================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------
FORM 8-K
-------------------------------
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
October 29, 1997
PROFFITT'S, INC.
(Exact name of registrant as specified in its charter)
TENNESSEE 1-13113 62-0331040
(State or other (Commission File (IRS Employer
jurisdiction Number) Identification No.)
of incorporation)
3455 Highway 80 West
Jackson, Mississippi 39209
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code:
(423) 983-7000
=================================================================
Item 5. Other Events.
On October 29, 1997, Proffitt's, Inc. and Carson Pirie Scott
& Co. jointly announced the signing of an Agreement and Plan of
Merger. Pursuant to General Instruction F to Form 8-K, the
following information is incorporated herein by reference and is
attached hereto: (i) Agreement and Plan of Merger Among
Proffitt's, Inc., LaSalle Merger Corporation and Carson Pirie
Scott & Co. dated October 29, 1997 (Exhibit 2); (ii) press
release dated October 29, 1997 (Exhibit 99.1); and (iii)
Analysts' Conference Call Script (Exhibit 99.2).
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
The following exhibits are filed as a part of this
report:
Exhibit
Number Description
2 Agreement and Plan of Merger Among Proffitt's,
Inc., LaSalle Merger Corporation and Carson Pirie
Scott & Co. dated October 29, 1997.
99.1 Press release dated October 29, 1997.
99.2 Analysts' Conference Call Script
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
PROFFITT'S INC.
Date: October 29, 1997 /s/ R. Brad Martin
_______________________
R. Brad Martin
(Printed)
Chairman of the Board
and Chief Executive
Officer
(Title)
AGREEMENT AND PLAN OF MERGER
among
PROFFITT'S, INC.,
LASALLE MERGER CORPORATION
and
CARSON PIRIE SCOTT & CO.
Dated as of October 29, 1997
TABLE OF CONTENTS
Page
ARTICLE ITHE MERGER. . . . . . . . . . . . . . . . . . . . . . .1
Section 1.1 The Merger.. . . . . . . . . . . . . . . . . .1
Section 1.2 Effective Time.. . . . . . . . . . . . . . . .2
Section 1.3 Effects of the Merger.. . . . . . . . . . . . .2
Section 1.4 Articles and By-Laws. . . . . . . . . . . . . .2
Section 1.5 Conversion of Securities. . . . . . . . . . . .2
Section 1.6 Parent to Make Certificates Available.. . . . .3
Section 1.7 Dividends; Transfer Taxes; Withholding. . . . .4
Section 1.8 No Fractional Securities. . . . . . . . . . . .5
Section 1.9 Return of Exchange Fund.. . . . . . . . . . . .5
Section 1.10 Adjustment of Conversion Number. . . . . . . .5
Section 1.11 No Further Ownership Rights in Company Common
Stock. . . . . . . . . . . . . . . . . . . . . . . . .6
Section 1.12 Closing of Company Transfer Books. . . . . . .6
Section 1.13 Lost Certificates. . . . . . . . . . . . . . .6
Section 1.14 Affiliates.. . . . . . . . . . . . . . . . . .6
Section 1.15 Dissenters' Rights.. . . . . . . . . . . . . .6
Section 1.16 Further Assurances.. . . . . . . . . . . . . .7
Section 1.17 Closing. . . . . . . . . . . . . . . . . . . .7
ARTICLE IIREPRESENTATIONS AND WARRANTIES OF PARENT AND SUB . . .7
Section 2.1 Organization, Standing and Power. . . . . . . .7
Section 2.2 Capital Structure. . . . . . . . . . . . . . .8
Section 2.3 Authority.. . . . . . . . . . . . . . . . . . .9
Section 2.4 Consents and Approvals; No Violation. . . . . 10
Section 2.5 SEC Documents and Other Reports.. . . . . . . 11
Section 2.6 Registration Statement and Joint Proxy
Statement. . . . . . . . . . . . . . . . . . 11
Section 2.7 Absence of Certain Changes or Events. . . . . 12
Section 2.8 Permits and Compliance. . . . . . . . . . . . 12
Section 2.9 Tax Matters.. . . . . . . . . . . . . . . . . 13
Section 2.10 Actions and Proceedings. . . . . . . . . . . 13
Section 2.11 Certain Agreements.. . . . . . . . . . . . . 13
Section 2.12 ERISA. . . . . . . . . . . . . . . . . . . . 14
Section 2.13 Compliance with Certain Laws.. . . . . . . . 15
Section 2.14 Liabilities. . . . . . . . . . . . . . . . . 15
Section 2.15 Labor Matters. . . . . . . . . . . . . . . . 15
Section 2.16 Intellectual Property. . . . . . . . . . . . 16
Section 2.17 Opinion of Financial Advisor.. . . . . . . . 16
Section 2.18 Pooling of Interests; Reorganization.. . . . 16
Section 2.19 Required Vote of Parent Shareholders.. . . . 16
Section 2.20 Ownership of Shares. . . . . . . . . . . . . 16
Section 2.21 Operations of Sub. . . . . . . . . . . . . . 16
Section 2.22 Brokers. . . . . . . . . . . . . . . . . . . 17
Section 2.23 State Takeover Statutes and Shareholder Rights
Plan.. . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IIIREPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . 17
Section 3.1 Organization, Standing and Power. . . . . . . 17
Section 3.2 Capital Structure.. . . . . . . . . . . . . . 17
Section 3.3 Authority.. . . . . . . . . . . . . . . . . . 18
Section 3.4 Consents and Approvals; No Violation. . . . . 19
Section 3.5 SEC Documents and Other Reports.. . . . . . . 20
Section 3.6 Registration Statement and Joint Proxy
Statement.. . . . . . . . . . . . . . . . . . 20
Section 3.7 Absence of Certain Changes or Events. . . . . 21
Section 3.8 Permits and Compliance. . . . . . . . . . . . 21
Section 3.9 Tax Matters.. . . . . . . . . . . . . . . . . 22
Section 3.10 Bank Matters.. . . . . . . . . . . . . . . . 22
Section 3.11 Actions and Proceedings. . . . . . . . . . . 22
Section 3.12 Certain Agreements.. . . . . . . . . . . . . 22
Section 3.13 ERISA. . . . . . . . . . . . . . . . . . . . 23
Section 3.14 Compliance with Certain Laws.. . . . . . . . 24
Section 3.15 Liabilities. . . . . . . . . . . . . . . . . 24
Section 3.16 Labor Matters. . . . . . . . . . . . . . . . 24
Section 3.17 Intellectual Property. . . . . . . . . . . . 25
Section 3.18 Opinion of Financial Advisor.. . . . . . . . 25
Section 3.19 State Takeover Statutes and Shareholder Rights
Plan.. . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.20 Required Vote of Company Shareholders. . . . 26
Section 3.21 Pooling of Interests; Reorganization.. . . . 26
Section 3.22 Brokers. . . . . . . . . . . . . . . . . . . 26
Section 3.23 Share Repurchases. . . . . . . . . . . . . 26
Section 3.24 Ownership of Shares. . . . . . . . . . . . 26
ARTICLE IVCOVENANTS RELATING TO CONDUCT OF BUSINESS. . . . . . 26
Section 4.1 Conduct of Business Pending the Merger. . . . 26
Section 4.2 No Solicitation.. . . . . . . . . . . . . . . 30
Section 4.3 Third Party Standstill Agreements.. . . . . . 31
Section 4.4 Pooling of Interests; Reorganization. . . . . 31
ARTICLE VADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . 31
Section 5.1 Shareholder Meetings. . . . . . . . . . . . . 31
Section 5.2 Preparation of the Registration Statement and
the Joint Proxy Statement. . . . . . . . . . . . . . 32
Section 5.3 Access to Information.. . . . . . . . . . . . 32
Section 5.4 Compliance with the Securities Act; Pooling
Period.. . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.5 NYSE Listing. . . . . . . . . . . . . . . . . 34
Section 5.6 Fees and Expenses.. . . . . . . . . . . . . . 34
Section 5.7 Company Stock Options; Stock Purchase Plan;
Employee Benefits. . . . . . . . . . . . . . . . . . 37
Section 5.8 Reasonable Best Efforts; Pooling of Interests.39
Section 5.9 Public Announcements. . . . . . . . . . . . . 40
Section 5.10 State Takeover Laws. . . . . . . . . . . . . 40
Section 5.11 Indemnification; Directors and Officers
Insurance. . . . . . . . . . . . . . . . . . . . . . 40
Section 5.12 Notification of Certain Matters. . . . . . . 41
Section 5.13 Directors. . . . . . . . . . . . . . . . . . 41
Section 5.14 Designation of Directors.. . . . . . . . . . 41
ARTICLE VICONDITIONS PRECEDENT TO THE MERGER . . . . . . . . . 42
Section 6.1 Conditions to Each Party's Obligation to Effect
the Merger.. . . . . . . . . . . . . . . . . . . . . 42
Section 6.2 Conditions to Obligation of the Company to Effect
the Merger.. . . . . . . . . . . . . . . . . . . . . 43
Section 6.3 Conditions to Obligations of Parent and Sub to
Effect the Merger. . . . . . . . . . . . . . . . . . 45
ARTICLE VIITERMINATION, AMENDMENT AND WAIVER . . . . . . . . . 45
Section 7.1 Termination.. . . . . . . . . . . . . . . . . 45
Section 7.2 Effect of Termination.. . . . . . . . . . . . 47
Section 7.3 Amendment.. . . . . . . . . . . . . . . . . . 48
Section 7.4 Waiver. . . . . . . . . . . . . . . . . . . . 48
ARTICLE VIIIGENERAL PROVISIONS . . . . . . . . . . . . . . . . 48
Section 8.1 Non-Survival of Representations, Warranties and
Agreements.. . . . . . . . . . . . . . . . . . . . . 48
Section 8.2 Notices.. . . . . . . . . . . . . . . . . . . 48
Section 8.3 Interpretation. . . . . . . . . . . . . . . . 49
Section 8.4 Counterparts. . . . . . . . . . . . . . . . . 49
Section 8.5 Entire Agreement; No Third-Party Beneficiaries.49
Section 8.6 Governing Law.. . . . . . . . . . . . . . . . 49
Section 8.7 Assignment. . . . . . . . . . . . . . . . . . 50
Section 8.8 Severability. . . . . . . . . . . . . . . . . 50
Section 8.9 Enforcement of this Agreement.. . . . . . . . 50
List of Schedules
Schedule 2.15
Schedule 3.4
Schedule 3.7
Schedule 3.8(a)
Schedule 3.8(b)
Schedule 3.11
Schedule 3.12
Schedule 3.14
Schedule 3.16
Schedule 4.1(b)
Schedule 5.7(g)
Schedule 6.2(d)
List of Exhibits
Exhibit A
Exhibit B
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 29, 1997
(this "Agreement"), among PROFFITT'S, INC., a Tennessee corporation
("Parent"), LASALLE MERGER CORPORATION, an Illinois corporation and
a wholly-owned subsidiary of Parent ("Sub"), and CARSON PIRIE SCOTT
& CO., an Illinois corporation (the "Company") (Sub and the Company
being hereinafter collectively referred to as the "Constituent
Corporations").
WITNESSETH:
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have approved and declared advisable the merger of Sub
and the Company (the "Merger"), upon the terms and subject to the
conditions set forth herein, whereby each issued and outstanding
share of Common Stock, par value $.01 per share, of the Company
("Company Common Stock") not owned directly or indirectly by Parent
or directly by the Company will be converted into shares of Parent
Common Stock, par value $.10 per share ("Parent Common Stock");
WHEREAS, the respective Boards of Directors of Parent and the
Company have determined that the Merger is in furtherance of and
consistent with their respective long-term business strategies and
is in the best interest of their respective shareholders and Parent
has approved this Agreement and the Merger as the sole shareholder
of Sub;
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code"); and
WHEREAS, it is intended that the Merger shall be recorded for
accounting purposes as a pooling of interests.
NOW, THEREFORE, in consideration of the premises,
representations, warranties and agreements herein contained, the
parties agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions hereof, and in accordance with the Illinois Business
Corporation Act of 1983, as amended (the "Ill.C."), Sub shall be
merged with and into the Company at the Effective Time (as
hereinafter defined). Following the Merger, the separate corporate
existence of Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and shall
succeed to and assume all the rights and obligations of Sub in
accordance with the Ill.C. Section 5/11.50.
Section 1.2 Effective Time. The Merger shall become
effective when a Certificate of Merger (the "Certificate of
Merger"), executed in accordance with the relevant provisions of
the Ill.C., is issued by the Secretary of State of the State of
Illinois; provided, however, that, upon mutual consent of the
Constituent Corporations, the Certificate of Merger may provide for
a later date of effectiveness of the Merger not more than 30 days
after the date the Certificate of Merger is issued. When used in
this Agreement, the term "Effective Time" shall mean the later of
the date and time at which the Certificate of Merger is issued or
such later time established by the Certificate of Merger. The
filing of the Articles of Merger in accordance with Section 5/11.25
of the Ill.C. shall be made on the date of the Closing (as defined
in Section 1.17), or as promptly thereafter as practicable.
Section 1.3 Effects of the Merger. The Merger shall have the
effects set forth in the Ill.C.
Section 1.4 Articles and By-Laws. At the Effective Time, the
Articles of Incorporation of the Sub, as in effect immediately
prior to the Effective Time, shall be the Articles of Incorporation
of the Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law. At the Effective Time, the
Board of the Surviving Corporation shall take such steps as shall
be necessary so that the By-Laws of the Sub, as in effect
immediately prior to the Effective Time, shall be the By-Laws of
the Surviving Corporation until thereafter changed or amended as
provided therein or by the Articles of Incorporation of the
Surviving Corporation or by applicable law.
Section 1.5 Conversion of Securities. As of the Effective
Time, by virtue of the Merger and without any action on the part of
Sub, the Company or the holders of any securities of the
Constituent Corporations:
(a) Each issued and outstanding share of common stock,
par value $.01 per share, of Sub shall be converted into one
validly issued, fully paid and nonassessable share of common
stock of the Surviving Corporation.
(b) All shares of Company Common Stock that are held in
the treasury of the Company and any shares of Company Common
Stock owned by Parent or by any wholly-owned Subsidiary of
Parent shall be canceled and no capital stock of Parent or
other consideration shall be delivered in exchange therefor.
(c) Subject to the provisions of Sections 1.8 and 1.10
hereof, each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other
than shares to be canceled in accordance with Section 1.5(b)
or as to which dissenters' rights have been perfected) shall
be converted into a number (the "Conversion Number") of
validly issued, fully paid and nonassessable shares of Parent
Common Stock, including the corresponding percentage of a
right to purchase shares of Parent preferred stock pursuant to
the Parent Rights Plan (as hereinafter defined). All such
shares of Company Common Stock, when so converted, shall no
longer be outstanding and shall automatically be canceled and
retired and each holder of a certificate formerly representing
any such shares shall cease to have any rights with respect
thereto, except the right to receive any dividends and other
distributions in accordance with Section 1.7, certificates
representing the shares of Parent Common Stock into which such
shares are converted and any cash, without interest, in lieu
of fractional shares to be issued or paid in consideration
therefor upon the surrender of such certificate in accordance
with Section 1.6. Each certificate shall, from and after the
Effective Time until surrendered in exchange for Parent Common
Stock, for all purposes be deemed to represent the shares of
Parent Common Stock into which such Company Common Stock was
converted in the Merger.
For purposes of this Agreement, the "Conversion Number" shall
be determined as follows: (i) in the event that the Closing Date
Market Price is less than $27.75, the Conversion Number shall be
1.80; (ii) in the event that the Closing Date Market Price is equal
to or greater than $27.75 and less than $28.57, the Conversion
Number shall be equal to $50.00 divided by the Closing Date Market
Price of one share of Parent Common Stock; (iii) in the event that
the Closing Date Market Price is equal to or greater than $28.57
and less than $30.86, the Conversion Number shall be 1.75; (iv) in
the event that the Closing Date Market Price is equal to or greater
than $30.86 and less than $31.77, the Conversion Number shall be
equal to $54.00 divided by the Closing Date Market Price of one
share of Parent Common Stock; and (v) in the event that the Closing
Date Market Price is equal to or greater than $31.77, the
Conversion Number shall be equal to 1.70. For purposes of this
Agreement, "Closing Date Market Price" shall mean the average
closing price for one share of Parent Common Stock during the
period of the twenty (20) most recent NYSE (as defined herein)
trading days ending on the third NYSE trading day prior to the date
of the Company Shareholder Meeting (as hereinafter defined). The
closing price on any day shall be the last reported sale price of
one share of Parent Common Stock on the NYSE. All calculations
under this Section 1.5(c) shall be rounded to the nearest
hundredth.
Section 1.6 Parent to Make Certificates Available.
(a) Exchange of Certificates. Parent shall authorize a
commercial bank reasonably acceptable to the Company (or such
other person or persons as shall be acceptable to Parent and
the Company) to act as Exchange Agent hereunder (the "Exchange
Agent"). As soon as practicable after the Effective Time,
Parent shall deposit with the Exchange Agent, in trust for the
holders of shares of Company Common Stock converted in the
Merger, certificates representing the shares of Parent Common
Stock issued pursuant to Section 1.5(c) in exchange for
outstanding certificates representing shares of Company Common
Stock and cash, as required to make payments in lieu of any
fractional shares pursuant to Section 1.8 (such cash and
shares of Parent Common Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred
to as the "Exchange Fund"). The Exchange Agent shall, pursuant
to irrevocable instructions, deliver the certificates
representing the Parent Common Stock contemplated to be
delivered pursuant to Section 1.5(c) out of the Exchange Fund.
Except as contemplated by this Section 1.6, and Sections 1.8
and 1.9, the Exchange Fund shall not be used for any other
purpose.
(b) Exchange Procedures. As soon as practicable after
the Effective Time, Parent shall cause the Exchange Agent to
mail to each record holder of a certificate or certificates
which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock converted in the
Merger (the "Certificates") a letter of transmittal (which
shall be in customary form, shall specify that delivery shall
be effected, and risk of loss and title to the Certificates
shall pass, only upon actual delivery of the Certificates to
the Exchange Agent, and shall contain instructions for use in
effecting the surrender of the Certificates in exchange for
certificates representing shares of Parent Common Stock and
cash in lieu of fractional shares). Upon surrender for
cancellation to the Exchange Agent of a Certificate, together
with such letter of transmittal, duly executed, the holder of
such Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole
shares of Parent Common Stock into which the shares
represented by the surrendered Certificate shall have been
converted at the Effective Time pursuant to this Article I,
cash in lieu of any fractional share in accordance with
Section 1.8 and certain dividends and other distributions in
accordance with Section 1.7, and any Certificate so
surrendered shall forthwith be canceled.
Section 1.7 Dividends; Transfer Taxes; Withholding. No
dividends or other distributions that are declared on or after the
Effective Time on Parent Common Stock, or are payable to the
holders of record thereof on or after the Effective Time, will be
paid to any person entitled by reason of the Merger to receive a
certificate representing Parent Common Stock and no cash payment in
lieu of fractional shares will be paid to any such person pursuant
to Section 1.8 until such person surrenders the related Certificate
or Certificates, as provided in Section 1.6. Subject to the effect
of applicable law, there shall be paid to each record holder of a
new certificate representing such Parent Common Stock: (i) at the
time of such surrender or as promptly as practicable thereafter,
the amount of any dividends or other distributions theretofore paid
with respect to the shares of Parent Common Stock represented by
such new certificate and having a record date on or after the
Effective Time and a payment date prior to such surrender; (ii) at
the appropriate payment date or as promptly as practicable
thereafter, the amount of any dividends or other distributions
payable with respect to such shares of Parent Common Stock and
having a record date on or after the Effective Time but prior to
such surrender and a payment date on or subsequent to such
surrender; and (iii) at the time of such surrender or as promptly
as practicable thereafter, the amount of any cash payable with
respect to a fractional share of Parent Common Stock to which such
holder is entitled pursuant to Section 1.8. In no event shall the
person entitled to receive such dividends or other distributions be
entitled to receive interest on such dividends or other
distributions. If any cash or certificate representing shares of
Parent Common Stock is to be paid to or issued in a name other than
that in which the Certificate surrendered in exchange therefor is
registered, it shall be a condition of such exchange that the
Certificate so surrendered shall be properly endorsed and otherwise
in proper form for transfer and that the person requesting such
exchange shall pay to the Exchange Agent any transfer or other
taxes required by reason of the issuance of certificates for such
shares of Parent Common Stock in a name other than that of the
registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Exchange Agent that such tax
has been paid or is not applicable. Parent or the Exchange Agent
shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock such amounts as Parent or the
Exchange Agent is required to deduct and withhold with respect to
the making of such payment under the Code or under any provision of
state, local or foreign tax law. To the extent that amounts are so
withheld by Parent or the Exchange Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been
paid to the holder of the Company Common Stock in respect of which
such deduction and withholding was made by Parent or the Exchange
Agent.
