposes of this Article 10.

SECTION 10.4 Rights of Holders of Senior Indebtedness Not to Be Impaired.
-----------------------------------------------------------
No right of any present or future holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act in good faith by any such holder, or by
any noncompliance by the Company with the terms and provisions and covenants
herein regardless of any knowledge thereof any such holder may have or otherwise
be charged with.

The provisions of this Article 10 are intended to be for the benefit of,
and shall be enforceable directly by, the holders of Senior Indebtedness.

Notwithstanding anything to the contrary in this Article 10, to the extent
the Holders or the Trustee have paid over or delivered to any holder of Senior
Indebtedness any payment or distribution received on account of the principal of
or interest on the Notes to which any other holder of Senior Indebtedness shall
be entitled to share in accordance with Section 10.2 hereof, no holder of Senior
Indebtedness shall have a claim or right against the Holders or

<PAGE>
the Trustee with respect to any such payment or distribution or as a result of
the failure to make payments or distributions to such other holder of Senior
Indebtedness.

SECTION 10.5 Authorization to Trustee to Take Action to Effectuate
-----------------------------------------------------
Subordination. Each Holder by his acceptance thereof authorizes and directs the
- -------------
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate, as between the holders of Senior Indebtedness and the Holders, the
subordination as provided in this Article 10 and appoints the Trustee his
attorney-in-fact for any and all such purposes.

SECTION 10.6 Subrogation. Upon the payment in full, in cash or cash
-----------
equivalents, of all Senior Indebtedness the Holders shall be subrogated to the
rights of the holders of such Senior Indebtedness to receive payments or
distributions of assets of the Company made on such Senior Indebtedness until
the Notes shall be paid in full; and for the purposes of such subrogation, no
payments or distributions to holders of such Senior Indebtedness of any cash,
property or securities to which Holders of the Notes would be entitled except
for the provisions of this Article 10, and no payment pursuant to the provisions
of this Article 10 to holders of such Senior Indebtedness by the Holders, shall,
as between the Company, its creditors other than holders of such Senior
Indebtedness and the Holders, be deemed to be a payment by the Company to or on
account of such Senior Indebtedness, it being understood that the provisions of
this Article 10 are solely for the purpose of defining the relative rights of
the holders of such Senior Indebtedness, on the one hand, and the Holders, on
the other hand.

If any payment or distribution to which the Holders would otherwise have
been entitled but for the provisions of this Article 10 shall have been applied,
pursuant to the provisions of this Article 10, to the payment of all Senior
Indebtedness, then and in such case, the Holders shall be entitled to receive
from the holders of such Senior Indebtedness at the time outstanding any
payments or distributions received by such holders of Senior Indebtedness in
excess of the amount sufficient to pay in cash or cash equivalents all such
Senior Indebtedness due in full.

SECTION 10.7 Obligations of Company Unconditional. Nothing contained in
------------------------------------
this Article 10 or elsewhere in this Indenture or in any Note is intended to or
shall impair, as between the Company and the Holders, the obligations of the
Company, which are absolute and unconditional, to pay to the Holders the
principal of and interest on the Notes as and when the same shall become due and
payable in accordance with their terms, or is intended to or shall affect the
relative rights of the Holders and creditors of the Company other than the
holders of the Senior Indebtedness, nor shall anything herein or therein prevent
the Trustee or any Holder from exercising all remedies otherwise permitted by
applicable law upon Default under this Indenture, subject to the rights, if any,
under this Article 10 of the holders of such Senior Indebtedness in respect of
cash, property or securities of the Company received upon the exercise of any
such remedy.

The failure to make a payment on account of principal of, premium, if any,
or interest on the Notes by reason of any provision of this Article 10 shall not
be construed as preventing the occurrence of an Event of Default under Section
4.1.

<PAGE>
SECTION 10.8 Trustee Entitled to Assume Payments Not Prohibited in Absence
-------------------------------------------------------------
of Notice. The Trustee or paying agent hereunder shall not at any time be
- ---------
charged with the knowledge of the existence of any facts which would prohibit
the making of any payment to or by the Trustee or paying agent, unless and until
the Trustee or paying agent shall have received written notice thereof from the
Company or one or more holders of Senior Indebtedness or from any trustee or
agent therefor or unless the Trustee or paying agent otherwise had actual
knowledge; and, prior to the receipt of any such written notice or actual
knowledge, the Trustee or paying agent shall be entitled to assume conclusively
that no such facts exist. Unless at least one day prior to the date on which by
the terms of this Indenture any monies are to be deposited by the Company with
the Trustee or any paying agent for any purpose (including, without limitation,
the payment of the principal or the interest on any Note), the Trustee or paying
agent shall, except where no notice is necessary or where notice is deemed given
in Sections 10.2 and 10.3 hereof, have received with respect to such monies the
notice provided for in the preceding sentence, the Trustee or paying agent shall
have full power and authority to receive such monies and to apply the same to
the purpose for which they were received, and shall not be affected by any
notice to the contrary which may be received by it on or after such date, except
for an acceleration of the Notes prior to such application. The foregoing shall
not apply to the paying agent if the Company is acting as paying agent. Nothing
contained in this Section 10.8 shall limit the right of the holders of Senior
Indebtedness to recover payments as contemplated by Section 10.2. The Trustee
or paying agent shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself or itself to be a holder of such Senior
Indebtedness (or a trustee on behalf of, or other representative of, such
holder) to establish that such notice has been given by a holder of such Senior
Indebtedness or a trustee or representative on behalf of any such holder. The
Trustee shall not be deemed to have any duty to the holders of Senior
Indebtedness.

