<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 4, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
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 82-0331040
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
3455 HIGHWAY 80 WEST
JACKSON, MISSISSIPPI 39209
(601) 968-4400
(Address, including zip code, and telephone number, including area code, of the
Company's principal executive offices)
---------------------
BRIAN J. MARTIN
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
PROFFITT'S, INC.
750 LAKESHORE PARKWAY
BIRMINGHAM, ALABAMA 35211
(205) 940-4890 FAX: (205) 940-4468
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES TO:
<TABLE>
<C> <C>
DAVID E. BROWN JONATHAN A. SCHAFFZIN
ALSTON & BIRD LLP CAHILL GORDON & REINDEL
ONE ATLANTIC CENTER 80 PINE STREET
1201 WEST PEACHTREE STREET NEW YORK, NEW YORK 10005
ATLANTA, GEORGIA 30309-3424 (212) 701-3000
(404) 881-7000 FAX: (212) 269-5420
FAX: (404) 881-4777
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
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 of 1933, 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 of 193, please check the following box and list the
Securities Act registration 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. [ ]
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================================
PROPOSED PROPOSED
TITLE OF EACH AMOUNT MAXIMUM MAXIMUM AMOUNT OF
CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock $.10 par value......... 2,019,975 shares(1) $53.22(2) $107,503,069.50(2) $32,576.69
- ----------------------------------------------------------------------------------------------------------------------------
Preferred Stock Purchase Rights..... 2,019,975 rights 0(3) 0(3) 0(3)
============================================================================================================================
</TABLE>
(1) Represents the maximum number of shares of the Registrant's Common Stock
issuable upon conversion of $86,250,000 aggregate principal amount of the
Registrant's 4 3/4% Convertible Subordinated Debentures due 2003 outstanding
at the close of business on September 3, 1997.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) on the basis of the average high and low prices for
the Common Stock reported on the New York Stock Exchange Composite Tape on
August 28, 1997.
(3) No additional consideration will be paid for the Preferred Stock Purchase
Rights.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
PROSPECTUS
2,019,975 SHARES
PROFFITT'S, INC.
COMMON STOCK
(PAR VALUE $.10 PER SHARE)
------------------
This Prospectus covers the issuance and sale of up to 2,019,975 shares of
Common Stock, par value $.10 per share (together with the accompanying Rights
(as defined herein), "Common Stock") of Proffitt's, Inc. (the "Company")
issuable either to holders of the Company's $86,250,000 aggregate principal
amount of outstanding 4 3/4% Convertible Subordinated Debentures Due 2003 (the
"Debentures") upon conversion of the Debentures or to Smith Barney Inc. (the
"Purchaser") under the standby arrangements described herein, and the resale to
the public by the Purchaser of any such shares of Common Stock (collectively,
the "Offering").
On September 5, 1997, the Company called for redemption on October 6, 1997
(the "Redemption Date"), all of its outstanding debentures at a redemption price
of 103.1667% of the principal amount thereof, plus interest accruing after May
1, 1997 to the Redemption Date, for a total price of $1,052.1184 for each $1,000
principal amount of Debentures (the "Redemption Price"). The Debentures (or any
portion thereof which is $1,000 or an integral multiple thereof) may be
converted into the Common Stock of the Company at a conversion price of $42.70
per share of Common Stock (equivalent to 23.42 shares of Common Stock for each
$1,000 principal amount of Debentures) at any time prior to 5:00 p.m. Eastern
Time on September 29, 1997 (the "Expiration Time"). Cash will be paid in lieu of
any fractional shares of Common Stock issuable upon conversion of the
Debentures. Debentures surrendered for conversion will not be entitled to
interest accrued to the date of conversion. See "Redemption of Debentures and
Alternatives to Redemption". ANY DEBENTURES NOT SO SURRENDERED FOR CONVERSION
PRIOR TO THE EXPIRATION TIME WILL BE REDEEMED FOR CASH ON THE REDEMPTION DATE
AND NO FURTHER INTEREST SHALL ACCRUE.
The Company has made arrangements with the Purchaser pursuant to which the
Purchaser has agreed, subject to certain conditions, to purchase from the
Company the total number of shares of Common Stock (the "Purchased Shares") that
would have been issuable upon conversion of those Debentures that are not duly
surrendered for conversion on or prior to the Expiration Date. The purchase
price for the Purchased Shares will be an amount equal to a price per share of
$44.92. The Purchaser may also purchase Debentures in the open market or
otherwise prior to the Expiration Time and has agreed to surrender for
conversion all Debentures so purchased by the Purchaser and any additional
Debentures beneficially owned by the Purchaser. See "Standby Arrangements" for a
description of the Purchaser's compensation and indemnification arrangements
with the Company.
On September 3, 1997, the closing price of the Common Stock as reported on
the New York Stock Exchange, Inc. ("NYSE") Composite Tape was $54.625 per share.
Based on such closing price, if a holder of $1,000 principal amount of
Debentures on that date had converted such principal amount, such holder would
have received Common Stock (and cash in lieu of a fractional share) having a
market value equal to $1,279.32. So long as the market price of the Common Stock
is greater than $44.92 per share at the time of conversion, a holder of
Debentures who exercises such holder's conversion rights will receive Common
Stock, plus cash in lieu of any fractional share, with a market value greater
than the amount of cash the holder would otherwise be entitled to receive upon
the redemption of the Debentures (before deducting any taxes, commissions and
other costs which would likely be incurred on sale of the Common Stock received
upon conversion of the Debentures). The market price of the Common Stock
received upon conversion is subject to fluctuation, and the holder may incur
various transaction costs if the Common Stock is sold.
Prior to, on or after the Redemption Date, the Purchaser may offer shares of
Common Stock, including shares acquired through the purchase and conversion of
Debentures, pursuant to this Prospectus directly to the public, at prices set
from time to time by the Purchaser. Prior to the Redemption Date, each such
price when set will not exceed the greater of the last sale or current asked
price of the Common Stock on the NYSE plus the amounts of any concession to
dealers, and an offering price on any calendar day will not be increased more
than once during such day. In effecting such transactions, the Purchaser may
realize profits or losses independent of the compensation referred to under
"Standby Arrangements." The Purchaser may also make sales to dealers at prices
which represent concessions from the prices at which such shares are then being
offered to the public. The amount of such concessions will be determined from
time to time by the Purchaser. Any Common Stock so offered is offered subject to
prior sale, when, as and if received by the Purchaser, and subject to the
Purchaser's right to reject orders in whole or in part. This Prospectus does not
constitute an offer to sell any securities other than the Common Stock offered
by the Purchaser.
The Common Stock and any shares acquired through conversion of Debentures
are listed, and application will be made for listing of the Purchased Shares, on
the NYSE. The Common Stock was traded on the Nasdaq National Market under the
symbol "PRFT" through July 3, 1997 and began trading on the NYSE on July 7, 1997
under the symbol "PFT."
SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
------------------
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.
------------------
SMITH BARNEY INC.
The date of this Prospectus is September 5, 1997.
<PAGE> 3
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVERALLOTMENT, ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING
TRANSACTIONS AND IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "STANDBY ARRANGEMENTS."
---------------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information may be
inspected at the public reference facilities maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the following Regional Offices of the Commission: 7 World Trade Center, Suite
1300, New York, New York 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies may be obtained at the
prescribed rates from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 or on
the Internet at http://www.sec.gov. Such reports and other information can also
be inspected at the offices of the NYSE, 20 Broad Street, New York, New York
10005.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (together with all amendments
and exhibits thereto, the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act") with respect to the securities offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto, as permitted by
the rules and regulations of the Commission. For further information with
respect to the Company and the Common Stock, reference is hereby made to the
Registration Statement, including the exhibits and schedules filed or
incorporated as a part thereof. Statements contained herein concerning the
provisions of any document are not necessarily complete and in each instance
reference is made to the copy of the document filed as an exhibit or schedule to
the Registration Statement. Each such statement is qualified in its entirety by
reference to the copy of the applicable document filed with the Commission.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission under
Section 13(a) or 15(d) of the Exchange Act are hereby incorporated by reference
in this Prospectus:
(i) the Company's Annual Report on Form 10-K for the fiscal year ended
February 1, 1997 (including the portions of the Company's Annual Report to
Shareholders incorporated by reference therein);
(ii) the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended May 3, 1997;
(iii) the Company's Current Reports on Form 8-K dated May 2, 1997 (as
amended by the Form 8-K/A filed on May 21, 1997), June 26, 1997, August 20,
1997, September 2, 1997 and September 4, 1997; and
(iv) the description of the Common Stock set forth in the Company's
registration statement filed pursuant to Section 12 of the Exchange Act,
and any amendment or report filed for the purpose of updating any such
description.
All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the Offering shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing such documents. Any statement contained herein or 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 or is
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<PAGE> 4
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will furnish, without charge, to each person to whom a
Prospectus is delivered, upon written or oral request, a copy of any or all of
the foregoing documents incorporated herein by reference other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
therein). Requests for such documents should be submitted in writing to
Proffitt's, Inc., 3455 Highway 80 West, P.O. Box 20080, Jackson, Mississippi
39289-0080. Telephone requests for such copies should be directed to (601)
968-4251.
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
CERTAIN OF THE MATTERS DISCUSSED AND INCORPORATED BY REFERENCE IN THIS
PROSPECTUS MAY CONSTITUTE FORWARD-LOOKING STATEMENTS FOR PURPOSES OF THE
SECURITIES ACT AND THE EXCHANGE ACT. ALL STATEMENTS, OTHER THAN STATEMENTS OF
HISTORICAL FACTS, INCLUDED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS THAT
ADDRESS ACTIVITIES, EVENTS OR DEVELOPMENTS THAT THE COMPANY EXPECTS OR
ANTICIPATES WILL OR MAY OCCUR IN THE FUTURE, INCLUDING SUCH THINGS AS FUTURE
CAPITAL EXPENDITURES (INCLUDING THE AMOUNT AND NATURE THEREOF), BUSINESS
STRATEGY AND MEASURES TO IMPLEMENT STRATEGY, COMPETITIVE STRENGTHS, GOALS,
EXPANSION AND GROWTH OF THE COMPANY'S AND ITS SUBSIDIARIES' BUSINESS AND
OPERATIONS, PLANS, REFERENCES TO FUTURE SUCCESS AND OTHER SUCH MATTERS ARE
FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS MAY INVOLVE
UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE THE ACTUAL RESULTS AND
PERFORMANCE OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM FUTURE RESULTS OR
PERFORMANCE EXPRESSED OR IMPLIED BY SUCH STATEMENTS. CAUTIONARY STATEMENTS
REGARDING THE RISKS ASSOCIATED WITH SUCH FORWARD-LOOKING STATEMENTS INCLUDE,
WITHOUT LIMITATION, THOSE STATEMENTS INCLUDED UNDER "RISK FACTORS," "SUMMARY"
AND ELSEWHERE HEREIN. AMONG OTHERS, FACTORS THAT COULD ADVERSELY AFFECT ACTUAL
RESULTS AND PERFORMANCE INCLUDE LOCAL AND REGIONAL ECONOMIC CONDITIONS IN THE
AREAS SERVED BY THE COMPANY, THE LEVEL OF CONSUMER SPENDING FOR APPAREL AND
OTHER CONSUMER GOODS, THE EFFECTS OF WEATHER CONDITIONS ON SEASONAL SALES IN THE
COMPANY'S MARKET AREAS, COMPETITION AMONG DEPARTMENT AND SPECIALTY STORES,
CHANGES IN MERCHANDISE MIXES, SITE SELECTION AND RELATED TRAFFIC AND DEMOGRAPHIC
PATTERNS, BEST PRACTICES AND MERCHANDISING, INVENTORY MANAGEMENT AND TURNOVER
LEVELS, REALIZATION OF PLANNED SYNERGIES AND COST SAVINGS, AND THE COMPANY'S
SUCCESS IN INTEGRATING RECENT AND POTENTIAL FUTURE ACQUISITIONS. SEE "RISK
FACTORS -- FORWARD-LOOKING STATEMENTS."
ALL WRITTEN OR ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY
ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE FOREGOING CAUTIONARY STATEMENT.
3
<PAGE> 5
SUMMARY
The following is a summary of certain information contained or incorporated
by reference in this Prospectus. Reference is made to, and this summary is
qualified in its entirety by, the more detailed information contained or
incorporated by reference in this Prospectus. As used herein, unless the context
otherwise requires, "Company" means Proffitt's, Inc. and its subsidiaries, and
the terms "Proffitt's," "McRae's," "Younkers," "Parisian" and "Herberger's"
refer to the Company's five department store chains, and the existing and
predecessor entities that conduct or conducted business under such names.
Reference in this Prospectus to the Company's fiscal year means the fiscal year
ended on the Saturday nearest January 31 of the following calendar year (e.g.,
"fiscal 1995" means the fiscal year ended February 3, 1996). Unless the context
otherwise requires, references in this Prospectus to "pro forma" financial
information reflect the acquisition by the Company of Parisian as if the
acquisition had occurred on February 4, 1996. Historical financial information
presented in this Prospectus includes the results of Parisian from and after
October 11, 1996, the date of its acquisition by the Company.
THE COMPANY
The Company is a leading regional department store chain operating 176
stores in 24 states, primarily in the Southeast and Midwest. The Company
operates its stores under five chain names: Proffitt's (19 stores), McRae's (30
stores), Younkers (50 stores), Parisian (40 stores) and Herberger's (37 stores).
Each chain operates primarily as a leading branded traditional department store
in its communities, with Parisian serving as a better branded specialty
department store. Most of the stores are located in premier regional malls in
the respective trade areas served. The Company's stores offer a wide selection
of fashion apparel, accessories, cosmetics and decorative home furnishings,
featuring assortments of premier brands, private brands and specialty
merchandise. Each of the Company's chains operates with its own merchandising,
marketing and store operations team in order to tailor regional assortments to
the local customer. At the same time, the Company coordinates merchandising
among the chains and consolidates administrative and support functions to
realize scale economies, to promote a competitive cost structure and to increase
margins.
In recent years, the Company has grown primarily through the acquisition of
strong, regional department store chains such as McRae's, Younkers, Parisian and
Herberger's. The Company's philosophy has been to maintain existing chain names,
to retain merchandising and store personnel and to employ a "best practices"
approach to integrating acquired companies. Best practices is a process whereby
each acquired chain's operating procedures and policies are reviewed to
determine those practices which the Company believes will increase synergies
while minimizing business interruptions. The Company believes the implementation
of best practices throughout the Company's chains has resulted in improved
comparable store sales and increased operating margins through better and more
consistent inventory control and pricing, and other operating efficiencies. In
addition, the Company realizes scale economies in purchasing and distribution,
in administrative areas such as accounting, proprietary credit card
administration, and management information systems and in other
infrastructure-related areas.
The Company places a high priority on being a market leader in each of the
markets in which it operates. In smaller communities, such as Ames, Iowa and
Kalispell, Montana, the Company's stores are frequently the only branded name
department store catering to middle and upper income customers and offering an
array of brands that frequently are not otherwise available to shoppers in such
markets. In most larger metropolitan markets, such as Atlanta, Georgia and
Indianapolis, Indiana, the Company seeks to maximize its market share by
operating multiple stores in prime locations. The Company believes that its
geographic diversity and the demographic breadth of its target customer groups
may to some extent serve to insulate the Company from sales and earnings
volatility typically associated with poor weather conditions, or changes in
local or regional economic conditions.
BUSINESS STRATEGY
The Company's business objective is to maximize profitability and
shareholder value by (i) expanding its core business through comparable store
sales growth, new store openings and margin expansion, and
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<PAGE> 6
(ii) monitoring acquisition opportunities while maintaining a strong capital
structure. Through the execution of this strategy under the leadership of R.
Brad Martin and an experienced senior management team, the Company has grown
from 11 stores and net sales of $94.8 million in fiscal 1989 to 173 stores and
pro forma net sales of $2.3 billion in fiscal 1996.
Comparable Store Sales Growth. The Company expects that comparable store
sales will benefit from a number of merchandising initiatives including (i)
implementing best practices, (ii) expanding sales of key brands, and (iii)
increasing sales of the Company's private brands. As part of best practices, the
Company benchmarks sales of product categories and brand assortments for each
store and identifies and targets opportunities to strengthen such sales by
altering the merchandise mix. As an example, the Company has successfully used
this strategy by applying the long history of strength in the cosmetics business
of McRae's and Proffitt's stores to increase the penetration and profitability
of Younkers stores' cosmetics business.
The Company's large scale and proven track record with vendors such as
Tommy Hilfiger, Liz Claiborne, Jones New York, Polo/Ralph Lauren, Calvin Klein,
Guess, and Nine West, among others, has enabled the Company to introduce certain
of these brands into acquired stores which, prior to combining with the Company,
did not have access to these vendors. Additionally, the Company plans to
increase sales of its private brand offerings within the apparel and housewares
categories from 6% of total net sales to 12% to 15% over the next two to three
years.
New Store Openings. The Company plans to open 15 to 20 new stores across
all chains over the next three years, including selective real estate
acquisitions in existing or new markets. The Company targets premier mall
locations principally based on favorable demographic profiles and trends, as
well as the compatibility and traffic draws of other tenants. High quality real
estate is a primary criterion for all new stores.
Margin Expansion. The Company has implemented the following strategies to
increase margins: (i) leveraging key vendor relationships; (ii) capitalizing on
purchasing economies of scale; (iii) extending key brands into certain acquired
stores; (iv) shifting the merchandise mix toward higher margin products; (v)
increasing private brand penetration; (vi) consolidating administrative and
support areas and eliminating redundant expenses; and (vii) realizing
efficiencies related to the re-engineering of certain operating activities.
The Company intends to further increase gross margins by increasing sales
of its private brand products, which typically generate higher margins and
enhance customer loyalty. Operating margins are also expected to benefit from
sales productivity enhancements across the Company's chains and from the
integration cost savings programs developed by management in conjunction with
the Younkers, Parisian, and Herberger's acquisitions. These programs reduced
operating expenses by a total of $6 million in fiscal 1996 (consistent with the
Company's announced target) and are expected to produce annualized expense
savings of $20 million in fiscal 1997 and $29 million in fiscal 1998 (compared
to the 1995 cost structure of the chains on an independent basis).
Monitor Acquisition Opportunities. The Company has an established record
of successfully acquiring and integrating regional department store chains. The
Company believes that its philosophy of retaining the local identity and
merchandising organization of acquired companies makes the Company an attractive
acquirer for regional department store companies. Although the Company currently
has no agreements, arrangements or understandings with respect to future
acquisitions, the Company expects the department store industry will continue to
consolidate, and the Company will regularly evaluate possible acquisition
opportunities as they arise.
Maintain Strong Capital Structure. The Company intends to maintain a
strong balance sheet to support its growth objectives. As part of the Company's
plan to improve its capital structure, the Company (i) issued and sold $125
million principal amount of its 8 1/8% Senior Notes due 2004 (the "Senior
Notes") on May 21, 1997, (ii) amended its credit facility (the "Credit
Facility") on June 26, 1997 to, among other things, increase the availability
thereunder to $400 million and (iii) on August 21, 1997, replaced its existing
asset-backed commercial paper conduit facility with a credit card master trust
to facilitate longer term, fixed-rate financing of private label credit card
receivables, as well as short-term variable-rate funding through asset-backed
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<PAGE> 7
commercial paper conduit facilities. The Company believes that, absent any
additional acquisitions, future cash flows from operations (with seasonal needs
supplemented by borrowings under the Credit Facility and additional sales of
accounts receivable under its private label credit card securitization programs)
will be sufficient to service debt and lease payments, and to fund capital
expenditures and working capital requirements. See "Capitalization."
RECENT DEVELOPMENTS
Second Quarter Results. On August 21, 1997, the Company reported operating
results for the fiscal quarter ended August 2, 1997. Net sales for the quarter
were $492.3 million, compared to net sales of $343.4 million for the second
fiscal quarter of the prior year, an increase of 43%. On a comparable stores
basis (excluding Parisian), total Company sales increased 6% in the second
fiscal quarter of 1997 compared to the second fiscal quarter of the prior year.
In addition, the Company realized net income of $5.3 million, or $.18 per share,
for the fiscal quarter ended August 2, 1997, compared to $3.5 million, or $.14
per share, for the second fiscal quarter of the prior year. Prior to certain
non-recurring and unusual items, net income for the fiscal quarter ended August
2, 1997 was $8.0 million, or $.28 per share, compared to $4.6 million, or $.18
per share, for the second fiscal quarter of the prior year.
For the six months ended August 2, 1997, net sales were $1,018.7 million,
compared to net sales of $708.5 million for the six months ended August 3, 1996,
an increase of 44%. On a comparable stores basis (excluding Parisian), total
Company sales increased 5% in the six months ended August 2, 1997, compared to
the first six months of the prior fiscal year. In addition, the Company realized
net income of $15.8 million, or $.55 per share, for the six months ended August
2, 1997, compared to $9.8 million, or $.39 per share, for the first six months
of the prior fiscal year. Prior to certain non-recurring and unusual items, net
income for the six months ended August 2, 1997 was $20.0 million, or $.68 per
share, compared to $11.3 million, or $.45 per share, for the first six months of
the prior fiscal year.
The foregoing per share net income data does not give effect to the
Company's two-for-one stock split referred to below.