Section 1.8 No Fractional Securities. No certificates or
scrip representing fractional shares of Parent Common Stock shall
be issued upon the surrender for exchange of Certificates pursuant
to this Article I, and no Parent dividend or other distribution or
stock split shall relate to any fractional share, and no fractional
share shall entitle the owner thereof to vote or to any other
rights of a security holder of Parent. In lieu of any such
fractional share, each holder of Company Common Stock who would
otherwise have been entitled to a fraction of a share of Parent
Common Stock upon surrender of Certificates for exchange pursuant
to this Article I will be paid an amount in cash (without
interest), rounded to the nearest cent, determined by multiplying
(i) the per share closing price on the New York Stock Exchange
("NYSE") of Parent Common Stock on the date of the Effective Time
(or, if the shares of Parent Common Stock do not trade on the NYSE
on such date, the first date of trading of shares of Parent Common
Stock on NYSE after the Effective Time) by (ii) the fractional
interest to which such holder would otherwise be entitled. As
promptly as practicable after the determination of the amount of
cash, if any, to be paid to holders of fractional share interests,
the Exchange Agent shall so notify the Parent, and the Parent shall
deposit such amount with the Exchange Agent and shall cause the
Exchange Agent to forward payments to such holders of fractional
share interests subject to and in accordance with the terms of
Section 1.7 and this Section 1.8.
Section 1.9 Return of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the former
shareholders of the Company for one year after the Effective Time
shall be delivered to Parent, upon demand of Parent, and any such
former shareholders who have not theretofore complied with this
Article I shall thereafter look only to Parent for payment of their
claim for Parent Common Stock, any cash in lieu of fractional
shares of Parent Common Stock and any dividends or distributions
with respect to Parent Common Stock. Neither Parent nor the
Surviving Corporation shall be liable to any former holder of
Company Common Stock for any such shares of Parent Common Stock,
cash and dividends and distributions held in the Exchange Fund
which is delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
Section 1.10 Adjustment of Conversion Number. In the event of
any reclassification, recapitalization, stock split, stock dividend
or subdivision with respect to Parent Common Stock, any change or
conversion of Parent Common Stock into other securities, any other
dividend or distribution with respect to the Parent Common Stock as
the same may be adjusted from time to time pursuant to the terms of
this Agreement (or if a record date with respect to any of the
foregoing should occur), prior to the Effective Time, appropriate
and proportionate adjustments, if any, shall be made to the
Conversion Number, and all references to the Conversion Number in
this Agreement shall be deemed to be to the Conversion Number as so
adjusted; provided, however, that in no event shall any such
adjustment result in the consideration to be paid pursuant to
Section 1.5(c) being any securities other than Parent Common Stock.
Section 1.11 No Further Ownership Rights in Company Common
Stock. All shares of Parent Common Stock issued pursuant to the
terms hereof (including any cash paid pursuant to Section 1.8)
shall be deemed to have been issued in full satisfaction of all
rights pertaining to the shares of Company Common Stock represented
by such Certificates.
Section 1.12 Closing of Company Transfer Books. At the
Effective Time, the stock transfer books of the Company shall be
closed and no transfer of shares of Company Common Stock
outstanding prior to the Effective Time shall thereafter be made on
the records of the Company. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, the
Exchange Agent or the Parent, such Certificates shall be canceled
and exchanged as provided in this Article I.
Section 1.13 Lost Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by the Surviving Corporation,
the posting by such person of a bond, in such reasonable amount as
the Surviving Corporation may direct (but consistent with the
practices the Parent applies to its own shareholders), as indemnity
against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Certificate the shares of Parent Common
Stock, any cash in lieu of fractional shares of Parent Common Stock
to which the holders thereof are entitled pursuant to Section 1.8
and any dividends or other distributions to which the holders
thereof are entitled pursuant to Section 1.7.
Section 1.14 Affiliates. Certificates surrendered for
exchange by any Affiliate (as determined pursuant to Section 5.4)
of the Company for purposes of Rule 145(c) under the Securities Act
of 1933, as amended (the "Securities Act"), and the rules and
regulations promulgated thereunder and for purposes of applicable
interpretations regarding pooling of interests accounting, shall
not be exchanged until Parent has received a written agreement from
such Person as provided in Section 5.4 hereof.
Section 1.15 Dissenters' Rights.
(a) Notwithstanding any provision of this Agreement to
the contrary, each outstanding share of Company Common Stock
held by a holder who has demanded and perfected his or her
appraisal rights in accordance with Section 5/11.65 of the
Ill.C. and who has not effectively withdrawn or lost his right
to such appraisal (a "Dissenting Share"), shall not be
converted into, become exchangeable for or represent a right
to receive Parent Common Stock pursuant to Section 1.5 hereof
but the holder thereof shall only be entitled to such rights
as are granted by the Ill.C. and shall not be entitled to vote
or to exercise any other rights of a shareholder of the
Company except as provided in the Ill.C. Each holder of
Dissenting Shares who becomes entitled to payment therefor
pursuant to the Ill.C. shall receive such payment from the
Surviving Corporation in accordance with the Ill.C.
(b) Notwithstanding the provisions of Section 1.15(a)
hereof if any shareholder who demands appraisal with respect
to a share of his Company Common Stock under the Ill.C. shall
effectively withdraw or lose (through failure to perfect or
otherwise) his right to appraisal, such share shall cease to
be a Dissenting Share and shall automatically be converted
into, become exchangeable for and represent only the right to
receive the shares of Parent Common Stock in accordance with
Section 1.5(c) hereof, without interest thereon, any cash in
lieu of fractional shares pursuant to Section 1.8 hereof and
any dividends or other distributions pursuant to Section 1.7
hereof, upon surrender of a Certificate.
Section 1.16 Further Assurances. If at any time after the
Effective Time the Surviving Corporation shall consider or be
advised that any deeds, bills of sale, assignments or assurances or
any other acts or things are necessary, desirable or proper (i) to
vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation its right, title or interest in, to or under any of the
rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (ii) otherwise to carry
out the purposes of this Agreement, the Surviving Corporation and
its proper officers and directors or their designees shall be
authorized to execute and deliver, in the name and on behalf of
either of the Constituent Corporations, all such deeds, bills of
sale, assignments and assurances and to do, in the name and on
behalf of either Constituent Corporation, all such other acts and
things as may be necessary, desirable or proper to vest, perfect or
confirm the Surviving Corporation's right, title or interest in, to
or under any of the rights, privileges, powers, franchises,
properties or assets of such Constituent Corporation and otherwise
to carry out the purposes of this Agreement.
Section 1.17 Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") and all actions
specified in this Agreement to occur at the Closing shall take
place immediately following the time the last of the conditions
set forth in Article VI shall have been fulfilled or waived or at
such other time as Parent and the Company shall agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub jointly and severally represent and warrant to
the Company as follows:
Section 2.1 Organization, Standing and Power. Parent is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Tennessee, and has the requisite
corporate power and authority to carry on its business as now being
conducted. Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of Illinois and
has the requisite corporate power and authority to carry on its
business as now being conducted. Each Subsidiary of Parent is duly
organized, validly existing and in good standing under the laws of
the jurisdiction in which it is organized and has the requisite
corporate or other power and authority to carry on its business as
now being conducted, except where the failure to be so organized,
existing or in good standing or to have such power or authority
would not, individually or in the aggregate, have a Material
Adverse Effect (as hereinafter defined) on Parent. Parent and each
of its Subsidiaries are duly qualified to do business, and are in
good standing, in each jurisdiction where the character of their
properties owned or held under lease or the nature of their
activities makes such qualification necessary, except where the
failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect on Parent. For purposes
of this Agreement (a) each of "Material Adverse Change" or
"Material Adverse Effect" means, when used with respect to Parent
or the Company, as the case may be, any change or effect that is
materially adverse to the assets, liabilities, results of operation
or financial condition of Parent and its Subsidiaries, taken as a
whole, or the Company and its Subsidiaries, taken as a whole, as
the case may be, and (b) "Subsidiary" means any corporation,
partnership, joint venture or other legal entity of which Parent or
the Company, as the case may be (either alone or through or
together with any other Subsidiary), owns, directly or indirectly,
50% or more of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the board
of directors or other governing body of such corporation,
partnership, joint venture or other legal entity. Parent has
heretofore delivered to the Company complete and correct copies of
Parent's certificate of incorporation ("Charter") and by-laws
("Parent By-Laws"), as in effect on the date hereof.
Section 2.2 Capital Structure. As of the Effective Time, the
authorized capital stock of Parent will consist of 500,000,000
shares of Parent Common Stock and 50,000,000 shares of Preferred
Stock, par value $1.00 per share (the "Parent Preferred Stock"). At
the close of business on October 24, 1997, (i) 61,762,302 shares of
Parent Common Stock were issued and outstanding, all of which were
validly issued, fully paid and nonassessable and free of preemptive
rights; (ii) 4,811,248 shares of Parent Common Stock were reserved
for future issuance pursuant to Parent's 1994 Long-Term Incentive
Plan, the 1987 Stock Option Plan, the 1997 Stock-Based Incentive
Plan and the Parisian Stock Option Plans (the "Parent Stock
Plans"); (iii) 645,036 shares of Parent Common Stock were reserved
for future issuance pursuant to Parent's 1994 Employee Stock
Purchase Plan; and (iv) no shares of Parent Preferred Stock were
issued or outstanding. All of the shares of Parent Common Stock
issuable in exchange for Company Common Stock at the Effective Time
in accordance with this Agreement will be, when so issued, duly
authorized, validly issued, fully paid and nonassessable, free of
preemptive rights and be entitled to the benefits of the Parent
Rights Plan under the terms thereof. As of the date of this
Agreement, except for (a) this Agreement, (b) stock options
covering not in excess of 4,196,248 shares of Parent Common Stock
(collectively, the "Parent Stock Options"), (c) the 1994 Employee
Stock Purchase Plan, (d) contingent stock grants of 615,000 shares
of Parent Common Stock to key executives, and (e) securities
issuable pursuant to the stock purchase rights declared as a
dividend on March 28, 1995 (the "Parent Rights") and the rights
agreement dated as of March 28, 1995 between Parent and Union
Planters National Bank (the "Parent Rights Agreement") ( the Parent
Rights and the Parent Rights Agreement are collectively the "Parent
Rights Plan"), there are no options, warrants, calls, rights or
agreements to which Parent or any of its Subsidiaries is a party or
by which any of them is bound obligating Parent or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of Parent or
any of its Subsidiaries, or securities convertible into or
exchangeable for such capital stock, or obligating Parent or any of
its Subsidiaries to grant, extend or enter into any such option,
warrant, call, right or agreement. Except as disclosed in Parent
SEC Documents filed prior to the date hereof (as hereinafter
defined), since October 24, 1997, Parent has not issued any shares
of its capital stock, or securities convertible into or
exchangeable for such capital stock, other than shares issued in
the ordinary course pursuant to the Parent Stock Plans and the
accompanying rights issued pursuant to the Parent Rights Agreement.
Except as disclosed in Parent SEC Documents filed prior to the date
hereof, there are no outstanding contractual obligations of Parent
or any of Parent's Subsidiaries (i) restricting the transfer of,
(ii) affecting the voting rights of, (iii) requiring the
repurchase, redemption or disposition of, (iv) requiring the
registration for sale of, or (v) granting any preemptive or
antidilutive right with respect to, any shares of Parent Common
Stock or any capital stock of any Subsidiary of Parent. Each
outstanding share of capital stock of each Subsidiary of Parent is
duly authorized, validly issued, fully paid, nonassessable and free
of preemptive rights and, except as disclosed in the Parent SEC
Documents filed prior to the date hereof, each such share is owned
by Parent or another Subsidiary of Parent, free and clear of all
security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on voting rights, charges
and other encumbrances of any nature whatsoever.
Section 2.3 Authority. The respective Boards of Directors of
Parent and Sub have on or prior to the date of this Agreement (a)
declared the Merger advisable and approved this Agreement in
accordance with the applicable law, (b) resolved to recommend the
approval by Parent's shareholders of the matters covered by the
Parent Shareholder Approvals (as hereinafter defined) and (c)
directed that this Agreement and the other matters subject to
Parent Shareholder Approvals be submitted to Parent's shareholders
for approval. Each of Parent and Sub has all requisite corporate
power and authority to enter into this Agreement and, subject to
approval by the shareholders of Parent of this Agreement, an
amendment to the Charter of Parent to increase the authorized
shares of Parent Common Stock (the "Charter Amendment") and the
issuance of Parent Common Stock in connection with the Merger (the
"Share Issuance") (collectively, the "Parent Shareholders'
Approvals"), to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Parent and Sub and
the consummation by Parent and Sub of the transactions contemplated
hereby, including the Charter Amendment and the Share Issuance,
have been duly authorized by all necessary corporate action on the
part of Parent and Sub, subject to (x) the Parent Shareholders'
Approvals, (y) the filing of appropriate Merger documents as
required by the Ill.C. and (z) the filing of the Charter Amendment
in accordance with Tennessee law. This Agreement has been duly
executed and delivered by Parent and Sub and (assuming the valid
authorization, execution and delivery of this Agreement by the
Company) this Agreement constitutes the valid and binding
obligation of Parent and Sub enforceable against each of them in
accordance with its terms. The Share Issuance and the filing of a
registration statement on Form S-4 with the Securities and Exchange
Commission ("SEC") by Parent under the Securities Act for the
purpose of registering the shares of Parent Common Stock to be
issued in the Merger (together with any amendments or supplements
thereto, whether prior to or after the effective date thereof, the
"Registration Statement") have been duly authorized by Parent's
Board of Directors. The Parent Common Stock, when issued, will be
registered under the Securities Act and Exchange Act (as
hereinafter defined) and registered or exempt from registration
under any applicable state securities or "blue sky" laws ("Blue Sky
Laws").
Section 2.4 Consents and Approvals; No Violation. Assuming
that all consents, approvals, authorizations and other actions
described in the second sentence of this Section 2.4 have been
obtained and all filings and obligations described in this Section
2.4 have been made, the execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated hereby
and compliance with the provisions hereof will not conflict with,
result in any violation of, or breach or default (with or without
notice or lapse of time, or both) under, or give to others a right
of termination, cancellation or acceleration of any obligation or
the loss of a material benefit under, or result in the creation of
any lien, security interest, charge or encumbrance upon any of the
properties or assets of Parent or any of its Subsidiaries under,
any provision of (i) the Charter or By-Laws of Parent, (ii) any
provision of the comparable charter or organization documents of
any of Parent's Subsidiaries, (iii) any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to
Parent or any of its Subsidiaries or (iv) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to
Parent or any of its Subsidiaries or any of their respective
properties or assets, other than, in the case of clauses (ii),
(iii) or (iv), any such conflicts, violations, breaches, defaults,
rights, liens, security interests, charges or encumbrances that,
individually or in the aggregate, would not have a Material Adverse
Effect on Parent, or prevent or materially delay the consummation
of any of the transactions contemplated hereby. No filing,
notification or registration with, or authorization, consent or
approval of, any domestic (federal and state), foreign or
supranational court, commission, governmental body, regulatory or
administrative agency, authority or tribunal (a "Governmental
Entity") is required by or with respect to Parent or any of its
Subsidiaries in connection with the execution and delivery of this
Agreement by Parent or Sub or is necessary for the consummation of
the Merger and the other transactions contemplated by this
Agreement, except for (i) in connection, or in compliance, with the
provisions of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), the Securities Act and the
Securities Exchange Act of 1934, as amended (together with the
rules and regulations promulgated thereunder, the "Exchange Act"),
(ii) the issuance of the Certificate of Merger by the Secretary of
State of the State of Illinois, the filing of the Charter Amendment
in Tennessee and the filing of the appropriate documents with the
relevant authorities of other states in which the Company or any of
its Subsidiaries is qualified to do business, (iii) such filings
and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure
or required approval triggered by the Merger or by the transactions
contemplated by this Agreement, (iv) such filings, authorizations,
orders and approvals as may be required by state takeover laws (the
"State Takeover Approvals"), (v) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be
required under the laws of any foreign country in which the Company
or any of its Subsidiaries conducts any business or owns any
property or assets, (vi) such filings and consents as may be
required under any state or foreign laws pertaining to debt
collection, the issuance of payment instruments or money
transmission, (vii) applicable requirements, if any, of Blue Sky
Laws and the NYSE, (viii) the approval of the Office of the
Comptroller of the Currency ("OCC") for the change of control of
the National Bank of Great Lakes, a wholly-owned Subsidiary of the
Company (the "Bank") and (ix) such other consents, orders,
authorizations, registrations, declarations and filings the failure
of which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect on Parent, or prevent or
materially delay the consummation of any of the transactions
contemplated hereby.
Section 2.5 SEC Documents and Other Reports. Parent and its
affiliates have filed all required documents with the SEC since
January 1, 1995 (the "Parent SEC Documents"). As of their
respective dates, the Parent SEC Documents complied in all material
respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and, at the respective times they
were filed, none of the Parent SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements (including,
in each case, any notes thereto) of Parent included in the Parent
SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principles ("GAAP")
(except, in the case of the unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the
notes thereto) and fairly presented in all material respects the
consolidated financial position of Parent and its consolidated
Subsidiaries as at the respective dates thereof and the
consolidated results of their operations and their consolidated
cash flows for the periods then ended (subject, in the case of
unaudited statements, to any other adjustments described therein
and normal year-end audit adjustments). Except as disclosed in the
Parent SEC Documents or as required by GAAP, Parent has not, since
February 1, 1997, made any change in the accounting practices or
policies applied in the preparation of financial statements. The
books and records of Parent and its Subsidiaries have been, and are
being, maintained in accordance with GAAP and other applicable
legal and accounting requirements.
Section 2.6 Registration Statement and Joint Proxy Statement.
None of the information to be supplied by Parent or Sub for
inclusion or incorporation by reference in the Registration
Statement or the joint proxy statement/prospectus included therein
(together with any amendments or supplements thereto, the "Joint
Proxy Statement") relating to the Shareholder Meetings (as defined
in Section 5.1) will (i) in the case of the Registration Statement,
at the time it becomes effective, contain any untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein
not misleading or (ii) in the case of the Joint Proxy Statement, at
the time of the mailing of the Joint Proxy Statement, the time of
each of the Shareholder Meetings and at the Effective Time, contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under
which they are made, not misleading. If at any time prior to the
Effective Time any event with respect to Parent, its officers and
directors or any of its Subsidiaries shall occur which is required
to be described in the Joint Proxy Statement or the Registration
Statement, such event shall be so described, and an appropriate
amendment or supplement shall be promptly filed with the SEC and,
as required by law, disseminated to the shareholders of Parent and
the Company. The Registration Statement will comply (with respect
to Parent) as to form in all material respects with the provisions
of the Securities Act, and the Joint Proxy Statement will comply
(with respect to Parent) as to form in all material respects with
the provisions of the Exchange Act.
Section 2.7 Absence of Certain Changes or Events. Except as
disclosed in Parent SEC Documents filed with the SEC prior to the
date of this Agreement, since February 1, 1997, (A) Parent and its
Subsidiaries have not incurred any material liability or obligation
(indirect, direct or contingent), or entered into any material oral
or written agreement or other transaction, that is not in the
ordinary course of business or that would result in a Material
Adverse Effect on Parent, except for any such changes or effects
resulting from this Agreement, the transactions contemplated hereby
or the announcement thereof; (B) Parent and its Subsidiaries have
not sustained any loss or interference with their business or
properties from fire, flood, windstorm, accident or other calamity
(whether or not covered by insurance) that has had a Material
Adverse Effect on Parent; (C) there has been no action taken by
Parent and its Subsidiaries that, if taken during the period from
the date of this Agreement through the Effective Time, would
constitute a breach of Section 4.1(a); and (D) there has been no
event, circumstance or development that would cause or have a
Material Adverse Effect on Parent, excluding any changes and
effects resulting from changes in economic, regulatory or political
conditions or changes in conditions generally applicable to the
industries in which Parent and Subsidiaries of Parent are involved
and except for any such changes or effects resulting from this
Agreement, the transactions contemplated hereby or the announcement
thereof.