SECTION 10.9 Right of Trustee to Hold Senior Indebtedness. The Trustee
--------------------------------------------
and any paying agent shall be entitled to all of the rights set forth in this
Article 10 in respect of any Senior Indebtedness at any time held by it to the
same extent as any other holder of such Senior Indebtedness, and nothing in this
Indenture shall be construed to deprive the Trustee or any paying agent of any
of its rights as such holder.

ARTICLE ELEVEN

REDEMPTION OF NOTES
-------------------

SECTION 11.1 Right of Optional Redemption; Prices. The Company at its
------------------------------------
option may, at any time on or after July 15, 1998, redeem all, or from time to
time any part of, the Notes upon payment of the optional redemption prices set
forth in the form of Note hereinabove recited, together with accrued interest to
the date fixed for redemption. In addition, at any time prior to July 15, 1996,
the Company may redeem up to $25 million aggregate principal amount of the
Notes at a redemption price of 110% of the principal amount thereof plus
accrued and unpaid interest to the redemption date, with the net proceeds of
an underwritten public offering of its Common Stock pursuant to an
effective registration statement under the Securities Act; provided that at
-------- ----
least $100 million aggregate principal

<PAGE>
amount of the Notes remain outstanding immediately after the occurrence of
such redemption and that such redemption shall occur within 90 days of the
date of the closing of such public offering.

SECTION 11.2 Notice of Redemption; Partial Redemptions. Notice of
-----------------------------------------
redemption to the Holders to be redeemed as a whole or in part shall be given by
mailing notice of such redemption by first class mail, postage prepaid, at least
30 days and not more than 60 days prior to the date fixed for redemption to such
Holders at their last addresses as they shall appear upon the registry books.
Any notice which is mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the Holder receives the notice.
Failure to give notice by mail, or any defect in the notice to the Holder of any
Note designated for redemption as a whole or in part shall not affect the
validity of the proceedings for the redemption of any other Note.

The notice of redemption to each such Holder shall specify the principal
amount of each Note hold by such holder to be redeemed, the date fixed for
redemption, the redemption price, the place or places of payment, that payment
will be made upon presentation and surrender of such Notes, that interest
accrued to the date fixed for redemption will be paid as specified in said
notice and that on and after said date interest thereon or on the portions
thereof to be redeemed will cease to accrue. In case any Note is to be redeemed
in part only the notice of redemption shall state the portion of the principal
amount thereof to be redeemed and shall state that on and after the date fixed
for redemption, upon surrender of such Note, a new Note or Notes in principal
amount equal to the unredeemed portion thereof will be issued.

The notice of redemption or Notes to be redeemed at the option of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.

On or prior to the redemption date specified in the notice of redemption
given as provided in this Section, the Company will deposit with the Trustee or
with one or more paying agents (or, if the Company is acting as its own paying
agent, set aside, segregate and hold in trust as provided in Section 3.4) an
amount of money sufficient to redeem on the redemption date all the Notes so
called for redemption at the appropriate redemption price, together with accrued
interest to the date fixed for redemption. The Company will deliver to the
Trustee at least 10 days prior to the delivery of the notice of redemption an
Officers' Certificate stating the aggregate principal amount of Notes to be
redeemed.

If less than all the Notes are to be redeemed, the Trustee shall select the
Notes to be redeemed in whole or in part by lot or pro rata or by any other
method that complies with the requirements of any exchange on which the Notes
are listed that the Trustee shall deem appropriate and fair. Notes may be
redeemed in part in multiples of $1,000 only. The Trustee shall promptly notify
the Company in writing of the Notes selected for redemption and, in the case of
any Notes selected for partial redemption, the principal amount thereof to be
redeemed. For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Note redeemed

<PAGE>
or to be redeemed only in part, to the portion of the principal amount of such
Note which has been or is to be redeemed.

SECTION 11.3 Payment of Notes Called for Redemption. If notice of
--------------------------------------
redemption has been given as above provided, the Notes or portions of Notes
specified in such notice shall become due and payable on the date and at the
place stated in such notice at the applicable redemption price, together with
interest accrued to the date fixed for redemption, and on and after said date
(unless the Company shall default in the payment of such Notes at the redemption
price, together with interest accrued to said date and shall have defaulted in
the deposit of funds therefor with the Trustee as provided in Section 11.2)
interest on the Notes or portions of Notes so called for redemption shall cease
to accrue and, except as provided in Sections 5.5 and 9.4, such Notes shall
cease from and after the date fixed for redemption to be entitled to any benefit
under this Indenture, and the holders thereof shall have no right in respect of
such Notes except the right to receive the redemption price thereof and unpaid
interest to the date fixed for redemption. On presentation and surrender of
such Notes at a place of payment specified in said notice, said Notes or the
specified portions thereof shall be paid and redeemed by the Company at the
applicable redemption price, together with interest accrued thereon to the date
fixed for redemption; provided that if the date fixed for redemption is a date
--------
on which any semi-annual payment of interest would otherwise become due, such
interest shall be payable to the holders of such Notes registered as such on the
relevant record date subject to the terms and provisions of Section 2.4 hereof.

If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid or duly provided for,
bear interest from the date fixed for redemption at the rate borne by the Note.