Two-for-One Stock Split. On August 21, 1997, the Company declared a
two-for-one stock split in the form of a 100% stock dividend payable on or about
October 27, 1997 to record holders of Common Stock at the close of business on
October 15, 1997.
The Company was incorporated under the laws of the State of Tennessee in
1919. The principal executive offices of the Company are located at 3455 Highway
80 West, Jackson, Mississippi 39209, and its telephone number is (601) 968-4400.
6
<PAGE> 8
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA
The following table presents summary historical and pro forma financial
data derived from the audited Consolidated Financial Statements of the Company
for the last five fiscal years and the unaudited Condensed Consolidated
Financial Statements for the three month periods ended May 3, 1997 and May 4,
1996. The historical financial data should be read in conjunction with the
Company's Consolidated Financial Statements and the notes thereto incorporated
by reference herein. The summary historical pro forma financial and operating
data give effect to the purchase of Parisian as if it had occurred on February
4, 1996, are based on certain assumptions and are derived from, and should be
read in conjunction with, Parisian's historical financial statements and the
notes thereto and the Company's pro forma financial statements and the notes
thereto incorporated by reference herein. The summary pro forma financial data
do not purport to present the actual financial position or results of operations
of the Company had the Parisian acquisition and the events assumed therein in
fact occurred on the dates specified, nor are they necessarily indicative of the
results of operations that may be achieved in the future. The data for the three
months ended May 3, 1997 and May 4, 1996 are not necessarily indicative of the
results that may be expected for the current fiscal year. See "Available
Information" and "Incorporation of Certain Information by Reference."
<TABLE>
<CAPTION>
THREE MONTHS ENDED PRO FORMA FISCAL YEAR ENDED(A)
--------------------- YEAR ENDED ---------------------------------------
MAY 3, MAY 4, FEBRUARY 1, FEBRUARY 1, FEBRUARY 3, JANUARY 28,
1997 1996(A) 1997 1997 1996 1995
---------- -------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME
STATEMENT DATA:
Net Sales................... $ 526,370 $365,179 $2,320,955 $1,889,779 $1,661,056 $1,513,444
Cost and expenses:
Cost of sales............. 335,882 237,201 1,511,802 1,230,454 1,087,619 986,028
Selling, general and
administrative
expenses................ 128,629 88,952 551,804 440,502 398,999 352,448
Depreciation and
amortization............ 10,898 9,811 48,471 41,037 43,013 40,305
Property and equipment
rentals................. 19,048 11,270 81,747 60,684 50,609 47,857
Taxes other than income
taxes................... 12,622 9,638 49,720 40,403 36,938 34,421
Merger, restructuring and
integration costs(b).... 1,468 2,763 15,929 15,929 20,822 --
Operating income, net....... 17,796 7,804 62,576 61,864 753 52,385
Other income (expense):
Finance charge income,
net(c).................. 10,878 7,160 37,883 32,305 31,273 27,934
Interest expense.......... (10,692) (4,706) (44,702) (26,756) (29,389) (23,286)
Other income, net......... 136 498 3,409 1,572 4,051 4,826
Income before provision for
income taxes,
extraordinary loss and
cumulative effect of
changes in accounting
methods................... 18,118 10,756 59,166 68,985 6,688 61,859
Net income (loss)........... 10,544 6,308 29,768 37,399 (1,419) 37,448
Net income available to
common shareholders....... 10,544 5,820 25,940 33,571 (3,369) 35,754
EARNINGS PER SHARE:
Earnings (loss) per common
share before extraordinary
loss and cumulative effect
of changes in accounting
methods
Primary................. .37 .25 .94 1.31 (0.06) 1.55
Fully diluted........... .37 .25 1.05 1.41 (0.06) 1.52
Earnings (loss) per common
share(d)
Primary................. .37 .25 .94 1.31 (0.15) 1.55
Fully diluted........... .37 .25 1.05 1.41 (0.15) 1.52
<CAPTION>
FISCAL YEAR ENDED(A)
-------------------------
JANUARY 29, JANUARY 30,
1994 1993
----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C>
CONSOLIDATED INCOME
STATEMENT DATA:
Net Sales................... $1,063,488 $858,754
Cost and expenses:
Cost of sales............. 690,083 523,444
Selling, general and
administrative
expenses................ 255,856 220,889
Depreciation and
amortization............ 26,693 19,586
Property and equipment
rentals................. 37,049 26,344
Taxes other than income
taxes................... 25,050 18,227
Merger, restructuring and
integration costs(b).... -- --
Operating income, net....... 28,757 50,264
Other income (expense):
Finance charge income,
net(c).................. 19,312 16,151
Interest expense.......... (11,286) (11,701)
Other income, net......... 4,063 233
Income before provision for
income taxes,
extraordinary loss and
cumulative effect of
changes in accounting
methods................... 40,846 54,947
Net income (loss)........... 25,540 32,522
Net income available to
common shareholders....... 25,540 32,522
EARNINGS PER SHARE:
Earnings (loss) per common
share before extraordinary
loss and cumulative effect
of changes in accounting
methods
Primary................. 1.12 1.97
Fully diluted........... 1.12 1.97
Earnings (loss) per common
share(d)
Primary................. 1.15 1.87
Fully diluted........... 1.15 1.87
</TABLE>
7
<PAGE> 9
<TABLE>
<CAPTION>
THREE MONTHS ENDED PRO FORMA FISCAL YEAR ENDED(A)
--------------------- YEAR ENDED ---------------------------------------
MAY 3, MAY 4, FEBRUARY 1, FEBRUARY 1, FEBRUARY 3, JANUARY 28,
1997 1996(A) 1997 1997 1996 1995
---------- -------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Weighted average common
shares
Primary................. 28,451 23,466 27,657 25,564 23,157 23,046
Fully diluted........... 30,539 23,655 28,277 28,204 23,166 26,301
EARNINGS PER SHARE RESTATED
FOR THE OCTOBER 27, 1997
2-FOR-1 STOCK SPLIT(E):
Earnings (loss) per common
share before extraordinary
loss and cumulative effect
of changes in accounting
methods
Primary................. .19 .13 .47 66 (0.03) .78
Fully diluted........... .19 .13 .53 .71 (0.03) .76
Earnings (loss) per common
share(d)
Primary................. .19 .13 .47 .66 (0.08) .78
Fully diluted........... .19 .13 .53 .71 (0.08) .76
CONSOLIDATED BALANCE SHEET
DATA:
Working capital............. $ 375,348 $226,361 $ 344,410 $ 344,410 $ 235,194 $ 301,270
Total assets................ 1,456,794 921,606 1,403,796 1,403,796 919,013 967,667
Long-term debt, less current
portion................... 505,108 247,537 502,577 502,577 269,442 325,501
Shareholders' equity........ 555,159 334,394 539,898 539,898 327,371 337,007
SELECTED STORE DATA(F):
Stores at beginning of
period.................... 173 144 181 144 146 115
Stores opened or acquired... 2 1 3 40 1 31
Stores closed or sold....... -- (2) (11) (11) (3) --
---------- -------- ---------- ---------- ---------- ----------
Stores at end of period..... 175 143 173 173 144 146
========== ======== ========== ========== ========== ==========
<CAPTION>
FISCAL YEAR ENDED(A)
-------------------------
JANUARY 29, JANUARY 30,
1994 1993
----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C>
Weighted average common
shares
Primary................. 22,167 17,396
Fully diluted........... 22,167 17,396
EARNINGS PER SHARE RESTATED
FOR THE OCTOBER 27, 1997
2-FOR-1 STOCK SPLIT(E):
Earnings (loss) per common
share before extraordinary
loss and cumulative effect
of changes in accounting
methods
Primary................. .56 .99
Fully diluted........... .56 .99
Earnings (loss) per common
share(d)
Primary................. .58 .94
Fully diluted........... .58 .94
CONSOLIDATED BALANCE SHEET
DATA:
Working capital............. $ 306,853 $203,977
Total assets................ 653,680 536,603
Long-term debt, less current
portion................... 203,838 216,985
Shareholders' equity........ 275,104 122,582
SELECTED STORE DATA(F):
Stores at beginning of
period.................... 106 77
Stores opened or acquired... 12 29
Stores closed or sold....... (3) --
---------- --------
Stores at end of period..... 115 106
========== ========
</TABLE>
- ---------------
(a) Effective February 1, 1997 and February 3, 1996, Herberger's and Younkers,
respectively, were acquired by the Company. Such acquisitions were accounted
for under the pooling-of-interests method. Accordingly, the Company's
financial statements were restated for all periods to include the results of
operations and financial position of Herberger's and Younkers.
(b) In connection with the acquisitions of Younkers and Herberger's, the Company
incurred certain merger, restructuring and integration costs, including
transaction costs, costs associated with severance and related benefits,
abandonment and elimination of duplicate administrative office space,
property, data processing equipment and software, and other costs.
(c) Finance charge income includes finance charges and late payment fees earned
on the Company's proprietary credit cards, less the portion of such income
allocated to third party purchasers of such credit card receivables.
(d) Losses per share attributable to extraordinary items were $.09 for the year
ended February 3, 1996 and $.05 for the year ended January 29, 1994.
Earnings (loss) per share attributable to cumulative effect of changes in
accounting methods were $.08 for the year ended January 29, 1994 and ($.10)
for the year ended January 30, 1993. Amounts after the Company's two-for-one
stock split are $.05 and $.03, respectively, for the extraordinary items,
and $.04 and ($.05), respectively, for the accounting changes. See " --
Recent Developments -- Two-For-One Stock Split."
(e) On August 21, 1997, the Company declared a two-for-one stock split in the
form of a 100% stock dividend payable on or about October 27, 1997 to record
holders of Common Stock at the close of business on October 15, 1997.
(f) Where operations within a particular shopping mall are divided among two or
more locations but operate under the same chain, the combined operation is
counted as one store.
8
<PAGE> 10
RISK FACTORS
Prospective investors should consider carefully the following factors in
addition to other information set forth in this Prospectus in evaluating an
investment in the shares of Common Stock offered hereby.
INDEBTEDNESS OF THE COMPANY
As of August 2, 1997, the Company had approximately $543.42 million of
indebtedness outstanding. A portion of the Company's cash flow from operations
will be dedicated to debt service, thereby reducing funds available for
operations, capital expenditures and distribution to shareholders. The
indebtedness and the restrictive covenants to which the Company is subject under
the terms of its indebtedness may make the Company more vulnerable to economic
downturns and competitive pressures, may hinder its ability to execute its
growth strategy, and may reduce its flexibility to respond to changing business
conditions. In addition, certain covenants to which the Company is subject under
the terms of its indebtedness restrict the ability of the Company to pay
dividends on its Common Stock. See "Capitalization."
COMPETITION
The department store business is highly competitive. The Company's stores
compete with national and regional department store chains, specialty apparel
stores and discount store chains, some of which are larger than the Company and
may be able to devote greater financial and other resources to marketing and
other competitive activities. The Company also competes with local stores that
carry similar categories of merchandise. The Company generally competes on the
basis of pricing, quality, merchandise selection, customer service and amenities
and store design. The Company's success also depends in part on its ability to
anticipate and respond to changing merchandise trends and customer preferences
in a timely manner. Accordingly, any failure by the Company to anticipate and
respond to changing merchandise trends and customer preferences could materially
adversely affect sales of the Company's private brands and product lines, which
in turn could materially adversely affect the Company's business, financial
condition or results of operations. There can be no assurance that the Company's
stores will continue to compete successfully with such other stores or that any
such competition will not have a material impact on the Company's financial
condition or results of operations.
GENERAL ECONOMIC CONDITIONS; SEASONALITY
The Company's future performance is subject to prevailing economic
conditions and to all operating risks normally incident to the retail industry.
The Company experiences seasonal fluctuations in sales and net income, with
disproportionate amounts typically realized during the fourth fiscal quarter of
each year. Sales and net income are generally weakest during the second fiscal
quarter.
INTEGRATION OF ACQUIRED COMPANIES
As part of its business strategy, the Company has consummated several
acquisitions and will regularly evaluate future acquisition opportunities
including acquisitions of other regional department store chains and individual
stores or locations. The Company's future operations and earnings will be
affected by its ability to continue to successfully integrate the operations of
any acquired businesses or store locations. While the Company has in the past
been successful at effectively integrating the operations of acquired
businesses, there can be no assurance that the Company will be able to continue
to do so. In addition, the successful integration of operations will be subject
to numerous contingencies, some of which are beyond the Company's control. The
failure to successfully integrate any such operations with those of the Company
could have a material adverse effect on the Company's financial position,
results of operations and cash flows.
ANTI-TAKEOVER PROVISIONS
Certain provisions of the Tennessee Business Corporation Act ("TBCA") and
of the Company's charter of incorporation (the "Charter") and by-laws (the
"By-laws") may have the effect of delaying or preventing transactions involving
a change of control of the Company, including transactions in which stockholders
might
9
<PAGE> 11
otherwise receive a substantial premium for their shares over then current
market prices. See "Description of Capital Stock -- Certain Provisions of
Tennessee Law Regarding Takeovers" and "Description of Capital
Stock -- Anti-Takeover Provisions in the Company's Charter and By-laws."
FORWARD-LOOKING STATEMENTS
This Prospectus contains and incorporates by reference certain
forward-looking statements concerning the Company's existing and contemplated
operations, economic performance and financial condition. These statements are
based upon a number of assumptions and estimates which are inherently subject to
uncertainties and contingencies, many of which are beyond the control of the
Company, including the level of consumer spending for apparel and other
merchandise carried by the Company, competition among department and specialty
stores, management's ability to predict consumer tastes, merchandise brands and
mix, the effectiveness of planned advertising, marketing and promotional
campaigns, appropriate inventory management, realization of planned synergies,
private brand sales and effective cost containment. See "Cautionary Notice
Regarding Forward-Looking Statements."
10
<PAGE> 12
USE OF PROCEEDS
The net proceeds from the sale of the Common Stock to the Purchaser
pursuant to the arrangements described under "Standby Arrangements" will be used
to redeem all outstanding Debentures not surrendered for conversion. The amount
of the proceeds to be received by the Company from the Purchaser is not
determinable at this time because the number of shares of Common Stock, if any,
that will be sold to the Purchaser cannot be determined at this time.
PRICE RANGE OF COMMON STOCK
The Common Stock began trading on the NYSE on July 7, 1997 under the symbol
"PFT." Through July 3, 1997, the Common Stock was traded on the Nasdaq National
Market under the symbol "PRFT." On August 21, 1997, the Company declared a
two-for-one stock split in the form of a stock dividend payable on or about
October 27, 1997 to record holders of Common Stock on October 15, 1997. The
following table sets forth on a per share basis, for the period indicated, the
high and low sales prices of the Common Stock as reported on the NYSE Composite
Tape and by the Nasdaq National Market, as applicable, and does not reflect the
effect of the two-for-one stock split. See "Summary -- Recent
Developments -- Two-for-One Stock Split."
<TABLE>
<CAPTION>
HIGH LOW
-------- --------
<S> <C> <C>
FISCAL 1995
First Quarter............................................... $26.5000 $20.7500
Second Quarter.............................................. 33.0000 24.0000
Third Quarter............................................... 34.2500 24.0000
Fourth Quarter.............................................. 29.0000 21.5000
FISCAL 1996
First Quarter............................................... $33.7500 $23.5000
Second Quarter.............................................. 40.0000 31.5000
Third Quarter............................................... 42.0000 35.5000
Fourth Quarter.............................................. 42.7500 32.6250
FISCAL 1997
First Quarter............................................... $41.3750 $31.2500
Second Quarter.............................................. 53.0625 36.6250
Third Quarter (through September 3, 1997)................... 54.6250 49.8750
</TABLE>
On September 3, 1997, the closing price of the Common Stock on the NYSE
Composite Tape was $54.625 per share. Prospective investors should obtain a
current quote on the shares of Common Stock. As of May 3, 1997, there were
approximately 1,351 holders of record of Common Stock.
DIVIDEND POLICY
Since its initial public offering, the Company has not paid a cash dividend
on its Common Stock. The Company expects to retain its earnings for the
development and expansion of its business and the repayment of indebtedness and,
therefore, does not intend to pay cash dividends on its Common Stock in the
foreseeable future. Any future determination to pay cash dividends will be at
the discretion of the Company's Board of Directors and will depend upon the
earnings of the Company, its financial condition, its capital requirements and
any other factors the Company's Board of Directors may deem relevant. In
addition, certain covenants to which the Company is subject under the terms of
its indebtedness restrict the ability of the Company to pay cash dividends on
its Common Stock.
11
<PAGE> 13
CAPITALIZATION
The following table sets forth the capitalization of the Company as of May
3, 1997, (a) on an actual basis, (b) on a pro forma basis giving effect to (i)
the issuance and sale by the Company of the Senior Notes and the application of
the net proceeds therefrom, (ii) an increase in the percentage of the Company's
private label credit card receivables sold to third parties under a restructured
asset securitization financing arrangement established on August 21, 1997 and
(iii) the purchase by the Company of approximately $28.4 million of Parisian's
9 7/8% Senior Subordinated Notes due 2003 (the "Senior Subordinated Notes"), and
(c) as further adjusted to reflect the assumed conversion of all of the
Debentures into shares of Common Stock. This table should be read in conjunction
with the Consolidated Financial Statements of the Company and the notes thereto
incorporated by reference herein. See "Available Information" and "Incorporation
of Certain Information by Reference."
<TABLE>
<CAPTION>
AS OF MAY 3, 1997
---------------------------------------
ACTUAL PRO FORMA AS ADJUSTED
---------- ---------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Long-term debt(a):
Credit facility(b)................................... $ 163,100 $ 115,358(c) $ 115,958
Real estate and mortgage notes....................... 113,578 49,547 49,547
Senior notes(d)...................................... -- 125,000 125,000
Other notes payable.................................. 3,754 -- --
Capital lease obligations............................ 10,706 10,706 10,706
Senior Subordinated Notes(e)......................... 125,000 96,597 96,597
Convertible subordinated debentures.................. 86,250 86,250 --
Junior subordinated debt............................. 14,590 14,590 14,590
---------- ---------- ----------
Total long-term debt......................... 516,978 498,048 412,398
Shareholders' equity(f)................................ 555,159 553,359 639,009
---------- ---------- ----------
Total capitalization......................... $1,072,137 $1,051,407 $1,051,407
========== ========== ==========
</TABLE>
- ---------------
(a) Includes current maturities of long-term debt.
(b) On June 26, 1997, the Company amended and restated the Credit Facility to,
among other things, (i) increase the availability thereunder from $275
million to $400 million, (ii) extend the maturity from October 1999 to June
2002, (iii) reduce the financial performance benchmarks at which more
favorable interest rates are made available to the Company, and (iv) lessen
in varying degrees the scope of the affirmative and negative covenants
applicable to the Company and its subsidiaries. Borrowings under the Credit
Facility are generally limited to 60% of eligible inventory.
(c) On August 21, 1997, the Company completed a restructuring of its private
label credit card accounts receivable securitization facilities. Under the
restructured arrangement, the recently formed Proffitt's Credit Card Master
Trust issued $200 million aggregate principal amount of Series 1997-2
five-year term, asset backed securities representing an undivided ownership
interest in credit card receivables originated at the Company's Proffitt's,
McRae's, Herberger's, and Parisian chains. The securities were issued in
two classes, $180 million aggregate principal amount issued at 99.587% of
the face amount thereof with a per annum interest rate of 6.50%, and $20
million aggregate principal amount issued at 99.642% of the face amount
thereof with a per annum interest rate of 6.69%. Concurrent with the
issuance of the Series 1997-2 Certificates, Proffitt's Credit Card Master
Trust issued $125 million aggregate principal amount of Series 1997-1
Variable Funding Certificates. The Variable Funding Certificates will
provide the Company with funding for seasonal and expansion related growth
in the underlying receivables portfolio. The net proceeds from the issuance
and sale of the Series 1997-2 Certificates and the Variable Funding
Certificates were used to repay outstanding borrowings under the Credit
Facility and to terminate the Company's previous securitization
arrangement.
(d) On May 21, 1997, the Company issued and sold $125 million of the Senior
Notes at 99.427% of the face amount thereof and a per annum interest rate
of 8 1/8%. The net proceeds from the issuance and sale of the Senior Notes
were used to repay (i) approximately $64.0 million of real estate and
mortgage notes, (ii) approximately $3.8 million of unsecured notes payable,
and (iii) approximately $53.0 million of outstanding borrowings under the
Company's then existing credit facility.
(e) Since May 3, 1997, the Company has purchased approximately $28.4 million of
the Senior Subordinated Notes, which are guaranteed on a senior
subordinated basis by the Company. Amounts purchased, including any premium
and transaction fees, are assumed to have been funded under the Credit
Facility for purposes of the Pro Forma Capitalization as of May 3, 1997.
(f) Shareholders' equity has been adjusted to reflect a $1.8 million loss (net
of taxes) on early extinguishment of debt and for estimated fees and
expenses in connection with the Offering and the assumed conversion of all
of the Debentures.
12
<PAGE> 14
REDEMPTION OF DEBENTURES AND ALTERNATIVES TO REDEMPTION
On September 5, 1997, the Company called for redemption on October 6, 1997
(the "Redemption Date"), all of its outstanding Debentures. As of September 3,
1997, $86,250,000 aggregate principal amount of Debentures was outstanding.