Section 2.8 Permits and Compliance. Each of Parent and its
Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any
Governmental Entity ("Permits") necessary for Parent or any of its
Subsidiaries to own, lease and operate its properties or to carry
on its business as it is now being conducted (the "Parent
Permits"), except where the failure to have any of the Parent
Permits would not, individually or in the aggregate, have a
Material Adverse Effect on Parent, and, as of the date of this
Agreement, no suspension or cancellation of any of the Parent
Permits is pending or, to the Knowledge of Parent (as hereinafter
defined herein), threatened, except where the suspension or
cancellation of any of the Parent Permits would not, individually
or in the aggregate, have a Material Adverse Effect on Parent.
Neither Parent nor any of its Subsidiaries is in violation of (A)
its charter, by-laws or other organizational documents, (B) any
applicable law, ordinance, administrative or governmental rule or
regulation or (C) any order, decree or judgment of any Governmental
Entity having jurisdiction over Parent or any of its Subsidiaries,
except, in the case of clauses (A) (as to Parent's Subsidiaries
only), (B) and (C), for any violations that, individually or in the
aggregate, would not have a Material Adverse Effect on Parent.
Except as disclosed in the Parent SEC Documents filed prior to the
date of this Agreement, as of the date hereof, there is no contract
or agreement that is material to the business, financial condition
or results of operations of Parent and its Subsidiaries, taken as
a whole. Except as set forth in the Parent SEC Documents filed
prior to the date of this Agreement, no event of default or event
that, but for the giving of notice or the lapse of time or both,
would constitute an event of default exists or, upon the
consummation by Parent of the transactions contemplated by this
Agreement, will exist under any indenture, mortgage, loan
agreement, note or other agreement or instrument for borrowed
money, any guarantee of any agreement or instrument for borrowed
money or any lease, contractual license or other agreement or
instrument to which Parent or any of its Subsidiaries is a party or
by which Parent or any such Subsidiary is bound or to which any of
the properties, assets or operations of Parent or any such
Subsidiary is subject, other than any defaults that, individually
or in the aggregate, would not have a Material Adverse Effect on
Parent. "Knowledge of Parent" means the actual knowledge, after due
inquiry, of the Chief Executive Officer and Chief Financial Officer
of the Parent.
Section 2.9 Tax Matters. Each of Parent and its Subsidiaries
has filed all Tax Returns required to have been filed (or
extensions have been duly obtained) and has paid all Taxes required
to have been paid by it, except where failure to file such Tax
Returns or pay such Taxes would not, in the aggregate, have a
Material Adverse Effect on Parent. For purposes of this Agreement:
(i) "Tax" (and, with correlative meaning, "Taxes") means any
federal, state, local or foreign income, gross receipts, property,
sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or added minimum, ad valorem, transfer or
excise tax, or any other tax, custom, duty, governmental fee or
other like assessment or charge of any kind whatsoever, together
with any interest or penalty, imposed by any governmental authority
and (ii) "Tax Return" means any return, report or similar statement
required to be filed with respect to any Tax (including any
attached schedules), including, without limitation, any information
return, claim for refund, amended return or declaration of
estimated Tax.
Section 2.10 Actions and Proceedings. Except as set forth in
Parent SEC Documents filed prior to the date of this Agreement,
there are no outstanding orders, judgments, injunctions, awards or
decrees of any Governmental Entity against or involving Parent or
any of its Subsidiaries, or against or involving any of the present
directors or officers of Parent or any of its Subsidiaries, as
such, any of its or their properties, assets or business that,
individually or in the aggregate, would have a Material Adverse
Effect on Parent. As of the date of this Agreement, there are no
actions, suits or claims or legal, administrative or arbitrative
proceedings or investigations pending or, to the Knowledge of
Parent, threatened against or involving Parent or any of its
Subsidiaries or any of its or their present directors or officers,
as such, any of its or their properties, assets or business that,
individually or in the aggregate, are reasonably likely to have a
Material Adverse Effect on Parent. As of the date hereof, there are
no actions, suits, labor disputes or other litigation, legal or
administrative proceedings or governmental investigations pending
or, to the Knowledge of Parent, threatened against or affecting
Parent or any of its Subsidiaries or any of its or their present
directors or officers, as such, or any of its or their properties,
assets or business relating to the transactions contemplated by
this Agreement.
Section 2.11 Certain Agreements. As of the date of this
Agreement, neither Parent nor any of its Subsidiaries is a party to
any oral or written agreement or plan, including any stock option
plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. No holder of any option to
purchase shares of Parent Common Stock, or shares of Parent Common
Stock granted in connection with the performance of services for
Parent or its Subsidiaries, is or will be entitled to receive cash
from the Parent or any Subsidiary in lieu of or in exchange for
such option or shares as a result of the transactions contemplated
by this Agreement. Neither Parent nor any Subsidiary is a party to
any termination benefits agreement or severance agreement or
employment agreement one trigger of which would be the consummation
of the transactions contemplated by this Agreement.
Section 2.12 ERISA.
(a) Each Parent Plan (as defined herein) complies in all
material respects with the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), the Code and all other applicable
statutes and governmental rules and regulations, including but not
limited to the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended ("COBRA"), and (i) no "reportable event" (within
the meaning of Section 4043 of ERISA) has occurred with respect to
any Parent Plan, (ii) neither Parent nor any of its ERISA
Affiliates (as hereinafter defined) has withdrawn from any Parent
Multiemployer Plan (as hereinafter defined) or instituted, or is
currently considering taking, any action to do so, (iii) no action
has been taken, or is currently being considered, to terminate any
Parent Plan subject to Title IV of ERISA, and (iv) Parent and its
ERISA Affiliates have complied in all material respects with the
continued medical coverage requirements of COBRA; other than, in
each case, such events or actions that, individually or in the
aggregate, would not have a Material Adverse Effect on Parent. No
Parent Plan, nor any trust created thereunder, has incurred any
"accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived.
(b) With respect to any Parent Plan which is subject to Title
IV of ERISA, the present value of the liabilities (as determined on
a terminated plan basis) did not exceed the fair market value of
the Plan assets as of the most recent valuation date for which an
actuarial report has been prepared and Parent has no Knowledge of
any Material Adverse Change to such status. With respect to the
Parent Plans, no event has occurred in connection with which Parent
or any ERISA Affiliate would be subject to any liability under the
terms of such Parent Plans, ERISA, the Code or any other applicable
law which would have a Material Adverse Effect on Parent. All
Parent Plans that are intended to be qualified under Section 401(a)
of the Code have been determined by the Internal Revenue Service to
be so qualified or a timely application for such qualification is
pending, and to the Knowledge of Parent, there is no reason why any
Parent Plan is not so qualified in operation. Neither Parent nor
any of its ERISA Affiliates has been notified by any Parent
Multiemployer Plan that such Parent Multiemployer Plan is currently
in reorganization or insolvency under and within the meaning of
Section 4241 or 4245 of ERISA or that such Parent Multiemployer
Plan intends to terminate or has been terminated under Section
4041A of ERISA. Neither Parent nor any of its ERISA Affiliates has
any liability or obligation under any welfare plan to provide
benefits after termination of employment to any employee or
dependent other than as required by ERISA or as disclosed in the
Parent SEC Documents filed prior to the date hereof, except for
certain health benefits for former employees of Younkers, Inc. and
Brandeis, Inc. As used herein, (i) "Parent Plan" means a "pension
plan" (as defined in Section 3(2) of ERISA (other than a Parent
Multiemployer Plan)) or a "welfare plan" (as defined in Section
3(l) of ERISA) established or maintained by Parent or any of its
ERISA Affiliates or as to which Parent or any of its ERISA
Affiliates has contributed or otherwise may have any liability,
(ii) "Parent Multiemployer Plan" means a "multiemployer plan" (as
defined in Section 4001(a)(3) of ERISA) to which Parent or any of
its ERISA Affiliates is or has been obligated to contribute or
otherwise may have any liability, and (iii) with respect to any
person, "ERISA Affiliate" means any trade or business (whether or
not incorporated) which is under common control or would be
considered a single employer with such person pursuant to Section
414(b), (c), (m) or (o) of the Code and the regulations promulgated
under those sections or pursuant to Section 4001(b) of ERISA and
the regulations promulgated thereunder, including without
limitation, each of Parent's Subsidiaries. Parent has made (or as
soon as practicable will make) available to Company the most
recent summary plan description of each Parent Plan for which a
summary plan description is required and each Parent Plan.
Section 2.13 Compliance with Certain Laws. The properties,
assets and operations of Parent and its Subsidiaries are in
compliance in all material respects with all applicable federal,
state, local and foreign laws, rules and regulations, orders,
decrees, judgments, permits and licenses relating to public and
worker health and safety (collectively, "Worker Safety Laws"), the
protection and clean-up of the environment and activities or
conditions related thereto, including, without limitation, those
relating to the generation, handling, disposal, transportation or
release of hazardous materials (collectively, "Environmental Laws")
and all consumer credit laws, including, without limitation,
bankruptcy laws relating to post-petition collection procedures
(collectively, "Consumer Credit Laws"), except for any violations
that, individually or in the aggregate, would not have a Material
Adverse Effect on Parent. With respect to such properties, assets
and operations, including any previously owned, leased or operated
properties, assets or operations, there are no past, present or
reasonably anticipated future events, conditions, circumstances,
activities, practices, incidents, actions or plans of Parent or any
of its Subsidiaries that may interfere with or prevent compliance
or continued compliance in all material respects with applicable
Worker Safety Laws and Environmental Laws, other than any such
interference or prevention as would not, individually or in the
aggregate with any such other interference or prevention, have a
Material Adverse Effect on Parent. The term "hazardous materials"
shall mean those substances that are regulated by or form the basis
for liability under any applicable Environmental Laws.
Section 2.14 Liabilities. Except as fully reflected or
reserved against in the consolidated balance sheet of Parent and
its Subsidiaries as of February 1, 1997, included in the Parent SEC
Documents, or disclosed in the footnotes thereto, Parent and its
Subsidiaries had no liabilities (including, without limitation, tax
liabilities) at the date of such balance sheet, absolute or
contingent, that would be required to be reflected on a balance
sheet or in notes thereto prepared in accordance with GAAP other
than liabilities incurred in the ordinary course of business or
that, individually or in the aggregate, would not have a Material
Adverse Effect on Parent.
Section 2.15 Labor Matters. Except as set forth on Schedule
2.15, neither Parent nor any of its Subsidiaries is a party to any
collective bargaining agreement or labor contract. Neither Parent
nor any of its Subsidiaries has engaged in any unfair labor
practice with respect to any persons employed by or otherwise
performing services for Parent or any of its Subsidiaries (the
"Parent Business Personnel"), and there is no unfair labor practice
complaint or grievance against Parent or any of its Subsidiaries by
the National Labor Relations Board or any comparable state agency
pending or threatened in writing with respect to the Parent
Business Personnel, except where such unfair labor practice,
complaint or grievance would not have a Material Adverse Effect on
Parent. There is no labor strike, dispute, slowdown or stoppage
pending or, to the Knowledge of Parent, threatened against or
affecting Parent or any of its Subsidiaries which may interfere
with the respective business activities of Parent or any of its
Subsidiaries, except where such dispute, strike or work stoppage
would not have a Material Adverse Effect on Parent.
Section 2.16 Intellectual Property. Parent and its
Subsidiaries own or possess adequate licenses or other legal rights
to use, free to Parent's Knowledge of infringement by others, all
patents, trademarks, trade names, trade dress, service marks, trade
secrets, copyrights, software, mailing lists and other proprietary
intellectual property rights including all applications with
respect thereto (collectively, "Intellectual Property Rights") as
are necessary in connection with the business of Parent and its
Subsidiaries as currently conducted, taken as a whole, except where
the failure to have such Intellectual Property Rights or such
infringement by others would not have a Material Adverse Effect on
Parent. To Parent's Knowledge, neither Parent nor any of its
Subsidiaries has infringed any Intellectual Property Rights of any
third party other than any infringements that, individually or in
the aggregate, would not have a Material Adverse Effect on Parent.
Section 2.17 Opinion of Financial Advisor. Parent has
received the written opinion of Salomon Brothers Inc, dated the
date hereof, to the effect that, as of such date, the Conversion
Number (as defined in such opinion) is fair to Parent from a
financial point of view, a copy of which opinion will be delivered
to the Company promptly after the date of this Agreement.
Section 2.18 Pooling of Interests; Reorganization. Neither
Parent nor any of its Subsidiaries, nor to Parent's Knowledge, any
of Parent's Affiliates, has or will have prior to Closing (i)
taken any action or failed to take any action which action or
failure would jeopardize the treatment of the Merger as a pooling
of interests for accounting purposes or (ii) taken any action or
failed to take any action which action or failure would jeopardize
the qualification of the Merger as a reorganization within the
meaning of Section 368(a) of the Code. Parent has no Knowledge of
any agreement, plan or other circumstance that would prevent the
Merger from qualifying as a pooling of interests for accounting
purposes, or as a reorganization within the meaning of Section
368(a) of the Code.
Section 2.19 Required Vote of Parent Shareholders. The
affirmative vote of a majority of the votes eligible to be cast on
the approval of this Agreement is required to approve this
Agreement. The affirmative vote of a majority of the quorum is
required to approve the Share Issuance and the Charter Amendment.
No other vote of the shareholders of Parent is required by law, the
Charter or By-Laws of Parent or otherwise in order for Parent to
consummate the Merger and the transactions contemplated hereby.
Section 2.20 Ownership of Shares. Neither Parent nor any of
its Subsidiaries (i) "Beneficially Owns" or is the "Beneficial
Owner" of (as such terms are defined in the Company's Rights
Agreement), or (ii) "owns," any Shares of Company Common Stock.
Section 2.21 Operations of Sub. Sub is a direct, wholly-owned
subsidiary of Parent, was formed solely for the purpose of engaging
in the transactions contemplated hereby, has engaged in no other
business activities and has conducted its operations only as
contemplated hereby.
Section 2.22 Brokers. No broker, investment banker or other
person, other than Salomon Brothers Inc, the fees and expenses of
which will be paid by Parent (and as reflected in agreements
between Salomon Brothers Inc, and Parent, a copy of which has been
furnished to the Company), is entitled to any broker's, finder's or
other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or
on behalf of Parent.
Section 2.23 State Takeover Statutes and Shareholder Rights
Plan. (a) Assuming the accuracy of the Company's representations
and warranties contained in Section 3.24 (Ownership of Shares), as
of the date hereof, no state takeover statutes or supermajority
Charter provisions are applicable to the Merger, this Agreement and
the transactions contemplated hereby.
(b) As of the Effective Time, (i) Parent will have no
additional obligations under the Parent Rights or the Parent Rights
Agreement and (ii) the holders of the Parent Rights will have no
additional rights under the Parent Rights or the Parent Rights
Agreement, in each case as a result of the transactions
contemplated by this Agreement. Execution and delivery of this
Agreement does not, and compliance with the provisions hereof will
not, cause the holders of the Parent Rights to have any rights
under the Parent Rights or the Parent Rights Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as
follows:
Section 3.1 Organization, Standing and Power. The Company is
a corporation duly organized, validly existing and in good standing
under the laws of the State of Illinois and has the requisite
corporate power and authority to carry on its business as now being
conducted. Each Subsidiary of the Company is duly organized,
validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite
corporate or other power and authority to carry on its business as
now being conducted, except where the failure to be so organized,
existing or in good standing or to have such power or authority
would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. The Company and each of its
Subsidiaries are duly qualified to do business, and are in good
standing, in each jurisdiction where the character of their
properties owned or held under lease or the nature of their
activities makes such qualification necessary, except where the
failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. The
Company has heretofore delivered to Parent complete and correct
copies of the Company's Articles of Incorporation ("Articles") and
by-laws ("Company By-Laws"), as in effect on the date hereof.
Section 3.2 Capital Structure. As of the Effective Time, the
authorized capital stock of the Company will consist of 100,000,000
shares of Company Common Stock, par value $.01 per share. At the
close of business on October 27, 1997, (i) 15,732,191 shares of
Company Common Stock were issued and outstanding, all of which were
validly issued, fully paid and nonassessable and free of preemptive
rights, (ii) 21,555,068 shares of Company Common Stock were held in
the treasury of the Company or by the Subsidiaries of the Company,
and (iii) not more than 2,564,130 shares of Company Common Stock
were reserved for future issuance pursuant to the Company's 1993
Stock Incentive Plan, 1993 Directors' Stock Option Plan and 1996
Directors' Stock Compensation Plan, or pursuant to any plans
assumed by the Company in connection with any acquisition, business
combination or similar transaction (collectively, the "Company
Stock Plans"). As of the date of this Agreement, except for stock
options covering not in excess of 1,219,532 shares of Company
Common Stock issued under the Company Stock Plans (collectively,
the "Company Stock Options") and securities issuable under the 1996
Directors' Stock Compensation Plan, the Company 1994 Employee Stock
Purchase Plan and the Company Rights Plan (as hereinafter defined),
there are no options, warrants, calls, rights or agreements to
which the Company or any of its Subsidiaries is a party or by which
any of them is bound obligating the Company or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of the
Company or any of its Subsidiaries or securities convertible into
or exchangeable for such capital stock, or obligating the Company
or any of its Subsidiaries to grant, extend or enter into any such
option, warrant, call, right or agreement. Except as disclosed in
the Company SEC Documents filed prior to the date hereof (as
hereinafter defined), since October 27, 1997, the Company has not
issued any shares of its capital stock, or securities convertible
into or exchangeable for such capital stock, other than shares
issued in the ordinary course pursuant to the Company Stock Plans
and the accompanying rights issued pursuant to the Company Rights
Agreement. Except as disclosed in the Company SEC Documents filed
prior to the date hereof, there are no outstanding contractual
obligations of the Company or any of the Company's Subsidiaries (i)
restricting the transfer of, (ii) affecting the voting rights of,
(iii) requiring the repurchase, redemption or disposition of, (iv)
requiring the registration for sale of, or (v) granting any
preemptive or antidilutive right with respect to, any shares of
Company Common Stock or any capital stock of any Subsidiary of the
Company. Each outstanding share of capital stock of each Subsidiary
of the Company that is a corporation is duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights,
and except as disclosed in the Company SEC Documents filed prior to
the date hereof, each such share is owned by the Company or another
Subsidiary of the Company, free and clear of all security
interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on voting rights, charges and
other encumbrances of any nature whatsoever.
Section 3.3 Authority. The Board of Directors of the Company
has on or prior to the date of this Agreement (a) declared the
Merger advisable and fair to and in the best interest of the
Company and its shareholders, (b) approved this Agreement in
accordance with the Ill.C., (c) resolved to recommend the approval
of this Agreement by the Company's shareholders and (d) directed
that this Agreement be submitted to the Company's shareholders for
approval. The Company has all requisite corporate power and
authority to enter into this Agreement and, subject to approval by
the shareholders of the Company of this Agreement (which, for all
purposes in this Agreement, shall be deemed to include any
necessary approval of amendments to the Company's stock plans)
(collectively, the "Company Shareholder Approvals"), to consummate
the transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company,
subject to (x) Company Shareholder Approvals and (y) the filing of
appropriate Merger documents as required by the Ill.C. This
Agreement has been duly executed and delivered by the Company and
(assuming the valid authorization, execution and delivery of this
Agreement by Parent and Sub) constitutes the valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms. The filing of the Joint Proxy Statement
with the SEC has been duly authorized by the Company's Board of
Directors.
Section 3.4 Consents and Approvals; No Violation. Assuming
all consents, approvals, authorizations and other actions described
in this Section 3.4 have been obtained and all filings and
obligations described in this Section 3.4 have been made and except
as set forth in Schedule 3.4 hereto, the execution and delivery of
this Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will
not, conflict with, result in any violation of, or breach or
default (with or without notice or lapse of time, or both) under,
or give to others a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit
under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the
Company or any of its Subsidiaries under, any provision of (i) the
Articles of Incorporation or By-Laws of the Company, (ii) any
provision of the comparable charter or organization documents of
any of the Company's Subsidiaries, (iii) any loan or credit
agreement, note, bond, mortgage, indenture or other agreement,
instrument, permit, concession, franchise or license applicable to
the Company or any of its Subsidiaries or (iv) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to
the Company or any of its Subsidiaries or any of their respective
properties or assets, other than, in the case of clauses (ii),
(iii) or (iv), any such conflicts, violations, breaches, defaults,
rights, liens, security interests, charges or encumbrances that,
individually or in the aggregate, would not have a Material Adverse
Effect on the Company, or prevent or materially delay the
consummation of any of the transactions contemplated hereby. No
filing, notification or registration with, or authorization,
consent or approval of, any Governmental Entity is required by or
with respect to the Company or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by the
Company or is necessary for the consummation of the Merger and the
other transactions contemplated by this Agreement, except for (i)
in connection, or in compliance, with the provisions of the HSR
Act, the Securities Act and the Exchange Act, (ii) the issuance of
the Certificate of Merger by the Secretary of State of the State of
Illinois and the filing of appropriate documents with the relevant
authorities of other states in which the Company or any of its
Subsidiaries is qualified to do business, (iii) such filings and
consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure
or required approval triggered by the Merger or by the transactions
contemplated by this Agreement,(iv) such filings, authorizations,
orders and approvals as may be required to obtain the State
Takeover Approvals, (v) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be
required under the laws of any foreign country in which the Company
or any of its Subsidiaries conducts any business or owns any
property or assets, (vi) such filings and consents as may be
required under any state or foreign laws pertaining to debt
collection, the issuance of payment instruments or money
transmission, (vii) applicable requirements, if any, of Blue Sky
Laws and the NYSE, (viii) the approval of the OCC for the change of
control of the Bank and (ix) such other consents, orders,
authorizations, registrations, declarations and filings the failure
of which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect on the Company or prevent
the consummation of any of the transactions contemplated hereby.