Upon presentation of any Note redeemed in part only, the Company shall
execute and the Trustee shall authenticate and deliver to or on the order of the
holder thereof, at the expense of the Company, a new Note or Notes, of
authorized denominations, in principal amount equal to the unredeemed portion of
the Note so presented.

SECTION 11.4 Exclusion of Certain Notes from Eligibility for Selection for
-------------------------------------------------------------
Redemption. Notes shall be excluded from eligibility for selection for
- ----------
redemption if they are identified by registration and certificate number in a
written statement signed by an authorized officer of the Company and delivered
to the Trustee at least 40 days prior to the last date on which notice of
redemption may be given as being owned of record and beneficially by the
Company.

ARTICLE TWELVE

MISCELLANEOUS PROVISIONS
------------------------

SECTION 12.1 Incorporators, Stockholders, Officers and Directors Exempt
----------------------------------------------------------
from Individual Liability. No recourse under or upon any obligation, covenant
- -------------------------
or agreement contained in this Indenture, or in any Note, or because of any
indebtedness evidenced thereby, shall be had against any incorporator, as such,
or against any past, present or future

<PAGE>
stockholder, officer or director, as such, of the Company or the Parent or of
any successor, either directly or through the Company or the Parent or any
successor, under any rule of law, statute or constitutional provision or by the
enforcement of any assessment or by any legal or equitable proceeding or
otherwise, all such liability being expressly waived and released by the
acceptance of the Notes by the Holders thereof and as part of the consideration
for the issue of the Notes.

SECTION 12.2 Provisions of Indenture for the Sole Benefit of Parties and
-----------------------------------------------------------
Holders. Nothing in this Indenture or in the Notes, expressed or implied, shall
- -------
give or be construed to give to any person, firm or corporation, other than the
parties hereto and their successors and the holders of the Senior Indebtedness,
any legal or equitable right, remedy or claim under this Indenture or under any
covenant or provision herein contained, all such covenants and provisions being
for the sole benefit of the parties hereto and their successors and of the
holders of the Senior Indebtedness.

SECTION 12.3 Successors and Assigns Bound by Indenture. All the
-----------------------------------------
covenants, stipulations, promises and agreements in this Indenture contained by
or on behalf of the Parent or the Company shall bind its successors and assigns,
whether so expressed or not.

SECTION 12.4 Notices and Demands on Parent, Company, Trustee and Holders.
-----------------------------------------------------------
Any notice or demand which by any provision of this Indenture is required or
permitted to be given or served by the Trustee or by the holders of Notes to or
on the Parent or the Company shall be deemed to be given if (i) personally
delivered or (ii) deposited in the United States Mail postage prepaid, by
certified mail, return receipt requested (except as otherwise specifically
provided herein) addressed (until another address of the Company is filed by the
Company with the Trustee) in the case of the Parent, to Proffitt's, Inc., P.O.
Box 20080, 3455 Highway 80 West, Jackson, MS 39209, Attention: Chief Financial
Officer, and, in the case of the Company, to Parisian, Inc., P.O. Box 20080,
3455 Highway 80 West, Jackson, MS 39209, Attention: President and Chief
Financial Officer. Any notice, direction, request or demand by the Parent, the
Company or any Holder to or upon the Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or made at the corporate
trust office.

Where this Indenture provides for notice to Holders, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class postage prepaid, to each Holder entitled thereto, at his
last address as it appears in the Note register. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by
Holders shall be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.

In case, by reason of the suspension of or irregularities in regular mail
service, it shall be impracticable to mail notice to the Parent, the Company and
Holders when such notice is required to be given pursuant to any provision of
this Indenture, then any manner of

<PAGE>
giving such notice as shall be satisfactory to the Trustee shall be deemed to be
a sufficient giving of such notice.

SECTION 12.5 Officers' Certificates and Opinions of Counsel; Statements to
-------------------------------------------------------------
Be Contained Therein. Upon any application or demand by the Parent or the
- --------------------
Company to the Trustee to take any action under any of the provisions of this
Indenture, the Parent or the Company shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent provided for in this Indenture
relating to the proposed action have been complied with and an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent have been complied with, except that in the case of any such
application or demand as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.

Each certificate or opinion provided for in this Indenture and delivered to
the Trustee with respect to compliance with a condition or covenant provided for
in this Indenture shall include (a) a statement that the person making such
certificate or opinion has read such covenant or condition, (b) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based, (c) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with and (d) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.

Any certificate, statement or opinion of an Officer may be based, insofar
as it relates to legal matters, upon a certificate or opinion of or
representations by counsel, unless such Officer knows that the certificate or
opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous.

<PAGE>
Any certificate, statement or Opinion of Counsel may be based, insofar as
it relates to factual matters, information with respect to which is in the
possession of the Parent or the Company, upon the certificate, statement or
opinion of or representations by an Officer or Officers, unless such counsel
knows that the certificate, statement or opinion or representations with respect
to the matters upon which his certificate, statement or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care (without the
necessity of conducting an investigation) should know that the same are
erroneous.

Any certificate, statement or opinion of an Officer or of counsel may be
based, insofar as it relates to accounting matters, upon a certificate or
opinion of or representations by an accountant or firm of accountants in the
employ of the Parent or the Company, unless such Officer or counsel, as the case
may be, knows that the certificate or opinion or representations with respect to
the accounting matters upon which his certificate, statement or opinion may be
based as aforesaid are erroneous, or in the exercise of reasonable care (without
the necessity of conducting an investigation) should know that the same are
erroneous.