The following alternatives are available to holders of Debentures:
1. Conversion into Common Stock. Holders may convert Debentures (or
any portion thereof which is $1,000 or an integral multiple thereof) into
the Common Stock of the Company at a conversion price of $42.70 per share
of Common Stock (equivalent to 23.42 shares of Common Stock for each $1,000
principal amount of Debentures). No fractional shares of Common Stock will
be issued upon conversion of Debentures. Instead, the Company will pay a
cash adjustment in respect of such fraction in an amount equal to the same
fraction of the Closing Price (as defined below) at the close of business
on the day of conversion (or, if such day is not a Trading Day (as defined
below), on the Trading Day immediately preceding such day). Debentures
surrendered for conversion will not be entitled to interest accrued to the
date of conversion. "Closing Price" means the last reported sales price
regular way or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular way, in either
case on the NYSE. "Trading Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday, other than any day on which securities are generally
not traded on the NYSE. The Debentures will not be convertible after 5:00
P.M., Eastern Time, on September 29, 1997.
To convert Debentures into Common Stock, the holder thereof must
surrender such Debentures prior to 5:00 P.M. Eastern Time, on September 29,
1997 to Union Planters National Bank, as paying and conversion agent (the
"Paying and Conversion Agent"). Such surrender of any Debenture must be
accompanied by a duly executed notice of the holder's election to convert
in the form provided on the reverse side of such Debenture (the "Conversion
Notice"). The Conversion Notice must also state the name or names, together
with the address or addresses, in which the Common Stock shall be issuable
upon the conversion if different from the registered holder of the
Debentures surrendered. Each Debenture surrendered for conversion must be
accompanied by proper assignments thereof to the Company or in blank for
transfer and any requisite federal or state transfer tax stamps. The
Conversion Notice that must be given to the Paying and Conversion Agent may
be provided by surrendering Debentures accompanied by a properly completed
Letter of Transmittal in the form provided to all registered holders of
Debentures (each, a "Letter of Transmittal"). Each holder's signature in a
Letter of Transmittal or any other Conversion Notice must be guaranteed by
a commercial bank, trust company, a member firm of a national stock
exchange or the National Association of Securities Dealers, Inc. (each, an
"Eligible Institution") if shares of Common Stock are to be delivered other
than to and in the name of the registered holder of the Debentures
converted. Holders should inquire of such Eligible Institutions
sufficiently in advance of the Expiration Date whether there are any dollar
limitations on the principal amount of Debentures with respect to which
signatures may be guaranteed by such Eligible Institutions. A Letter of
Transmittal and any other Conversion Notice, once given to the Paying and
Conversion Agent, is not revocable. As promptly as practicable after the
surrender of a Debenture as aforesaid, the Company shall deliver to the
holder at the office of the Paying and Conversion Agent a certificate or
certificates for the number of full shares of Common Stock issuable upon
the conversion of such Debenture or portion thereof and a check in an
amount equivalent to the value of any fractional share otherwise issuable
upon such conversion. See "Paying and Conversion Agent and the Information
Agent."
Debenture holders wishing to convert their Debentures whose Debentures
are not immediately available or who cannot deliver their Debentures and
all other documents required by the Letter of Transmittal to the Paying and
Conversion Agent on or prior to 5:00 p.m., Eastern Time, on September 29,
1997 may elect to convert their Debentures pursuant to the following
procedures: (a) such election to convert must be made by or through an
Eligible Institution, (b) a properly completed and duly executed Notice of
Guaranteed Delivery in the form provided by the Company to all registered
holders of Debentures (each, a "Notice of Guaranteed Delivery") must be
received by the Paying and Conversion
13
<PAGE> 15
Agent on or prior to 5:00 p.m., Eastern Time, on September 29, 1997, and
(c) the Debentures in proper form for transfer, together with a properly
completed and duly executed Letter of Transmittal and all other documents
required thereby, must be received by the Paying and Conversion Agent
within five business days after the date such Notice of Guaranteed Delivery
is received by the Paying and Conversion Agent. Notwithstanding the
foregoing, shares of Common Stock will be issued in respect of Debentures
surrendered for conversion only after timely receipt by the Paying and
Conversion Agent of the surrendered Debentures, a properly completed and
duly executed Letter of Transmittal and any other documents required by the
Letter of Transmittal.
Each holder of Debentures that does not directly hold certificates for
its Debentures, but instead maintains its holdings indirectly in an account
with a broker or other intermediary (each, a "Beneficial Holder") must
comply with the procedures of such intermediary to convert such Beneficial
Holder's Debentures. Such an intermediary may maintain its holdings with
The Depository Trust Company (the "Depository"). In those instances, the
procedures of the Depository must also be followed for a Beneficial Holder
to convert its Debentures.
IT IS THE RESPONSIBILITY OF EACH BENEFICIAL HOLDER TO GIVE
INSTRUCTIONS TO ITS INTERMEDIARY IN SUFFICIENT TIME FOR THAT INTERMEDIARY,
ANY HIGHER INTERMEDIARIES AND THE RECORD HOLDER OF SUCH BENEFICIAL HOLDER'S
DEBENTURES (WHICH MAY BE THE DEPOSITORY) TO TAKE THE ACTIONS WHICH ARE
NECESSARY TO EFFECT CONVERSION OF SUCH BENEFICIAL HOLDER'S DEBENTURES PRIOR
TO 5:00 P.M., EASTERN TIME, ON SEPTEMBER 29, 1997.
The Company will decide, in its sole discretion, all questions as to
the form of documents and the validity, eligibility (including time of
receipt) and acceptance for conversion by the Company of any Debentures.
Any defect or irregularity in the surrender or delivery of any document in
connection with the conversion of Debentures may result in such Debentures
not being converted into Common Stock and, therefore, being redeemed on the
Redemption Date.
2. Sale in Open Market. Holders may sell the Debentures in the open
market. Holders of Debentures who wish to sell their Debentures in the open
market should consult with their own advisors regarding if and when they
should sell their Debentures and the tax consequences thereof. Holders may
incur various fees and expenses in connection with any such sale.
3. Redemption. Holders may allow the Debentures to be redeemed on
October 6, 1997. Pursuant to the terms of the Indenture between the Company
and Union Planters National Bank, as Trustee, dated as of October 26, 1993,
holders of the Debentures will be entitled to receive upon redemption
103.1667% of the principal amount thereof, plus interest accruing after May
1, 1997 to the Redemption Date (the "Redemption Price"). A holder of $1,000
principal amount of Debentures redeemed at the Redemption Price would
receive $1,052.1184 in cash. Payment of the Redemption Price will be made
by the Paying and Conversion Agent upon surrender of Debentures to the
Paying and Conversion Agent by holders of Debentures accompanied by a
properly completed Letter of Transmittal. Each holder's signature in a
Letter of Transmittal must be guaranteed by an Eligible Institution if the
Redemption Price for Debentures surrendered by such holder for redemption
is to be paid other than to the registered holder of such Debentures.
Holders should inquire of such Eligible Institutions sufficiently in
advance of the Redemption Date whether there are any dollar limitations on
the principal amount of Debentures with respect to which signatures may be
guaranteed by such Eligible Institutions. On and after the Redemption Date,
interest will cease to accrue and holders of Debentures will not have any
rights as such holders other than the right to receive the Redemption
Price. See "Paying and Conversion Agent and the Information Agent."
On September 3, 1997, the closing price of the Common Stock as
reported on the NYSE Composite Tape was $54.625 per share. Based on such
closing price, if a holder of $1,000 principal amount of Debentures on that
date had converted such principal amount, such holder would have received
Common Stock (and cash in lieu of a fractional share) having a market value
equal to $1,279.32, which amount is higher than the amount ($1,052.1184) to
be received upon redemption. The market price of the
14
<PAGE> 16
Common Stock received upon conversion, however, is subject to fluctuation,
and the holder may incur various transaction costs if such Common Stock is
sold. Holders of Debentures are urged to obtain current market quotations
for the Common Stock.
SO LONG AS THE MARKET PRICE OF THE COMMON STOCK IS GREATER THAN $44.92
PER SHARE AT THE TIME OF CONVERSION, A HOLDER WHO CONVERTS DEBENTURES INTO
COMMON STOCK WILL RECEIVE CONSIDERATION (COMMON STOCK, PLUS CASH IN LIEU OF
ANY FRACTIONAL SHARE) HAVING A MARKET VALUE GREATER THAN THE REDEMPTION
PRICE OF THE DEBENTURES. TAXES, COMMISSIONS AND OTHER COSTS WHICH WOULD
LIKELY BE INCURRED UPON SALE OF COMMON STOCK RECEIVED UPON CONVERSION OF
THE DEBENTURES WOULD REDUCE OR ELIMINATE THE ECONOMIC ADVANTAGE OF
CONVERSION OVER REDEMPTION. MOREOVER, THE MARKET VALUE OF THE COMMON STOCK
RECEIVED IS SUBJECT TO FLUCTUATION.
For a discussion of certain United States federal income tax
considerations, see "Certain Federal Income Tax Considerations."
PAYING AND CONVERSION AGENT AND THE INFORMATION AGENT
Union Planters National Bank has been appointed as Paying and Conversion
Agent for the redemption and conversion of the Debentures. The surrender of
Debentures for conversion or redemption should be accompanied by a properly
completed Letter of Transmittal and be delivered to the Paying and Conversion
Agent by hand delivery, overnight courier or mail as follows:
THE PAYING AND CONVERSION AGENT
<TABLE>
<S> <C>
BY HAND OR OVERNIGHT COURIER: BY MAIL:
(registered or certified mail recommended)
Union Planters National Bank Union Planters National Bank
Corporate Trust Department Corporate Trust Department
6200 Poplar Avenue P.O. Box 387
Third Floor Memphis, Tennessee 38147
Memphis, Tennessee 38119
</TABLE>
Beacon Hill Partners, Inc. has been retained by the Company as information
agent (the "Information Agent") to assist in connection with the redemption and
conversion of the Debentures. Questions and requests for assistance regarding
the redemption or the conversion of the Debentures and requests for additional
copies of this Prospectus, the Letter of Transmittal and the Notice of
Guaranteed Delivery may be directed to the Information Agent as follows:
THE INFORMATION AGENT
Beacon Hill Partners, Inc.
90 Broad Street
New York, New York 10004
Attention: Edward McCarthy
Telephone: (800) 755-5001
The Company will pay the Paying and Conversion Agent and the Information
Agent their reasonable and customary fees for their services and will reimburse
them for all of their reasonable out-of-pocket expenses in connection therewith.
15
<PAGE> 17
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of certain United States federal income
tax considerations relevant to the conversion, redemption or sale of Debentures
by a beneficial owner of Debentures. This summary is based on the Internal
Revenue Code of 1986, as amended (the "Code"), Treasury Regulations (including
Proposed Regulations and Temporary Regulations) promulgated thereunder, Internal
Revenue Service ("IRS") rulings, official pronouncements and judicial decisions,
all as in effect on the date hereof and all of which are subject to change,
possibly with retroactive effect, or different interpretations. This summary is
applicable only to holders who are United States persons for federal income tax
purposes and who hold Debentures as capital assets and who will hold any Common
Stock received on conversion of Debentures as capital assets. Additionally, this
summary is not applicable to non-United States persons who have an indirect
interest in Debentures or Common Stock through a United States partnership,
trust or estate, or other flow-through entity.
This summary does not discuss all the tax consequences that may be relevant
to a particular holder in light of the holder's particular circumstances and it
is not intended to be applicable in all respects to all categories of investors,
some of whom -- such as insurance companies, tax-exempt persons, financial
institutions, regulated investment companies, dealers in securities or
currencies, persons that hold the Debentures as a position in a "straddle," as
part of a "synthetic security," "hedge," "conversion transaction" or other
integrated investment, persons that enter into "short sales against the box" or
certain other "constructive sales" involving the Debentures or substantially
identical property, or persons whose functional currency is other than United
States dollars -- may be subject to different rules not discussed below. In
addition, this summary does not address any state, local or foreign tax
considerations that may be relevant to a particular holder.
HOLDERS OF DEBENTURES ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE
CONVERSION, SALE OR REDEMPTION OF THE DEBENTURES IN LIGHT OF THEIR OWN
PARTICULAR CIRCUMSTANCES.
CONVERSION OF DEBENTURES
In general, no gain or loss will be recognized on conversion of Debentures
solely into Common Stock. The tax basis for the Common Stock received upon such
conversion will be equal to the tax basis of the Debentures converted (reduced
by the portion of such basis allocable to any fractional Common Stock interest
paid in cash). The holding period for the Common Stock generally will include
the holding period of the Debentures converted. A holder generally will
recognize gain (or loss) upon a conversion to the extent that any cash paid in
lieu of a fractional share of Common Stock exceeds (or is less than) its tax
basis in such fractional share.
SALE OR REDEMPTION OF DEBENTURES
Generally, the sale or redemption of a Debenture will result in taxable
gain or loss equal to the difference between the amount realized and the
holder's adjusted tax basis in the Debentures. Except as discussed below under
"Market Discount," such gain or loss will be capital gain or loss.
MARKET DISCOUNT
Special rules will apply to Debentures acquired with market discount. A
market discount note is, generally, a note the principal amount of which exceeds
the holder's basis in the note immediately after acquisition by more than a
specified de minimus amount. Generally, any gain recognized on the sale or
redemption of a market discount note will be treated as ordinary income to the
extent of the accrued market discount on such note not previously included in
income. In general, market discount accrues on a straight line basis or, at the
option of the holder, at a constant yield to maturity basis.
16
<PAGE> 18
Although the matter is not free from doubt, a holder of a Debenture with
market discount should not have to recognize income on the conversion of the
Debenture, even with respect to market discount that has accrued but has not
been taken into account. Market discount not recognized on conversion will carry
over to the Common Stock acquired upon conversion thereof and will be recognized
as ordinary income to the extent of gain recognized upon the disposition of such
Common Stock, including any deemed disposition of fractional shares of Common
Stock for cash at the time of conversion.
SALE OR DISPOSITION OF COMMON STOCK
A holder will recognize gain or loss on the sale or exchange of Common
Stock received upon conversion of a Debenture equal to the difference between
the amount realized on such sale or exchange and the holder's adjusted tax basis
in the Common Stock sold or exchanged.
BACKUP WITHHOLDING
A holder of a Debenture or Common Stock issued upon conversion of a
Debenture may be subject to backup withholding at a rate of 31% with respect to
dividends on, or the proceeds of a sale or redemption of, such Debenture or
Common Stock, as the case may be, unless (i) such holder is a corporation or
comes within certain other exempt categories and, when required, demonstrates
this fact, or (ii) provides a taxpayer identification number, certifies as to no
loss of exemption from backup withholding, and otherwise complies with
applicable backup withholding rules.
DESCRIPTION OF CAPITAL STOCK
GENERAL
As of the date hereof, the Company's authorized capital stock consists of
100,000,000 shares of Common Stock, par value $0.10 per share, and 10,000,000
shares of preferred stock, par value $1.00 per share (the "Preferred Stock"). As
of September 3, 1997, 28,739,212 shares of Common Stock and no shares of the
Series C Preferred Stock (as defined herein) were issued and outstanding. The
following summary description of the capital stock of the Company does not
purport to be complete and is qualified in its entirety by reference to the
Company's Charter and to the TBCA. See "Available Information" and
"Incorporation of Certain Information by Reference."
COMMON STOCK
Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of shareholders of the Company and do not have
cumulative voting rights. Accordingly, holders of a majority of the shares of
Common Stock entitled to vote in any election of directors of the Company may
elect all of the directors standing for election. The Company's Charter requires
that its Board of Directors be staggered, consisting of three classes of
directors which are as nearly equal in number as possible. Holders of Common
Stock are entitled to receive ratably such dividends, if any, as may be declared
by the Board of Directors of the Company out of funds legally available
therefor, subject to any preferential dividend rights of outstanding Preferred
Stock. Upon the liquidation, dissolution or winding up of the Company, the
holders of Common Stock are entitled to receive ratably the net assets of the
Company available after payment of all debts and other liabilities and subject
to the prior rights of outstanding Preferred Stock. Holders of Common Stock have
no preemptive, subscription, redemption or conversion rights. All outstanding
shares of Common Stock are duly authorized, validly issued, fully paid and
nonassessable. The rights, preferences and privileges of holders of Common Stock
are subject to, and may be adversely affected by, the rights of the holders of
any series of Preferred Stock, whether currently outstanding or designated and
issued in the future. See "Price Range of Common Stock," "Dividend Policy,"
"-- Preferred Stock" and "-- Anti-Takeover Provisions in the Company's Charter
and By-laws."
The transfer agent and registrar for the Common Stock is Union Planters
National Bank.
17
<PAGE> 19
PREFERRED STOCK
The Board of Directors of the Company has the authority to issue the
Preferred Stock in one or more classes or series and to fix the designations,
powers, preferences and rights of the shares of each class or series, including
dividend rates, conversion rights, terms of redemption and liquidation
preferences and the number of shares constituting each such class or series,
without any further vote or action by the shareholders of the Company. The
ability of the Board of Directors of the Company to issue Preferred Stock, while
providing flexibility in connection with possible acquisitions and other
corporate purposes, could have the effect of making it more difficult for a
third party to acquire, or of discouraging a third party from acquiring, a
majority of the outstanding voting stock of the Company.
As of September 4, 1997, 1,000,000 shares of the Preferred Stock were
designated as Series C Junior Preferred Stock ("Series C Preferred Stock"). The
Series C Preferred Stock will be issued upon exercise of the Rights. Each share
of the Series C Preferred stock, if issued, would bear a dividend rate of 100
times the aggregate amount per share of any dividend declared on the Common
Stock. After any such dividend on the Series C Preferred Stock becomes payable
and is in arrears, the Company may not declare or pay dividends or other
distributions on any shares of stock ranking junior to, or on parity with, the
Series C Preferred Stock (including the Common Stock), or redeem, purchase or
acquire for value any such shares of stock. Each share of Series C Preferred
Stock would also entitle the holder to 100 votes on all matters submitted to a
vote of the shareholders of the Company. In addition, upon a liquidation,
dissolution or winding up of the Company, (i) no distribution can be made to
holders of shares of stock ranking junior to the Series C Preferred Stock
(including holders of Common Stock) unless, prior thereto, a distribution of
$1.00 per share is made to the holders of the Series C Preferred Stock and (ii)
holders of the Series C Preferred Stock are entitled to receive, for each share
of Series C Preferred Stock held, 100 times the aggregate amount to be
distributed per share to holders of Common Stock. No shares of Series C
Preferred Stock have been issued, and management is aware of no facts suggesting
that issuance of such shares may be imminent. See "-- Rights Plan."
RIGHTS PLAN
On March 28, 1995, the Board of Directors of the Company declared a
dividend distribution of one right (a "Right") for each share of Common Stock.
Each Right entitles the holder to purchase from the Company one one-hundredth
( 1/100) of a share of Series C Preferred Stock at a price of $85 per one
one-hundredth ( 1/100) of a share. Initially, the Rights are not exercisable.
However, they will become exercisable if, without the prior approval of the
Board of Directors of the Company, any person either acquires 20% or more of the
shares of Common Stock then outstanding or commences a tender or exchange offer
which, if successfully consummated, would result in such person's acquisition of
20% or more of the shares of Common Stock then outstanding. The Rights are
generally designed to deter coercive takeover tactics and to encourage all
persons interested in potentially acquiring control of the Company to treat each
shareholder on a fair and equal basis. See "-- Preferred Stock."
CERTAIN PROVISIONS OF TENNESSEE LAW REGARDING TAKEOVERS
As a Tennessee corporation, the Company is subject to certain provisions of
Tennessee law which may discourage or render more difficult an unsolicited
takeover of the Company. These provisions include Tennessee's Business
Combination Act, Control Share Acquisition Act, Investor Protection Act and
Greenmail Act.
Business Combination Act. Tennessee's Business Combination Act (the
"Business Combination Act") provides that a party owning 10% or more of stock in
a "resident domestic corporation" (such party is called an "interested
shareholder") cannot engage in a business combination with the resident domestic
corporation unless the combination (i) takes place at least five years after the
interested shareholder first acquired 10% or more of the resident domestic
corporation, and (ii) either (A) is approved by at least 2/3 of the
noninterested voting shares of the resident domestic corporation or (B)
satisfies certain fairness conditions specified in the Business Combination Act.
These provisions apply unless one of two events occurs. A business
combination with an entity can proceed without delay when approved by the target
corporation's board of directors before that entity becomes
18
<PAGE> 20
an interested shareholder, or the resident corporation may enact a charter
amendment or bylaw to remove itself entirely from the Business Combination Act.
This charter amendment or by-law must be approved by a majority of the
shareholders who have held shares for more than one year prior to the vote. It
may not take effect for at least two years after the vote. The Company has not
adopted a provision in its Charter or By-laws removing the Company from coverage
under the Business Combination Act.
The Business Combination Act further provides an exemption from liability
for officers and directors of resident domestic corporations who do not approve
proposed business combinations or charter amendments and by-laws removing their
corporations from the Business Combination Act's coverage as long as the
officers and directors act in "good faith belief" that the proposed business
combination would adversely affect their corporation's employees, customers,
suppliers, or the communities in which their corporation operates and such
factors are permitted to be considered by the board of directors under the
charter.