Section 3.5 SEC Documents and Other Reports. The Company has
filed all required documents with the SEC since January 1, 1995
(the "Company SEC Documents"). As of their respective dates, the
Company SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case
may be, and, at the respective times they were filed, none of the
Company SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The
consolidated financial statements (including, in each case, any
notes thereto) of the Company included in the Company SEC Documents
complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of
the SEC with respect thereto, were prepared in accordance with GAAP
(except, in the case of the unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the
notes thereto) and fairly presented in all material respects the
consolidated financial position of the Company and its consolidated
Subsidiaries as at the respective dates thereof and the
consolidated results of their operations and their consolidated
cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments and to
any other adjustments described therein). Except as disclosed in
the Company SEC Documents or as required by GAAP, the Company has
not, since February 1, 1997, made any change in the accounting
practices or policies applied in the preparation of financial
statements. The books and records of the Company and its
Subsidiaries have been, and are being, maintained in accordance
with GAAP and other applicable legal and accounting requirements.
Section 3.6 Registration Statement and Joint Proxy Statement.
None of the information to be supplied by the Company for inclusion
or incorporation by reference in the Registration Statement or the
Joint Proxy Statement will (i) in the case of the Registration
Statement, at the time it becomes effective, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading or (ii) in the case of the Joint
Proxy Statement, at the time of the mailing of the Joint Proxy
Statement, the time of each of the Shareholder Meetings and at the
Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any
time prior to the Effective Time any event with respect to the
Company, its officers and directors or any of its Subsidiaries
shall occur which is required to be described in the Joint Proxy
Statement or the Registration Statement, such event shall be so
described, and an appropriate amendment or supplement shall be
promptly filed with the SEC and, as required by law, disseminated
to the shareholders of Parent and the Company. The Registration
Statement will comply (with respect to the Company) as to form in
all material respects with the provisions of the Securities Act,
and the Joint Proxy Statement will comply (with respect to the
Company) as to form in all material respects with the provisions of
the Exchange Act.
Section 3.7 Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Documents filed with the SEC prior to
the date of this Agreement, since February 1, 1997 or in Schedule
3.7 hereto, (A) the Company and its Subsidiaries have not incurred
any material liability or obligation (indirect, direct or
contingent), or entered into any material oral or written agreement
or other transaction, that is not in the ordinary course of
business or that would result in a Material Adverse Effect on the
Company, except for any such changes or effects resulting from
this Agreement, the transactions contemplated hereby or the
announcement thereof; (B) the Company and its Subsidiaries have not
sustained any loss or interference with their business or
properties from fire, flood, windstorm, accident or other calamity
(whether or not covered by insurance) that has had a Material
Adverse Effect on the Company; (C) there has been no action taken
by the Company and its Subsidiaries, that, if taken during the
period from the date of this Agreement through the Effective Time,
would constitute a breach of Section 4.1(b); and (D) there has been
no event, circumstance or development that would cause or have a
Material Adverse Effect on the Company, excluding any changes and
effects resulting from changes in economic, regulatory or political
conditions or changes in conditions generally applicable to the
industries in which the Company and Subsidiaries of the Company are
involved and except for any such changes or effects resulting from
this Agreement, the transactions contemplated hereby or the
announcement thereof.
Section 3.8 Permits and Compliance. Each of the Company and
its Subsidiaries is in possession of all Permits necessary for the
Company or any of its Subsidiaries to own, lease and operate its
properties or to carry on its business as it is now being conducted
(the "Company Permits"), except where the failure to have any of
the Company Permits would not, individually or in the aggregate,
have a Material Adverse Effect on the Company, and, as of the date
of this Agreement, no suspension or cancellation of any of the
Company Permits is pending or, to the Knowledge of the Company (as
hereinafter defined), threatened, except where the suspension or
cancellation of any of the Company Permits would not, individually
or in the aggregate, have a Material Adverse Effect on the Company.
Neither the Company nor any of its Subsidiaries is in violation of
(A) its articles, by-laws or other organizational documents, (B)
any applicable law, ordinance, administrative or governmental rule
or regulation or (C) any order, decree or judgment of any
Governmental Entity having jurisdiction over the Company or any of
its Subsidiaries, except, in the case of clauses (A) (as to the
Company's Subsidiaries only), (B) and (C), for any violations that,
individually or in the aggregate, would not have a Material Adverse
Effect on the Company. Except as disclosed in the Company SEC
Documents filed prior to the date of this Agreement or in Schedule
3.8(a) hereto, as of the date hereof there is no contract or
agreement that is material to the business, financial condition or
results of operations of the Company and its Subsidiaries, taken as
a whole. Except as set forth in the Company SEC Documents filed
prior to the date of this Agreement or in Schedule 3.8(b) hereto,
no event of default or event that, but for the giving of notice or
the lapse of time or both, would constitute an event of default
exists or, upon the consummation by the Company of the transactions
contemplated by this Agreement, will exist under any indenture,
mortgage, loan agreement, note or other agreement or instrument for
borrowed money, any guarantee of any agreement or instrument for
borrowed money or any contractual license or other agreement or
instrument to which the Company or any of its Subsidiaries is a
party or by which the Company or any such Subsidiary is bound or to
which any of the properties, assets or operations of the Company or
any such Subsidiary is subject, other than any defaults that,
individually or in the aggregate, would not have a Material Adverse
Effect on the Company. "Knowledge of the Company" means the actual
knowledge, after due inquiry, of the Chief Executive Officer and
the Chief Financial Officer.
Section 3.9 Tax Matters. Each of the Company and its
Subsidiaries has filed all Tax Returns required to have been filed
(or extensions have been duly obtained) and has paid all Taxes
required to have been paid by it, except where failure to file such
Tax Returns or pay such Taxes would not, in the aggregate, have a
Material Adverse Effect on the Company.
Section 3.10 Bank Matters. The Bank is a national bank, duly
organized, validly existing and in good standing. It has all the
requisite power and all Permits necessary to conduct its business.
The Bank's deposits are insured by the FDIC and it is a member in
good standing of (i) the FDIC's Bank Insurance Fund ("BIF"), and
(ii) the Federal Reserve System. There are no material memoranda
of understanding, cease and desist or removal orders, or capital or
other directives, resolutions or other action by any regulatory
authority against the Bank or any of its directors, officers or
employees.
Section 3.11 Actions and Proceedings. Except as set forth in
the Company SEC Documents filed prior to this Agreement or on
Schedule 3.11 hereto, there are no outstanding orders, judgments,
injunctions, awards or decrees of any Governmental Entity against
or involving the Company or any of its Subsidiaries, or against or
involving any of the present directors or officers of the Company
or any of its Subsidiaries, as such, any of its or their
properties, assets or business that, individually or in the
aggregate, would have a Material Adverse Effect on the Company.
Except as set forth in the Company SEC Documents or on Schedule
3.11 hereto, as of the date of this Agreement, there are no
actions, suits or claims or legal, administrative or arbitrative
proceedings or investigations pending or, to the Knowledge of the
Company, threatened against or involving the Company or any of its
Subsidiaries or any of its or their present directors or officers,
as such, any of its or their properties, assets or business that,
individually or in the aggregate, would have a Material Adverse
Effect on the Company. As of the date hereof, there are no
actions, suits, labor disputes or other litigation, legal or
administrative proceedings or governmental investigations pending
or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries or any of its or
their present directors or officers, as such, or any of its or
their properties, assets or business relating to the transactions
contemplated by this Agreement.
Section 3.12 Certain Agreements. Except as set forth in
Schedule 3.12, as of the date of this Agreement, neither the
Company nor any of its Subsidiaries is a party to any oral or
written agreement or plan, including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase
plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by
this Agreement. No holder of any option to purchase shares of
Company Common Stock, or shares of Company Common Stock granted in
connection with the performance of services for the Company or its
Subsidiaries, is or will be entitled to receive cash from the
Company or any Subsidiary in lieu of or in exchange for such option
or shares as a result of the transactions contemplated by this
Agreement (other than in lieu of fractional shares). Neither the
Company nor any Subsidiary is a party to any termination benefits
agreement or severance agreement or employment agreement one
trigger of which would be the consummation of the transactions
contemplated by this Agreement, except as set forth in Schedule
3.12.
Section 3.13 ERISA.
(a) With respect to each material Company Plan (as hereinafter
defined), the Company has made (or as soon as practicable will
make) available to Parent a true and correct copy of (i) the three
most recent annual reports (Form 5500) filed with the Internal
Revenue Service (the "IRS"), (ii) such Company Plan, (iii) each
trust agreement, insurance contract or administration agreement
relating to such Company Plan, (iv) the most recent summary plan
description of each Company Plan for which a summary plan
description is required, (v) the most recent actuarial report or
valuation relating to a Company Plan subject to Title IV of ERISA
and (vi) the most recent determination letter, if any, issued by
the IRS with respect to any Company Plan intended to be qualified
under section 401(a) of the Code. Except as would not have a
Material Adverse Effect on the Company, (i) each Company Plan
complies in all material respects with ERISA, the Code and all
other applicable statutes and governmental rules and regulations,
including but not limited to COBRA, (ii) no "reportable event"
(within the meaning of Section 4043 of ERISA) has occurred with
respect to any Company Plan, (iii) neither the Company nor any of
its ERISA Affiliates has withdrawn from any Company Multiemployer
Plan (as hereinafter defined), or instituted, or is currently
considering taking, any action to do so, and (iv) no action has
been taken, or is currently being considered, to terminate any
Company Plan subject to Title IV of ERISA, and (v) the Company and
its ERISA Affiliates have complied in all material respects with
the continued medical coverage requirements of COBRA. Except as
would not have a Material Adverse Effect on the Company, no Company
Plan, nor any trust created thereunder, has incurred any
"accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived. With respect to any Company Plan
which is subject to Title IV of ERISA, the present value of accrued
benefit obligations, as determined in accordance with FAS 87 in
accordance with the actuarial assumptions used to prepare the most
recent reports of such Company Plan, did not exceed the fair market
value of the Plan assets as of the most recent valuation date for
which an actuarial report has been prepared, and the Company has no
Knowledge of any Material Adverse Change to such status.
(b) With respect to the Company Plans, no event has occurred
in connection with which the Company or any ERISA Affiliate would
be subject to any liability under the terms of such Company Plans,
ERISA, the Code or any other applicable law which would have a
Material Adverse Effect on the Company. All Company Plans that are
intended to be qualified under Section 401(a) of the Code have been
determined by the Internal Revenue Service to be so qualified, or
a timely application for such determination is now pending, and to
the Knowledge of the Company, there is no reason why any Company
Plan is not so qualified in operation. Neither the Company nor any
of its ERISA Affiliates has been notified by any Company
Multiemployer Plan that such Company Multiemployer Plan is
currently in reorganization or insolvency under and within the
meaning of Section 4241 or 4245 of ERISA or that such Company
Multiemployer Plan intends to terminate or has been terminated
under Section 4041A of ERISA. Except as disclosed in the Company
SEC Documents, neither the Company nor any of its ERISA Affiliates
has any liability or obligation under any welfare plan to provide
benefits after termination of employment to any employee or
dependent other than as required by ERISA or as disclosed in the
Company Annual Report. As used herein, (i) "Company Plan" means a
"pension plan" (as defined in Section 3(2) of ERISA (other than a
Company Multiemployer Plan)) or a "welfare plan" (as defined in
Section 3(1) of ERISA) established or maintained by the Company or
any of its ERISA Affiliates or as to which the Company or any of
its ERISA Affiliates has contributed or otherwise may have any
liability, (ii) "Company Multiemployer Plan" means a "multiemployer
plan" (as defined in Section 4001(a)(3) of ERISA) to which the
Company or any of its ERISA Affiliates is or has been obligated to
contribute or otherwise may have any liability and (iii) with
respect to any person, "ERISA Affiliate" means any trade or
business (whether or not incorporated) which is under common
control or would be considered a single employer with such person
pursuant to Section 414(b), (c), (m) or (o) of the Code and the
regulations promulgated under those sections or pursuant to Section
4001(b) of ERISA and the regulations promulgated thereunder,
including, without limitation, each of the Company's Subsidiaries.
Section 3.14 Compliance with Certain Laws. Except as
disclosed in Schedule 3.14 hereto, the properties, assets and
operations of the Company and its Subsidiaries are in compliance in
all material respects with all applicable Worker Safety Laws,
Environmental Laws and Consumer Credit Laws, except as would not
have a Material Adverse Effect on the Company. Except as disclosed
in Schedule 3.14 hereto, with respect to such properties, assets
and operations, including any previously owned, leased or operated
properties, assets or operations, there are no past, present or
reasonably anticipated future events, conditions, circumstances,
activities, practices, incidents, actions or plans of the Company
or any of its Subsidiaries that may interfere with or prevent
compliance or continued compliance in all material respects with
applicable Worker Safety Laws and Environmental Laws, except as
would not have a Material Adverse Effect on the Company. The
Company will make available to Parent such certificates and
environmental studies with respect to such properties as the
Company has available on the date hereof.
Section 3.15 Liabilities. Except as fully reflected or
reserved against in the consolidated balance sheet of the Company
and its Subsidiaries as of February 1, 1997, included in the
Company SEC Documents, or disclosed in the footnotes thereto, the
Company and its Subsidiaries had no liabilities (including, without
limitation, tax liabilities) at the date of such balance sheet,
absolute or contingent, that would be required to be reflected on
a balance sheet or in notes thereto prepared in accordance with
GAAP other than liabilities incurred in the ordinary course of
business or that, individually or in the aggregate, would not have
a Material Adverse Effect on the Company.
Section 3.16 Labor Matters. Except as set forth in Schedule
3.16, neither the Company nor any of its Subsidiaries is a party to
any collective bargaining agreement or labor contract. Neither the
Company nor any of its Subsidiaries has engaged in any unfair labor
practice with respect to any persons employed by or otherwise
performing services primarily for the Company or any of its
Subsidiaries (the "Company Business Personnel"), and there is no
unfair labor practice complaint or grievance against the Company or
any of its Subsidiaries by the National Labor Relations Board or
any comparable state agency pending or threatened in writing with
respect to the Company Business Personnel, except where such unfair
labor practice, complaint or grievance would not have a Material
Adverse Effect on the Company. There is no labor strike, dispute,
slowdown or stoppage pending or, to the Knowledge of the Company,
threatened against or affecting the Company or any of its
Subsidiaries which may interfere with the respective business
activities of the Company or any of its Subsidiaries, except where
such dispute, strike or work stoppage would not have a Material
Adverse Effect on the Company.
Section 3.17 Intellectual Property. The Company and its
Subsidiaries own or possess adequate licenses or other legal rights
to use, free to the Company's Knowledge of infringement by others,
all Intellectual Property Rights as are necessary in connection
with the business of the Company and its Subsidiaries as currently
conducted, taken as a whole, except where the failure to have such
Intellectual Property Rights or such infringement by others would
not have a Material Adverse Effect on the Company. To the Company's
Knowledge, neither the Company nor any of its Subsidiaries has
infringed any Intellectual Property Rights of any third party other
than any infringements that, individually or in the aggregate,
would not have a Material Adverse Effect on the Company.
Section 3.18 Opinion of Financial Advisor. The Company has
received the written opinion of SBC Warburg Dillon Read Inc., dated
the date hereof, to the effect that, as of the date hereof, the
Conversion Number (as defined in such opinion) is fair to the
Company's shareholders from a financial point of view, a copy of
which opinion will be delivered to Parent promptly after the date
of this Agreement.
Section 3.19 State Takeover Statutes and Shareholder Rights
Plan. (a) Assuming the accuracy of Parent's representations and
warranties contained in Section 2.20 (Ownership of Shares), the
Board of Directors of the Company has taken all action so that
prior to the execution hereof, the Board of Directors has approved
the Merger pursuant to Sections 5/7.85 and 5/11.75 of the Ill.C. As
of the date hereof, no other state takeover statutes, including
without limitation, any business combination act, are applicable to
the Merger, this Agreement and the transactions contemplated
hereby.
(b) The Company has taken all necessary action so that, as of
the Effective Time, (i) the Company will have no additional
obligations and Parent will have no obligations under the rights to
purchase Company Common Stock (the "Rights") issued pursuant to the
Rights Agreement between the Company and Harris Trust & Savings
Bank , dated as of November 2,1993 (the "Rights Agreement") (the
Rights and Rights Agreement collectively are the "Company Rights
Plan") or the Rights Agreement and (ii) the holders of the Rights
will have no additional rights under the Rights or the Rights
Agreement, in each case as a result of the transactions
contemplated by this Agreement. Execution and delivery of this
Agreement does not, and compliance with the provisions hereof will
not, cause the holders of the Rights to have any rights under the
Rights or the Rights Agreement.
Section 3.20 Required Vote of Company Shareholders. The
affirmative vote of the holders of not less than a majority of the
outstanding shares of Company Common Stock is required to approve
the transactions contemplated by this Agreement. No other vote of
the shareholders of the Company is required by law, the Articles of
Incorporation or By-Laws of the Company or otherwise for the
Company to consummate the Merger and the transactions contemplated
hereby.
Section 3.21 Pooling of Interests; Reorganization. To the
Knowledge of the Company, neither it nor any of its Subsidiaries or
Affiliates has, or will have prior to Closing, (i) taken any action
or failed to take any action which action or failure would
jeopardize the treatment of the Merger as a pooling of interests
for accounting purposes or (ii) taken any action or failed to take
any action which action or failure would jeopardize the
qualification of the Merger as a reorganization within the meaning
of Section 368(a) of the Code.
Section 3.22 Brokers. No broker, investment banker or other
person, other than SBC Warburg Dillon Read Inc., the fees and
expenses of which will be paid by the Company (and are reflected in
an agreement between SBC Warburg Dillon Read Inc. and the Company,
a copy of which has been furnished to Parent), is entitled to any
broker's, finder's or other similar fee or commission in connection
with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company.
Section 3.23 Share Repurchases. The Board of Directors has
rescinded the $20 million share repurchase program adopted in
January, 1997 (the "Share Repurchase Program"), and has directed
management publicly to disclose that fact in connection with the
first press release related to this Agreement.
Section 3.24 Ownership of Shares. Neither Company nor any of
its Subsidiaries (i) "Beneficially Owns" or is the "Beneficial
Owner" of (as such terms are defined in Parent's Rights Agreement),
or (ii) "owns," any Shares of Parent Common Stock.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business Pending the Merger.