Any certificate or opinion of any independent firm of public accountants
filed with the Trustee shall contain a statement that such firm is independent.

SECTION 12.6 Payments Due on Saturdays, Sundays and Holidays. If the date
-----------------------------------------------
of maturity of interest on or principal of the Notes or the date fixed for
redemption of any Note shall not be a Business Day, then payment of interest or
principal need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the date of maturity
or the date fixed for redemption, and no interest shall accrue for the period
after such date.

SECTION 12.7 Conflict of Any Provision of Indenture with Trust Indenture
-----------------------------------------------------------
Act of 1939. If and to the extent that any provision of this Indenture limits,
- -----------
qualifies or conflicts with another provision included in this Indenture by
operation of Sections 310 to 317, inclusive, of the Trust Indenture Act of 1939
(an "incorporated provision"), such incorporated provision shall control.

SECTION 12.8 New York Law to Govern. This Indenture and each Note shall
----------------------
be deemed to be a contract under the laws of the State of New York, and for all
purposes shall be construed in accordance with the laws of said State, except as
may otherwise be required by mandatory provisions of law.

SECTION 12.9 Counterparts. This Indenture may be executed in
------------
counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.

SECTION 12.10 Effect of Headings. The Article and Section headings herein
------------------
and the Table of Contents are for convenience only and shall not affect the
construction hereof.

ARTICLE THIRTEEN

PARENT GUARANTEE
----------------

SECTION 13.1 Parent Guarantee. The Parent hereby unconditionally and
-----------------
irrevocably guarantees (such guarantee to be referred to herein as the "Parent
Guarantee") to each Holder and to the Trustee and its successors and assigns,
subject to Article 14, (a) the due and punctual payment of the principal of and,
within applicable grace periods, interest on the Notes when due, whether at
Stated Maturity, by acceleration, by redemption, upon repurchase or otherwise,
and all other monetary obligations of the Company under this Indenture and the
Notes and (b) the due and punctual performance within applicable grace periods
of all other obligations of the Company under this Indenture and the Notes (all
the foregoing being hereinafter collectively called the "Guaranteed
Obligations"). The Parent further agrees that the Guaranteed Obligations may be
extended or renewed, in whole or in part, without notice or further assent from
the Parent, and that the Parent will remain bound by this Article 13
notwithstanding any extension or renewal of any Guaranteed Obligation.

<PAGE>
The Parent waives presentation to, demand of payment from and protest to
the Company of any of the Guaranteed Obligations, and also waives notice of
protest for nonpayment. The Parent waives notice of any default under the Notes
or the other Guaranteed Obligations. The Parent Guarantee shall not be affected
by (a) the failure of any Holder or the Trustee to assert any claim or demand or
to enforce any right or remedy against the Company or any other Person under
this Indenture, the Notes or any other agreement or otherwise; (b) any extension
or renewal of any thereof; (c) any rescission, waiver, amendment or modification
of any of the terms or provisions of this Indenture, the Notes or any other
agreement; (d) the release of any security held by any Holder or the Trustee for
the Guaranteed Obligations or any of them; (e) the failure of any Holder or the
Trustee to exercise any right or remedy against any other guarantor of the
Guaranteed Obligations; or (f) any change in the ownership of the Parent.

The Parent further agrees that the Parent Guarantee constitutes a guaranty
of payment, performance and compliance when due (and not a guaranty of
collection) and waives any right to require that any resort be had by any Holder
or the Trustee to any security held for payment of the Guaranteed Obligations.

The Parent Guarantee shall not be subject to any reduction, limitation,
impairment or termination for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense of setoff, counterclaim, and recoupment or termination whatsoever or by
reason of the invalidity, illegality or unenforceability of the Guaranteed
Obligations or otherwise. Without limiting the generality of the foregoing, the
Parent Guarantee shall not be discharged or impaired or otherwise affected by
the failure of any Holder or the Trustee to assert any claim or demand or to
enforce any remedy under this Indenture, the Notes or any other agreement, by
any waiver or modification of any thereof, by any default, failure or delay,
wilful or otherwise, in the performance of the Guaranteed Obligations, or by any
other act or thing or omission or delay to do any other act or thing which may
or might in any manner or to any extent vary the risk of the Parent or would
otherwise act as a discharge of the Parent as a matter of law of equity.

The Parent further agrees that the Parent Guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of principal of or interest on any Guaranteed Obligation is
rescinded or must otherwise be restored by any Holder or the Trustee upon the
bankruptcy or reorganization of the Company or otherwise.

In furtherance of the foregoing and not in limitation of any other right
which any Holder or the Trustee has at law or in equity against the Parent by
virtue hereof, upon the failure of the Company to pay the principal of or
interest on any Guaranteed Obligation when and as the same shall become due,
whether at Stated Maturity, by acceleration, by redemption, upon repurchase or
otherwise, or to perform or comply with any other Guaranteed Obligation, the
Parent hereby promises to and will, upon receipt of written demand by the
Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the
Trustee an amount equal to the sum of (i) the unpaid principal amount of such
Guaranteed Obligations, (ii) accrued and unpaid interest on such Guaranteed
Obligations (but only to the extent not prohibited by law) and (iii) all other
monetary Guaranteed Obligations of the Company to the Holders and the Trustee.