Control Share Acquisition Act. The Tennessee Control Share Acquisition Act
("TCSAA") strips a purchaser's shares of voting rights any time an acquisition
of shares in a covered Tennessee corporation brings the purchaser's voting power
to one-fifth, one-third or a majority of all voting power. The purchaser's
voting rights can be reestablished only by a majority vote of the other
shareholders. The purchaser may demand a special meeting of shareholders to
conduct such a vote. The purchaser can demand such a meeting before acquiring a
control share only if it holds at least 10% of outstanding shares and announces
a good faith intention to make the control share acquisition. A target
corporation may or may not redeem the purchaser's shares if the shares are not
granted voting rights. The TCSAA applies only to a corporation that has adopted
a provision in its charter or by-laws expressly declaring that the TCSAA will
apply. The Company has not adopted any provision in its Charter or By-laws
electing protection under the TCSAA.
Investor Protection Act. Tennessee's Investor Protection Act ("TIPA")
applies to tender offers directed at corporations (called "offeree companies")
that have "substantial assets" in Tennessee and that are either incorporated in
or have a principal office in Tennessee. The TIPA requires an offeror making a
tender offer for an offeree company to file with the Commissioner of Commerce
and Insurance (the "Commissioner") a registration statement. When the offeror
intends to gain control of the offeree company, the registration statement must
indicate any plans the offeror has for the offeree. The Commissioner may require
additional information material to the takeover offer and may call for hearings.
The TIPA does not apply to an offer that the offeree company's board of
directors recommends to shareholders.
In addition to requiring the offeror to file a registration statement with
the Commissioner, the TIPA requires the offeror and the offeree company to
deliver to the Commissioner all solicitation materials used in connection with
the tender offer. The TIPA prohibits "fraudulent, deceptive, or manipulative
acts or practices" by either side, and gives the Commissioner standing to apply
for equitable relief to the Chancery Court of Davidson County, Tennessee, or to
any other chancery court having jurisdiction whenever it appears to the
Commissioner that the offeror, the offeree company, or any of its respective
affiliates has engaged in or is about to engage in a violation of the TIPA. Upon
proper showing, the Chancery Court may grant injunctive relief. The TIPA further
provides civil and criminal penalties for violations.
Greenmail Act. The Tennessee Greenmail Act ("TGA") applies to any
corporation (including the Company) chartered under the laws of Tennessee which
has a class of voting stock registered or traded on a national securities
exchange or registered with the Commission pursuant to Section 12(g) of the
Exchange Act. The TGA provides that it is unlawful for any corporation or
subsidiary to purchase, either directly or indirectly, any of its shares at a
price above the market value, as defined in the TGA, from any person who holds
more than 3% of the class of the securities purchased if such person has held
such shares for less than two years, unless either the purchase is first
approved by the affirmative vote of a majority of the outstanding shares of each
class of voting stock issued or the corporation makes an offer of at least equal
value per share to all holders of shares of such class.
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<PAGE> 21
ANTI-TAKEOVER PROVISIONS IN THE COMPANY'S CHARTER AND BY-LAWS
Certain provisions of the Company's Charter and By-laws may discourage or
render more difficult an unsolicited takeover of the Company.
Removal of Directors. The Company's Charter and By-laws provide that any
or all directors may be removed only for cause (as defined in the TBCA) by a
vote of a majority of the stockholders entitled to vote thereon.
Staggered Board of Directors. The Company's Charter requires that its
Board of Directors be staggered, consisting of three classes of directors which
are as nearly equal in number as possible. The initial terms of the Class I,
Class II and Class III directors expire at the Company's annual meeting of
shareholders in the years 1998, 1999 and 2000, respectively. Thereafter,
directors of each class are elected for terms of three years. The Company's
Charter also provides that the affirmative vote of the holders of at least 80%
of the voting power of the then outstanding capital stock is required to amend
or repeal, or adopt any provision inconsistent with, the provision of the
Company's Charter requiring a staggered Board of Directors.
Required Shareholder Vote for Authorization of Certain Actions. The TBCA
provides that the approval of the Company's Board of Directors and of a majority
of the outstanding shares of the Company's Common Stock entitled to vote thereon
would generally be required to approve a merger or to sell, lease, exchange or
otherwise dispose of substantially all of the Company's assets. However, the
Company's Charter provides that, except under specified circumstances, the
affirmative vote of the holders of at least 80% of the voting power of the then
outstanding shares of capital stock entitled to vote in the election of
directors is required for the approval of (i) certain mergers or consolidations,
(ii) certain sales, leases, exchanges, mortgages, pledges or other dispositions
of the assets of the Company, (iii) the adoption of a plan for the liquidation
of the Company, (iv) certain reclassifications of the Company's securities and
certain recapitalizations and (v) any agreement providing for the foregoing.
No Shareholder Action by Written Consent. The Company's Charter and
By-laws require that any shareholder action must be effected at a duly called
annual or special meeting and may not be effected by written consent.
STANDBY ARRANGEMENTS
Under the terms and subject to the conditions of a Standby Agreement (the
"Standby Agreement"), the Purchaser has agreed, subject to certain conditions,
to purchase the Purchased Shares from the Company. The purchase price for the
Purchased Shares will be equal to a price per share of $44.92. The Purchaser
also may acquire Debentures in the open market or otherwise on or prior to the
Expiration Date in such amounts and at such prices as the Purchaser may deem
advisable. The Purchaser has agreed to surrender for conversion all Debentures
so purchased and any additional Debentures beneficially owned by them.
Prior to, on or after the Redemption Date, the Purchaser may offer shares
of Common Stock pursuant to this Prospectus directly to the public, at prices
set from time to time by the Purchaser, including shares acquired through
conversion of Debentures acquired by the Purchaser. Prior to the Redemption
Date, each such price when set will not exceed the greater of the last sale or
current asked price of the Common Stock on the NYSE plus the amounts of any
concession to dealers, and an offering price on any calendar day will not be
increased more than once during such day. In effecting such transactions, the
Purchaser may realize profits or losses independent of the compensation referred
to below. The Purchaser may also make sales to dealers at prices which represent
concessions from the prices at which such shares are then being offered to the
public. The amount of such concessions will be determined from time to time by
the Purchaser. Any Common Stock so offered is offered subject to prior sale,
when, as and if received by the Purchaser, and subject to the Purchaser's right
to reject orders in whole or in part.
Pursuant to the Standby Agreement, the Company has agreed to pay the
Purchaser for the commitments undertaken by the Purchaser under the Standby
Agreement an amount equal to (i) $362,949 as a standby fee and (ii) in the event
that the Purchaser acquires Acquired Shares (as defined below) in excess of
100,999
20
<PAGE> 22
shares of Common Stock, an amount equal to $2.02 per Acquired Share for all
Acquired Shares; provided, however, that if the closing market price of the
Common Stock (as reported on the NYSE Composite Tape) at the Expiration Time is
greater than $44.92 per share, the Company is not required to pay any amounts
due under clause (ii) above with respect to any shares of Common Stock acquired
by the Purchaser upon the conversion of Debentures held by the Purchaser.
"Acquired Shares" means (i) the Purchased Shares and (ii) shares of Common Stock
acquired by the Purchaser upon the conversion of Debentures. The Company has
agreed to reimburse the Purchaser for all of the Purchaser's out-of-pocket
costs, including the reasonable fees and disbursements of the Purchaser's
counsel.
In connection with the Offering and in compliance with the applicable law,
the Purchaser may overallot (i.e., sell more shares of Common Stock than the
total amount shown on the cover page of this Prospectus) and may effect
transactions which stabilize, maintain or otherwise affect the market price of
the Common Stock at levels above those which might otherwise prevail in the open
market. Such transactions may include placing bids for the Common Stock or
effecting purchases of the Common Stock for the purpose of pegging, fixing or
maintaining the price of the Common Stock or for the purpose of reducing a short
position created in connection with the Offering. A short position may be
covered by exercise of the option described above rather than by open market
purchases. The Purchaser is not required to engage in any of these activities
and any such activities, if commenced, may be discontinued at any time.
During the period beginning on the date of this Prospectus and continuing
to and including the Redemption Date, and, if the Purchaser purchases any
Purchased Shares, further continuing and including the date ending 90 days after
the date of this Prospectus, the Company has agreed not to offer, sell, contract
to sell or otherwise dispose of, any shares of Common Stock of the Company, any
securities of the Company substantially similar to the Common Stock or any
securities convertible into or exchangeable for shares of Common Stock or any
such substantially similar security (except for any securities issued, offered,
sold or disposed of by the Company pursuant to its stock option and other
benefit plans maintained for, or employment agreements with, its officers,
directors and employees or Common Stock issued or distributed in connection with
the conversion or exercise of any security of the Company outstanding on the
date of this Prospectus) without the Purchaser's prior written consent. The
Company's directors and executive officers have entered into similar
arrangements with the Purchaser.
The Company has agreed to indemnify the Purchaser against certain
liabilities, including liabilities under the Securities Act.
The Purchaser may assist in the solicitation of conversions by holders of
Debentures but will receive no commission or other compensation therefor.
The Purchaser performs investment banking and financial advisory and other
financial services for the Company and its affiliates from time to time.
LEGAL MATTERS
The validity of the shares of Common Stock have been passed upon for the
Company by Alston & Bird LLP, Atlanta, Georgia, and for the Purchaser by Cahill
Gordon & Reindel (a partnership including a professional corporation), New York,
New York.
EXPERTS
The consolidated financial statements of the Company as of February 1, 1997
and February 3, 1996 and for each of the three years in the period ended
February 1, 1997, all incorporated by reference herein, have been audited by
Coopers & Lybrand L.L.P., independent accountants, as set forth in their report
thereon, which is incorporated by reference herein. Such consolidated financial
statements are so incorporated in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
The consolidated financial statements for the year ended January 28, 1995
as it relates to Younkers, Inc. and subsidiary, which are incorporated by
reference herein, have been audited by Deloitte & Touche LLP,
21
<PAGE> 23
independent auditors, as stated in their report, which is incorporated by
reference herein, and are so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
The consolidated financial statements of Parisian, Inc. as of February 3,
1996 and January 28, 1995, and for each of the three years in the period ended
February 3, 1996, all incorporated by reference herein, have been audited by
Coopers & Lybrand L.L.P., independent accountants, as set forth in their report
thereon, which is incorporated by reference herein. Such consolidated financial
statements are so incorporated in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
22
<PAGE> 24
======================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY THE PURCHASER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THOSE TO WHICH IT RELATES
IN ANY STATE TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH
STATE. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Information
by Reference........................ 2
Cautionary Notice Regarding Forward-
Looking Statements.................. 3
Summary............................... 4
Risk Factors.......................... 9
Use of Proceeds....................... 11
Price Range of Common Stock........... 11
Dividend Policy....................... 11
Capitalization........................ 12
Redemption of Debentures and
Alternatives to Redemption.......... 13
Paying and Conversion Agent and the
Information Agent................... 15
Certain Federal Income Tax
Considerations...................... 16
Description of Capital Stock.......... 17
Standby Arrangements.................. 20
Legal Matters......................... 21
Experts............................... 21
</TABLE>
======================================================
======================================================
2,019,975 SHARES
PROFFITT'S, INC.
COMMON STOCK
------------
PROSPECTUS
SEPTEMBER 5, 1997
------------
SMITH BARNEY INC.
======================================================
<PAGE> 25
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
All amounts are estimates except the SEC registration fee.
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 32,576.69
Accounting fees and expenses................................ 15,000
Legal fees and expenses..................................... 120,000
Printing and engraving expenses............................. 25,000
Blue Sky fees and expenses.................................. 10,000
Trustee, Paying and Conversion Agent, Transfer Agent and
Registrar fees and expenses............................... 20,000
Miscellaneous............................................... 17,423.31
-----------
Total............................................. $ 240,000
===========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The By-Laws of the Company provide that the Company 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 the Company or serves or
served as an officer or director of any other enterprise at the request of the
Company.
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.
The Company's By-Laws further provide that the Company may purchase and
maintain insurance on behalf of any person who is or was or has agreed to become
a director or officer of the Company, or is or was serving at the request of the
Company 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 the
Company would have the power to indemnify such person against such liability
under the By-Laws, provided that such insurance is available on acceptable terms
as determined by a majority of the Company's Board of Directors.
II-1
<PAGE> 26
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following exhibits are filed as a part of this Registration
Statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <C> <S>
1.1 -- Form of Standby Agreement
4.1* -- Charter of the Company, as amended(1),(2),(3),(4),(5)
4.2* -- Amended and Restated Bylaws of the Company(4)
4.3* -- Rights Agreement dated as of March 28, 1995 between
Proffitt's, Inc. and Union Planters National Bank, as Rights
Agent(6)
5.1 -- Opinion and Consent of Alston & Bird LLP
11.1* -- Statement Regarding Computation of Historical Earnings Per
Common Share(7)
23.1 -- Consent of Alston & Bird LLP (included in Exhibit 5.1)
23.2 -- Consent of Coopers & Lybrand LLP
23.3 -- Consent of Coopers & Lybrand LLP
23.4 -- Consent of Deloitte & Touche LLP
24.1 -- Powers of Attorney (contained on page II-4)
99.1 -- Form of Letter of Transmittal
99.2 -- Form of Notice of Redemption
</TABLE>
- ---------------
* A referenced exhibit is incorporated as follows:
(1) Incorporated by reference from the Exhibits to the Form S-1 Registration
Statement No. 33-13548 of Proffitt's, Inc. dated June 3, 1987.
(2) Incorporated by reference from the Exhibits to the Form 8-K of Proffitt's,
Inc. dated April 14, 1994.
(3) Incorporated by reference from the Exhibits to the Form 8-K of Proffitt's,
Inc. dated April 3, 1995.
(4) Incorporated by reference from the Exhibits to the Form 10-Q of Proffitt's,
Inc. for the quarter ended July 29, 1995.
(5) Incorporated by reference from the Exhibits to the Form 10-K of Proffitt's,
Inc. for the fiscal year ended February 3, 1996.
(6) Incorporated by reference from Exhibits to the Form 8-K of Proffitt's, Inc.
dated March 28, 1995.
(7) Incorporated by reference from Exhibits to the Form S-1 Registration
Statement No. 333-29919 of Proffitt's, Inc., G.R. Herberger's, Inc.,
McRae's, Inc., McRae's Stores Partnership, McRae's of Alabama, Inc. and
Parisian, Inc. dated July 8, 1997.
ITEM 17. UNDERTAKINGS.
The registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;
(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 and 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 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
II-2
<PAGE> 27
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and 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 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
2. 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. 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. That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(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)
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 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 as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
payment by the registrant of expenses incurred or paid by a director,
officer, or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person of the registrant 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 is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
II-3
<PAGE> 28
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 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Birmingham, State of Alabama, on September 4, 1997.
PROFFITT'S, INC.
By: /s/ DOUGLAS E. COLTHARP
------------------------------------
Douglas E. Coltharp
Executive Vice President and
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Brian J. Martin and Douglas E. Coltharp, and each
of them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, including any
Registration Statement filed pursuant to Rule 462(b) of the Securities Act of
1933, as amended, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on September 4, 1997.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
/s/ R. BRAD MARTIN Chairman of the Board and Chief Executive
- ----------------------------------------------------- Officer
R. Brad Martin
/s/ RONALD DE WAAL Vice Chairman of the Board
- -----------------------------------------------------
Ronald de Waal
/s/ DOUGLAS E. COLTHARP Executive Vice President and Chief
- ----------------------------------------------------- Financial Officer (Principal Financial
Douglas E. Coltharp Officer)
/s/ DONALD E. WRIGHT Senior Vice President of Finance and
- ----------------------------------------------------- Accounting (Principal Accounting
Donald E. Wright Officer)
/s/ BERNARD E. BERNSTEIN Director
- -----------------------------------------------------
Bernard E. Bernstein
Director
- -----------------------------------------------------
Edmond D. Cicala
</TABLE>
II-4
<PAGE> 29
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
/s/ GERARD K. DONNELLY Director
- -----------------------------------------------------
Gerard K. Donnelly
/s/ DONALD F. DUNN Director
- -----------------------------------------------------
Donald F. Dunn
/s/ MICHAEL S. GROSS Director
- -----------------------------------------------------
Michael S. Gross
/s/ DONALD E. HESS Director
- -----------------------------------------------------
Donald E. Hess
/s/ G. DAVID HURD Director
- -----------------------------------------------------
G. David Hurd
Director
- -----------------------------------------------------
C. Warren Neel
/s/ MARGUERITE W. SALLEE Director
- -----------------------------------------------------
Marguerite W. Sallee
Director
- -----------------------------------------------------
Gerald Tsai, Jr.
</TABLE>
II-5
<PAGE> 1
EXHIBIT 1.1
PROFFITT'S, INC.
4 3/4% Convertible Subordinated
Debentures due 2003
STANDBY AGREEMENT
September , 1997
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Proffitt's, Inc., a Tennessee corporation (the "Company"),
proposes to redeem on October 6, 1997 (the "Redemption Date") all of its
outstanding 4 3/4% Convertible Subordinated Debentures due 2003 (the
"Debentures") at a total redemption price of $1,052.1184 per $1,000 principal
amount of Debentures (which amount includes accrued interest to the date of
redemption and the required redemption premium). Each $1,000 principal amount
of Debentures or integral multiple thereof is convertible into Common Stock,
$.10 par value (the "Common Stock"), of the Company at a conversion price of
$42.70 per share (equivalent to 23.42 shares of Common Stock per $1,000
principal amount of Debentures). The right to convert the Debentures into
shares of Common Stock will terminate at the close of business (5:00 p.m., New
York City time) on September 29, 1997 (the "Conversion Expiration Time").
The Company desires to make arrangements with Smith Barney
Inc., as purchaser (the "Purchaser"), pursuant to which the Purchaser will
purchase authorized but unissued shares of Common Stock which would have been
issuable upon conversion of those Debentures which are not duly surrendered for
conversion prior to the Conversion Expiration Time by persons other than the
Purchaser.
The Company wishes to confirm as follows its agreement with
the Purchaser in respect of such arrangement.
<PAGE> 2
-2-
1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement on Form S-3 under the Act
(the "registration statement"), including a prospectus relating to the maximum
number of shares of Common Stock (the "Shares") issuable by the Company upon
conversion of the Debentures and in accordance with this Agreement. The Company
has also filed such amendments thereto, if any, as may have been required to
the date hereof and will file, if required, on or prior to the effective date
of the registration statement one or more additional amendments thereto. As
used in this Agreement, the term "Registration Statement" means such
registration statement in the form in which it becomes effective and includes
all financial statements, reports and documents incorporated by reference
therein and not required to be filed therewith by Form S-3 under the Act (the
"Incorporated Documents"), filed in accordance with the Securities Exchange Act
of 1934, as amended, and the rules, regulations and forms of the Commission
thereunder (collectively, the "Exchange Act") on or before the date on which
the Registration Statement becomes effective; provided, however, that if the
Company files any documents pursuant to Section 13 or 14 of the Exchange Act
after the time the Registration Statement becomes effective and prior to the
termination of the offering of the Common Stock by the Purchasers, which
documents are deemed to be incorporated by reference into the Registration
Statement or the Prospectus, the term "Incorporated Documents" shall include
the documents so filed from and after the time said documents are filed with
the Commission. The term "Prospectus" means the prospectus, including any
Incorporated Documents, on file with the Commission at the time the
Registration Statement becomes effective; provided, however, that if the
prospectus filed by the Company pursuant to Rule 424(b) of the rules and
regulations of the Commission under the Exchange Act differs from such
prospectus, the term "Prospectus" shall refer to the Rule 424(b) Prospectus
from and after the time it is mailed or otherwise delivered to the Commission
for filing.
2. Agreements to Sell and Purchase. (a) The Company hereby
agrees, subject to all the terms and conditions set forth herein, to issue and
sell to the Purchaser and, upon the basis of the representations, warranties
and agreements of the
<PAGE> 3
-3-
Company herein contained and subject to all the terms and conditions set forth
herein, the Purchaser agrees to purchase from the Company the number of shares
of Common Stock that would have been issued upon conversion of all Debentures
that are not duly surrendered for conversion on or prior to the Conversion
Expiration Time by persons other than the Purchaser at a purchase price equal
to $44.92 per share (the "Purchase Price"); provided, however, that the
aggregate number of such shares of Common Stock issued and sold pursuant to
this Agreement shall not exceed 2,019,975. Shares of Common Stock acquired by
the Purchaser pursuant to this Section 2(a) are referred to herein as the
"Purchased Shares."
Certificates for the Purchased Shares to be purchased
hereunder shall be registered in such names and in such denominations as the
Purchaser shall request prior to 9:30 A.M., New York City time, on the second
business day preceding the Closing Date (as defined). Such certificates shall
be made available to the Purchaser in New York City for inspection and
packaging not later than 9:30 A.M., New York City time, on the business day
next preceding the Closing Date. Delivery to the Purchaser of any Purchased
Shares purchased pursuant to this Section 2(a) shall be made at the offices of
Smith Barney Inc., 388 Greenwich Street, New York, New York 10013, on October
6, 1997 (the "Closing Date"). The certificates evidencing the Purchased Shares
to be purchased hereunder shall be delivered to the Purchaser on the Closing
Date against payment of the purchase price therefor in immediately available
funds.