(a) Actions by Parent. Except as expressly permitted by
clauses (i) through (ix) of this Section 4.1(a), during the period
from the date of this Agreement through the Effective Time, Parent,
subject to Section 4.2 hereof, shall, and shall cause each of its
Subsidiaries to, in all material respects carry on its business in
the ordinary course of its business as currently conducted and, to
the extent consistent therewith, use reasonable best efforts to
preserve intact its current business organizations, keep available
the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business
dealings with it to the end that its goodwill and ongoing business
shall be unimpaired at the Effective Time. Without limiting the
generality of the foregoing, and except as otherwise expressly
contemplated by this Agreement, Parent, subject to Section 4.2
hereof, shall not, and shall not permit any of its Subsidiaries to,
without the prior written consent of the Company:
(i) (w) declare, set aside or pay any dividends on, or make
any other actual, constructive or deemed distributions in respect
of, any of its capital stock, or otherwise make any payments to its
shareholders in their capacity as such (other than dividends and
other distributions by Subsidiaries), (x) other than in the case of
any Subsidiary, split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its
capital stock, (y) purchase, redeem or otherwise acquire any
shares of capital stock of Parent or any other securities thereof
or the capital stock of any Subsidiary or any other securities
thereof or any rights, warrants or options to acquire any such
shares or other securities, or (z) institute any share repurchase
program;
(ii) issue, deliver, sell, pledge, dispose of, grant, transfer
or otherwise encumber any shares of its capital stock, any other
voting securities or equity equivalent or any securities
convertible or exchangeable into, or exercisable for, or any
rights, warrants or options to acquire any such shares, voting
securities, equity equivalent or convertible securities, other than
(A) subject to Section 4.4, the issuance of stock options and
shares of Parent Common Stock to employees of Parent or any of its
Subsidiaries in the ordinary course of business consistent with
past practice, (B) the issuance of Parent securities pursuant to
the Parent Rights Plan, and (C) the issuance by any wholly-owned
Subsidiary of Parent of its capital stock to Parent or another
wholly-owned Subsidiary of Parent;
(iii) amend its Charter or By-Laws; provided, however, that
Parent may amend its Charter to increase its authorized capital
stock and its By-Laws in accordance with Section 5.14 hereof;
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of or
equity in, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof or otherwise acquire or agree to acquire any assets, other
than acquisitions of assets in the ordinary course of business
consistent with past practice, unless (i) the entering into a
definitive agreement relating to or the consummation of such
acquisition, merger, consolidation or purchase would not (A) impose
any material delay in the obtaining of, or significantly increase
the risk of not obtaining, any authorizations, consents, orders,
declarations or approvals of any Governmental Entity necessary to
consummate the Merger or the expiration or termination of any
applicable waiting period, (B) significantly increase the risk of
any Governmental Entity entering an order prohibiting the
consummation of the Merger or (C) significantly increase the risk
of not being able to remove any such order on appeal or otherwise,
and (ii) in the case of any individual acquisition, merger,
consolidation or purchase, the value of which does not exceed $175
million;
(v) sell, lease or otherwise dispose of, or agree to sell,
lease or otherwise dispose of, any of its assets, other than (A)
transactions that are in the ordinary course of business consistent
with past practice and not material to Parent and its Subsidiaries
taken as a whole, (B) as may be required by any Governmental Entity
and (C) subject to Sections 4.4 and 5.8(d), dispositions involving
an aggregate consideration not in excess of $100 million;
(vi) incur any indebtedness for borrowed money, guarantee any
such indebtedness or make any loans, advances or capital
contributions to, or other investments in, any other person, other
than (A) in the ordinary course of business consistent with past
practice, and (B) indebtedness, loans, advances, capital
contributions and investments between Parent and any of its
wholly-owned Subsidiaries or between any of such wholly-owned
Subsidiaries;
(vii) knowingly violate or knowingly fail to perform any
material obligation or duty imposed upon it or any Subsidiary by
any applicable material federal, state or local law, rule,
regulation, guideline or ordinance;
(viii) take any action, other than reasonable and usual
actions in the ordinary course of business consistent with past
practice, with respect to accounting policies or procedures (other
than actions required to be taken by GAAP); or
(ix) authorize, recommend or announce an intention to do any
of the foregoing, or enter into any contract, agreement, commitment
or arrangement to do any of the foregoing.
(b) Actions by the Company. Except as expressly permitted by
clauses (i) through (xiii) of this Section 4.1(b) and as set forth
in Schedule 4.1(b), during the period from the date of this
Agreement through the Effective Time, the Company, subject to
Section 4.2 hereof, shall, and shall cause each of its Subsidiaries
to, in all material respects, carry on its business in, the
ordinary course of its business as currently conducted and, to the
extent consistent therewith, use reasonable best efforts to
preserve intact its current business organizations, keep available
the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business
dealings with it to the end that its goodwill and ongoing business
shall be unimpaired at the Effective Time. Without limiting the
generality of the foregoing, and except as otherwise expressly
contemplated by this Agreement, the Company, subject to Section 4.2
hereof, shall not, and shall not permit any of its Subsidiaries to,
without the prior written consent of Parent:
(i) (w) declare, set aside or pay any dividends on, or make
any other actual, constructive or deemed distributions in respect
of, any of its capital stock, or otherwise make any payments to its
shareholders in their capacity as such (other than dividends and
other distributions by Subsidiaries), (x) other than in the case of
any Subsidiary, split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital
stock, (y) purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any other securities thereof or the
capital stock of any Subsidiaries, or any securities thereof, or
any rights, warrants or options to acquire any such shares or other
securities or (z) reinstate the Share Repurchase Program or
institute any similar share repurchase program;
(ii) issue, deliver, sell, pledge, dispose of, grant, transfer
or otherwise encumber any shares of its capital stock, any other
voting securities or equity equivalent or any securities
convertible or exchangeable into, or exercisable for, or any
rights, warrants or options to acquire any such shares, voting
securities, equity equivalent or convertible securities, other than
(A) the issuance of shares of Company Common Stock upon the
exercise of Company Stock Options outstanding on the date of this
Agreement in accordance with their current terms, (B) the issuance
of Company securities pursuant to the 1996 Directors' Stock
Compensation Plan or the Company Rights Plan, or (C) the issuance
by any wholly-owned Subsidiary of the Company of its capital stock
to the Company or another wholly-owned Subsidiary of the Company;
(iii) amend its Articles of Incorporation or By-Laws;
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing a portion of the assets of or equity in, or
by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets other than
acquisitions of assets in the ordinary course of business
consistent with past practice;
(v) sell, lease or otherwise dispose of, or agree to sell,
lease or otherwise dispose of, any of its assets, other than (A)
transactions that are in the ordinary course of business consistent
with past practice and not material to the Company and its
Subsidiaries taken as a whole and (B) as may be required by any
Governmental Entity;
(vi) incur any indebtedness for borrowed money, guarantee any
such indebtedness or make any loans, advances or capital
contributions to, or other investments in, any other person, other
than (A) indebtedness incurred in the ordinary course of business
consistent with past practice and (B) indebtedness, loans,
advances, capital contributions and investments between the Company
and any of its wholly-owned Subsidiaries or between any of such
wholly-owned Subsidiaries;
(vii) alter (through merger, liquidation, reorganization,
restructuring or in any other fashion) the corporate structure or
ownership of the Company or any Subsidiary;
(viii) enter into or adopt, or amend any existing, severance
plan, agreement or arrangement or enter into or amend any Company
Plan or employment or consulting agreement, other than (A) as
required by law, or (B) as expressly contemplated by this
Agreement;
(ix) increase the compensation payable or to become payable to
its officers or employees, except for increases in the ordinary
course of business consistent with past practice in salaries or
wages of employees of the Company or any of its Subsidiaries who
are not officers of the Company or any of its Subsidiaries, or
grant any additional rights to severance or termination pay to, or
enter into any employment or severance agreement with, any director
or officer of the Company or any of its Subsidiaries, or establish,
adopt, enter into, or, except as set forth on Schedule 4.1(b) or as
may be required to comply with applicable law, amend or take
action in any such case in a manner so as to enhance or accelerate
any rights or benefits under, any labor, collective bargaining,
bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any director,
officer or employee;
(x) knowingly violate or knowingly fail to perform any
material obligation or duty imposed upon it or any Subsidiary by
any applicable material federal, state or local law, rule,
regulation, guideline or ordinance;
(xi) take any action, other than reasonable and usual actions
in the ordinary course of business consistent with past practice,
with respect to accounting policies or procedures (other than
actions required to be taken by GAAP);
(xii) make any tax election or settle or compromise any
material federal, state, local or foreign income tax liability; or
(xiii) authorize, recommend, propose or announce an intention
to do any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
Section 4.2 No Solicitation. From and after the date hereof,
neither Parent nor the Company will, and each will use its best
efforts to cause any of its officers, directors, employees,
attorneys, financial advisors, agents or other representatives or
those of any of its Subsidiaries not to, directly or indirectly,
(a) solicit, initiate or knowingly encourage (including by way of
furnishing non-public information) any proposal or offer from any
person that constitutes, or may reasonably be expected to lead to,
a Takeover Proposal (as hereinafter defined), or (b) engage in or
continue discussions or negotiations relating to a Takeover
Proposal; provided, however, that prior to the receipt of approval
by their respective shareholders, either Parent or the Company may
engage in discussions or negotiations with, or furnish information
concerning itself and its Subsidiaries, business, properties or
assets to, any third party which makes a Takeover Proposal (as
hereinafter defined) if the Board of Directors of either Parent or
the Company concludes in good faith on the basis of the advice of
its outside counsel (Sommer & Barnard, PC and Wachtell, Lipton,
Rosen & Katz, respectively) that the failure to take such action
would violate the fiduciary obligations of such Board under
applicable law. Each of Parent and the Company will promptly (but
in no case later than 24 hours) notify (and if in writing, provide
a copy to) the other of any Takeover Proposal, including the
material terms and conditions thereof. As used in this Agreement,
"Takeover Proposal" shall mean any proposal or offer, or any
expression of interest by any third party relating to Parent's or
the Company's willingness or ability to receive or discuss a
proposal or offer, for (A) a tender or exchange offer, or other
acquisition of beneficial ownership of, in each case 30% or more of
the outstanding voting capital stock of Parent or the Company,
respectively, (B) a merger, consolidation or other business
combination involving either Parent or the Company or any of their
respective Subsidiaries or (C) any proposal to acquire in any
manner 30% or more of the assets of, either Parent or the Company
and their respective Subsidiaries, taken as a whole.
Section 4.3 Third Party Standstill Agreements. During the
period from the date of this Agreement through the Effective Time,
neither the Parent nor the Company, without the consent of the
other party, shall terminate, amend, modify or waive any provision
of any confidentiality or standstill agreement to which Parent or
the Company or any of their respective Subsidiaries is a party and
which relates to a Takeover Proposal for Parent or the Company,
respectively (other than any involving the other party hereto),
unless the Board of Directors of Parent or the Company, as the case
may be, concludes in good faith on the basis of the advice of its
outside counsel (who may be its regularly engaged outside counsel),
that the failure to terminate, amend, modify or waive any such
confidentiality or standstill agreement would violate the fiduciary
obligations of the Board under applicable law. Subject to such
fiduciary duties, during such period, each of Parent and the
Company agrees to enforce, to the fullest extent permitted under
applicable law, the provisions of any such agreements, including,
but not limited to, obtaining injunctions to prevent any breaches
of such agreements and to enforce specifically the terms and
provisions thereof in any court of the United States or any state
thereof having jurisdiction.
Section 4.4 Pooling of Interests; Reorganization. During the
period from the date of this Agreement through the Effective Time,
unless the other party shall otherwise agree in writing, none of
Parent, the Company or any of their respective Subsidiaries or
Affiliates over which they exercise control shall (a) knowingly
take or fail to take any action which action or failure would
jeopardize the treatment of the Merger as a pooling of interests
for accounting purposes or (b) knowingly take or fail to take any
action which action or failure would jeopardize the qualification
of the Merger as a reorganization within the meaning of Section
368(a) of the Code. Between the date of this Agreement and the
Effective Time, Parent and the Company each shall take all
reasonable actions necessary to cause the characterization of the
Merger as a pooling of interests for accounting purposes if such a
characterization were jeopardized by action taken by Parent or the
Company, respectively, prior to the Effective Time. Following the
Effective Time, Parent shall not knowingly take any action, or fail
to take any action, that would jeopardize the characterization of
the Merger as a "pooling of interests" for accounting purposes.
Parent shall cause financial results covering the first full month
of post-Merger combined operations to be published within 75 days
after the Effective Time.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Shareholder Meetings. Except to the extent
legally required for the discharge by the board of directors of its
fiduciary duties as advised by counsel, the Company and Parent each
shall call a meeting of its shareholders (respectively, the
"Company Shareholder Meeting" and the "Parent Shareholder Meeting"
and, collectively, the "Shareholder Meetings") to be held on the
same day and as promptly as practicable after the date on which the
Registration Statement becomes effective, but in no event prior to
January 20, 1998, for the purpose of considering the approval of
this Agreement (in the case of the Company) and the Parent
Shareholders' Approvals (in the case of Parent). The Company and
Parent will, through their respective Boards of Directors,
recommend to their respective shareholders approval of such matters
and shall not withdraw such recommendation; provided, however, that
a Board of Directors shall not be required to make, and shall be
entitled to withdraw, such recommendation if such Board concludes
in good faith on the basis of the advice of Wachtell, Lipton,
Rosen & Katz in the case of the Company and Sommer & Barnard, PC in
the case of Parent that the making of, or the failure to withdraw,
such recommendation would violate the fiduciary obligations of such
Board under applicable law. The Boards of Directors of the Company,
Parent and Sub will not rescind their respective declarations that
the Merger is advisable, fair to and in the best interest of such
company and its shareholders unless, in any such case, any such
Board concludes in good faith on the basis of the advice of
Wachtell, Lipton, Rosen & Katz in the case of the Company and
Sommer & Barnard, PC in the case of Parent that the failure to
rescind such determination would violate the fiduciary obligations
of such Board under applicable law.
Section 5.2 Preparation of the Registration Statement and the
Joint Proxy Statement. The Company and Parent shall promptly
prepare and file with the SEC the Joint Proxy Statement and Parent
shall prepare and file with the SEC the Registration Statement, in
which the Joint Proxy Statement will be included as a prospectus.
Each of Parent and the Company shall use its reasonable best
efforts to have the Registration Statement declared effective under
the Securities Act as promptly as practicable after such filing. As
promptly as practicable after the Registration Statement shall have
become effective, each of Parent and the Company shall mail the
Joint Proxy Statement to its respective shareholders. Parent shall
also take any action (other than qualifying to do business in any
jurisdiction in which it is now not so qualified) required to be
taken under any applicable state securities laws in connection with
the issuance of Parent Common Stock in the Merger, and the Company
shall furnish all information concerning the Company and the
holders of Company Common Stock as may be reasonably requested in
connection with any such action. No amendment or supplement to the
Joint Proxy Statement or the Registration Statement will be made by
Parent or the Company without the prior approval of the other
party. Parent and the Company each will advise the other, promptly
after it receives notice thereof, of the time when the Registration
Statement has become effective or any supplement or amendment has
been filed, of the issuance of any stop order, of the suspension of
the qualification of the Parent Common Stock issuable in connection
with the Merger for offering or sale in any jurisdiction, or of any
request by the SEC for amendment of the Joint Proxy Statement or
the Registration Statement or comments thereon and responses
thereto or requests by the SEC for additional information.
Section 5.3 Access to Information. Subject to currently
existing contractual and legal restrictions applicable to Parent or
to the Company or any of their Subsidiaries, each of Parent and the
Company shall, and shall cause each of its Subsidiaries to, afford
to the accountants, counsel, financial advisors and other
representatives of the other party hereto reasonable access to, and
permit them to make such inspections as they may reasonably require
of, during normal business hours during the period from the date of
this Agreement through the Effective Time, all their respective
properties, books, contracts, commitments and records (including,
without limitation, the work papers of independent accountants, if
available and subject to the consent of such independent
accountants) and, during such period, Parent and the Company shall,
and shall cause each of its Subsidiaries to, furnish promptly to
the other (i) a copy of each report, schedule, registration
statement and other document filed by it during such period
pursuant to the requirements of federal or state securities laws
and (ii) all other information concerning its business, properties
and personnel as the other may reasonably request. No investigation
pursuant to this Section 5.3 shall affect any representation or
warranty in this Agreement of any party hereto or any condition to
the obligations of the parties hereto. All information obtained by
Parent or the Company pursuant to this Section 5.3 shall be kept
confidential in accordance with the Confidentiality Agreement dated
October 15, 1997 between Parent and the Company (the
"Confidentiality Agreement").
Section 5.4 Compliance with the Securities Act; Pooling
Period.
(a) Not less than 45 days prior to the Effective Time, the
Company shall deliver to Parent a list of names and addresses of
those persons who were, in the opinion of the Company at the time
of the Company Shareholder Meeting referred to in Section 5.1,
"affiliates" of the Company within the meaning of Rule 145 under
the Securities Act and for the purposes of applicable
interpretations regarding the pooling-of-interests method of
accounting; it being understood that the mere fact that a
shareholder owns more than 10% of the Company's Common Stock shall
not, absent such shareholder's having board representation or
otherwise having the ability to control the management of the
Company, mean that such holder is an Affiliate ("Affiliates"). The
Company shall provide to Parent such information and documents as
Parent shall reasonably request for purposes of reviewing such
list. There shall be added to such list the names and addresses of
any other person which Parent reasonably identifies (by written
notice to the Company within ten business days after Parent's
receipt of such list) as being a person who may be deemed to be an
Affiliate of the Company; provided, however, that no such person
identified by Parent shall be added to the list of Affiliates of
the Company if Parent shall receive from the Company, on or before
the Effective Time, an opinion of counsel reasonably satisfactory
to Parent to the effect that such person is not an Affiliate. The
Company shall exercise all reasonable efforts to deliver or cause
to be delivered to Parent, not later than 30 days prior to the
Effective Time, from each of such Affiliates of the Company
identified in the foregoing list, an affiliate letter in the form
attached hereto as Exhibit A.
(b) Not less than 45 days prior to the Effective Time,
Parent shall deliver to the Company a list of names and addresses
of those persons who were, in the opinion of Parent at the time of
the Parent Shareholder Meeting referred to in Section 5.1,
"affiliates" of Parent within the meaning of Rule 145 under the
Securities Act and for the purposes of applicable interpretations
regarding the pooling-of-interests method of accounting; it being
understood that the mere fact that a shareholder owns more than
10% of the Parent's Common Stock shall not, absent such
shareholder's having board representation or otherwise having the
ability to control the management of Parent, mean that such holder
is an Affiliate ("Affiliates"). Parent shall provide to the Company
such information and documents as the Company shall reasonably
request for purposes of reviewing such list. There shall be added
to such list the names and addresses of any other person which the
Company reasonably identifies (by written notice to Parent within
ten business days after the Company's receipt of such list) as
being a person who may be deemed to be an Affiliate of the Parent;
provided, however, that no such person identified by the Company
shall be added to the list of Affiliates of Parent if the Company
shall receive from Parent, on or before the Effective Time, an
opinion of counsel reasonably satisfactory to the Company to the
effect that such person is not an Affiliate. Parent shall exercise
all reasonable efforts to deliver or cause to be delivered to the
Company, not later than 30 days prior to the Effective Time, from
each of such Affiliates of Parent identified in the foregoing list,
an affiliate letter in the form attached hereto as Exhibit B.
(c) If the Merger would otherwise qualify for
pooling-of-interests accounting treatment, shares of Parent Common
Stock issued to such Affiliates of the Company in exchange for
Shares shall not be transferable until such time as financial
results covering at least 30 days of combined operations of Parent
and the Company have been published within the meaning of Section
201.01 of the SEC's Codification of Financial Reporting Policies,
regardless whether each such Affiliates has provided the written
agreement referred to in this Section 5.4, except to the extent
permitted by, and in accordance with, Accounting Series Release 135
and Staff Accounting Bulletins 65 and 76. Any shares of Company
Common Stock held by such Affiliates shall not be transferable,
regardless whether each such Affiliate has provided the written
agreement referred to in this Section 5.4, if such transfer, either
alone or in the aggregate with other transfers by Affiliates, would
preclude Parent's ability to account for the business combination
to be effected by the Merger as a pooling of interests. The Company
shall not register the transfer of any Certificate, unless such
transfer is made in compliance with the foregoing. Parent shall not
be required to maintain the effectiveness of the S-4 Registration
Statement or any other registration statement under the Securities
Act for the purposes of resale of Parent Common Stock by such
Affiliates received in the Merger and the certificates representing
Parent Common Stock received by such Affiliates shall bear a
customary legend regarding applicable Securities Act restrictions
and the provisions of this Section 5.4.
Section 5.5 NYSE Listing. Parent shall use its reasonable
best efforts to list on the NYSE, upon official notice of issuance,
the shares of Parent Common Stock to be issued in connection with
the Merger.
Section 5.6 Fees and Expenses.
(a) Except as provided in this Section 5.6, whether or not the
Merger is consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated
hereby including, without limitation, the fees and disbursements of
counsel, financial advisors and accountants, shall be paid by the
party incurring such costs and expenses, provided that all printing
expenses and filing fees shall be divided equally between Parent
and the Company.
(b) (i) If any event referred to in Section 7.1(i) occurs at
a time when the Company does not have a right to terminate under
Section 7.1(k), this Agreement is terminated thereafter by the
Company or Parent (whether or not pursuant to such clause) and
prior to such termination the shareholders of the Company did not
approve this Agreement, then, so long as Parent is not in material
breach of any representation, warranty or material covenant herein,
the Company shall (without prejudice to any other rights of Parent
against the Company) pay to Parent a fee of $20.0 million in cash,
such payment to be made promptly, but in no event later than the
second business day following such termination.