<PAGE>
The Parent agrees that it shall not be entitled to any right of subrogation
in relation to the Holders in respect of any Guaranteed Obligations until
payment in full of all Guaranteed Obligations has been made in cash or cash
equivalents. The Parent further agrees that, as between the Parent, on the one
hand, and the Holders and the Trustee, on the other hand, (x) the maturity of
the Guaranteed Obligations may be accelerated as provided in Article 4 for the
purposes of the Parent Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Guaranteed
Obligations, and (y) in the event of any declaration of acceleration of such
Guaranteed Obligations as provided in Article 4, such Guaranteed Obligations
(whether or not due and payable) shall forthwith become due and payable by the
Parent for purposes of this Section 13.1.

The Parent also agrees to pay any and all costs and expenses (including
reasonable attorneys' fees) incurred by the Trustee or any Holder in enforcing
any rights under this Section 13.1.

SECTION 13.2 Successors and Assigns. This Article 13 shall be binding
-----------------------
upon the Parent and its successors and assigns and shall inure to the benefit of
the successors and assigns of the Trustee and the Holders and, in the event of
any transfer or assignment of rights by any Holder or the Trustee, the rights
and privileges conferred upon that party in this Indenture and in the Notes
shall automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions of this Indenture.

SECTION 13.3 No Waiver, etc. Neither a failure nor a delay on the part of
---------------
either the Trustee or the Holders in exercising any right, power or privilege
under this Article 13 shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the Trustee and the
Holders herein expressly specified are cumulative and not exclusive of any other
rights, remedies and benefits which any of them may have under this Article 13
at law, in equity, by statue or otherwise.

SECTION 13.4 Modification, etc. No modification, amendment or waiver of
------------------
any provision of this Article 13, nor the consent to any departure by the Parent
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Trustee, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. No notice to
or demand on the Parent in any case shall entitle the Parent to any other or
further notice or demand in the same, similar or other circumstances.

SECTION 13.5 Subordination of Parent Guarantee. The obligations of the
---------------------------------
Parent to the Holders of Notes and to the Trustee pursuant to the Parent
Guarantee are expressly subordinate and subject in right of payment to the prior
payment in full of all Senior Indebtedness, to the extent and in the manner
provided in Article 14.

<PAGE>
ARTICLE FOURTEEN

SUBORDINATION OF PARENT GUARANTEE
---------------------------------

SECTION 14.1 Parent Guarantee Subordinated to Parent Senior Indebtedness.
-----------------------------------------------------------
Notwithstanding the provisions of Section 4.1 hereof or any other provision
herein or in the Notes, the Parent covenants and agrees, and the Trustee and
each Holder by his acceptance thereof likewise (a) covenants and agrees, that
all payments by the Parent in respect of the Parent Guarantee shall be
subordinated in accordance with the provisions of this Article 14 to the prior
payment in full, in cash or cash equivalents, of all amounts payable on, under
or in connection with Parent Senior Indebtedness and (b) acknowledges that
holders of Parent Senior Indebtedness are or shall be relying on the provisions
of this Article 14.

SECTION 14.2 Priority and Payment Over of Proceeds in Certain Events.
-------------------------------------------------------
(a) Upon any payment or distribution of assets or securities of the Parent, as
the case may be, of any kind or character, whether in cash, property or
securities, upon any dissolution or winding up or total or partial liquidation
or reorganization of the Parent, whether voluntary or involuntary, or in
bankruptcy, insolvency, receivership or other proceedings, all amounts payable
on, under or in connection with Parent Senior Indebtedness shall first be paid
in full in cash, or payment provided for in cash or cash equivalents, before the
Holders or the Trustee on behalf of the Holders shall be entitled to receive
from the Parent any payment in respect of the Parent Guarantee or distribution
of any assets or securities. Before any payment may be made by the Parent in
respect of the Parent Guarantee and upon any such dissolution or winding up or
liquidation or reorganization, any payment or distribution of assets or
securities of the Parent of any kind or character, whether in cash, property or
securities, to which the Holders or the Trustee on their behalf would be
entitled, except for the provisions of this Article 14, shall be made by the
Parent or by any receiver, trustee in bankruptcy, liquidating trustee, agent or
other Person making such payment or distribution, first directly to the holders
of the Significant Parent Senior Indebtedness or their representatives to the
extent necessary to pay all such Significant Parent Senior Indebtedness in full
after giving effect to any concurrent payment or distribution to the holders of
such Significant Parent Senior Indebtedness and second directly to the holders
of all other Parent Senior Indebtedness or their representatives to the extent
necessary to pay all such Parent Senior Indebtedness in full after giving effect
to any concurrent payment or distribution to the holders of such Parent Senior
Indebtedness.

(b) (i) No direct or indirect payment by or on behalf of the Parent in
respect of the Parent Guarantee shall be made if, at the time of such payment
there exists a default in the payment of all or any portion of any Parent Senior
Indebtedness (and the Trustee has received written notice thereof from the
Parent, one or more holders of Parent Senior Indebtedness or from any trustee,
representative or agent therefor), and such default shall not have been cured or
waived or the benefits of this sentence waived by or on behalf of the holders of
such Parent Senior Indebtedness; and (ii) during the continuance of a default
(other than a default of the nature described in clause (i) of this subsection
(b)) pursuant to which the maturity of such Significant Parent Senior
Indebtedness may be accelerated, upon the earlier to occur of (A) receipt by the
Trustee of written notice from any trustee, representative or agent for the
holders of any Significant Parent Senior Indebtedness (or the