(b) Until the Conversion Expiration Time, the Purchaser may
(but shall not be obligated to) solicit or purchase Debentures in the open
market or otherwise in such amounts and at such prices as Purchaser may deem
advisable. The Purchaser agrees to surrender for conversion on the Conversion
Expiration Time any Debentures beneficially owned by it on the Conversion
Expiration Time. Shares of Common Stock issued to the Purchaser upon conversion
of such Debentures may be sold by the Purchaser at any time or from time to
time pursuant to an effective registration statement under the Act (including
the Registration Statement) or an applicable exemption under the Act. Shares of
Common Stock acquired upon conversion of the Debentures referred to in this
Section 2(b) are referred to as "Additional Shares." Purchased Shares and
Additional Shares are referred to in this Agreement as "Acquired Shares."
<PAGE> 4
-4-
(c) As compensation to the Purchaser for its commitment
hereunder, the Company will pay to the Purchaser: (i) on the date hereof,
$362,949 as a standby fee, by wire transfer of immediately available funds, and
(ii) on the Closing Date, in the event the Purchaser acquires Acquired Shares
in excess of 100,999 shares of Common Stock, an amount equal to $2.02 per
Acquired Share for all Acquired Shares, by wire transfer of immediately
available funds; provided, however, that if the closing market price of the
Common Stock (as reported on the New York Stock Exchange Composite Tape) at the
Conversion Expiration Time is greater than the Purchase Price, the Company
shall not be required to pay any amounts due under this clause (ii) with
respect to any Additional Shares. At the option of the Purchaser, in lieu of
being paid by the Company the amount referred to in this Section 2(c)(ii), the
Purchaser may deduct such amount from the Purchase Price payable pursuant to
Section 2(a).
(d) The Purchaser agrees to inform the Company when all
Acquired Shares have been sold or if any offering of Acquired Shares is
otherwise terminated.
(e) Upon advice from the Company pursuant to Section
3(b)(iii) of the happening of any event which requires the amendment of or the
filing of any supplement to the Registration Statement or the Prospectus, the
Purchaser will suspend any offering of Acquired Shares until the Company has so
amended or supplemented the Registration Statement or Prospectus.
3. Agreements of the Company. The Company agrees with the
Purchaser as follows:
(a) The Company will use its best efforts to cause the
Registration Statement to become effective by 5:30 p.m. on the
date hereof and will advise the Purchasers promptly and, if
requested by the Purchaser, will confirm such advice in writing,
when the Company receives notice (written or oral) that the
Registration Statement has become effective.
(b) The Company will advise the Purchaser promptly and, if
requested by the Purchaser, will confirm such advice in writing:
(i) of any request by the Commission for amendment of or a
supplement to the Registration Statement or the Prospectus or
for additional information; (ii) of
<PAGE> 5
-5-
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the suspension
of qualification of the Shares for offering or sale in any
jurisdiction or the initiation of any proceeding for such
purpose; and (iii) within the period of time referred to in the
first sentence of paragraph (e) below, of any change in the
Company's condition (financial or other), business, prospects,
properties, net worth or results of operations, or of the
happening of any event, which makes any statement of a material
fact made in the Registration Statement or the Prospectus (as
then amended or supplemented) untrue in any material respect or
which requires the making of any additions to or changes in the
Registration Statement or the Prospectus (as then amended or
supplemented) in order to state a material fact required by the
Act or the regulations thereunder to be stated therein or
necessary in order to make the statements therein (with respect
to the Prospectus, in light of the circumstances under which
they were made) not misleading, or of the necessity to amend or
supplement the Prospectus (as then amended or supplemented) to
comply with the Act or any other law. If at any time the
Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, the Company will
make every reasonable effort to obtain the withdrawal of such
order at the earliest possible time.
(c) The Company will furnish to the Purchaser, without
charge (i) a signed copy of the registration statement as
originally filed with the Commission and of each amendment
thereto, including financial statements and all exhibits to the
registration statement, (ii) such number of conformed copies of
the registration statement as originally filed and of each
amendment thereto, but without exhibits, as the Purchaser may
request, (iii) such number of copies of the Incorporated
Documents, without exhibits, as the Purchaser may request, and
(iv) two copies of the exhibits to the Incorporated Documents.
(d) The Company will not file any amendment to the
Registration Statement or make any amendment or supplement to
the Prospectus or, prior to the end of the period of time
referred to in the first sentence in subsection (e) below, file
any document which, upon filing becomes an Incorporated
Document, of which the Purchaser shall not pre-
<PAGE> 6
-6-
viously have been advised or to which, after the Purchaser shall
have received a copy of the document proposed to be filed, the
Purchaser shall reasonably object.
(e) As soon after the execution and delivery of this
Agreement as possible and thereafter from time to time for such
period as in the opinion of counsel for the Purchaser a
prospectus is required by the Act to be delivered in connection
with sales by the Purchaser or any dealer, the Company will
expeditiously deliver to the Purchaser and each dealer, without
charge, as many copies of the Prospectus (and of any amendment
or supplement thereto) as the Purchaser may request. The Company
consents to the use of the Prospectus (and of any amendment or
supplement thereto) in accordance with the provisions of the Act
and with the securities or Blue Sky laws of the jurisdictions in
which the Shares are offered by the Purchaser and by all dealers
to whom Shares may be sold, both in connection with the offering
and sale of the Shares and for such period of time thereafter as
the Prospectus is required by the Act to be delivered in
connection with sales by the Purchaser or any dealer. If during
such period of time any event shall occur that in the judgment
of the Company or in the reasonable opinion of counsel for the
Purchaser is required to be set forth in the Prospectus (as then
amended or supplemented) or should be set forth therein in order
to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if
it is necessary to supplement or amend the Prospectus (or to
file under the Exchange Act any document which, upon filing,
becomes an Incorporated Document) in order to comply with the
Act or any other law, the Company will forthwith prepare and,
subject to the provisions of paragraph (d) above, file with the
Commission an appropriate supplement or amendment thereto (or to
such document), and will expeditiously furnish to the Purchaser
and dealers a reasonable number of copies thereof. In the event
that the Company and the Purchaser agree that the Prospectus
should be amended or supplemented, the Company, if requested by
the Purchaser, will promptly issue a press release announcing or
disclosing the matters to be covered by the proposed amendment
or supplement.
(f) The Company will cooperate with the Purchaser and with
counsel for the Purchaser in connection with the
<PAGE> 7
-7-
registration or qualification of the Shares for offering and
sale by the Purchaser and by dealers under the securities or
Blue Sky laws of such jurisdictions as the Purchaser may
designate and will file such consents to service of process or
other documents necessary or appropriate in order to effect such
registration or qualification; provided, however, that in no
event shall the Company be obligated to (i) qualify as a foreign
corporation or as a broker or dealer in securities in any
jurisdiction where it would not otherwise be required to so
qualify but for this Section 3(f), (ii) file any general consent
to service of process in any jurisdiction where it is not at the
date hereof then so subject or (iii) subject itself to taxation
in any such jurisdiction if it is not so subject.
(g) The Company will make generally available to its
security holders a consolidated earnings statement, which need
not be audited, covering a twelve-month period commencing after
the effective date of the Registration Statement and ending not
later than 15 months thereafter, as soon as practicable after
the end of such period, which consolidated earnings statement
shall satisfy the provisions of Section 11(a) of the Act.
(h) During the period of five years hereafter, the Company
will furnish to the Purchaser as soon as available, a copy of
each report of the Company mailed to stockholders or filed with
the Commission.
(i) The Company will apply the net proceeds from the sale
of the Shares substantially in accordance with the description
set forth in the Prospectus.
(j) Not later than the business day immediately following
the effective date of the Registration Statement, the Company
will mail or cause to be mailed to registered holders of
Debentures or their agents a Prospectus and a notice of
redemption complying with the requirements of the Indenture
dated as of October 26, 1993 (the "Indenture") between the
Company and Union Planters National Bank, as Trustee, as in
effect on the date hereof (the "Notice of Redemption") with
respect to redemption of the Debentures. In addition, the
Company will cause to be published in The Wall Street Journal on
not later than the second business day immediately following the
effective
<PAGE> 8
-8-
date of the Registration Statement an advertisement
relating to the redemption of the Debentures.
(k) The Company will advise the Purchaser daily or direct
Union Planters National Bank, as conversion and paying agent,
respectively, for the Debentures to advise the Purchaser daily
of the principal amount of Debentures surrendered for conversion
into Common Stock and surrendered for redemption on the
preceding day.
(l) Prior to the Conversion Expiration Time, the Company
will take no action the effect of which would, in accordance
with Section 1304 of the Indenture, be to require an adjustment
in the conversion price of the Debentures.
(m) The Company will pay all costs and expenses incident to
the performance of its obligations hereunder, including (i) the
costs of preparation, printing or duplication, as the case may
be, and filing of the Registration Statement (including the
exhibits thereto), the Prospectus, and any amendments or
supplements to the Registration Statement or the Prospectus, and
any other documents relating to the call for redemption of the
Debentures, and expenses in connection with the duplication of
this redemption of the Debentures, and expenses in connection
with the duplication of this Agreement, (ii) the costs relating
to the issuance and delivery of the Common Stock (including
transfer taxes, if any), (iii) the fees and expenses of the
Company's accountants and counsel, (iv) the costs of furnishing
to the Purchaser and to each dealer, if any (including postage,
air freight charges and charges for counting and packing) such
copies of the Registration Statement, the Prospectus, and all
amendments or supplements to the Registration Statement and the
Prospectus, and any other documents relating to the call for
redemption of the Debentures, as may be requested for use in
connection with the offering and sale of the Purchased Shares by
the Purchaser or by dealers to whom such shares may be sold, (v)
the Commission's registration fee and the costs of filing with
the National Association of Securities Dealers, Inc., if
required, (vi) the fees and expenses of the Trustee and any
transfer, exchange, redemption or conversion agents for the
Common Stock and Debentures, (vii) the fees for listing of the
Common Stock on
<PAGE> 9
-9-
the New York Stock Exchange and (viii) the expenses in
connection with the qualification of the Purchased Shares under
state securities laws, including filing fees, the reasonable
fees and disbursements of counsel for the Purchaser in
connection therewith and in connection with the preparation of
the Blue Sky Survey, if any, and the costs of printing and
delivery to the Purchaser of copies of the Blue Sky Survey, if
any.
(n) The Company will also reimburse the Purchaser for all
of the Purchaser's out-of-pocket expenses reasonably incurred in
connection herewith, including reasonable fees and expenses of
counsel to the Purchaser.
(o) Except as otherwise provided in this Agreement, the
Company will not sell, contract to sell or otherwise dispose of
any Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, or grant any
options or warrants to purchase Common Stock (except for any
securities issued, offered, sold or disposed of by the Company
pursuant to its stock option and other benefit plans maintained
for, or employment agreements with, its officers, directors and
employees or Common Stock issued or distributed in connection
with the conversion or exercise of any security of the Company
outstanding on the date of the Prospectus), for a period of 90
days after the date of the Prospectus, without the prior written
consent of the Purchaser.
(p) The Company has furnished or will furnish to the
Purchaser "lock-up" letters, in form and substance satisfactory
to the Purchaser, signed by each of its current executive
officers and directors prohibiting them from offering, selling,
contracting to sell or otherwise disposing of any Common Stock
for a period of 90 days after the date of the Prospectus.
(q) Except as stated in this Agreement and in the
Prospectus, the Company has not taken, nor will it take,
directly or indirectly, any action designed to or that might
reasonably be expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the
sale or resale of the Shares.
<PAGE> 10
-10-
(r) The Company will have the Shares listed, subject to
notice of issuance, on the New York Stock Exchange on or before
the Closing Date.
4. Representations and Warranties of the Company. The
Company represents and warrants to the Purchaser that:
(a) Each Prospectus included as part of the registration
statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 under the Act,
complied when so filed in all material respects with the
provisions of the Act. The Commission has not issued any order
preventing or suspending the use of any Prospectus.
(b) The Company and the transactions contemplated by this
Agreement meet the requirements for using Form S-3 under the
Act. The registration statement in the form in which it became
or becomes effective and also in such form as it may be when any
post-effective amendment thereto shall become effective and the
prospectus and any supplement or amendment thereto when filed
with the Commission under Rule 424(b) under the Act, complied or
will comply in all material respects with the provisions of the
Act and will not at any such times contain an untrue statement
of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein
(with respect to the Prospectus, in light of the circumstances
under which they were made) not misleading, except that this
representation and warranty does not apply to statements in or
omissions from the registration statement or the prospectus made
in reliance upon and in conformity with information relating to
the Purchaser furnished to the Company in writing by or on
behalf of the Purchaser through the Purchaser expressly for use
therein.
(c) The Incorporated Documents heretofore filed, when they
were filed (or, if any amendment with respect to any such
document was filed, when such amendment was filed), conformed in
all material respects with the requirements of the Exchange Act,
any further Incorporated Documents so filed will, when they are
filed, conform in all material respects with the requirements of
the Exchange Act; no such document when it was filed (or, if an
<PAGE> 11
-11-
amendment with respect to any such document was filed, when such
amendment was filed), contained an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading; and no such further document, when it is
filed, will contain an untrue statement of a material fact or
will omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(d) All the outstanding shares of Common Stock of the
Company have been duly authorized and validly issued, are fully
paid and nonassessable and are free of any preemptive or similar
rights; the Purchased Shares have been duly authorized and, when
issued and delivered to the Purchaser against payment therefor
in accordance with the terms hereof, will be validly issued,
fully paid and nonassessable and free of any preemptive or
similar rights; the Additional Shares to be issued by the
Company have been duly authorized and when issued and delivered
to the Purchaser upon conversion of any Debentures held by it in
accordance with the terms thereof and hereof, will be validly
issued, fully paid and nonassessable and free of any preemptive
or similar rights; and the capital stock of the Company conforms
to the description thereof in the registration statement and the
Prospectus.
(e) The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of
Tennessee with full corporate power and authority to own, lease
and operate its properties and to conduct its business as
described in the Registration Statement and the Prospectus, and
is duly registered and qualified to conduct its business and is
in good standing in each jurisdiction or place where the nature
of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to
register or qualify does not have a Material Adverse Effect (as
defined).
(f) All the Company's subsidiaries (collectively, the
"Subsidiaries") are listed in an exhibit to the Company's Annual
Report on Form 10-K which is incorporated by
<PAGE> 12
-12-
reference into the Registration Statement. Each Subsidiary is a
corporation or partnership duly organized, validly existing and,
if a corporation, in good standing in the jurisdiction of its
incorporation with full power (corporate or otherwise) and
authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement
and the Prospectus, and is duly registered and qualified to
conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the
conduct of its business requires such registration or
qualification, except where the failure so to register or
qualify does not have a Material Adverse Effect (as defined).
(g) There are no legal or governmental proceedings pending
or, to the knowledge of the Company, threatened, against the
Company or any of the Subsidiaries, or to which the Company or
any of the Subsidiaries, or to which any of their respective
properties, is subject, that are required to be described in the
Registration Statement or the Prospectus but are not described
as required, and there are no agreements, contracts, indentures,
leases or other instruments that are required to be described in
the Registration Statement or the Prospectus or to be filed as
an exhibit to the Registration Statement or any Incorporated
Document that are not described or filed as required by the Act
or the Exchange Act.
(h) Neither of the Company nor any of the Subsidiaries is
(A) in violation of its respective articles, certificate or
charter of incorporation, by-laws or, if such Subsidiary is a
partnership, its partnership agreement (each, an "Organizational
Document"), (B) in default (or, with notice or lapse of time or
both, would be in default) in the performance or observance of
any obligation, agreement, covenant or condition contained in
any bond, debenture, note or any other evidence of indebtedness
or in any agreement, indenture, lease or other instrument to
which the Company or any of the Subsidiaries is a party or by
which any of them or any of their respective properties is
bound, or (C) in violation of any law, statute, judgment,
decree, order, rule or regulation of any domestic or foreign
court with jurisdiction over the Company or the Subsidiaries or
any of their respective assets or properties, or other
governmental or regulatory authority, agency or
<PAGE> 13
-13-
other body, other than, in the case of clause (B) or (C), such
defaults or violations which, individually or in the aggregate,
could not reasonably be expected to have or result in a Material
Adverse Effect. As used herein, "Material Adverse Effect" shall
mean a material adverse effect on the business, condition
(financial or otherwise), results of operations, business
affairs or business prospects of the Company and the
Subsidiaries taken as a whole.
(i) None of the call for the redemption of the Debentures,
the redemption of the Debentures (so long as paid for with the
proceeds of the Purchased Shares), the issuance and sale of the
Shares, the execution, delivery or performance of this Agreement
by the Company or the consummation by the Company of the
transactions contemplated hereby (i) requires any consent,
approval, authorization or other order of or registration or
filing with, any court, regulatory body, administrative agency
or other governmental body, agency or official (except such as
may be required for the registration of the Shares under the Act
and the Exchange Act and compliance with the securities or Blue
Sky laws of various jurisdictions, all of which have been or
will be effected in accordance with this Agreement) or conflicts
or will conflict with or constitutes or will constitute a breach
of, or a default under, any Organizational Documents, of the
Company or any of the Subsidiaries or (ii) conflicts or will
conflict with or constitutes or will constitute a breach of, or
a default under, any agreement, indenture, lease or other
instrument to which the Company or any of the Subsidiaries is a
party or by which any of them or any of their respective
properties may be bound and which, in the case of this clause
(ii), is material to the Company and the Subsidiaries, taken as
a whole, or violates or will violate any law, statute, rule or
regulation, or any judgment, decree or order, in any such case,
of any domestic or foreign court or governmental or regulatory
agency or other body having jurisdiction over the Company or any
of the Subsidiaries or any of their respective properties or
assets.
(j) The accountants, Coopers & Lybrand L.L.P. and Deloitte
& Touche, LLP, who have certified or shall certify the financial
statements included or incorporated by
<PAGE> 14
-14-
reference in the Registration Statement and the Prospectus (or
any amendment or supplement thereto) are independent public
accountants as required by Regulation S-X under the Act.
(k) The financial statements, together with related
schedules and notes, included or incorporated by reference in
the Registration Statement and the Prospectus (and any amendment
or supplement thereto), present fairly in all material respects
the consolidated financial position, results of operations and
changes in financial position of the Company and the
Subsidiaries on the basis stated in the Registration Statement
at the respective dates or for the respective periods to which
they apply; such statements and related schedules and notes have
been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved,
except as disclosed therein; and the other financial and
statistical information and data included or incorporated by
reference in the Registration Statement and the Prospectus (and
any amendment or supplement thereto) are accurately presented in
all material respects and prepared on a basis materially
consistent with such financial statements and the books and
records of the Company and the Subsidiaries.
(l) This Agreement has been duly authorized, executed and
delivered by the Company.
(m) Except as set forth in or contemplated by the
Registration Statement and the Prospectus (or any amendment or
supplement thereto), subsequent to the respective dates as of
which such information is given in the Registration Statement
and the Prospectus (or any amendment or supplement thereto),
there has been no (A) material adverse change in the business,
condition (financial or otherwise), results of operations,
business affairs or business prospects of the Company and the
Subsidiaries taken as a whole, (B) transaction entered into by
the Company or any of the Subsidiaries, other than in the
ordinary course of business, that is material to the Company and
the Subsidiaries, taken as a whole, or (C) material change in
the capital stock or material increase in the short-term debt or
long-term debt of the Company (other than in the ordinary course
of business).
<PAGE> 15
-15-
(n) Each of the Company and the Subsidiaries has (i) good
and marketable title to all real property described in the
Prospectus as being owned by it, (ii) good title to all personal
property described in the Prospectus as being owned by it and
(iii) good title to the leasehold estate in the real and
personal property described in the Prospectus as being leased by
it, in each case, free and clear of all liens, claims, security
interests or other encumbrances except as provided in the
related lease or such as are described in the Registration
Statement and the Prospectus or in a document filed as an
exhibit to the Registration Statement, and except where the
failure to have such title or the existence of such liens,
claims, security interests or other encumbrances or the
invalidity or unenforceability of any such lease would not,
individually or in the aggregate, be reasonably expected to have
or result in a Material Adverse Effect.
(o) The Company has not distributed and, prior to the later
to occur of (i) the Closing Date and (ii) completion of the
distribution of the Shares, will not distribute any offering
material in connection with the offering and sale of the Shares
other than the Registration Statement, the Prospectus or other
materials, if any, permitted by the Act.
(p) Each of the Company and the Subsidiaries has obtained
all material consents, approvals, orders, certificates,
licenses, permits, franchises and other authorizations of and
from, and has made all material declarations and filings with,
all governmental and regulatory authorities, all self-regulatory
organizations and all courts and other tribunals necessary to
own, lease, license and use their respective properties and
assets and to conduct their respective businesses in the manner
described in the Prospectus, except where the failure to so
obtain or so declare or file would not be reasonably likely to
have or result in a Material Adverse Effect.
(q) Each of the Company and the Subsidiaries has filed all
necessary federal, state and foreign income and franchise tax
returns, and has paid all taxes shown as due thereon; and there
is no tax deficiency that has been asserted against the Company
or the Subsidiaries, in each
<PAGE> 16
-16-
case other than as would not individually or in the aggregate
have a Material Adverse Effect.
(r) No holder of any security of the Company has any right
to require registration of shares of Common Stock or any other
security of the Company because of the filing of the
registration statement or consummation of the transactions
contemplated by this Agreement, except such as have been waived
or may not be exercised. Except as described in the Prospectus,
there are no outstanding options, warrants or other rights
calling for the issuance of, and there are no commitments, plans
or arrangements to issue, any shares of Common Stock of the
Company or any security convertible into or exchangeable or
exercisable for Common Stock of the Company.