(ii) If at a time when the Company does not have a right to
terminate under Section 7.1(k):
(A) this Agreement is terminated by the Company pursuant
to Section 7.1(d) where prior to the Company Shareholder
Meeting a Takeover Proposal with respect to the Company was
made and within twelve months after such a termination a
Company Acquisition Transaction (as hereinafter defined)
occurs;
(B) (x) this Agreement is terminated by the Company or
Parent at a time when Parent is entitled to terminate this
Agreement pursuant to Section 7.1(e), and (y) prior to the
Company Shareholder Meeting but after the date of this
Agreement a Takeover Proposal with respect to the Company was
made;
(C) this Agreement is terminated by the Company or Parent
pursuant to Section 7.1(g) and within twelve months after such
termination a Company Acquisition Transaction occurs; or
(D) this Agreement is terminated by Parent pursuant to
Section 7.1(i) following the occurrence of a Company
Acquisition Transaction;
then, in each case, so long as Parent is not in material breach of
any representation, warranty or material covenant herein, the
Company shall (without prejudice to any other rights of Parent
against the Company) pay to Parent a fee of $20.0 million in cash,
such payment to be made promptly, but in no event later than the
second business day following, in the case of clause (A) and (C),
the Company Acquisition Transaction, or, in the case of clause (B)
or (D), such termination. Regardless of the circumstances giving
rise to termination, a maximum of $20.0 million will be payable
under clauses (b)(i) and (b)(ii).
A "Company Acquisition Transaction" means any of the following
events: (A) any Person other than Parent or its Affiliates,
acquires or becomes the beneficial owner of 30% or more of the
outstanding shares of Company Common Stock; (B) any new group is
formed which, at the time of formation, beneficially owns 30% or
more of the outstanding shares of Company Common Stock (other than
a group which includes or may reasonably be deemed to include
Parent or any of its Affiliates); (C) the Company enters into an
agreement, including, without limitation, an agreement in
principle, providing for a merger or other business combination
involving the Company or the acquisition of a 30% interest in, or
at least 30% of the assets, business or operations of, the Company
(other than the transactions contemplated by this Agreement); or
(D) any Person (other than Parent or its Affiliates) is granted any
option or right, conditional or otherwise, to acquire or otherwise
become the beneficial owner of shares of Company Common Stock
which, together with all shares of Company Common Stock
beneficially owned by such Person, results or would result in such
Person being the beneficial owner of 30% or more of the outstanding
shares of Company Common Stock. For purposes of this Section 5.6,
the terms "group" and "beneficial owner" shall be defined by
reference to Section 13(d) of the Exchange Act.
(c) (i) If any event referred to in Section 7.1(j) occurs,
this Agreement is terminated thereafter by the Company or Parent
(whether or not pursuant to such clause) and prior to such
termination the shareholders of Parent did not approve this
Agreement, then, so long as the Company is not in material breach
of any representation, warranty or material covenant herein, Parent
shall (without prejudice to any other rights of Company against
Parent) pay to the Company a fee of $30.0 million in cash, such
payment to be made promptly, but in no event later than the second
business day following such termination.
(ii) If:
(A) this Agreement is terminated by Parent pursuant to
Section 7.1(d) where prior to the Parent Shareholder Meeting
a Takeover Proposal with respect to the Parent was made and
within twelve months after such a termination a Parent
Acquisition Transaction (as hereinafter defined) occurs;
(B) (x) this Agreement is terminated by the Company or
Parent at a time when the Company is entitled to terminate
this Agreement pursuant to Section 7.1(f), and (y) prior to
the Parent Shareholder Meeting but after the date of this
Agreement a Takeover Proposal with respect to the Parent was
made;
(C) this Agreement is terminated by the Company or Parent
pursuant to Section 7.1(h) and within twelve months after such
termination a Parent Acquisition Transaction occurs; or
(D) this Agreement is terminated by the Company pursuant
to Section 7.1(j) following the occurrence of a Parent
Acquisition Transaction;
then, in each case, so long as the Company is not in material
breach of any representation, warranty or material covenant herein,
Parent shall (without prejudice to any other rights of the Company
against Parent) pay to the Company a fee of $30.0 million in cash
in the case of clauses (A), (C) and (D) or $25.0 million in the
case of clause (B), such payment to be made promptly, but in no
event later than the second business day following, in the case of
clause (A) and (C), the Parent Acquisition Transaction or, in the
case of clauses (B) or (D), such termination. Regardless of the
circumstances giving rise to termination, a maximum of $30.0
million will be payable under clauses (c)(i) and (c)(ii).
A "Parent Acquisition Transaction" means any of the following
events: (A) any Person acquires or becomes the beneficial owner of
30% or more of the outstanding shares of Parent Common Stock; (B)
any new group is formed which, at the time of formation,
beneficially owns 30% or more of the outstanding shares of Parent
Common Stock (other than a group which includes or may reasonably
be deemed to include Parent or any of its Affiliates); (C) Parent
enters into an agreement, including, without limitation, an
agreement in principle, providing for a merger or other business
combination involving Parent (other than this Agreement) or the
acquisition of a 30% interest in, or at least 30% of the assets,
business or operations of, Parent or (D) any Person (other than the
Company or its Affiliates) is granted any option or right,
conditional or otherwise, to acquire or otherwise become the
beneficial owner of shares of Parent Common Stock which, together
with all shares of Parent Common Stock beneficially owned by such
Person, results or would result in such Person being the beneficial
owner of 30% or more of the outstanding shares of Parent Common
Stock.
(iii) If the event referred to in Section 7.1(k) occurs, (w)
the directors of the Company determine not to terminate the
Agreement as a result of such event, (x) the directors of the
Company determine not to withdraw their recommendation, (y) SBC
Warburg Dillon Read Inc. does not withdraw its opinion, and (z) the
shareholders of the Company do not approve this Agreement at the
Company Shareholder Meeting or any adjournment or postponement
thereof and this Agreement is terminated as a result thereof
pursuant to Section 7.1(e), Parent shall pay to the Company a fee
of $20.0 million in cash, such payment to be made immediately into
an escrow account to be released to the Company only if no Company
Acquisition Transaction occurs within 6 months of the Company
Shareholder Meeting, and otherwise to Parent.
(d) Parent and the Company acknowledge that the agreements
contained in Sections 5.6(b) and 5.6(c) are an integral part of the
transactions contemplated by this Agreement, and that, without
these agreements, Parent and Sub and the Company would not enter
into this Agreement. Accordingly, if either Parent or the Company
fails promptly to pay the amount due pursuant to Sections 5.6(b)
and 5.6(c), and, to obtain such payment, Company, on the one hand,
or Parent or Sub, on the other hand, commences a suit which results
in a judgment for the fee set forth in Section 5.6(b) or 5.6(c),
the Company or Parent, as the case may be, shall pay to Parent or
Sub, on the one hand, or the Company, on the other hand, its costs
and expenses (including attorneys' fees) in connection with such
suit together with interest on the amount of the fee at the prime
rate of NationsBank of North Carolina, N.A., in effect on the date
such payment was required to be made.
Section 5.7 Company Stock Options; Stock Purchase Plan;
Employee Benefits.
(a) At the Effective Time, by virtue of the Merger and without
any further action on the part of the Company or the holder
thereof, each unexpired and unexercised option to purchase shares
of Company Common Stock (a "Company Stock Option"), under the
Company Stock Option Plans, or otherwise granted by the Company
outside of any Company Stock Option Plan, will be assumed by Parent
as hereinafter provided. At the Effective Time, by virtue of the
Merger and without any further action on the part of the Company or
the holder thereof, each Company Stock Option will be automatically
converted into an option (the "Parent Stock Option") to purchase a
number of shares of Parent Common Stock equal to the number of
shares of Company Common Stock that could have been purchased under
such Company Stock Option multiplied by the Conversion Number, at
a price per share of Parent Common Stock equal to the per share
option exercise price specified in the Company Stock Option,
divided by the Conversion Number. Such Parent Stock Option shall
otherwise be subject to the same terms and conditions as such
Company Stock Option. Each Company Stock Option that is outstanding
prior to the Effective Time shall, pursuant to its terms and
without any further action on the part of the Board of Directors of
the Company, become fully vested and exercisable as of the
Effective Time. The resolutions of the Parent Board approving this
Agreement shall specifically approve the terms and conditions of
the Company Stock Options so assumed for purposes of Rule 16b-3(d)(1)
under the Exchange Act. At the Effective Time, (i) all
references in the Company Stock Option Plans, the applicable stock
option or other awards agreements issued thereunder and in any
other Company Stock Options to the Company shall be deemed to refer
to Parent; and (ii) Parent shall assume the Company Stock Option
Plans and all of the Company's obligations with respect to the
Company Stock Options.
(b) In respect of each Company Stock Option as converted into
a Parent Stock Option pursuant to Section 5.7(a) and assumed by
Parent, and the shares of Parent Common Stock underlying such
option, Parent shall file as soon as practicable after the
Effective Time with the Securities and Exchange Commission, and
keep current the effectiveness of, a registration statement on Form
S-8 (which may be accomplished by amendment of the registration
statement on Form S-4) or other appropriate form for as long as
such options remain outstanding (and maintain the current status of
the prospectus with respect thereto). Parent agrees to reserve a
number of shares of Parent Common Stock equal to the number of
shares of Parent Common Stock issuable upon the exercise of such
Company Stock Options.
(c) The Company agrees that it will not grant any stock
options, restricted stock, stock appreciation rights or limited
stock appreciation rights and will not permit cash payments to
holders of Company Stock Options in lieu of the substitution
therefor of Parent Stock Options, as described in this Section 5.7.
(d) From and after the Effective Time, Parent shall honor, and
shall cause the Company and Company Subsidiaries to honor, in
accordance with their terms all existing employment and severance
agreements and severance and bonus plans which apply to current or
former employees or directors of the Company or the Company
Subsidiaries. Parent and the Company acknowledge and agree that
the transactions contemplated by this Agreement shall constitute,
as of the receipt of the Company Shareholder Approvals or the
Effective Time (depending on such arrangement language), a "Change
of Control" as such term is defined in all Company change of
control benefit arrangements.
(e) To the extent that service is relevant for purposes of
eligibility, participation, vesting or (except in the case of a
defined benefit pension plan maintained by Parent, and not
previously maintained by the Company or any Company Subsidiary)
benefit accrual under any employee benefit plan, program or
arrangement established or maintained by Parent, the Company or any
of their respective Subsidiaries, employees of the Company and the
Company Subsidiaries shall be credited for service accrued or
deemed accrued prior to the Effective Time with the Company or a
Company Subsidiary, as the case may be.
(f) For one year immediately following the Effective Time,
Parent will cause the Company or its Subsidiaries to pay bonuses
pursuant to the Company's current bonus plans, consistent with past
practices, as determined by the current Chairman of the Board of
Directors of the Company.
(g) In addition to the matters referred to on Schedule 5.7(g),
for one year immediately following the Effective Time, any changes
to the Company's and the Company's Subsidiaries' benefit plans and
arrangements shall be subject to the determination of the current
Chairman of the Board of Directors of the Company.
Section 5.8 Reasonable Best Efforts; Pooling of Interests.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use reasonable best
efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by
this Agreement, including, but not limited to: (i) the obtaining of
all necessary actions or nonactions, waivers, consents and
approvals from all Governmental Entities and the making of all
necessary registrations and filings (including filings with
Governmental Entities) and the taking of all reasonable steps as
may be necessary to obtain an approval or waiver from, or to avoid
an action or proceeding by, any Governmental Entity (including
those in connection with the HSR Act and State Takeover Approvals),
(ii) the obtaining of all necessary consents, approvals or waivers
from third parties, (iii) the defending of any lawsuits or other
legal proceedings, whether judicial or administrative, challenging
this Agreement or the consummation of the transactions contemplated
hereby, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or
reversed, and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated
by this Agreement. Parent and the Company shall cooperate with each
other in connection with the making of such filings, including
providing copies of all such documents to the non-filing party and
its advisors prior to filing and, if requested, accepting all
reasonable suggestions in connection therewith.
The parties hereto will consult and cooperate with one
another, and consider in good faith the views of one another, in
connection with any analyses, appearances, presentations,
memoranda, briefs, arguments, opinions and proposals made or
submitted by or in behalf of any party hereto in connection with
proceedings under or relating to the HSR Act or any other federal,
state or foreign antitrust or fair trade law. Each party shall
promptly notify the other party of any communication to that party
from any Governmental Entity in connection with any required filing
with, or approval or review by, such Governmental Entity in
connection with the Merger and permit the other party to review in
advance any such proposed communication to any Governmental Entity.
Neither party shall agree to participate in any meeting with any
Governmental Entity in respect of any such filings, investigation
or other inquiry unless it consults with the other party in advance
and, to the extent permitted by such Governmental Entity, gives the
other party the opportunity to attend and participate thereat. No
party to this Agreement shall consent to any voluntary delay of the
consummation of the Merger at the behest of any Governmental Entity
without the consent of the other parties to this Agreement, which
consent shall not be unreasonably withheld.
(b) The Company agrees to cooperate with and use all
reasonable efforts to assist Parent to make all applications to,
and obtain all necessary approvals of, all Regulatory Authorities
having jurisdiction over the Bank and/or its directors and
executive officers as a result of the transactions contemplated
herein.
(c) Each party shall use all reasonable best efforts to not
take any action, or enter into any transaction, which would cause
any of its representations or warranties contained in this
Agreement to be untrue or result in a breach of any covenant made
by it in this Agreement.
(d) Notwithstanding anything to the contrary contained in this
Agreement,(i) neither Parent nor the Company shall be obligated to
use its reasonable best efforts or to take any action pursuant to
this Section 5.8 if the Board of Directors of Parent or the
Company, as the case may be, shall conclude in good faith on the
basis of the advice of Wachtell, Lipton, Rosen & Katz in the case
of the Company and Sommer & Barnard, PC in the case of Parent that
such action would violate the fiduciary obligations of such Board
under applicable law, and (ii) in connection with any filing or
submission required or action to be taken by either Parent or the
Company to effect the Merger and to consummate the other
transactions contemplated hereby, neither Parent nor the Company
shall, without the other party's prior written consent, commit to
any material divestiture transaction, and neither Parent nor the
Company shall be required to agree to such a divestiture or to
commit to take any action that limits Parent's freedom of action
with respect to, or its ability to retain, the Company or any of
the material businesses, or assets of Parent or any of its
Affiliates or that otherwise would have a Material Adverse Effect
on Parent.
Section 5.9 Public Announcements. The initial press release
shall be a joint press release and thereafter the Company and
Parent each shall consult with the other prior to issuing any press
releases or otherwise making public announcements with respect to
the Merger and the other transactions contemplated by this
Agreement and prior to making any filings with any third party
and/or any Governmental Entity (including any national securities
exchange or interdealer quotation service) with respect thereto,
except as may be required by law or by obligations pursuant to any
listing agreement with or rules of the NYSE.
Section 5.10 State Takeover Laws. If any "fair price,"
"business combination" or "control share acquisition" statute or
other similar statute or regulation shall become applicable to the
transactions contemplated hereby, Parent and the Company and their
respective Boards of Directors shall use their reasonable best
efforts to grant such approvals and take such actions as are
necessary so that the transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated
hereby and otherwise act to minimize the effects of any such
statute or regulation on the transactions contemplated hereby.
Section 5.11 Indemnification; Directors and Officers
Insurance. For three years from and after the Effective Time,
Parent agrees to, and to cause the Surviving Corporation to,
indemnify and hold harmless all past and present directors,
officers and employees of the Company and of its Subsidiaries to
the same extent such persons are indemnified as of the date of this
Agreement by the Company pursuant to the Company's Articles of
Incorporation and By-Laws and indemnification agreements, if any,
in existence on the date hereof with any directors, officers and
employees of the Company and its Subsidiaries for acts or omissions
occurring at or prior to the Effective Time; provided, however,
that Parent agrees to, and to cause the Surviving Corporation to,
indemnify and hold harmless such persons to the fullest extent
permitted by law for acts or omissions occurring in connection with
the approval of this Agreement and the consummation of the
transactions contemplated hereby. Parent shall cause the Surviving
Corporation to provide, for an aggregate period of not less than
two years from the Effective Time, the Company's current directors
and officers an insurance and indemnification policy that provides
coverage for events occurring prior to the Effective Time (the "D&O
Insurance") that is no less favorable than the Company's existing
policy or, if substantially equivalent insurance coverage is
unavailable, the best available coverage; provided, however, that
the Surviving Corporation shall not be required to pay an annual
premium for the D&O Insurance in excess of 200 percent of the last
annual premium paid prior to the date hereof (which premium the
Company represents and warrants to be approximately $300,000).
Section 5.12 Notification of Certain Matters. Parent shall
use its reasonable best efforts to give prompt notice to the
Company, and the Company shall use its reasonable best efforts to
give prompt notice to Parent, of: (i) the occurrence, or
non-occurrence, of any event the occurrence, or nonoccurrence, of
which it is aware and which would be reasonably likely to cause (x)
any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect or (y) any covenant,
condition or agreement contained in this Agreement not to be
complied with or satisfied in all material respects, (ii) any
failure of Parent or the Company, as the case may be, to comply in
a timely manner with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder or (iii)
any change or event which would be reasonably likely to have a
Material Adverse Effect on Parent or the Company, as the case may
be; provided, however, that the delivery of any notice pursuant to
this Section 5.12 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
Section 5.13 Directors. The directors of Sub at the Effective
Time shall, from and after the Effective Time, be the directors of
the Surviving Corporation until their successors have been duly
elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Articles of
Incorporation and By-Laws.
Section 5.14 Designation of Directors. At the Effective Time,
Parent shall cause Stanton J. Bluestone for the class of 1998 and
John W. Burden III for the class of 1999 to be appointed to its
Board of Directors, each of whom shall serve until the next
regularly scheduled annual meeting of Parent or until their
successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance
with the Charter and By-Laws. Parent shall cause its Board to
renominate Mr. Bluestone for the class of 2001 and Mr. Burden for
the class of 2002. In addition, in connection with the next
regularly scheduled annual meeting of the shareholders of Parent,
Messrs. Bluestone, Burden and R. Brad Martin shall jointly make a
recommendation for an additional Parent board member, who may or
may not be a current director of the Company, to the Strategic
Planning and Corporate Governance Committee of the Board of
Directors of Parent. The Strategic Planning and Corporate
Governance Committee shall, consistent with its fiduciary
obligations, consider any such recommendation. Section 13 of
Article III of Parent's By-Laws shall be amended so that the
resignation requirement shall not apply to the Company's nominees.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the
Merger shall be subject to the fulfillment at or prior to the
Effective Time of the following conditions:
(a) Shareholder Approval. This Agreement shall have been duly
approved by the requisite vote of shareholders of the Company in
accordance with applicable law and the Articles of Incorporation
and By-Laws of the Company, and the Parent Shareholders' Approvals
shall have been obtained by the requisite vote of the shareholders
of Parent in accordance with applicable rules of the NYSE,
applicable law, and the Charter and By-Laws of Parent.
(b) Listing on the NYSE. The Parent Common Stock issuable in
the Merger shall have been authorized for listing on the NYSE,
subject to official notice of issuance.
(c) HSR, OCC and Other Approvals.
(i) The waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act
shall have expired or been terminated.
(ii) The OCC shall have approved the change of control of
the Bank.
(iii) All authorizations, consents, orders, declarations
or approvals of, or filings with, or terminations or
expirations of waiting periods imposed by, any Governmental
Entity, which the failure to obtain, make or occur would have
the effect of making the Merger or any of the transactions
contemplated hereby illegal or would have a Material Adverse
Effect on Parent (assuming the Merger had taken place), shall
have been obtained, shall have been made or shall have
occurred.
(iv) All authorizations, consents, or approvals of, any
third party, which the failure to obtain would have a Material
Adverse Effect on Parent or the Company shall have been
obtained.
(d) Accounting. Parent shall have received an opinion of
Coopers & Lybrand, LLP, dated as of the Effective Time, in form and
substance reasonably satisfactory to Parent and the Company, that
the Merger will qualify for pooling of interests accounting
treatment under generally accepted accounting principles if closed
and consummated in accordance with this Agreement. Parent shall
have received a "cold comfort" letter of Coopers & Lybrand, LLP,
dated the date on which the Registration Statement shall become
Effective and the Effective Time, respectively, in form and
substance reasonably satisfactory to Parent and the Company and
reasonably customary in scope and substance for letters of such
type.