<PAGE>
holders of at least a majority in principal amount of such Significant Parent
Senior Indebtedness then outstanding), or (B) if such default results directly
or indirectly from acceleration of the Notes, the date of such acceleration, no
such payment may be made by the Parent in respect of the Parent Guarantee for a
period ("Parent Payment Blockage Period") commencing on the earlier of the date
of receipt of such notice or the date of such acceleration and ending 179 days
thereafter unless such Parent Payment Blockage Period shall be terminated by
written notice to the Trustee from any trustee, representative or agent for the
holders of any Significant Parent Senior Indebtedness (or the holders of at
least a majority in principal amount of such Significant Parent Senior
Indebtedness then outstanding). Not more than one Parent Payment Blockage
Period with respect to the Notes may be commenced during any period of 360
consecutive days. For all purposes of this Section 14.2(b) and subject to the
foregoing, no event of default which existed or was continuing on the date of
the commencement of any Parent Payment Blockage Period with respect to the
Significant Parent Senior Indebtedness initiating such Parent Payment Blockage
Period shall be, or be made, the basis for the commencement of a second Parent
Payment Blockage Period by the representative for or the holders of such
Significant Parent Senior Indebtedness whether or not within a period of 360
consecutive days unless such event of default shall have been cured or waived
for a period of not less than 90 consecutive days.

(c) In the event that, notwithstanding the foregoing provision prohibiting
such payment or distribution, the Trustee or any Holder shall have received any
payment in respect of the Parent Guarantee (other than as permitted by
subsections (a) and (b) of this Section 14.2) at a time when such payment is
prohibited by this Section 14.2 and before all amounts payable on, under or in
connection with Parent Senior Indebtedness are paid in full in cash or cash
equivalents, then and in such event (subject to the provisions of Section 14.8)
such payment or distribution shall be received and held in trust for the holders
of Parent Senior Indebtedness and shall be paid over or delivered first to the
holders of the Significant Parent Senior Indebtedness remaining unpaid to the
extent necessary to pay in full in cash or cash equivalents such Significant
Parent Senior Indebtedness and second to the holders of all other Parent Senior
Indebtedness to the extent necessary to pay in full such other Parent Senior
Indebtedness both in accordance with their respective terms after giving effect
to any concurrent payment or distribution to such holders.

Nothing contained in this Article 14 shall limit the right of the Trustee
or the Holders of Notes to take any action to accelerate the maturity of the
Notes pursuant to Section 4.1 or to pursue any rights or remedies hereunder
against the Parent; provided that all Parent Senior Indebtedness shall first be
--------
paid in accordance with this Article 14 before the Holders or the Trustee are
entitled to receive any payment from the Parent in respect of the Parent
Guarantee.

Upon any payment or distribution of assets or securities referred to in
this Article 14, the Trustee and the Holders shall be entitled to rely upon any
order or decree of a court of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings are pending, and upon a
certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent
or other Person making any such payment or distribution, delivered to the
Trustee for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of Parent Senior Indebtedness and other
Indebtedness of the Parent,

<PAGE>
the amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article 14.

SECTION 14.3 Payments May Be Made Prior to Dissolution. Nothing contained
-----------------------------------------
in this Article 14 or elsewhere in this Indenture shall prevent (i) the Parent,
except under the conditions described in Section 14.2, from making payments at
any time for the purpose of making such payments in respect of the Parent
Guarantee or from depositing with the Trustee any monies for such payments, or
(ii) the application by the Trustee of any monies deposited with it for the
purpose of making such payments in respect of the Parent Guarantee, to the
Holders entitled thereto, unless at least one day prior to the date upon which
such payment would otherwise (except for the prohibitions contained in Section
14.2) become due and payable, the Trustee shall have received the written notice
provided for in Section 14.2(b)(ii). The Parent shall give prompt notice to the
Trustee of any dissolution, winding up, liquidation or reorganization of the
Parent and, for purposes of Section 14.2(b) hereof, acceleration of the Notes is
deemed to be sufficient notice to the Trustee for all purposes of this Article
14.

SECTION 14.4 Rights of Holders of Parent Senior Indebtedness Not to Be
---------------------------------------------------------
Impaired. No right of any present or future holder of any Parent Senior
- --------
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act in good faith by
any such holder, or by any noncompliance by the Parent with the terms and
provisions and covenants herein regardless of any knowledge thereof any such
holder may have or otherwise be charged with.

The provisions of this Article 14 are intended to be for the benefit of,
and shall be enforceable directly by, the holders of Parent Senior Indebtedness.

Notwithstanding anything to the contrary in this Article 14, to the extent
the Holders or the Trustee have paid over or delivered to any holder of Parent
Senior Indebtedness any payment or distribution received on account of the
Parent Guarantee to which any other holder of Parent Senior Indebtedness shall
be entitled to share in accordance with Section 14.2 hereof, no holder of Parent
Senior Indebtedness shall have a claim or right against the Holders or the
Trustee with respect to any such payment or distribution or as a result of the
failure to make payments or distributions to such other holder of Parent Senior
Indebtedness.

SECTION 14.5 Authorization to Trustee to Take Action to Effectuate
-----------------------------------------------------
Subordination. Each Holder by his acceptance thereof authorizes and directs the
- -------------
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate, as between the holders of Parent Senior Indebtedness and the
Holders, the subordination as provided in this Article 14 and appoints the
Trustee his attorney-in-fact for any and all such purposes.