(s) Neither the Company nor any of the Subsidiaries is an
"investment company" or a company "controlled by" an "investment
company" as such terms are defined in the Investment Company Act
of 1940, as amended, and the rules and regulations thereunder.
(t) No strike, labor problem, dispute, slowdown, work
stoppage or disturbance with the employees of the Company or any
of the Subsidiaries exists or, to the knowledge of the Company,
is threatened which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.
(u) Each of the Company and the Subsidiaries owns or
possesses, or can acquire on reasonable terms, adequate
licenses, trademarks, service marks, trade names, copyrights and
know-how (including trade secrets and other proprietary or
confidential information, systems or procedures) (collectively,
"intellectual property") necessary to conduct the business now
or proposed to be operated by each of them as described in the
Prospectus, except where the failure to own, possess or have the
ability to acquire any such intellectual property could not,
individually or in the aggregate, be reasonably expected to have
a Material Adverse Effect; and none of the Company or any of the
Subsidiaries has received any notice of infringement of or
conflict with (and none of them knows of any such infringement
of or conflict with) asserted rights of others with respect to
any of such intellectual property.
<PAGE> 17
-17-
(v) The Company has insurance in such amounts and covering
such risks and liabilities as are in accordance, in all material
respects, with normal industry practice.
(w) Other than as disclosed in the Prospectus, none of the
Company or any Subsidiary has any profit sharing, deferred
compensation, stock option, stock purchase, phantom stock or
similar plans, including agreements evidencing rights to
purchase securities or to share in the profits of the Company or
any Subsidiary which is material to the Company and the
Subsidiaries, taken as a whole.
(x) The statistical and market-related data included in the
Prospectus are based on or derived from sources which the
Company believes to be reliable and accurate in all material
respects or represent the Company's good faith estimates that
are made on the basis of data derived from such sources.
(y) Except as described in the Prospectus or as would not,
individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect (A) each of the Company and the
Subsidiaries is in compliance with and not subject to any known
liability under applicable Environmental Laws (as defined
below), (B) each of the Company and the Subsidiaries has made
all filings and provided all notices required under any
applicable Environmental Law, and has, and is in compliance
with, all permits required under any applicable Environmental
Laws and each of them is in full force and effect, (C) (x) there
is no pending civil, criminal or administrative action, or
pending hearing or suit, (y) neither the Company nor any
Subsidiary has received any demand, claim, or notice of
violation and (z) to the knowledge of the Company, there is no
investigation, proceeding, notice or demand letter or request
for information threatened against the Company or any of the
Subsidiaries in the case of (x), (y) and (z), under any
Environmental Law, (D) no lien, charge, encumbrance or
restriction has been recorded under any Environmental Law with
respect to any assets, facility or property owned, operated,
leased or controlled by the Company or any Subsidiary, (E)
neither the Company nor any Subsidiary has received notice that
it has been identified as a potentially responsible party under
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980,
<PAGE> 18
-18-
as amended ("CERCLA"), or any comparable state law, (F) no property
or facility of the Company or any Subsidiary is (i) listed or, to the
knowledge of the Company, proposed for listing on the National
Priorities List under CERCLA or (ii) listed in the Comprehensive
Environmental Response, Compensation, Liability Information System
List promulgated pursuant to CERCLA, or on any comparable list
maintained by any state or local governmental authority.
For purposes of this Agreement, "Environmental Laws" means
all applicable federal, provincial, state and local laws or
regulations, codes, orders, decrees, judgments or injunctions issued,
promulgated, approved or entered thereunder, relating to pollution or
protection of public or employee health and safety or the environment,
including, without limitation, laws relating to (i) emissions,
discharges, releases or threatened releases of Hazardous Materials (as
defined below) into the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface
strata), (ii) the manufacture, processing, distribution, use,
generation, treatment, storage, disposal, transport or handling of
Hazardous Materials, and (iii) underground and above ground storage
tanks and related piping, and emissions, discharges, releases or
threatened releases therefrom. The term "Hazardous Material" means (a)
any "hazardous substance" as defined in the Comprehensive
Environmental Response, the Resource Conservation and Recovery Act, as
amended, (b) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (c) any petroleum or
petroleum product, (d) any polychlorinated biphenyl and (e) any
pollutant or contaminant or hazardous, dangerous or toxic chemical,
material, waste or substance.
(z) Except as described in the Prospectus, neither the Company
nor any of the Subsidiaries has incurred any liability for any
prohibited transaction or funding deficiency or any complete or
partial withdrawal liability with respect to any pension, profit
sharing or other plan which is subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), to which the
Company or any of the Subsidiaries makes or ever has made a
contribution and in which any employee of the Company or any such
Subsidiary is or has ever been a participant,
<PAGE> 19
-19-
which in the aggregate would reasonably be expected to have a
Material Adverse Effect. With respect to such plans, each of the
Company and the Subsidiaries is in compliance in all respects with
all applicable provisions of ERISA, except where the failure to so
comply would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
5. Indemnification and Contribution. (a) The Company agrees
to indemnify and hold harmless the Purchaser and each person, if any, who
controls the Purchaser within the meaning of Section 15 of the Act or Section
20 of the Exchange Act from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation) arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus or in
any amendment or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (with respect to the
Prospectus, in light of the circumstances under which they were made) not
misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which has been made therein or omitted
therefrom in reliance upon and in conformity with the information relating to
the Purchaser furnished in writing to the Company by or on behalf of the
Purchaser expressly for use in connection therewith. The foregoing indemnity
agreement shall be in addition to any liability which the Company may otherwise
have.
(b) If any action, suit or proceeding shall be brought
against the Purchaser or any person controlling the Purchaser in respect of
which indemnity may be sought against the Company hereunder, the Purchaser or
such controlling person shall promptly notify the Company and the Company shall
assume the defense thereof, including the employment of counsel and payment of
all fees and expenses. The Purchaser or any such controlling person shall have
the right to employ separate counsel in any such action, suit or proceeding and
to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the Purchaser or such controlling person
unless (i) the Company has agreed in writing to pay such fees and expenses,
(ii) the Company has failed to as-
<PAGE> 20
-20-
sume the defense and employ counsel, or (iii) the named parties to any such
action, suit or proceeding (including any impleaded parties) include both the
Purchaser or such controlling person and the Company and the Purchaser or such
controlling person shall have been advised by its counsel that representation
of such indemnified party and the Company by the same counsel would be
inappropriate under applicable standards of professional conduct (whether or
not such representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the Company shall not
have the right to assume the defense of such action, suit or proceeding on
behalf of the Purchaser or such controlling person). It is understood, however,
that the Company shall, in connection with any one such action, suit or
proceeding or separate but substantially similar or related actions, suits or
proceedings arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to one local counsel in each separate jurisdiction) at
any time for the Purchaser and controlling persons not having actual or
potential differing interests with the Purchaser or among themselves, which
firm shall be designated in writing by the Purchaser, and that all such fees
and expenses shall be reimbursed as they are incurred, but not more frequently
than monthly. The Company shall not be liable for any settlement, compromise or
consent to the entry of any judgment with respect to any such action, suit or
proceeding effected without its written consent, but if settled with such
written consent, or if there be a final nonappealable judgment for the
plaintiff in any such action, suit or proceeding, the Company agrees to
indemnify and hold harmless the Purchaser, to the extent provided in the
preceding paragraph, and any such controlling person from and against any loss,
claim, damage, liability or expense by reason of such settlement or judgment.
(c) The Purchaser agrees to indemnify and hold harmless the
Company, its directors, its officers who sign the Registration Statement, and
any person who controls the Company within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act, to the same extent as the foregoing
indemnity from the Company to the Purchaser, but only with respect to
information relating to the Purchaser furnished in writing by or on behalf of
the Purchaser expressly for use in the Registration Statement or the Prospectus
or any amendment or supplement thereto. If any action, suit or proceeding shall
be brought
<PAGE> 21
-21-
against the Company, any of its directors, any such officer, or any such
controlling person based on the Registration Statement or the Prospectus or any
amendment or supplement thereto, and in respect of which indemnity may be
sought against the Purchaser pursuant to this paragraph (c), the Purchaser
shall have the rights and duties given to the Company by paragraph (b) above
(except that if the Company shall have assumed the defense thereof the
Purchaser shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the Purchaser's expense), and the Company, its
directors, any such officer, and any such controlling person shall have the
rights and duties given to the Purchaser by paragraph (b) above. The foregoing
indemnity agreement shall be in addition to any liability which the Purchaser
may otherwise have.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Purchaser on the other hand from the
offering of the Shares, or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company on the one hand and the Purchaser on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Purchaser on the other shall be deemed to be in the same
proportion as the aggregate Redemption Price of all Debentures outstanding on
the date of this Agreement bears to the total compensation received by the
Purchaser pursuant to Section 2. The relative fault of the Company on the one
hand and the Purchaser on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or by the
Purchaser on the other hand and the par-
<PAGE> 22
-22-
ties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(e) The Company and the Purchaser agree that it would not be
just and equitable if contribution pursuant to this Section 5 were determined
by a pro rata allocation or by any other method of allocation that does not
take account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to in paragraph (d)
above shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 5, the Purchaser
shall not be required to contribute any amount in excess of the amount by which
the aggregate Purchase Price of the Purchased Shares pursuant to Section 2
exceeds the amount of any damages which the Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(f) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such action, suit or proceeding and does not include a
statement as to, or an admission of, fault, culpability or a failure to act by
or on behalf of any indemnified party.
(g) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 5 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred, but not
more frequently than monthly. The indemnity and contribution agreements
contained in this Section 5 and the representations
<PAGE> 23
-23-
and warranties of the Company set forth in this Agreement shall remain
operative and in full force and effect, regardless of (i) any investigation
made by or on behalf of the Purchaser or any person controlling the Purchaser,
the Company, its directors or officers, or any person controlling the Company,
(ii) acceptance of any Shares and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to the Purchaser or any person
controlling the Purchaser, or to the Company, its directors or officers, or any
person controlling the Company, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this Section
5.
6. Conditions of the Purchaser's Obligations. The obligations
of the Purchaser to purchase the Purchased Shares hereunder are subject to the
following conditions:
(a) The registration statement shall have become effective not
later than 5:30 P.M., New York City time, on the date hereof, or of
such later date and time as shall be consented to in writing by the
Purchaser.
(b) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any change, or any development involving
a prospective change, in or affecting the condition (financial or
other), business, properties, net worth, or results of operations of
the Company or the Subsidiaries not contemplated by the Prospectus,
which, in the Purchaser's reasonable opinion, would materially
adversely affect the market for the Shares, or (ii) any event or
development relating to or involving the Company or any officer or
director of the Company which makes any statement made in the
Prospectus untrue or which, in the opinion of the Company and its
counsel or the Purchaser and its counsel, requires the making of any
addition to or change in the Prospectus in order to state a material
fact required by the Act or any other law to be stated therein or
necessary in order to make the statements therein not misleading, if
amending or supplementing the Prospectus to reflect such event or
development would, in the Purchaser's reasonable opinion, materially
adversely affect the market for the Shares.
(c) On the effective date of the Registration Statement and
prior to the mailing of the notice of redemption
<PAGE> 24
-24-
for the Debentures as described in the Prospectus and the
Registration Statement (the "Notice of Redemption"), the Purchaser
shall have received opinions of each of Brian J. Martin, Executive
Vice President of Law and General Counsel of the Company (as to the
matters set forth in paragraphs (viii), (xiii)(A) and (xvi) below and
the penultimate paragraph of this Section 6(c) and Alston & Bird LLP,
counsel for the Company (as to the matters set forth in paragraphs
(i), (ii), (iii), (iv), (v), (vi), (vii), (ix), (x), (xi), (xii),
(xiii)(B), (xiv), (xv) and (xvii) below and the penultimate paragraph
of this Section 6(c). Each opinion shall be dated as of the effective
date and otherwise satisfactory to the Purchaser and counsel for the
Purchaser.
(i) The Company has been duly incorporated and is
validly existing under the laws of the State of Tennessee,
with corporate power and authority to own, lease and
operate its properties and to conduct its business as
described in the Registration Statement and the Prospectus
(and any amendment or supplement thereto) and to enter into
and perform its obligations under this agreement; the
Company is duly qualified as a foreign corporation to
transact business and is in good standing in each
jurisdiction in which it conducts its business (based on
certificates of officers of the Company) and such
qualification is required, whether by reason of the
ownership or leasing of property or the conduct of its
business, except where the failure so to qualify or to be
in good standing would not result in a Material Adverse
Effect;
(ii) The authorized and outstanding capital stock of
the Company is as set forth under the caption "Description
of Capital Stock" in the Prospectus; and the authorized
capital stock of the Company conforms in all material
respects as to legal matters to the description thereof
contained in the Prospectus under the caption "Description
of Capital Stock";
(iii) All the shares of capital stock of the Company
outstanding prior to the issuance of the Shares have been
duly authorized and validly issued, and are fully paid and
nonassessable;
<PAGE> 25
-25-
(iv) The Debentures are convertible into shares of
Common Stock as provided in the Indenture and as described
in the Prospectus and, to the knowledge of such counsel,
such shares of Common Stock have been duly reserved for
issuance upon conversion of the Debentures. The Acquired
Shares have been duly authorized and, when issued and
delivered to the Purchaser against payment therefor in
accordance with the terms hereof, will be validly issued,
fully paid and nonassessable and free of any preemptive, or
to the knowledge of such counsel, similar rights that
entitle or will entitle any person to acquire any Acquired
Shares upon the issuance thereof by the Company;
(v) The form of certificates for the Shares conforms
in all material respects to the requirements of the
Tennessee Business Corporation Act;
(vi) The Registration Statement and all post-effective
amendments, if any, have become effective under the Act
and, to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose are
pending before or contemplated by the Commission; and any
required filing of the Prospectus pursuant to Rule 424(b)
has been made in accordance with Rule 424(b);
(vii) The Company has the requisite corporate power
and authority to enter into this Agreement and to issue,
sell and deliver the Acquired Shares to the Purchaser as
provided herein, and this Agreement has been duly
authorized, executed and delivered by the Company;
(viii) Neither the Company nor any of the Subsidiaries
is in violation of its respective Organizational Document;
provided, however, that with respect to the business
purpose clauses of the charter of the Company and the
Subsidiaries, such opinion may be limited to the knowledge
of such counsel after due inquiry; to the knowledge of such
counsel, no default by the Company exists in the due
performance or observance of any material obligation,
agreement, covenant or condition contained in any contract
identi-
<PAGE> 26
-26-
fied to such counsel as material by the Company or filed as
an exhibit to any Incorporated Document; and to the
knowledge of such counsel, the Company is not in breach or
violation of any law, ordinance, statute, rule or
regulation, or any judgment, decree or order or
governmental or regulatory agency or other body having
jurisdiction over the Company or any of its properties or
assets in any material respect;
(ix) The Company is not an "investment company" or a
company "controlled by" or required to register as an
investment company as such terms are defined in the
Investment Company Act of 1940, as amended, and the rules
and regulations thereunder;
(x) The issuance, sale and delivery of the Acquired
Shares, the execution, delivery and performance by the
Company of this Agreement (assuming due authorization and
execution by the Purchaser), and the consummation by the
Company of the transactions contemplated hereby and the
compliance by the Company with the terms of this Agreement
do not conflict with or constitute or result in a breach or
violation by the Company of (A) any provision of the
Charter of Incorporation or By-laws of the Company, (B) any
of the terms or provisions of, or constitute a default (or
an event which, with notice or lapse of time or both, would
constitute a default) by the Company, or give rise to any
right to accelerate the maturity or require the prepayment
of any indebtedness under, or result in the creation or
imposition of any lien, charge or encumbrance upon any
property or assets of the Company under any agreement of
the Company identified to such counsel as material or (C)
any law, statute, rule, or regulation or any order, decree
or judgment known to such counsel to be applicable to the
Company, of any court or governmental or regulatory agency
or body or arbitrator known to such counsel to have
jurisdiction over the Company or any of its properties or
assets;
(xi) No consent, waiver, approval, authorization,
license, qualification or order of or filing or
registration with, any court or governmental or regulatory
agency or body is required for the execution
<PAGE> 27
-27-
and delivery by the Company of this Agreement, the offer,
sale and delivery of the Acquired Shares, the performance
by the Company of its obligations under this Agreement, or
for the consummation of any of the transactions
contemplated hereby, except, such as may be required under
the "blue sky" laws of any jurisdiction in connection with
the offer, sale and delivery of the Acquired Shares by the
Purchaser (as to which such counsel need express no
opinion);
(xii) The Registration Statement and the Prospectus
and any supplements or amendments thereto (except for the
financial statements and the notes thereto and the
schedules and other financial and statistical data included
therein, as to which such counsel need not express any
opinion) comply as to form in all material respects with
the requirements of the Act; and each of the Incorporated
Documents (except for the financial statements and the
notes thereto and the schedules and other financial and
statistical data included therein, as to which counsel need
not express any opinion) complies as to form in all
material respects with the Exchange Act;
(xiii) To the knowledge of such counsel, (A) other
than as described or contemplated in the Prospectus (or any
supplement thereto), there are no legal or governmental
proceedings pending or threatened against the Company or
any of the Subsidiaries, or to which the Company or any of
the Subsidiaries, or any of their property, is subject,
which in the judgment of the Company could reasonably be
expected to have a Material Adverse Effect and (B) there
are no agreements, contracts, indentures, leases or other
instruments, that are required to be described in the
Registration Statement or the Prospectus (or any amendment
or supplement thereto) or to be filed as an exhibit to the
Registration Statement or any Incorporated Document that
are not described or filed as required, as the case may be;
(xiv) The redemption of all of the outstanding
Debentures on the Redemption Date has been duly authorized
by the Company; and the only remaining action required by
the terms of the Debentures to call
<PAGE> 28
-28-
the Debentures for redemption on the Redemption Date is the
giving of the Notice of Redemption to holders of Debentures
by mail in accordance with the requirements contained in
the Indenture and the payment by the Company of the
redemption price in accordance with the terms of the
Indenture;
(xv) Except as described in the Prospectus, to such
counsel's knowledge, there are no outstanding options,
warrants or other rights calling for the issuance of, and
such counsel does not know of any commitment, plan or
arrangement to issue, any shares of capital stock of the
Company or any security convertible into or exchangeable or
exercisable for capital stock of the Company;
(xvi) Except as described in the Prospectus, to such
counsel's knowledge, no holder of any security of the
Company has any right to require registration of shares of
Common Stock or any other security of the Company because
of the filing of the registration statement or consummation
of the transactions contemplated by this Agreement, except
such as have been waived or may not be exercised; and
(xvii) The statements in the Registration Statement
and the Prospectus under the caption "Certain Federal
Income Tax Considerations," insofar as they are
descriptions of legal documents or refer to statements of
law or legal conclusions, are accurate in all material
respects.
In addition, such counsel shall state that although counsel
has not undertaken, except as otherwise indicated in their opinion, to
determine independently, and does not assume any responsibility for,
the accuracy or completeness of the statements in the Registration
Statement, such counsel has participated in the preparation of the
Registration Statement and the Prospectus, including review and
discussion of the contents thereof (including review and discussion of
the contents of all Incorporated Documents), and nothing has come to
the attention of such counsel that has caused them to believe that the
Registration Statement (including the Incorporated Documents) at the
time the Registration Statement became effective, or the Prospec-
<PAGE> 29
-29-
tus, as of its date and as of the Closing Date, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein (with respect to the Prospectus, in light of the
circumstances under which they were made) not misleading or that any
amendment or supplement to the Prospectus, as of its respective date,
and as of the Closing Date, contained any untrue statement of a
material fact or omitted to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading (it being understood that
such counsel need express no opinion with respect to the financial
statements and the notes thereto and the schedules and other
financial and statistical data included in the Registration Statement
or the Prospectus or any Incorporated Document).
In rendering their opinion as aforesaid, counsel may rely
upon an opinion or opinions, each dated the Closing Date, of other
counsel retained by them or the Company as to laws of any jurisdiction
other than the United States or the States of Georgia and Tennessee;
provided, however, that (1) each such local counsel is acceptable to
the Purchaser, (2) such reliance is expressly authorized by each
opinion so relied upon and a copy of each such opinion is delivered to
the Purchaser and is, in form and substance satisfactory to them and
their counsel, and (3) counsel shall state in their opinion that they
believe that they and the Purchaser are justified in relying thereon.
(d) On the effective date of the Registration Statement and
prior to the mailing of the Notice of Redemption, an opinion of
Cahill Gordon & Reindel, counsel for the Purchaser, dated the Closing
Date and addressed to the Purchaser, as Representatives of the
Purchaser, with respect to the matters referred to in clauses (vi)
and (xii) and the penultimate subparagraph of the foregoing paragraph
(c) and such other related matters as the Purchaser may request. The
opinion of such counsel may be limited to the laws of the State of
New York, the General Corporation Law of the State of Delaware and
the Federal laws of the United States. In rendering their opinion as
aforesaid, counsel may, as to factual matters, rely upon written
certificates or statements of officers of the Company.
<PAGE> 30
-30-
(e) On the effective date of the Registration Statement and
prior to the mailing of the Notice of Redemption, the Purchaser shall
have received a letter addressed to the Purchaser, and dated the date
hereof from Coopers & Lybrand L.L.P., independent certified public
accountants, substantially in the form heretofore approved by the
Purchaser.