(e) Registration Statement. The Registration Statement shall
have become effective in accordance with the provisions of the
Securities Act. No stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and no
proceedings for that purpose shall have been initiated or, to the
Knowledge of Parent or the Company, threatened by the SEC. All
necessary state securities or blue sky authorizations (including
State Takeover Approvals) shall have been received.
(f) No Order. No court or other Governmental Entity having
jurisdiction over the Company or Parent, or any of their respective
Subsidiaries, shall have enacted, issued, promulgated, enforced or
entered any law, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or
permanent) which is then in effect and has the effect of making the
Merger or any of the transactions contemplated hereby illegal.
(g) Litigation. There shall not be instituted or pending any
suit, action or proceeding by a Governmental Entity or any other
person as a result of this Agreement or any of the transactions
contemplated herein which, in the opinion of Sommer & Barnard, PC,
would have a Material Adverse Effect on Parent (assuming for
purposes of this paragraph (g) that the Merger shall have
occurred).
(h) Dissenting Shares. At the time of Closing, holders of no
more than 5% of the outstanding shares of Company Common Stock
shall have dissented and preserved their rights to seek appraisal
(excluding Company Common Stock owned by any of the Company's
Subsidiaries).
Section 6.2 Conditions to Obligation of the Company to Effect
the Merger. The obligation of the Company to effect the Merger
shall be subject to the fulfillment at or prior to the Effective
Time of the following additional conditions:
(a) Performance of Obligations; Representations and
Warranties. Each of Parent and Sub shall have performed in all
material respects each of its agreements contained in this
Agreement required to be performed on or prior to the Effective
Time, each of the representations and warranties of Parent and Sub
contained in this Agreement that is qualified by materiality shall
be true and correct on and as of the Effective Time as if made on
and as of such date (other than representations and warranties
which address matters only as of a certain date which shall be true
and correct as of such certain date) and each of the
representations and warranties that is not so qualified shall be
true and correct in all material respects on and as of the
Effective Time as if made on and as of such date (other than
representations and warranties which address matters only as of a
certain date which shall be true and correct in all material
respects as of such certain date), in each case except as
contemplated or permitted by this Agreement, and the Company shall
have received a certificate signed on behalf of each of Parent and
Sub by its Chief Executive Officer and its Chief Financial Officer
to such effect.
(b) Tax Opinion. The Company shall have received an opinion of
Wachtell, Lipton, Rosen & Katz in form and substance reasonably
satisfactory to the Company, dated the Effective Time,
substantially to the effect that on the basis of facts,
representations and assumptions set forth in such opinion which are
consistent with the state of facts existing as of the Effective
Time, for federal income tax purposes:
(i) the Merger will constitute a "reorganization" within
the meaning of Section 368(a) of the Code, and the Company,
Sub and Parent will each be a party to that reorganization
within the meaning of Section 368(b) of the Code;
(ii) no gain or loss will be recognized by Parent or the
Company as a result of the Merger;
(iii) no gain or loss will be recognized by the
shareholders of the Company upon the conversion of their
shares of Company Common Stock into shares of Parent Common
Stock pursuant to the Merger, except with respect to cash, if
any, received in lieu of fractional shares of Parent Common
Stock;
(iv) the aggregate tax basis of the shares of Parent
Common Stock received in exchange for shares of Company Common
Stock pursuant to the Merger (including fractional shares of
Parent Common Stock for which cash is received) will be the
same as the aggregate tax basis of such shares of Company
Common Stock;
(v) the holding period for shares of Parent Common Stock
received in exchange for shares of Company Common Stock
pursuant to the Merger will include the holder's holding
period for such shares of Company Common Stock, provided such
shares of Company Common Stock were held as capital assets by
the holder at the Effective Time; and
(vi) a shareholder of the Company who receives cash in
lieu of a fractional share of Parent Common Stock will
recognize gain or loss equal to the difference, if any,
between such shareholder's basis in the fractional share (as
described in clause (iv) above) and the amount of cash
received.
In rendering such opinion, Wachtell, Lipton, Rosen & Katz may
receive and rely upon representations from Parent, the Company, and
others.
(c) The Company shall have received an opinion of Sommer &
Barnard, PC, counsel to Parent, in form and substance reasonably
satisfactory to the Company, dated the Closing Date, to the effect
that the Parent Common Stock to be issued in the Merger will, when
issued, have been duly authorized, validly issued and shall not be
subject to further assessment. In rendering such opinion, Sommer &
Barnard, PC may rely upon the opinion of Tennessee counsel
reasonably satisfactory to the Company.
(d) Parent shall have proffered executed employment agreements
in forms heretofore agreed for Mr. Stanton J. Bluestone and Mr.
Michael R. MacDonald, which proffers shall not have been withdrawn,
and shall have complied with the agreements in Schedule 6.2(d)
hereof.
Section 6.3 Conditions to Obligations of Parent and Sub to
Effect the Merger. The obligations of Parent and Sub to effect the
Merger shall be subject to the fulfillment at or prior to the
Effective Time of the following additional condition:
(a) Performance of Obligations; Representations and
Warranties. The Company shall have performed in all material
respects each of its agreements contained in this Agreement
required to be performed on or prior to the Effective Time, each of
the representations and warranties of the Company contained in this
Agreement that is qualified by materiality shall be true and
correct on and as of the Effective Time as if made on and as of
such date (other than representations and warranties which address
matters only as of a certain date which shall be true and correct
as of such certain date) and each of the representations and
warranties that is not so qualified shall be true and correct in
all material respects on and as of the Effective Time as if made on
and as of such date (other than representations and warranties
which address matters only as of a certain date which shall be true
and correct in all material respects as of such certain date), in
each case except as contemplated or permitted by this Agreement,
and Parent shall have received a certificate signed on behalf of
the Company by its Chief Executive Officer and its Chief Financial
Officer to such effect.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after any
approval of the matters presented in connection with the Merger by
the shareholders of the Company or Parent:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company (provided such party is
not then in material breach) if the other party shall have failed
to comply in any material respect with any of its covenants or
agreements contained in this Agreement required to be complied with
prior to the date of such termination, which failure to comply has
not been cured within ten business days following receipt by such
other party of written notice of such failure to comply; provided,
however, that if any such breach is curable by the breaching party
through the exercise of the breaching party's best efforts and for
so long as the breaching party shall be so using its best efforts
to cure such breach, the non-breaching party may not terminate this
Agreement pursuant to this paragraph;
(c) by either Parent or the Company (provided such party is
not then in material breach) if there has been (i) a breach by the
other party (in the case of Parent, including any material breach
by Sub) of any representation or warranty that is not qualified as
to materiality which has the effect of making such representation
or warranty not true and correct in all material respects or (ii)
a breach by the other party (in the case of Parent, including any
material breach by Sub) of any representation or warranty that is
qualified as to materiality, in each case which breach has not been
cured within ten business days following receipt by the breaching
party of written notice of the breach; provided, however, that if
any such breach is curable by the breaching party through the
exercise of the breaching party's best efforts and for so long as
the breaching party shall be so using its best efforts to cure such
breach, the non-breaching party may not terminate this Agreement
pursuant to this paragraph;
(d) by Parent or the Company if the Merger has not been
effected on or prior to the close of business on April 15, 1998
(the "Termination Date"); provided, however, that the right to
terminate this Agreement pursuant to this Section 7.1(d) shall not
be available to any party whose failure to fulfill any of its
obligations contained in this Agreement has been the cause of, or
resulted in, the failure of the Merger to have occurred on or prior
to the aforesaid date;
(e) by Parent or the Company if the shareholders of the
Company do not approve this Agreement at the Company Shareholder
Meeting or any adjournment or postponement thereof;
(f) by Parent or the Company if the Parent Shareholders'
Approvals are not obtained at the Parent Shareholder Meeting or any
adjournment or postponement thereof;
(g) by Parent or the Company prior to approval of this
Agreement by the Company's shareholders if the Board of Directors
of the Company reasonably determines that a Takeover Proposal with
respect to the Company constitutes a Superior Proposal (as
hereinafter defined); provided, however, that the Company may not
terminate this Agreement pursuant to this Section 7.1(g) until
three business days have elapsed following delivery to Parent of a
written notice of such determination by the Board of Directors of
the Company (which written notice shall inform Parent of the
material terms and conditions of the Takeover Proposal) and the
delivery of a copy thereof if such Takeover Proposal is in writing;
(h) by Parent or the Company prior to the receipt of the
Parent Shareholder Approvals if the Board of Directors of Parent
reasonably determines that a Takeover Proposal with respect to
Parent constitutes a Superior Proposal (as hereinafter defined);
provided, however, that the Parent may not terminate this Agreement
pursuant to this Section 7.1(h) until three business days have
elapsed following delivery to the Company of a written notice of
such determination by the Board of Directors of Parent (which
written notice shall inform the Company of the material terms and
conditions of the Takeover Proposal) and the delivery of a copy
thereof if such Takeover Proposal is in writing;
(i) by Parent prior to approval of this Agreement by the
Company's shareholders if (i) the Board of Directors of the Company
shall not have recommended, or shall have resolved not to
recommend, or shall have modified or withdrawn its recommendation
of the Merger or declaration that the Merger is advisable and fair
to and in the best interest of the Company and its shareholders, or
shall have resolved to do so, (ii) the Board of Directors of the
Company shall have recommended to the shareholders of the Company
any Takeover Proposal or shall have resolved to do so, or (iii) a
tender offer or exchange offer for 30% or more of the outstanding
shares of capital stock of the Company is announced or commenced,
and, after fifteen (15) business days, the Board of Directors of
the Company fails to recommend against acceptance of such tender
offer or exchange offer by its shareholders (including by taking no
position with respect to the acceptance of such tender offer or
exchange offer by its shareholders);
(j) by the Company prior to the receipt of the Parent
Shareholder Approvals if (i) the Board of Directors of Parent shall
not have recommended, or shall have resolved not to recommend or
shall have modified or withdrawn its recommendation of the Parent
Shareholders' Approvals or declaration that the Merger is advisable
and fair to and in the best interests of Parent and its
shareholders, or shall have resolved to do so, (ii) the Board of
Directors of the Parent shall have recommended to the shareholders
of the Parent any Takeover Proposal or shall have resolved to do
so, or (iii) a tender offer or exchange offer for 30% or more of
the outstanding capital stock of Parent is announced or commenced,
and, after fifteen (15) business days, the Board of Directors of
Parent fails to recommend against acceptance of such offer by its
shareholders (including taking no position with respect to the
acceptance of such tender offer or exchange offer by its
shareholders); or
(k) by the Company if the closing price on the NYSE of the
Parent Common Stock is less than $22.00 per share on each trading
day in any period of fifteen (15) consecutive trading days
beginning seven calendar days after execution of this Agreement.
The right of any party hereto to terminate this Agreement
pursuant to this Section 7.1 shall remain operative and in full
force and effect regardless of any investigation made by or on
behalf of any party hereto, any person controlling any such party
or any of their respective officers or directors, whether prior to
or after the execution of this Agreement.
"Superior Proposal" shall mean a bona fide proposal or offer
made by a third party to acquire Parent or the Company (as
applicable) pursuant to a Takeover Proposal which a majority of the
members of the Board of Directors of Parent or the Company (as
applicable) determines in their good faith reasonable judgment
(based on the advice of independent financial advisors) to be more
favorable to Parent or the Company and to its shareholders than the
transactions contemplated hereby, provided that in making such
determination the Board considers the likelihood that such third
party is able to consummate such proposed transaction.
Section 7.2 Effect of Termination. In the event of
termination of this Agreement by either Parent or the Company, as
provided in Section 7.1, this Agreement shall forthwith terminate
and there shall be no liability hereunder on the part of the
Company, Parent, Sub or their respective officers or directors
(except for the last sentence of Section 5.3 and the entirety of
Section 5.6, which shall survive the termination); provided,
however, that nothing contained in this Section 7.2 shall relieve
any party hereto from any liability for any willful breach of a
representation or warranty contained in this Agreement or the
breach of any covenant contained in this Agreement.
Section 7.3 Amendment. This Agreement may be amended by the
parties hereto, by or pursuant to action taken by their respective
Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the shareholders
of Parent and the Company, but, after any such approval, no
amendment shall be made which by law requires further approval by
such shareholders without such further approval. This Agreement may
not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
Section 7.4 Waiver. At any time prior to the Effective Time,
the parties hereto may (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions
contained herein which may legally be waived. Any agreement on the
part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement
shall terminate at the Effective Time or upon the termination of
this Agreement pursuant to Section 7.1, as the case may be, except
that the agreements set forth in Article I and Sections 4.4, 5.7
and 5.11, 5.14 and this Article VIII shall survive the Effective
Time, and those set forth in the last sentence of Section 5.3 and
Sections 5.6 and 7.2 and this Article VIII and the Confidentiality
Agreement shall survive termination.
Section 8.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given when
delivered personally, one day after being delivered to an overnight
courier or when telecopied (with a confirmatory copy sent by
overnight courier) to the parties at the following addresses (or at
such other address for a party as shall be specified by like
notice):
(a) if to Parent or Sub, to:
Proffitt's, Inc.
750 Lakeshore Parkway
Birmingham, Alabama 35211
Attn.: Mr. R. Brad Martin
Proffitt's, Inc.
750 Lakeshore Parkway
Birmingham, Alabama 35211
Attn.: Brian J. Martin, Esquire
with copies to:
James A. Strain, Esquire
Sommer & Barnard, PC
4000 Bank One Tower
Indianapolis, Indiana 46204
(b) if to the Company, to:
Carson Pirie Scott & Co.
331 W. Wisconsin Avenue
Milwaukee, Wisconsin 53203
Attn.: Charles J. Hansen, Esquire
with copies to:
Patricia A. Vlahakis, Esquire
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Section 8.3 Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of
this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation
of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
Section 8.4 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other
parties.
Section 8.5 Entire Agreement; No Third-Party Beneficiaries.
This Agreement, together with the Confidentiality Agreement, is the
entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter hereof. This Agreement is not
intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
Section 8.6 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of
Illinois, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof. EACH OF THE
PARTIES HERETO IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE ACTIONS OF PARENT, THE COMPANY, OR SUB IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT
THEREOF.
Section 8.7 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties.
Section 8.8 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced
by any rule of law, or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic and legal substance of the
transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that
the transactions contemplated by this Agreement may be consummated
as originally contemplated to the fullest extent possible.
Section 8.9 Enforcement of this Agreement. The parties hereto
agree that irreparable damage would occur in the event that any of
the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and
to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, such
remedy being in addition to any other remedy to which any party is
entitled at law or in equity. Each party hereto hereby irrevocably
and unconditionally consents to submit to the exclusive
jurisdiction of the United States District Court located in the
State of Indiana (unless such courts assert no jurisdiction, in
which case the Company consents to the exclusive jurisdiction of
the courts of the State of Indiana) for any actions, suits or
proceedings arising out of or relating to this Agreement and the
transactions contemplated hereby (and each party hereto agrees not
to commence any action, suit or proceeding relating thereto except
in such courts), and further agrees that service of any process,
summons, notice or document by U.S. registered mail to the
addresses set forth herein shall be effective service of process
for any such action, suit or proceeding brought against the each
party in such court. Each party hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any
action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby, in the United States District
Courts located in the State of Indiana (unless such courts assert
no jurisdiction, in which case each party consents to the exclusive
jurisdiction of the courts of the State of Indiana). Each party
hereby further irrevocably and unconditionally waives and agrees
not to plead or to claim in any such court that any such action,
suit or proceeding brought in any such court has been brought in an
inconvenient forum.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto
duly authorized all as of the date first written above.
PROFFITT'S, INC.
By: /s/ R. Brad Martin
__________________________
Name: R. Brad Martin
Title: Chairman of the
Board and Chief Executive
Officer
Attest:
By: /s/ Douglas E. Coltharp
______________________
Name: Douglas E. Coltharp
Title: Executive Vice President
and Chief Financial Officer
LASALLE MERGER CORPORATION
By: /s/ R. Brad Martin
___________________________
Name: R. Brad Martin
Title: President<PAGE>
Attest:
By: /s/ Brian J. Martin
_________________________
Name: Brian J. Martin
Title: Vice President
CARSON PIRIE SCOTT & CO.
By: /s/ Stanton J. Bluestone
___________________________
Name: Stanton J. Bluestone
Title: Chairman of the
Board and Chief Executive
Officer
Attest:
By: /s/ Charles J. Hansen
_________________________
Name:Charles J. Hansen
Title: Secretary
PROFFITT'S
INCORPORATED
Post Office Box 9388
Alcoa, TN 37701
(423) 983-7000
Fax: (423) 981-6336
Proffitt's, Inc. and Carson Pirie Scott & Co. Announce Merger
Agreement
NOTE: The management of Proffitt's, Inc. has scheduled a
conference call at 10:00 a.m. Eastern Time on
Thursday, October 30, 1997, to discuss the proposed
business combination of the two companies. To
participate, please call 816/650-0613
(10 minutes prior to the call).
The management of Proffitt's, Inc. will host a
luncheon in New York at the Pierre Hotel on Monday,
November 3, 1997, at 12:00 noon to discuss the
proposed merger. For luncheon reservations, please
call Julissa Gonzalez at 212/816-8329.
KNOXVILLE, Tenn. and MILWAUKEE, Wis.--Oct. 29, 1997--
Proffitt's, Inc. (NYSE:PFT) ("Proffitt's" or the "Company")
and Carson Pirie Scott & Co. (NYSE:CRP) ("Carson's"), two of the
nation's leading regional department store companies, jointly
announced today that they have entered into an agreement and plan
of merger in which the two companies will be combined, with
Carson's, headquartered in Milwaukee, Wisconsin, becoming an
operating division of Proffitt's, Inc. The Boards of Directors of
Proffitt's and Carson's have approved the merger.
Under the terms of the transaction, shareholders of Carson's
will receive between 1.7 and 1.8 shares of Proffitt's, Inc. Common
Stock for each share of Carson Pirie Scott & Co. Common Stock.
This exchange ratio reflects Proffitt's 2-for-1 Common Stock split
which was effective October 15, 1997. Proffitt's will issue
approximately 29.7 million shares in the transaction, representing
a transaction equity value of approximately $790 million, based
upon Proffitt's October 24, 1997 closing stock price of $27.125 per
share (which also reflects the stock split). The merger is
expected to be completed in early 1998, subject to certain
conditions, including regulatory approval under the Hart-Scott-Rodino
Anti-Trust Act, regulatory approval under federal banking
laws, an effective registration statement filed with the Securities
and Exchange Commission, and approval by the shareholders of both
companies. The combination has been structured as a tax-free
transaction and will be accounted for as a pooling of interests.
Proffitt's, Inc. is a leading regional department store
company currently operating five divisions - the Proffitt's
Division headquartered in Knoxville, Tennessee with 19 stores in
Tennessee, Georgia, Kentucky, North Carolina, Virginia, and West
Virginia; the McRae's Division headquartered in Jackson,
Mississippi with 31 stores in Alabama, Mississippi, Florida, and
Louisiana; the Younkers Division headquartered in Des Moines, Iowa
with 50 stores in Iowa, Wisconsin, Michigan, Nebraska, Illinois,
Minnesota, and South Dakota; the Parisian Division headquartered in
Birmingham, Alabama with 40 stores in Alabama, Georgia, Florida,
Ohio, South Carolina, Tennessee, Indiana, Michigan, and
Mississippi; and the Herberger's Division headquartered in St.
Cloud, Minnesota with 37 stores in Minnesota, Montana, Nebraska,
North Dakota, South Dakota, Wisconsin, Colorado, Illinois, Iowa,
and Wyoming. The total Company operates 177 stores in twenty-four
states.
For the twelve months ended August 2, 1997, Proffitt's, Inc.
achieved record sales of $2.2 billion, net income before non-recurring
items of $67.3 million, and earnings per share before
non-recurring items of $2.32. Primarily as a result of
acquisitions, the Company has grown revenues and net earnings at
annual compound rates of 96% and 71%, respectively, over the last
four fiscal years.
Carson Pirie Scott & Co. is a leading regional department
store company with 52 department stores in Illinois, Wisconsin,
Indiana, and Minnesota operating under the names of Carson Pirie
Scott, Boston Store, and Bergner's. Carson's also operates four
free-standing furniture stores in Illinois and Wisconsin. For the
twelve months ended August 2, 1997, Carson's achieved sales of
$1.143 billion, net income of $31.6 million, and operating earnings
per share of $2.43. The Company has grown operating earnings per
share at an annual compound rate of 12% over the last four fiscal
years.