SECTION 14.6 Subrogation. Upon the payment in full, in cash or cash
-----------
equivalents, of all Parent Senior Indebtedness the Holders shall be subrogated
to the rights of the holders of such Parent Senior Indebtedness to receive
payments or distributions of assets of the Parent made on such Parent Senior
Indebtedness until the Notes shall be paid in full; and for the purposes of such
subrogation, no payments or distributions to holders of such Parent Senior
Indebtedness of any cash, property or securities to which Holders of the Notes
would be entitled except for the provisions of this Article 14, and no payment
pursuant to the

<PAGE>
provisions of this Article 14 to holders of such Parent Senior Indebtedness by
the Holders, shall, as between the Parent, its creditors other than holders of
such Parent Senior Indebtedness and the Holders, be deemed to be a payment by
the Parent to or on account of such Parent Senior Indebtedness, it being
understood that the provisions of this Article 14 are solely for the purpose of
defining the relative rights of the holders of such Parent Senior Indebtedness,
on the one hand, and the Holders, on the other hand.

If any payment or distribution to which the Holders would otherwise have
been entitled but for the provisions of this Article 14 shall have been applied,
pursuant to the provisions of this Article 14, to the payment of all Parent
Senior Indebtedness, then and in such case, the Holders shall be entitled to
receive from the holders of such Parent Senior Indebtedness at the time
outstanding any payments or distributions received by such holders of Parent
Senior Indebtedness in excess of the amount sufficient to pay in cash or cash
equivalents all such Parent Senior Indebtedness due in full.

SECTION 14.7 Obligations of Parent Unconditional. Nothing contained in
-----------------------------------
this Article 14 or elsewhere in this Indenture or in any Note is intended to or
shall impair, as between the Parent and the Holders, the obligations of the
Parent, which are absolute and unconditional, to pay to the Holders all amounts
due and payable under the Parent Guarantee as and when the same shall become due
and payable in accordance with its terms, or is intended to or shall affect the
relative rights of the Holders and creditors of the Parent other than the
holders of the Parent Senior Indebtedness, nor shall anything herein or therein
prevent the Trustee or any Holder from exercising all remedies otherwise
permitted by applicable law upon Default under this Indenture, subject to the
rights, if any, under this Article 14 of the holders of such Parent Senior
Indebtedness in respect of cash, property or securities of the Parent received
upon the exercise of any such remedy.

The failure to make a payment on account of the Parent Guarantee by reason
of any provision of this Article 14 shall not be construed as preventing the
occurrence of an Event of Default under Section 4.1.

SECTION 14.8 Trustee Entitled to Assume Payments Not Prohibited in Absence
-------------------------------------------------------------
of Notice. The Trustee or paying agent hereunder shall not at any time be
- ---------
charged with the knowledge of the existence of any facts which would prohibit
the making of any payment to or by the Trustee or paying agent, unless and until
the Trustee or paying agent shall have received written notice thereof from the
Parent or one or more holders of Parent Senior Indebtedness or from any trustee
or agent therefor or unless the Trustee or paying agent otherwise had actual
knowledge and, prior to the receipt of any such written notice or actual
knowledge, the Trustee or paying agent shall be entitled to assume conclusively
that no such facts exist. Unless at least one day prior to the date on which by
the terms of this Indenture any monies are to be deposited by the Parent with
the Trustee or any paying agent for any purpose, the Trustee or paying agent
shall, except where no notice is necessary or where notice is deemed given in
Sections 14.2 and 14.3 hereof, have received with respect to such monies the
notice provided for in the preceding sentence, the Trustee or paying agent shall
have full power and authority to receive such monies and to apply the same to
the purpose for which they were received, and shall not be affected by any
notice to the contrary which may be received by it on or after such date, except
for an acceleration of the Notes prior to

<PAGE>
such application. The foregoing shall not apply to the paying agent if the
Company is acting as paying agent. Nothing contained in this Section 14.8 shall
limit the right of the holders of Parent Senior Indebtedness to recover payments
as contemplated by Section 14.2. The Trustee or paying agent shall be entitled
to rely on the delivery to it of a written notice by a Person representing
himself or itself to be a holder of such Parent Senior Indebtedness (or a
trustee on behalf of, or other representative of, such holder) to establish that
such notice has been given by a holder of such Parent Senior Indebtedness or a
trustee or representative on behalf of any such holder. The Trustee shall not
be deemed to have any duty to the holders of Parent Senior Indebtedness.

SECTION 14.9 Right of Trustee to Hold Parent Senior Indebtedness. The
---------------------------------------------------
Trustee and any paying agent shall be entitled to all of the rights set forth in
this Article 14 in respect of any Parent Senior Indebtedness at any time held by
it to the same extent as any other holder of such Parent Senior Indebtedness,
and nothing in this Indenture shall be construed to deprive the Trustee or any
paying agent of any of its rights as such holder.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of _______________ ____, 1996.

[CORPORATE SEAL] PROFFITT'S, INC.

Attest:

By By
----------------------- ----------------------------

[CORPORATE SEAL] PARISIAN, INC.

Attest:

By By
----------------------- ----------------------------

[BANK SEAL] AMSOUTH BANK OF ALABAMA, as Trustee

Attest:

By By
----------------------- ----------------------------

EXHIBIT 5

August 23, 1996

Proffitt's, Inc.
P. O. Box 9388
Alcoa, Tennessee 37701

Ladies and Gentleman:

We have acted as counsel to Proffitt's, Inc., a Tennessee
Corporation ("Proffitt's"), in connection with the registration
by Proffitt's of its guaranty of certain Senior Subordinated
Notes due 2003 (the "Notes") of Parisian, Inc. ("Parisian")
pursuant to a registration statement on Form S-3 (Registration
No. 333-09941), as amended (the "Registration Statement"), filed
by Proffitt's with the Securities and Exchange Commission (the
"Commission"). This opinion is being delivered to you, and will
be filed with the Commission by amendment to the Registration
Statement, at your request and pursuant to Item 601(b)(5) of
Regulation S-K promulgated by the Commission.