(f) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall have been taken or, to the knowledge of the
Company, shall be contemplated by the Commission at or prior to the
Closing Date; (ii) there shall not have been any material change in
the capital stock of the Company nor any material increase in the
short-term or long-term debt of the Company (other than in the
ordinary course of business) from that set forth in or contemplated
by the Registration Statement or the Prospectus (or any amendment or
Supplement thereto); (iii) there shall not have been, since the
respective dates as of which information is given in the Registration
Statement and the Prospectus (or any amendment or supplement
thereto), except as may otherwise be stated in the Registration
Statement and Prospectus (or any amendment or supplement thereto),
any material adverse change in the condition (financial or other),
business, prospects, properties, net worth or results of operations
of the Company and the Subsidiaries taken as a whole; (iv) the
Company and the Subsidiaries shall not have any liabilities or
obligations, direct or contingent (whether or not in the ordinary
course of business), that are material to the Company and the
Subsidiaries, taken as a whole, other than those contemplated by the
Registration Statement or the Prospectus (or any amendment or
supplement thereto); and (v) all the representations and warranties
of the Company contained in this Agreement shall be true and correct
in all material respects on and as of the date hereof and on and as
of the Closing Date as if made on and as of the Closing Date, and the
Purchaser shall have received a certificate, dated the Closing Date
and signed by the Chairman of the Board or the President or the
principal financial or accounting officer of the Company (or such
other officers as are acceptable to the Purchaser), to the effect set
forth in this Section 6(f) and that the Company shall not have failed
at or prior to the Closing Date to
<PAGE> 31
-31-
have performed or complied in all material respects with any of its
agreements herein contained and required to be performed or complied
with by it hereunder at or prior to the Closing Date.
(g) Prior to the offering of the Purchased Shares, the Purchased
Shares shall have been listed, subject to notice of issuance, on the
New York Stock Exchange.
(h) The Company shall have furnished or caused to be furnished
to the Purchaser such further certificates and documents as the
Purchaser shall have reasonably requested.
(i) There shall not have been any change after the date of this
Agreement in the certificate of incorporation or by-laws of the
Company adversely affecting the rights of the holders of the Common
Stock or any other action affecting the conversion price of the
Debentures.
(j) On the Closing Date, the Purchaser shall have received, in
form and substance satisfactory to the Purchaser, (i) letters, dated
the Closing Date, from the counsel referred to in Section 6(c) and
Cahill Gordon & Reindel to the effect that they reaffirm the
respective opinions set forth in Section 6(c) and 6(d), respectively,
and (ii) a letter from Coopers & Lybrand L.L.C. to the effect that it
reaffirms its statements made in its letter furnished pursuant to
Section 6(e).
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are satisfactory
in form and substance to the Purchaser and the Purchaser's counsel.
Any certificate or document signed by any officer of the
Company and delivered to the Purchaser or to counsel for the Purchaser, shall
be deemed a representation and warranty by the Company to the Purchaser as to
the statements made therein.
If any condition specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement and all the Purchaser's obligations hereunder may be canceled by the
Purchaser by notifying the Company of such cancellation in writing or by
telegram at any time at or prior to the Redemption Date, and any such
can-
<PAGE> 32
-32-
cellation shall be without liability of any party to any other party, except
as provided in Sections 2(c)(i), 3(m), 3(n), 5 and 8(c).
7. Effective Date of Agreement. This Agreement shall become
effective when the Purchaser and the Company shall have received notification
of the effectiveness of the Registration Statement.
8. Termination of Agreement. (a) Prior to the time the
Company mails the Notice of Redemption, with respect to the Debentures, this
Agreement may be terminated by the Company by written notice to the
Purchaser, or by the Purchaser by written notice to the Company.
(b) The Purchaser shall also have the right to terminate this
Agreement by giving notice as hereinafter specified at any time at or prior to
the Redemption Date if prior to the Redemption Date (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market shall have been suspended or materially limited, (ii) a
general moratorium on commercial banking activities shall have been declared by
either federal or New York State authorities, or (iii) there shall have
occurred any outbreak or escalation of hostilities or other international or
domestic calamity, crisis or change in political, financial or economic
conditions, the effect of which on the financial markets of the United States
is such as to make it, in the Purchaser's reasonable judgment, impracticable or
inadvisable to commence or continue the offering of the Shares to the public or
to enforce contracts for the resale of the Shares by the Purchaser.
(c) Any notice given pursuant to this Section 8 shall be
effective only upon receipt. If this Agreement is terminated pursuant to this
Section 8, such termination shall be without liability of any other party
except as provided in Sections 2(c)(i), 3(m), 3(n) and 5.
9. Miscellaneous. Except as otherwise provided in Sections 3,
7 and 8 hereof, notice given pursuant to any provision of this Agreement shall
be in writing and shall be delivered (i) if to the Company, at the office of
the Company at 750 Lakeshore Parkway, Birmingham, Alabama 35211, Facsimile:
(205) 940-4098, Attention: Brian J. Martin, with a copy to Alston & Bird LLP,
One Atlantic Center, 1201 W. Peachtree Street,
<PAGE> 33
-33-
Atlanta, Georgia 30309-3424, Facsimile: (404) 881-4777, Attention: H. Sadler
Poe; or (ii) if to Smith Barney Inc., at 388 Greenwich Street, New York, New
York 10013, Facsimile: (212) 816-7917, Attention: Manager, Investment Banking
Division.
This Agreement has been and is made solely for the benefit of
the Purchaser, the Company, its directors and officers, and the other
controlling persons referred to in Section 5 hereof and their respective
successors and assigns, to the extent provided herein, and no other person
shall acquire or have any right under or by virtue of this Agreement. Neither
the term "successor" nor the term "successors and assigns" as used in this
Agreement shall include a purchaser from the Purchaser of any of the Shares in
his status as such purchaser.
10. Applicable Law; Counterparts. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which
together constitute one and the same instrument. If signed in counterparts,
this Agreement shall not become effective unless at least one counterpart
hereof shall have been executed and delivered on behalf of each party hereto.
[Remainder of Page Intentionally Left Blank]
<PAGE> 34
-34-
Please confirm that the foregoing correctly sets forth the
agreement between the Company and the Purchaser.
Very truly yours,
PROFFITT'S, INC.
By:
------------------------------------
Name:
Title:
Confirmed as of the date first
above mentioned.
SMITH BARNEY INC.
By:
-----------------------------------------
Managing Director
<PAGE> 1
EXHIBIT 5.1
ALSTON&BIRD LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
404-881-7000
Fax: 404-881-7777
September 4, 1997
Proffitt's, Inc.
3455 Highway 80 West
Jackson, Mississippi 39209
Ladies and Gentlemen:
We have acted as special counsel to Proffitt's, Inc., a Tennessee
corporation (the "Company"), in connection with the preparation of the
Registration Statement on Form S-3 of the Company, filed with the Securities
and Exchange Commission on September 4, 1997 (the "Registration Statement"),
relating to the registration under the Securities Act of 1933, as amended (the
"Securities Act"), of 2,019,975 shares of the Company's Common Stock, par value
$.10 per share, together with 2,019,975 of the accompanying preferred stock
purchase rights (collectively, the "Shares"), in connection with a partially
underwritten call for redemption of the Company's 4-3/4% Convertible
Subordinated Debentures Due 2003 (the "Debentures"). The Shares may be either
issued upon conversion of the Debentures in accordance with the terms of the
indenture governing the Debentures (the "Indenture") or purchased by Smith
Barney Inc. acting as standby purchaser (the "Standby Purchaser") pursuant to
the Standby Agreement to be dated as of September 5, 1997 between the Standby
Purchaser and the Company (the "Standby Agreement").
In this connection, we have reviewed (i) the Charter of Incorporation
and By-laws of the Company as currently in effect, (ii) the Registration
Statement, (iii) certain resolutions adopted by the Board of Directors of the
Company and the Conversion Committee thereof, and (iv) such other documents and
corporate records as we have deemed necessary or appropriate in order to give
the opinions set forth herein. We have relied as to factual matters on
certificates or other documents furnished by the Company
<TABLE>
<S> <C> <C>
1211 East Morehead Street 3605 Glenwood Avenue 601 Pennsylvania Avenue, N.W.
P. O. Drawer 34009 P. O. Drawer 31107 North Building, Suite 250
Charlotte, NC 28234-4009 Raleigh, NC 27622-1107 Washington, DC 20004-2601
704-331-6000 919-420-2200 202-508-3300
Fax: 704-334-2014 Fax: 919-881-3175 Fax: 202-508-3333
</TABLE>
<PAGE> 2
Proffitt's Inc.
September 4, 1997
Page 2
or its officers and by governmental authorities and upon such other documents
and data that we have deemed appropriate. We have assumed the authenticity and
genuineness of all documents examined by us and all signatures thereon, the
legal capacity of all persons executing such documents, the conformity to
original documents of all copies of documents submitted to us and the truth and
correctness of any representations and warranties contained therein.
Based on such examination and review and subject to the foregoing, we
are of the opinion that the Shares are duly authorized and, when issued upon
the conversion of the Debentures as provided in the Indenture or sold in
accordance with the provisions of the Standby Agreement, will be duly and
validly issued, fully paid and non-assessable.
We consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to our firm under the caption
"Legal Matters" in the Prospectus that is a part of the Registration Statement.
In giving such consent, we do not hereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act.
Very truly yours,
ALSTON & BIRD LLP
By: /s/ David E. Brown, Jr.
---------------------------
A Partner
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-3 of our
report, dated March 20, 1997, on our audits of the consolidated financial
statements of Proffitt's, Inc. as of February 1, 1997 and February 3, 1996, and
for each of the three years in the period ended February 1, 1997. We also
consent to the reference to our firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
September 3, 1997
<PAGE> 1
EXHIBIT 23.3
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
September 3, 1997
<PAGE> 1
EXHIBIT 23.4
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Proffitt's, Inc. on Form S-3 of our report dated March 3, 1995 (relating to the
consolidated financial statements of Younkers, Inc. and subsidiary for the year
ended January 28, 1995, not separately presented) and incorporated by reference
in the Annual Report on Form 10-K of Proffitt's Inc. for the year ended
February 1, 1997 and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
Deloitte & Touche LLP
Des Moines, Iowa
September 2, 1997
<PAGE> 1
EXHIBIT 99.1
PROFFITT'S, INC.
LETTER OF TRANSMITTAL
TO ACCOMPANY THE 4 3/4% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2003
PURSUANT TO THE PROSPECTUS DATED SEPTEMBER 5, 1997
- --------------------------------------------------------------------------------
THE CONVERSION RIGHTS WILL EXPIRE AT 5:00 P.M. EASTERN TIME
ON SEPTEMBER 29, 1997
- --------------------------------------------------------------------------------
PLEASE READ CAREFULLY THE ENCLOSED INSTRUCTIONS
ANY DEBENTURES SURRENDERED FOR CONVERSION OR REDEMPTION SHOULD BE DELIVERED AS
FOLLOWS, TOGETHER WITH A
COMPLETED AND SIGNED LETTER OF TRANSMITTAL:
TO: THE PAYING AND CONVERSION AGENT
UNION PLANTERS NATIONAL BANK
<TABLE>
<S> <C>
BY HAND OR OVERNIGHT COURIER: BY MAIL:
(registered or certified mail recommended)
Union Planters National Bank Union Planters National Bank
Corporate Trust Department Corporate Trust Department
6200 Poplar Avenue P.O. Box 387
Third Floor Memphis, Tennessee 38147
Memphis, Tennessee 38119
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
FOR ANY QUESTIONS REGARDING THIS LETTER OF TRANSMITTAL OR FOR ANY
ADDITIONAL INFORMATION, YOU MAY CONTACT BEACON HILL PARTNERS, INC., THE
INFORMATION AGENT, AT (800) 755-5001.
Ladies and Gentlemen:
This Letter of Transmittal should be used in connection with the surrender
of your 4 3/4% Convertible Subordinated Debentures Due 2003 (the "Debentures")
of Proffitt's, Inc. (the "Company") for conversion or redemption.
If you wish to convert your Debentures by means of this Letter of
Transmittal, then your Debentures and this Letter of Transmittal must be
RECEIVED by Union Planters National Bank (the "Paying and Conversion Agent")
PRIOR TO 5:00 P.M., EASTERN TIME, ON SEPTEMBER 29, 1997. This Letter of
Transmittal is to be used only if Debentures to be converted are to be forwarded
herewith.
Debenture holders wishing to convert their Debentures whose Debentures are
not immediately available or who cannot deliver their Debentures and all other
documents required hereby to the Paying and Conversion Agent prior to 5:00 p.m.,
Eastern Time, on September 29, 1997 must elect to convert their Debentures
according to the instructions for guaranteed delivery set forth in Instruction 7
hereof.
If you wish to surrender your Debentures for redemption by means of this
Letter of Transmittal, please deliver your Debentures and this Letter of
Transmittal to the Paying and Conversion Agent listed below prior to 5:00 P.M.,
EASTERN TIME, ON OCTOBER 6, 1997. This Letter of Transmittal is to be used only
if Debentures to be redeemed are to be forwarded herewith.
ITEMS A, B, E AND F OF THIS LETTER OF TRANSMITTAL MUST BE COMPLETED IN ALL
CASES.
<PAGE> 2
ITEM A.
(MUST BE COMPLETED BY ALL HOLDERS OF DEBENTURES)
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------
DESCRIPTION OF DEBENTURES PRESENTED
- ----------------------------------------------------------------------------------------------
DEBENTURE TRANSMITTED
NAME AND ADDRESS OF REGISTERED HOLDER (PLEASE FILL IN NUMBERS AND
(IF THE NAME AND ADDRESS SHOWN OF RECORD AMOUNTS
WITH THE PAYING AND CONVERSION AGENT ARE NOT AND ATTACH SIGNED LIST IF SPACE
CORRECT, PLEASE INDICATE ANY CHANGES NECESSARY.) BELOW IS INADEQUATE.)
- ----------------------------------------------------------------------------------------------
DEBENTURE PRINCIPAL
NUMBER AMOUNT
- ----------------------------------------------------------------------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
TOTAL PRINCIPAL
AMOUNT:
- ----------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
ITEM B.
(MUST BE COMPLETED BY ALL HOLDERS OF DEBENTURES)
THE ABOVE DEBENTURES ARE SURRENDERED FOR THE ACTION INDICATED BELOW.
[ ] CONVERSION into shares of common stock, par value $.10 per share ("Common
Stock") of the Company ("Shares") at the conversion price of $42.70 per
Share (equivalent to 23.42 Shares per $1,000 principal amount of
Debentures), with cash in lieu of fractional Shares. Such payment of cash
will be in the form of a check drawn on an account of the Paying and
Conversion Agent. See Instruction 2. Complete Items C and E below.
Holders of Debentures who convert their Debentures will not be entitled to
any accrued but unpaid interest on the Debentures.
SO LONG AS THE MARKET PRICE OF THE COMMON STOCK IS GREATER THAN $44.92 PER
SHARE AT THE TIME OF CONVERSION, A HOLDER WHO CONVERTS DEBENTURES INTO
COMMON STOCK WILL RECEIVE CONSIDERATION (COMMON STOCK, PLUS CASH IN LIEU OF
ANY FRACTIONAL SHARE) HAVING A MARKET VALUE GREATER THAN THE REDEMPTION
PRICE OF THE DEBENTURES. TAXES, COMMISSIONS AND OTHER COSTS WHICH WOULD
LIKELY BE INCURRED UPON SALE OF COMMON STOCK RECEIVED UPON CONVERSION OF THE
DEBENTURES WOULD REDUCE OR ELIMINATE THE ECONOMIC ADVANTAGE OF CONVERSION
OVER REDEMPTION. MOREOVER, THE MARKET VALUE OF THE COMMON STOCK RECEIVED IS
SUBJECT TO FLUCTUATION. SEE INSTRUCTION 2 BELOW FOR INFORMATION RELATING TO
THE PAYMENT OF CASH IN LIEU OF ANY FRACTIONAL SHARE.
[ ] REDEMPTION at a price of 103.1667% of the principal amount thereof, plus
interest accruing after May 1, 1997 to the Redemption Date of October 6,
1997 (the "Redemption Price"). A holder of $1,000 principal amount of
Debentures redeemed at the Redemption Price would receive $1,052.1184 in
cash. See Instruction 3. Complete Items D and E below.
[ ] PARTIAL CONVERSION/PARTIAL REDEMPTION, If this box is checked you must
indicate (1) the principal amount of Debentures you wish to convert into
Shares on Item C and (2) the principal amount of Debentures you wish to have
redeemed on Item D. If this box is checked and no additional instructions
are provided, the delivery of Debentures prior to 5:00 p.m., Eastern Time,
on September 29, 1997, will be treated by the Paying and Conversion Agent as
an instruction to convert such Debentures into Shares. Complete Items C, D
and E below.
[ ] CHECK HERE IF DEBENTURES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE PAYING AND CONVERSION AGENT.
IF NO BOX IS CHECKED AND THE ABOVE DEBENTURES ARE RECEIVED BY THE PAYING AND
CONVERSION AGENT PRIOR TO 5:00 P.M., EASTERN TIME, ON SEPTEMBER 29, 1997, SUCH
DEBENTURES WILL BE DEEMED SURRENDERED FOR CONVERSION INTO SHARES. IF ANY
DEBENTURES ARE RECEIVED AFTER THAT TIME, SUCH DEBENTURES WILL BE REDEEMED
REGARDLESS OF WHICH OR WHETHER ANY CHOICE IS INDICATED.
3
<PAGE> 4
ITEM C.
CONVERSION
DEBENTURE HOLDERS PLEASE COMPLETE
1. If the stock certificates evidencing Shares of Common Stock and/or check for
payment (if any) are to be issued in the name of a person other than as
indicated in Item A above, fill in this space. See Instructions 4 and 5.
ISSUE TO:
Name:
----------------------------------------------------------------------------
Address:
----------------------------------------------------------------------------
Zip Code:
----------------------------------------------------------------------------
Social Security Number or Taxpayer I.D. Number:
----------------------------------------------------------------------------
2. If stock certificates evidencing Shares of Common Stock and/or check for
payment (if any) are to be mailed to an address other than as indicated in
Item A above, fill in this space. See Instructions 4 and 5.
MAIL TO:
Name:
----------------------------------------------------------------------------
Address:
----------------------------------------------------------------------------
Zip Code:
----------------------------------------------------------------------------
Principal Amount of Debentures Surrendered for Conversion: $
----------------------------------------------------------------------------
ITEM D.
REDEMPTION
DEBENTURE HOLDERS PLEASE COMPLETE
1. If the check for payment is to be issued to a person other than as indicated
in Item A above, fill in this space. See instructions 4 and 5.
ISSUE TO:
Name:
----------------------------------------------------------------------------
Address:
----------------------------------------------------------------------------
Zip Code:
----------------------------------------------------------------------------
Social Security Number or Taxpayer I.D. Number:
----------------------------------------------------------------------------
2. If the check for payment is to be mailed to an address other than as
indicated in Item A above, fill in this space. See Instructions 4 and 5.
MAIL TO:
Name:
----------------------------------------------------------------------------
Address:
----------------------------------------------------------------------------
Zip Code:
----------------------------------------------------------------------------
Principal Amount of Debentures surrendered for Redemption: $
----------------------------------------------------------------------------
4
<PAGE> 5
ITEM E.
REQUIRED SIGNATURE
(MUST BE COMPLETED BY ALL HOLDERS OF DEBENTURES)
REQUIRED SIGNATURE
The signatures on this Letter of Transmittal must correspond exactly with
the name(s) of the (1) registered owners of the Debentures surrendered, or (2)
persons to whom such Debentures have been properly assigned or transferred, in
which case evidence of transfer must accompany this letter. See Instructions 1,
4, 5 and 6 below.
Dated:
- --------------------------------------------------------------------------------
Signature:
- --------------------------------------------------------------------------------
Telephone:
- --------------------------------------------------------------------------------
Social Security Number or Taxpayer I.D. Number:
- --------------------------------------------------------------------------------
SIGNATURE GUARANTEE
(IF APPLICABLE)
If stock certificates are to be issued in a name other than that of the
registered owner of the Debentures surrendered or persons to whom such
Debentures have been properly assigned or transferred, or if a check for payment
is to be made payable to a different name, the signature of the holder must be
guaranteed by a commercial bank, trust company, a member firm of a national
stock exchange or the National Association of Securities Dealers, Inc. See
Instructions 4 and 5.
Signature Guarantee:
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------------------------------------------------
Name of Firm issuing Guarantee:
- --------------------------------------------------------------------------------
Signature of Officer:
- --------------------------------------------------------------------------------
Title of Officer Signing This Guarantee:
- --------------------------------------------------------------------------------
Address of Guaranteeing Firm:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5
<PAGE> 6
ITEM F.
(MUST BE COMPLETED BY ALL HOLDERS OF DEBENTURES)
IMPORTANT TAX INFORMATION
- --------------------------------------------------------------------------------
COMPLETE AND SIGN SUBSTITUTE FORM W-9 IN ADDITION TO THE SIGNATURE(S)
REQUIRED IN ITEM E.
(SEE INSTRUCTION 11)
PAYOR'S NAME: PROFFITT'S, INC.