Once the businesses are combined, Carson's will operate as a
separate department store division of Proffitt's, Inc., with its
divisional headquarters in Milwaukee. Merchandising, store
operations, sales promotion, management information systems
("MIS"), and various support functions for the Carson's Division
will remain in Milwaukee, and Carson's credit operations center
will remain in Chicago. Stanton J. Bluestone will continue in his
role as Chairman and Chief Executive Officer of Carson's. The
Carson's organization will report through the Proffitt's, Inc.
organizational structure.
R. Brad Martin, Chairman and Chief Executive Officer of
Proffitt's, Inc., and Stan Bluestone expressed their enthusiasm for
the merger of the two companies. Mr. Martin stated, "We are very
excited about combining the two premier regional department store
companies in the country. This transaction will create the fourth
largest traditional department store company in the United States,
operating over 230 stores in 24 states with annual revenues in
excess of $3.5 billion. This combination will produce an
enterprise which will provide further opportunities for growth for
our associates and our shareholders."
Mr. Martin further commented, "Our Company has had a long-standing
respect for Carson's management, merchandising strategies,
customer service standards, and reputation in its markets and
throughout the vendor community. The contiguous geographical
relationship of our stores, with only limited market overlap, makes
this combination a great fit. The addition of Carson's
substantially strengthens our presence throughout the important
Midwest, particularly in the greater Chicago area, Milwaukee and
central Illinois."
Mr. Bluestone noted, "Proffitt's is indeed an ideal partner
for Carson's. Proffitt's has a terrific culture and an exemplary
reputation in the way it treats its associates, customers, and
business partners. Our combination with Proffitt's will provide
our associates and our shareholders with a bright future and a
substantial interest in the fastest growing department store
company in the country and in a company with a proven record for
creating shareholder value through successful business combinations
and solid financial performance. Proffitt's operating structure
and philosophy will enable our organization to operate as a
separate division within Proffitt's, Inc., while enjoying the many
benefits of shared resources and economies of scale. We are
confident that Proffitt's growth orientation will create further
opportunities for our team."
Mr. Martin noted, "This transaction will lower the financial
leverage of Proffitt's, Inc., strengthening our balance sheet and
providing additional flexibility for future growth opportunities.
Upon the successful completion of the transaction, we expect our
total debt to total capitalization will approximate 27% at year
end, a decline from approximately 40% presently.
"We believe the addition of Carson's would be modestly
accretive to the earnings of Proffitt's, Inc. beginning in 1998
even without the realization of synergies. Based upon achieving
the 1998 synergies outlined below, we expect fully diluted earnings
per share to approximate $1.77, adjusted for the 2-for-1 stock
split, in 1998."
Mr. Martin also noted, "We expect to realize synergies of
approximately $10 million, $20 million, and $40 million, in 1998,
1999, and 2000, respectively, related to this transaction. As soon
as practical, designated teams of managers from both Proffitt's and
Carson's will begin their work in identifying synergies and best
practices that will allow us to most effectively and efficiently
operate our existing business and to further position the Company
for additional growth."
Cost reductions related to the merger are expected to come in
several forms, such as through the elimination of certain duplicate
corporate expenses. Additionally, many best practices of the two
companies will be implemented throughout the combined corporation.
Examples include shared technology and systems, enhanced logistics
management at the distribution facilities, and the expansion of
Carson's national credit card bank to the Company's other operating
divisions. Savings will also be recognized on a combined basis
through the purchasing power of increased scale in such areas as
property and casualty insurance, associate benefits, advertising
media, and supply purchasing.
Martin concluded, "Through this merger, we believe there are
opportunities to improve the merchandising operations of the
combined business through strengthened vendor relationships,
development of key businesses and key brands, and further private
brand development. Additionally, the Carson's MIS and credit
operations will increase capacity in these important areas for the
entire organization and will provide a platform and infrastructure
to support future regional growth."
Upon closing the transaction, the Company will incur certain
non-recurring charges related to the business combination.
In connection with executing the merger agreement, the Board
of Directors of Carson's has rescinded the $20 million share
repurchase program adopted in January 1997.
This announcement is neither an offer of securities nor a
solicitation of proxies. An offering will only be made by means of
a prospectus which is part of an effective registration statement,
and proxies will only be solicited pursuant to a definitive proxy
statement.
The forward-looking information presented in the press release
is premised on many factors, some of which are outlined below.
Actual consolidated results might differ materially from projected
forward-looking information if there are any material changes in
management's assumptions.
The forward-looking information and statements are based on a
series of preliminary projections and estimates, are contingent
upon the timely completion of the merger transaction with Carson's,
and involve certain risks and uncertainties. Potential risks and
uncertainties include such factors as the level of consumer
spending for apparel and other merchandise carried by the Company,
the competitive pricing environment within the department and
specialty store industries, the effectiveness of planned
advertising, marketing, and promotional campaigns, appropriate
inventory management, realization of planned synergies, and
effective cost containment.
CONTACT: Proffitt's, Inc., Knoxville Julia Bentley, 423/981-6243
or Carson Pirie Scott & Co., Milwaukee Ed Carroll,
414/347-5340 (media) Darren Jackson, 414/278-5787
(investors)
SPECIAL CONFERENCE CALL
PROFFITT'S/CARSON'S ANNOUNCEMENT
October 30, 1997
Brad Martin
This is Brad Martin, the Chairman and Chief Executive Officer of
Proffitt's, Inc. I'm joined on the call today by Stan Bluestone,
the Chairman and Chief Executive Officer of Carson's, and Julia
Bentley, the Senior VP of Investor Relations for Proffitt's, Inc.
(Introduce any others on the call).
I would like to thank each of you for taking the time to join us
for the call today. The purpose of our call is to outline the
proposed business combination between Proffitt's, Inc. and Carson
Pirie Scott & Co. and to answer questions you may have.
Proffitt's will combine its business with Carson's in a stock-for-stock,
tax-free transaction that will be accounted for as a pooling
of interests. Each share of Carson's Common Stock will. be
exchanged for between 1.7 and 1.8 shares of Proffitt's Common
Stock, depending upon the average stock price closer to the closing
date. This exchange ratio reflects Proffitt's recent 2-for-1 stock
split. Proffitt's will issue approximately 29.7 million shares in
the transaction, representing a transaction equity value of
approximately $790 million, based on Proffitt's October 24 closing
stock price (adjusted for the split) of $27.125 per share.
The Boards of both companies have approved the transaction. The
merger is expected to be completed in early 1998 and is subject to
certain conditions, including an effective registration statement
filed with the SEC, a filing under the Hart-Scott-Rodino Antitrust
Act, regulatory approval under federal banking laws, and approval
by the shareholders of both companies.
Upon completion of the transaction, Carson's will operate as a
division of Proffitt's, Inc., with its divisional headquarters in
Milwaukee. Stan will remain Chairman and CEO of Carson's.
For those of you that may be unfamiliar with either Proffitt's or
Carson's, let me take a minute to give you an overview of
Proffitt's, and I'll ask Stan to do the same for Carson's.
Proffitt's, Inc. is a leading regional department store company
offering moderate to better brand name and private label fashion
apparel, accessories, cosmetics, and decorative home furnishings.
The Company currently operates five divisions under the names of
Proffitt's, McRae's, Younkers, Parisian, and Herberger's. The
Company's stores are primarily anchor stores in leading regional
malls, and are principally located throughout the Southeast,
Midwest, and Great Plains regions of the U.S. Our stores are
located in both smaller communities like Elizabethtown, Kentucky
and Greenville, Mississippi, where we are the only traditional
branded department store in the market, and in midsized to major
metropolitan areas, like Knoxville, Tennessee, Birmingham, Alabama,
and Des Moines, Iowa, where we are a leading department store in
the market. We operate approximately 16.5 million square feet of
space.
Proffitt's has grown from its base of just 5 stores in metropolitan
Knoxville to 177 stores in 24 states during the last 9 years. This
dynamic growth was primarily achieved through a series of
successful acquisitions including McRae's in 1994, Younkers and
Parisian in 1996, and Herberger's in 1997. For the twelve months
ended August 2, 1997, Proffitt's achieved record sales of $2.2
billion, net income before non-recurring items of $67.3 million,
and fully diluted earnings per share before non-recurring items of
$2.32.
I'd like to ask Stan to give a little background on Carson's.
Stan Bluestone
Carson Pirie Scott is a leading regional department store company
also offering moderate to better brand name and private label
fashion apparel, accessories, cosmetics, and home furnishings. Our
company's 52 department stores operate under the names of Carson
Pirie Scott, Boston Store, and Bergner's, and are located in
Illinois, Wisconsin, Indiana and Minnesota. Carson's stores are
primarily located in mid-sized to larger metropolitan areas and are
in leading regional malls. Twenty-eight of our department stores
are located in the greater Chicago area. We also operate four
free-standing furniture stores in Illinois and Wisconsin. We
operate approximately 8.1 million square feet of space.
For the twelve months ended August 2, 1997, Carson's achieved sales
of $1.143 billion, net income of $31.6 million, and operating
earnings per share of $2.43.
Brad Martin
Thank you Stan.
Upon completion of this transaction, Proffitt's, Inc. will operate
six separate department store divisions: Proffitt's, headquartered
in Knoxville, Tennessee, with 19 stores; McRae's, headquartered in
Jackson, Mississippi, with 31 stores; Younkers, headquartered in
Des Moines, Iowa, with 50 stores; Parisian headquartered in
Birmingham, Alabama, with 40 stores; Herberger's, headquartered in
St. Cloud, Minnesota, with 37 stores; and Carson's, headquartered
in Milwaukee, Wisconsin, with 52 department stores.
We are very excited about combining the two premier regional
department store chains and creating the fourth largest traditional
department store company in the United States. The combined
enterprise will operate over 230 stores with over 24 million feet
of space in 24 states with annual revenues in excess of $3.5
billion. This merger will help to assure that Proffitt's will be
a strong, long-term competitor in this industry and will produce an
enterprise which will provide further opportunities for our
associates and value for our shareholders.
I would like to go over the rationale behind business combination.
First, this combination significantly extends our Midwestern
presence, particularly in greater Chicago, Milwaukee, and central
Illinois, providing a platform for future expansion. The
contiguous geographic relationship of our stores, with only seven
overlapping units, makes this combination a natural fit. This
business combination positions the Company to pursue additional
growth opportunities in the mid-western section of the U.S.
Carson's has outstanding real estate locations, and the stores are
in excellent condition. A program has been in place whereby
approximately 70% of Carson's existing stores are new or have been
renovated within the last five years.
Second, the merchandising strategies of the companies are very
similar, with both emphasizing branded and selected private-label
merchandise targeted to middle- and upper-income families. Premier
brands carried by our stores typically include Liz Claiborne,
Calvin Klein, Jones New York, Guess, Tommy Hilfiger, Nautica,
Polo/Ralph Lauren, Estee Lauder, Clinique, Lancome, Enzo, Nine
West, Coach, Waterford, Calphalon, and Bali. We believe there are
opportunities to improve the merchandising operations of the
combined business through strengthened vendor relationships,
sharing of management personnel, and private label development.
These efforts will be led by the Proffitt's Merchandising Group.
The buying power of the combined company will be substantially
enhanced through the addition of Carson's.
Third, this transaction lowers the financial leverage of
Proffitt's, strengthening our balance sheet and providing
additional flexibility for future growth opportunities. Upon the
successful completion of the transaction, we expect our total debt
to total capitalization will approximate 27%, a decline from
approximately 40% presently. At year end (subsequent to the
closing), senior debt to total capital will approximate just 20%.
The combined business is expected to generate substantial free cash
flow.
We believe that the addition of Carson's will be modestly accretive
to the earnings of Proffitt's, Inc. beginning in 1998 even without
the realization of synergies. We certainly expect meaningful
synergies out of the combined business. I'll discuss these
anticipated synergies a little later on the call.
Our Company has had a long-standing respect for Carson's
management, merchandising strategies, customer service standards,
and reputation in its markets and throughout the vendor community.
Carson's is a well-run business positioned for growth and one that
has made significant capital investments in both store remodeling
and management information systems.
Proffitt's has invested in the infrastructure and management
necessary to execute our aggressive growth strategy. This
acquisition is consistent with that strategy. This transaction is
also consistent with Proffitt's corporate history of expanding our
franchise and creating shareholder value through accretive business
combinations. We are excited about the prospect of combining these
two well-positioned, leading companies and complementing our
respective strengths. This combined business will be of a size to
enjoy substantial benefits associated with increased economies of
scale in the consolidating department store industry, while
retaining the flexibility to serve our customers effectively on a
market by market basis.
Stan Bluestone
We believe Proffitt's is indeed an ideal partner for Carson's.
Proffitt's has a terrific culture and an exemplary reputation in
the way it treats its associates, customers and business partners.
Our combination with Proffitt's will provide our associates and our
shareholders with a bright future and a substantial interest in the
fastest growing department store company in the country and in a
company with a proven record for creating shareholder value through
successful business combinations and outstanding financial
performance.
Proffitt's operating structure and philosophy will enable our
organization to operate as a separate division within Proffitt's,
Inc., while enjoying the many benefits of shared resources and
economics of scale. Our merchandising, stores and advertising
staffs will be headquartered in Milwaukee. In addition, Proffitt's
intends to maintain management information systems operations and
other support functions in Milwaukee and Carson's credit operations
center in Chicago to appropriately support the Carson's business.
We are confident that this structure and Proffitt's growth
orientation will create further opportunities for our team.
Brad Martin
Merchandising Initiatives
About 6% of Proffitt's business is private label and about 8% of
Carson's business is private label. While Proffitt's, Inc. will
remain a branded department store company, a major initiative
currently underway at the Company (being led by the Proffitt's
Merchandising Group) is the development and implementation of an
exciting new private brand program that will enhance merchandise
margins, create further differentiation from competitors through
unique, high quality product offerings, and allow the Company to
lower its operating costs through reducing our relationships with
the outside buying offices (AMC and Frederick Atkins) which have
traditionally coordinated these programs. The Company's new
private brand program will be introduced throughout 1998, and the
newly developed products may be carried at the Carson's stores as
well. The new product offerings are in five key areas: women's
career, women's casual, men's casual, children's, and home. The
Company intends to increase private brands to approximately 12% of
total company sales over the next two years.
Carson's has some very well-developed businesses, such as feminine
apparel, home, and cosmetics. We see further opportunities to
develop key businesses at Carson's in such areas as shoes (which is
a leased business), men's, and children's. We will continue to use
the best practices approach to develop key businesses and to
introduce new vendors and assortments, as appropriate, in each
division.
As I previously mentioned, the addition of Carson's volume will
enhance our relationships with our key suppliers and should benefit
gross margins over time.
Synergies
First, let me note that we have made much progress regarding the
synergies process with our Younkers, Parisian, and Herberger's
transactions. As you recall, our targeted annualized synergy/cost
savings number was $20 million for 1997 and $29 million for 1998.
We remain on schedule to achieve these targets.
Of course, we also anticipate meaningful synergies with the
Carson's transaction. As soon as practical, designated teams of
managers from both Proffitt's and Carson's will begin their work in
identifying synergies and best practices that will allow us to most
effectively and efficiently operate our existing businesses and to
further position the Company for additional growth. We expect
synergies of $10 million in 1998, $20 million in 1999, and $40
million in 2000 related to this transaction.
Cost reductions related to the Carson's merger are expected to come
in several forms, such as through the elimination of certain
duplicate corporate expenses. These types of reductions can be
realized very quickly. Additionally, many best practices of the
two companies will be implemented throughout the combined
corporation. Examples include shared technology and systems,
enhanced logistics management at the distribution facilities, and
the expansion of Carson's national credit card bank to the
Company's other divisions.
Let me note that Proffitt's has been pursuing the establishment of
its own nationally chartered credit card bank to serve as the
issuer on our private label credit cards. The combination with
Carson's will allow us to use the already established National Bank
of the Great Lakes to issue cards for all six divisions. This will
allow the existing Proffitt's divisions to realize the revenue
benefits associated with the bank while eliminating many of the
duplicative operating and set-up costs.
Savings also will be recognized on a combined basis through the
purchasing power of our increased scale in such areas as property
and casualty insurance, associate benefits, advertising, and supply
purchasing.
As Stan previously mentioned, the Company intends to maintain
management information systems and credit functions in Milwaukee
and Chicago, respectively, in order to properly support the
Carson's Division. This will increase capacity and reliability in
these critical areas for the entire organization and will provide
the platform and. Infastructure to support future regional growth.
Carson's EBITDA for the last 12 months ended August 2, 1997 was
$101 million, or 8.9% of sales. Proffitt's LTM EBITDA (before non-recurring
items) for the same period was $216 million, or 9.6% of
sales. Our goal is to increase our combined EBITDA margin
(including Carson's) to in excess of 10% in 1998. Our operating
margins should be enhanced through targeted sales growth
opportunities, margin improvement, and the realization of
meaningful cost savings identified through the Younkers, Parisian,
Herberger's, and Carson's synergy processes.
I will now ask Julia Bentley to comment briefly on our timetable
for closing the transaction and our planned communications
throughout the next couple of months.
Julia Bentley
After the call today, I will be available by phone to clarify any
items discussed on today's call or covered in the press release.
Since we are entering a registration and proxy solicitation period,
there will be some topics, such as forward-looking financial
information, that management from either company will be prohibited
from discussing. I will note that on August 21 and 22, we released
via press release and conference call certain 1997 income statement
guidance that remains unchanged. Excluding Carson's, we are still
comfortable with 1997 revenues in the $2.375 billion to $2.425
billion range and fully diluted earnings per share before non-recurring items
of $2.84 (or $1.42 adjusted for the recent 2-for-
1 stock split). Our previous stand-alone 1998 targets of revenues
in the $2.5 billion to $2.55 billion range and fully diluted
earnings per share of $3.40 (or $1.70 adjusted for the stock split)
are of course subject to change based on the Carson's transaction.
Our estimated revenues for the combined Company for 1998 range from
$3.65 billion to $3.8 billion and upon the aforementioned expected
1998 synergy savings of $10 million, we expect 1998 fully diluted
earnings per share to approximate $1.77, adjusted for the stock
split.
Upon closing the transaction, the Company will incur certain non-recurring
charges related to the merger of the two businesses. The
details of these charges will be disclosed shortly after closing.
The majority of the one-time charges should be incurred in the
fourth quarter, when the transaction is expected to be consummated.
Additional relatively immaterial charges will be incurred
throughout 1998.
The forward-looking information presented during this call is
premised on many factors. Actual consolidated results might differ
materially from projected forward-looking information if there are
any material changes in management's assumptions.
The forward-looking information and statements are based on a
series of preliminary projections and estimates, are contingent
upon the timely completion of the merger transaction with Carson's,
and involve certain risks and uncertainties. Potential risks and
uncertainties include such factors as the level of consumer
spending for apparel and other merchandise carried by the Company,
the competitive pricing environment with the department and
specialty store industries, the effectiveness of planned
advertising, marketing, and promotional campaigns, appropriate
inventory management, realization of planned synergies, and
effective cost containment.
We will be pleased to provide you with any historical information
about either company that has been previously filed with the SEC.
We also have a transaction summary and summary company information
that we would be glad to fax or mail you upon request. Please call
423/981-6243 to receive this information.
We have scheduled a luncheon meeting in New York at the Pierre
Hotel on Monday, November 3 at 12:00 noon to discuss the business
combination. Both Brad Martin and Stan Bluestone will speak at the
luncheon and will be available for questions. To make
reservations, please call Julissa Gonzalez at 212/816-8329.
Let me talk a minute about the timing of the transaction. We
expect to file Hart-Scott-Rodino in mid-November. We also expect
our registration statement to be filed with the SEC on or about
November 15 and to be effective by the end of December or early
January. Let me note that the registration statement will contain
historical pro forma financial information which will be available
to the public once effective. We expect to begin the proxy
solicitation process in late-December and hold the special
shareholders' meetings to vote on the transaction in late-January.
We anticipate the transaction will close in early 1998, hopefully
in conjunction with our fiscal year end, January 31, 1998. We will
be able to resume our regular communications with Wall Street at
that time.
Both Proffitt's and Carson's will release monthly sales as usual on
the first Thursday following the month end. Proffitt's will
release third quarter results on Thursday, November 20 at the close
of business as planned, and we will have our regularly scheduled
conference call on Friday, November 21 at 10:00 a.m. ET. The dial-in number
is 904-779-4774. Carson's will release third quarter
results on Thursday, November 13 as planned and will have their
regularly scheduled conference call at 10:00 a.m. CT that day. The
dial-in number is 800-482-5547.
Again, please call me at 423/981-6243 today or anytime in the next
few days if I can be of assistance.
Brad Martin
Thank you, Julia. We would now by happy to answer questions about
the pending transaction.
(After questions)