In that connection, we have reviewed originals or copies of,
among other things, the Registration Statement, the form of
Supplemental Indenture between Parisian and AmSouth Bank of
Alabama, as trustee, which is attached to the Registration
Statement as Exhibit 4(d), and the form of Amended and Restated
Indenture which is attached to the form of Supplemental Indenture
as Exhibit A. Unless otherwise defined in this letter, each term
defined in the Registration Statement and used in this letter in
initially capitalized form shall have the meaning ascribed to it
in the Registration Statement.

This letter is governed by, and shall be construed in
accordance with, the Legal Opinion Accord (the "Accord") of the
ABA Section of Business Law (1991). As a consequence, it is
subject to a number of qualifications, exceptions, definitions,
limitations on coverage, and other limitations more particularly
described in the Accord, and this letter should be read in
conjunction with the Accord.

The opinions set forth in this letter are based solely on,
and are limited to, the laws of the United States of America, the
internal, substantive laws of the State of New York (without
regard to its choice of law principles and laws), and the
Tennessee Business Corporation Act, as amended. We express no
opinion on the laws of any other jurisdiction or governmental
authority or on any matter governed by any such laws.

Based upon and subject to the foregoing and the further
qualifications, assumptions, exceptions and limitations set forth
in this letter, we are of the opinion that ,when the Registration
Statement has become effective, the holders of not less than a

<PAGE>

majority in aggregate principal amount of the Notes have approved
the Supplemental Indenture, the Merger has been consummated, and
the Supplemental Indenture and Amended and Restated Indenture
have been duly and properly authorized, executed and delivered,
for value received, by all parties thereto, the Parent Guarantee
(as set forth in Article Thirteen of the Amended and Restated
Indenture) will be legally issued and will be the binding
obligation of Proffitt's.

The foregoing opinion is subject to the General
Qualifications (as defined in the Accord) and the effect of
constitutional and public policy limitations. For purposes of
the foregoing opinion, we have assumed that (a) the final form of
the Supplemental Indenture and the Amended and Restated Indenture
will conform, in all material respects, to the forms of those
documents which are included in the Registration Statement, and
(b) the Notes constitute the legal, valid and binding obligations
of Parisian.

We consent to the use of this opinion as an Exhibit to the
Registration Statement and to the reference to this firm under
the caption "Legal Opinions" in the prospectus which constitutes
a part of the Registration Statement.

This letter and this opinion it contains are provided solely
for the purpose described above and may not be used or relied
upon by you for any other purpose and, except as set forth above,
may not be used or relied upon by, or disclosed to, any other
person for any purpose without, in each instance, our prior
written consent.

Very truly yours,

SOMMER & BARNARD, PC

/s/ Sommer & Barnard, PC

EXHIBIT 23(a)

COOPERS Coopers & Lybrand L.L.P.
&LYBRAND
a professional services firm

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the Registration Statement of
Proffitt's, Inc. on Form S-3 of our report dated March 15, 1996, on our audits
of the consolidated financial statements and financial statement schedules of
Proffitt's, Inc. as of February 3, 1996 and January 28, 1995, and for each of
three years in the period ended February 3, 1996 which report is incorporated
by reference herein. We also consent to the reference to our firm under the
caption "Experts."

/s/ Coopers & Lybrand L.L.P.

Atlanta, Georgia
August 21, 1996

Coopers & Lybrand L.L.P. is a member of Coopers & Lybrand International,
a limited liability association incorporated in Switzerland.

EXHIBIT 23(b)

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Registration Statement of
Profitt's, Inc. on Form S-3 of our report dated March 3, 1995 of Younkers, Inc.,
appearing in and incorporated by reference in the Annual Report on Form 10-K of
Profitt's Inc. for the year ended February 3, 1996 and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.

/s/ Deloitte & Touche, LLP
- ---------------------------

Des Moines, Iowa
August 21, 1996

EXHIBIT 23(c)

[ERNST & YOUNG LLP LETTERHEAD]

Consent of Independent Auditors

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement of Proffitt's, Inc. (Form S-3) pertaining to the
Guaranty of the Parisian Senior Subordinated Notes and to the incorporation
by reference therein of our report dated March 3, 1994 (with respect to the
consolidated statements of earnings, shareholders' equity, and cash flows of
Younkers, Inc. for the year ended January 29, 1994, not separately presented),
appearing in the Annual Report (Form 10-K) of Proffitt's, Inc. for the year
ended February 3, 1996, filed with the Securities and Exchange Commission.

/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP

Des Moines, Iowa
August 19, 1996

EXHIBIT 23(d)

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-3 of our
report dated March 22, 1996, on our audits of the consolidated financial
statements of Parisian, Inc. as of January 28, 1995 and February 3, 1996, and
for the years ended January 29, 1994, January 28, 1995, and February 3, 1996.
We also consent to the reference to our firm under the caption "Experts."

COOPERS & LYBRAND L.L.P.

Birmingham, Alabama
August 21, 1996