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------
SUBSTITUTE Name As Shown On Account (if joint account, list first and circle name
FORM W-9 of the person or entity whose number you enter in part 1 below)
-----------------------------------------------------------------------
Address
-----------------------------------------------------------------------
City, State And Zip Code
-----------------------------------------------------------------------
List Account Number(s) here (optional)
-----------------------------------------------------------------------
Department of the Treasury PART 1 -- PLEASE PROVIDE YOUR TAXPAYER Social security
Internal Revenue Service IDENTIFICATION NUMBER ("TIN") IN THE BOX AT number(s) or TIN
RIGHT AND CERTIFY BY SIGNING AND DATING BELOW
-----------------------------------------------------------------------
PART 2 -- CHECK THE BOX IF YOU ARE NOT SUBJECT TO BACKUP WITHHOLDING
BECAUSE (I) YOU ARE EXEMPT FROM BACKUP WITHHOLDING, OR (II) YOU HAVE
NOT BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE THAT YOU ARE SUB-
JECT TO BACKUP WITHHOLDING AS A RESULT OF A FAILURE TO REPORT ALL
INTEREST OR DIVIDENDS, OR (III) THE INTERNAL REVENUE SERVICE HAS NOTI-
FIED YOU THAT YOU ARE NO LONGER SUBJECT TO BACKUP WITHHOLDING. (YOU
MUST CROSS OUT THIS PART 2 IF YOU ARE CURRENTLY SUBJECT TO BACKUP
WITHHOLDING BECAUSE OF UNDERREPORTING OF INTEREST OR DIVIDENDS ON YOUR
TAX RETURN.) [ ]
- -------------------------------------------------------------------------------------------------------------
REQUEST FOR TAXPAYER CERTIFICATION -- UNDER PENALTIES OF PERJURY, I CERTIFY THAT THE
IDENTIFICATION NUMBER (TIN) INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE.
SIGNATURE ____ Date , 1997
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C>
SUBSTITUTE
FORM W-9
Department of the Treasury
Internal Revenue Service
-----------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
REQUEST FOR TAXPAYER PART 3
IDENTIFICATION NUMBER (TIN)
Awaiting TIN [ ]
- -------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENT MADE TO YOU. PLEASE REVIEW THE ENCLOSED "GUIDELINES
FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM
W-9" FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 3 OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office, or (b) I intend to mail
or deliver an application in the near future. I understand that, notwithstanding
that I have checked the box on Part 3 (and have completed this Certificate of
Awaiting Taxpayer Identification Number), all reportable payments made to me
prior to the time I provide the Conversion and Paying Agent with a properly
certified taxpayer identification number will be subject to a 31% backup
withholding tax.
<TABLE>
<S> <C>
---------------------------------- -----------------------------
Signature Date
</TABLE>
6
<PAGE> 7
INSTRUCTIONS
TO LETTER OF TRANSMITTAL
1. GENERAL. Please do not send Debentures directly to the Company. The
Debentures, together with the signed and completed Letter of Transmittal and any
required supporting documents (see Instruction 2 below), should be mailed or
otherwise delivered to Union Planters National Bank, the Paying and Conversion
Agent, at the address indicated on the front of this Letter of Transmittal. The
method of transmitting the Debentures and the Letter of Transmittal is at the
sole option and sole risk of the Debenture holder but, if mail is used, it is
recommended that registered mail, properly insured, be used as a precaution
against loss. CONSIDERATION SHOULD BE GIVEN TO USING SOME FORM OF EXPRESS
DELIVERY SERVICE BECAUSE THE CONVERSION ALTERNATIVE DISCUSSED BELOW EXPIRES AT
5:00 P.M., EASTERN TIME, ON SEPTEMBER 29, 1997.
ITEMS A, B, E AND F OF THIS LETTER OF TRANSMITTAL MUST BE COMPLETED IN ALL
CASES.
2. IF YOU WISH TO CONVERT YOUR DEBENTURES. If you wish to convert your
Debentures into Shares of Common Stock, then prior to 5:00 p.m., Eastern Time,
on September 29, 1997 you must deposit with the Paying and Conversion Agent (a)
the Debentures, (b) a properly completed Letter of Transmittal and (c) any other
documents required by this Letter of Transmittal. If your Debenture Certificates
are not immediately available, please see Instruction 7.
Debentures surrendered for conversion will not be entitled to interest
accrued to the date of conversion. Instead of issuing any fractional share of
Common Stock which would otherwise be issuable upon conversion of any Debenture
(or specified portions thereof), the Company will pay a cash adjustment in
respect of such fraction in an amount equal to the same fraction of the Closing
Price (as defined below) at the close of business on the day of conversion (or,
if such day is not a Trading Day (as defined below), on the Trading Day
immediately preceding such day). "Closing Price" means the last reported sales
price regular way or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular way, in either case
on the New York Stock Exchange. "Trading Day" means each Monday, Tuesday,
Wednesday, Thursday and Friday, other than any day on which securities are
generally not traded on the New York Stock Exchange. Such cash in lieu of any
fractional Share will be paid by check drawn on an account of the Paying and
Conversion Agent.
Each holder of Debentures that does not directly hold certificates for its
Debentures, but instead maintains its holdings indirectly in an account with a
broker or other intermediary (each, a "Beneficial Holder") must comply with the
procedures of such intermediary to convert such Beneficial Holder's Debentures.
Such an intermediary may maintain its holdings with The Depository Trust Company
(the "Depository"). In those instances, the procedures of the Depository must
also be followed for a Beneficial Holder to convert its Debentures.
IT IS THE RESPONSIBILITY OF EACH BENEFICIAL HOLDER TO GIVE INSTRUCTIONS TO
ITS INTERMEDIARY IN SUFFICIENT TIME FOR THAT INTERMEDIARY, ANY HIGHER
INTERMEDIARIES AND THE RECORD HOLDER OF SUCH BENEFICIAL HOLDER'S DEBENTURES
(WHICH MAY BE THE DEPOSITORY) TO TAKE THE ACTIONS WHICH ARE NECESSARY TO EFFECT
CONVERSION OF SUCH BENEFICIAL HOLDER'S DEBENTURES PRIOR TO 5:00 P.M., EASTERN
TIME, ON SEPTEMBER 29, 1997.
SO LONG AS THE MARKET PRICE OF THE COMMON STOCK IS GREATER THAN $44.92 PER
SHARE AT THE TIME OF CONVERSION, A HOLDER WHO CONVERTS DEBENTURES INTO COMMON
STOCK WILL RECEIVE CONSIDERATION (COMMON STOCK, PLUS CASH IN LIEU OF ANY
FRACTIONAL SHARE) HAVING A MARKET VALUE GREATER THAN THE REDEMPTION PRICE OF THE
DEBENTURES. TAXES, COMMISSIONS AND OTHER COSTS WHICH WOULD LIKELY BE INCURRED
UPON SALE OF COMMON STOCK RECEIVED UPON CONVERSION OF THE DEBENTURES WOULD
REDUCE OR ELIMINATE THE ECONOMIC ADVANTAGE OF CONVERSION OVER REDEMPTION.
MOREOVER, THE MARKET VALUE OF THE COMMON STOCK RECEIVED IS SUBJECT TO
FLUCTUATION.
7
<PAGE> 8
If the stock certificates and any cash in lieu of fractional Shares, are to
be (i) issued in the same name(s) as that in which the surrendered Debentures
are registered and (ii) mailed to the same address as given in Item A, complete
Items A, B, E and F.
If the stock certificates and any cash in lieu of fractional Shares, are to
be issued in the name or names of a different person(s), see Instruction 4, 5
and 6 and complete Items A, B, C, E and F.
If the stock certificates and any cash in lieu of fractional Shares, are to
be mailed to an address different from that given in Item A, complete Items A,
B, C, E and F.
If more than one Debenture is surrendered for conversion at any one time
under the same Letter of Transmittal or other notice by the same holder, the
number of shares issuable upon conversion of such Debentures will be computed
upon the basis of the aggregate principal amount of Debentures so surrendered.
Holders are also entitled to convert fewer than all Debentures they hold,
provided that any conversions are for amounts of Debentures in integral
multiples of $1,000.
A single Common Stock certificate will be issued unless you give written
instructions to the contrary. The Common Stock certificate and cash in lieu of
fractional Shares will be mailed as soon as possible after receipt of your
Debentures.
3. IF YOU WISH TO REDEEM YOUR DEBENTURES. If you wish your Debentures to
be redeemed by the Company, deliver your Debentures and a properly completed
Letter of Transmittal to the Paying and Conversion Agent. A check for
$1,052.1184 per $1,000 principal amount of Debentures will be sent to you when
the Debentures have been received by the Paying and Conversion Agent, but in no
event earlier than the Redemption Date, October 6, 1997.
If the check is to be issued in the same name(s) as that in which the
surrendered Debentures are registered and mailed to the same address as given in
Item A, complete Items A, B, E and F.
If the check is to be issued in a different name or names, see Instructions
4 and 5 and complete Items A, B, D, E and F.
If the check is to be mailed to an address different from that given in
Item A, complete Items A, B, D, E and F.
4. CERTIFICATE OR CHECK TO BE ISSUED IN A DIFFERENT NAME. Unless
instructions are given in Item C or D, the Shares or a check are to be issued in
the same name as that of the record holder inscribed on the surrendered
Debenture. If the Shares or a check are to be issued in a name other than that
of the record holder of the listed Debenture please be guided by the following:
(a) Endorsement and Guarantee. The Debentures surrendered must be
properly endorsed (or accompanied by one or more appropriate powers
properly executed by the record holder of such Debentures to the person who
is to receive the Common Stock certificates). The signature of the record
holder on the endorsement or stock powers must correspond with the name as
written upon the face of the Debentures surrendered in every particular and
must be guaranteed by a commercial bank, trust company, a member firm of a
national stock exchange or the National Association of Securities Dealers,
Inc. (each, an "Eligible Institution").
(b) Transferee's Signature. This Letter of Transmittal must be signed
by the person to whom the transfer or assignment is made, or by his agent,
and should not be signed by the person transferring or assigning the
Debentures. The signature of such transferee, assignee, or agent must be
guaranteed as provided in Instruction 4(a).
(c) Correction of or Change in Name. For a name correction, or for a
change in name which does not involve a change of ownership, proceed as
follows. For a correction in name the listed Debentures should be endorsed
as follows: "James E. Brown, incorrectly inscribed as J. E. Brown," with
the signature guaranteed as described in Instruction 4(a). For a change in
name by marriage, the surrendered Debentures should be endorsed as follows:
"Mary Doe, now by marriage, Mrs. Mary Jones" with the signature guaranteed
as described in Instruction 4(a).
8
<PAGE> 9
5. SIGNATURE BY FIDUCIARY OR OTHER THAN REGISTERED HOLDER. If this Letter
of Transmittal is signed by the registered holder(s) of the Debentures
transmitted herewith, the signatures must correspond exactly with the name(s) of
such registered holder(s).
If the Letter of Transmittal is signed in Item E by an executor,
administrator, trustee, guardian, attorney or the like, such person should so
indicate when signing, and the Letter of Transmittal and Debentures must be
accompanied by evidence, satisfactory to the Paying and Conversion Agent and the
Company, of the authority of such person to sign the Letter of Transmittal and
the signatures must be properly guaranteed by an Eligible Institution.
If the Letter of Transmittal is signed in Item E by a person other than the
registered holder, who is not a person described in the preceding paragraph, the
Debentures must be properly endorsed or be accompanied by appropriate stock
powers, properly executed by the registered holder(s), so that such endorsement
or powers are signed exactly as the name(s) of the registered holder(s) appears
on the Debentures and the signatures to the endorsement or on the stock power
must be properly guaranteed by an Eligible Institution.
If the Debentures are endorsed by, or accompanied by stock powers signed
by, trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or other persons acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Company of their authority so to act must be submitted, and
the signatures must be properly guaranteed by an Eligible Institution.
If you have completed Item C or D regarding special issuance instructions,
the signature on this Letter of Transmittal must be guaranteed, in the space
provided in Item E, by an Eligible Institution.
6. JOINT HOLDERS OR DEBENTURES REGISTERED IN DIFFERENT NAMES. If
Debentures are tendered by joint holders or owners, all such persons must sign
the Letter of Transmittal in Item E. If Debentures are registered in different
names or forms of ownership, separate Letters of Transmittal must be completed,
signed and returned for each different registration. See Instruction 5 above.
7. NOTICE OF GUARANTEED DELIVERY. Debenture holders wishing to convert
their Debentures whose Debentures are not immediately available or who cannot
deliver their Debentures and all other documents required hereby to the Paying
and Conversion Agent on or prior to 5:00 p.m., Eastern Time, on September 29,
1997 may elect to convert their Debentures pursuant to the following procedures:
(a) such election to convert must be made by or through an Eligible Institution,
(b) a properly completed and duly executed Notice of Guaranteed Delivery in the
form provided by the Company to all registered holders of Debentures must be
received by the Paying and Conversion Agent on or prior to 5:00 p.m., Eastern
Time, on September 29, 1997, and (c) the Debentures in proper form for transfer,
together with a properly completed and duly executed Letter of Transmittal and
all other documents required by this Letter of Transmittal, must be received by
the Paying and Conversion Agent within five business days after the date such
Notice of Guaranteed Delivery is received by the Paying and Conversion Agent.
Notwithstanding the foregoing, Shares will be issued in respect of Debentures
surrendered for conversion only after timely receipt by the Paying and
Conversion Agent of the surrendered Debentures, a properly completed and duly
executed Letter of Transmittal and any other documents required by the Letter of
Transmittal.
8. TRANSFER TAXES. It is not anticipated that any transfer taxes will be
payable in connection with the issuance of certificates evidencing Shares upon
conversion of the Debentures. If, however, it should develop that in certain
circumstances such taxes may be payable, conversion of Debentures will be
effected without charge to the converting holder for any such stock transfer
tax, except in the following cases. If stock certificates issued upon conversion
are to be registered in the name of any person other than the registered owner
of Debentures, the amount of any stock transfer taxes (whether imposed on the
registered owner(s) of the certificates) transmitted herewith or such person(s)
payable on account of the transfer to such person(s) must accompany this Letter
of Transmittal or evidence must be submitted as to the payment of such taxes, or
exemption therefrom. The Company will not be required to issue or deliver stock
certificates in any such case until such person(s) has made payment or submitted
such evidence.
9
<PAGE> 10
9. LOST OR DESTROYED DEBENTURES. If your Debentures have been either lost
or destroyed, notify Union Planters National, as Trustee, of this fact
immediately by telephone at (901) 580-5476 or by mail, hand delivery or
overnight courier at the appropriate address as set forth on the cover of this
Letter of Transmittal. In order to retain your rights to convert your Debentures
which have been lost or destroyed, the procedures set forth in Item 7(a) and (b)
of these instructions must be followed. You will then be instructed as to the
steps you must take in order to convert the Debentures that you own. This form
and related documents cannot be processed until the missing Debentures have been
replaced. You must act immediately if you wish to safeguard your rights.
10. QUESTIONS AND ADDITIONAL COPIES. All questions regarding appropriate
procedures for converting Debentures and requests for additional copies of the
Notice of Redemption, Letter of Transmittal and Notice of Guaranteed Delivery
should be directed to Beacon Hill Partners, Inc., 90 Broad Street, New York, New
York 10004, Attention: Edward McCarthy, Telephone: (800) 755-5001.
11. SUBSTITUTE FORM W-9. Each Debenture holder is required to provide the
Paying and Conversion Agent with a correct taxpayer identification number
("TIN") on Substitute Form W-9 which is provided under Item F, and to indicate
that the Debenture holder is not subject to backup withholding by checking the
box in Part 2 of the form. Failure to provide the information on the form may
subject the Debenture holder to 31% backup withholding on the payments made to
the Debenture holder or other payee with respect to Debentures redeemed or
amounts paid for fractional Shares. The box in Part 3 of the form may be checked
if the Debenture holder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked
and the Paying and Conversion Agent is not provided with a TIN within sixty (60)
days, the Paying and Conversion Agent will withhold 31% on all such payments
until a TIN is provided.
IMPORTANT TAX INFORMATION
Under federal income tax law, a Debenture holder whose Debentures are
redeemed or who receives cash for fractional shares is required by law to
provide the Paying and Conversion Agent with such Debenture holder's correct TIN
on Substitute Form W-9. If such Debenture holder is an individual, the TIN is
his or her social security number. If the Paying and Conversion Agent is not
provided with the correct TIN, the Debenture holder or other payee may be
subject to a $50 penalty imposed by the Internal Revenue Service. In addition
payments that are made to such Debenture holder or other payee with respect to
Debentures redeemed or with respect to amounts paid for fractional shares may be
subject to backup withholding.
Certain Debenture holders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that Debenture holder must submit a Form W-8, signed under
penalties of perjury, attesting to that individual's exempt status. Such
statements can be obtained from the Paying and Conversion Agent.
If backup withholding applies, the Paying and Conversion Agent is required
to withhold 31 percent (31%) of any such payments made to the Debenture holder
or other payee. Backup withholding is not an additional tax. Rather, the tax
liability of persons subject to backup withholding will be reduced by the amount
of tax withheld. If withholding results in an overpayment of taxes, a refund may
be obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments made to a Debenture holder or
other payee, the Debenture holder is required to notify the Paying and
Conversion Agent of the Debenture holder's correct TIN by completing the form,
certifying that the TIN provided on Substitute Form W-9 is correct or that such
Debenture holder is awaiting a TIN and that (a) the Debenture holder has not
been notified by the Internal Revenue Service that the Debenture holder is
subject to backup withholding as a result of failure to report all interest or
dividends or (b) the Internal Revenue Service has notified the Debenture holder
that the Debenture holder is no longer subject to backup withholding.
10
<PAGE> 11
WHAT NUMBER TO GIVE THE PAYING AND CONVERSION AGENT
The Debenture holder is required to give the Paying and Conversion Agent
the TIN (e.g., social security number or employer identification number) of the
registered holder of the Debentures. If the Debentures are in more than one name
or are not in the name of the actual owner, consult the enclosed guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report.
HOLDERS OF DEBENTURES ARE ADVISED TO READ THE PROSPECTUS AND TO CONSULT
THEIR OWN TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES OF THE CONVERSION OR REDEMPTION OF THE DEBENTURES IN LIGHT OF THEIR
OWN PARTICULAR CIRCUMSTANCES.
11
<PAGE> 1
EXHIBIT 99.2
NOTICE OF REDEMPTION
TO THE HOLDERS OF
PROFFITT'S, INC.
4 3/4% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2003
REDEMPTION DATE: OCTOBER 6, 1997
CONVERSION RIGHT EXPIRES AT 5 P.M.,
EASTERN TIME, SEPTEMBER 29, 1997
NOTICE IS HEREBY GIVEN that in accordance with Article Eleven of the
Indenture, dated as of October 26, 1993 (the "Indenture"), between Proffitt's,
Inc. (the "Company") and Union Planters National Bank, as Trustee (the
"Trustee"), the Company has elected to redeem all of the Company's 4 3/4%
Convertible Subordinated Debentures Due 2003 (the "Debentures") on October 6,
1997 (the "Redemption Date"). Capitalized terms used herein and not defined are
used as defined in the Indenture.
The Debentures will be redeemed at a redemption price of 103.1667% of the
principal amount thereof, plus interest accruing after May 1, 1997 to the
Redemption Date, for a total price of $1,052.1184 for each $1,000 principal
amount of Debentures (the "Redemption Price"). On the Redemption Date, the
Redemption Price will become due and payable upon each Debenture, or portion
thereof, to be redeemed and interest will cease to accrue on and after such
date.
Debentures (or any portion thereof which is $1,000 or an integral multiple
thereof) may be converted into the Company's common stock, par value $.10 per
share (the "Common Stock"), at a conversion price of $42.70 principal amount of
Debentures per share of Common Stock (equivalent to 23.42 shares of Common Stock
for each $1,000 principal amount of Debentures). The Company will deliver cash
in lieu of any fractional share of Common Stock.
THE DEBENTURES WILL NOT BE CONVERTIBLE AFTER 5:00 P.M., EASTERN TIME, ON
SEPTEMBER 29, 1997.
Debentures must be surrendered to Union Planters National Bank, as paying
and conversion agent (the "Paying and Conversion Agent"), to collect the
Redemption Price or to convert the Debentures. A Letter of Transmittal should be
used in connection with the surrender of Debentures for conversion and
redemption. Debentures are to be surrendered for conversion or redemption at the
office of the Paying and Conversion Agent shown below:
<TABLE>
<S> <C>
BY HAND OR OVERNIGHT COURIER: BY MAIL:
(registered or certified mail recommended)
Union Planters National Bank Union Planters National Bank
Corporate Trust Department Corporate Trust Department
6200 Poplar Avenue P.O. Box 387
Third Floor Memphis, Tennessee 38147
Memphis, Tennessee 38119
</TABLE>
This Notice of Redemption, a Letter of Transmittal and a prospectus have
been sent to each holder of record of Debentures. Debenture holders should read
the prospectus and instructions to the Letter of Transmittal carefully.
If any holder requires assistance, has questions or would like to obtain
copies of the redemption materials, please contact Beacon Hill Partners, Inc.,
90 Broad Street, New York, New York 10004, Attention: Edward McCarthy,
Telephone: (800) 755-5001.
PROFFITT'S, INC.
Dated: September 5, 1997
