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
CARSON PIRIE SCOTT & CO.
(Exact Name of Registrant as Specified in Charter)
Illinois 0-22682 37-0175980
(State of Incorporation) (Commission (IRS Employer
File Number) Identification No.)
331 West Wisconsin Avenue
Milwaukee, Wisconsin 53203
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (414) 347-4141<PAGE>
ITEM 5. OTHER EVENTS.
On October 29, 1997, Carson Pirie Scott & Co. (the
"Registrant"), Proffitt's, Inc., a Tennessee corporation
("Proffitt's"), and LaSalle Merger Corporation, an Illinois
corporation and wholly owned subsidiary of Proffitt's ("Merger
Sub"), entered into an Agreement and Plan of Merger, dated as
of October 29, 1997 (the "Merger Agreement"), pursuant to
which, among other things, Merger Sub will be merged with and
into the Registrant, with the Registrant as the surviving
corporation in the merger, and the Registrant will become a
wholly-owned subsidiary of Proffitt's. A copy of the Merger
Agreement is filed as an exhibit hereto and is incorporated herein
by reference.
On October 29, 1997, the Registrant and Proffitt's
issued a joint press release announcing the signing of the
Merger Agreement. A copy of the joint press release is filed
as an exhibit hereto and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
(c) Exhibits. The following exhibits are filed as part
of this report:
2.1 Agreement and Plan of Merger, dated as of
October 29, 1997, among Proffitt's, Merger Sub
and the Registrant.
99.1 Joint press release, dated October 29, 1997,
issued by the Registrant and Proffitt's.<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 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.
Dated: October 30, 1997
CARSON PIRIE SCOTT & CO.
By /s/ Charles J. Hansen
----------------------
Name: Charles J. Hansen
Title: Vice President, General
Counsel and Secretary<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
2.1 Agreement and Plan of Merger, dated as of October
29, 1997, among Proffitt's, Merger Sub and the
Registrant.
99.1 Joint press release, dated October 29, 1997,
issued by the Registrant and Proffitt's.
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
among
PROFFITT'S, INC.,
LASALLE MERGER CORPORATION
and
CARSON PIRIE SCOTT & CO.
Dated as of October 29, 1997<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
THE 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 II
REPRESENTATIONS 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
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TABLE OF CONTENTS
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 III
REPRESENTATIONS 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 IV
COVENANTS RELATING TO CONDUCT OF BUSINESS...........................26
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TABLE OF CONTENTS
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 V
ADDITIONAL 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 VI
CONDITIONS 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 VII
TERMINATION, 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 VIII
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TABLE OF CONTENTS
GENERAL 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
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TABLE OF CONTENTS
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)
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TABLE OF CONTENTS
LIST OF EXHIBITS
Exhibit A
Exhibit B
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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.<PAGE>
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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
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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.
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(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
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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
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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
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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
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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
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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)
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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
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"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
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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
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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
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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
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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
-15-
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
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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
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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)
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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
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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
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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
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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
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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
-23-
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
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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
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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
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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
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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:
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(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
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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
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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
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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.
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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
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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
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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
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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
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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
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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.
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(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
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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
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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.
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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
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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 s
ubstance 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
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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
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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;
-45-
(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
-46-
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
-47-
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
-48-
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
-49-
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
-50-
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
Attest:
By: /s/ Brian J. Martin
--------------------
Name: Brian J. Martin
Title: Exec. VP
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
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EXHIBIT 99.1
Page 1 of 5
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
Page 2 of 5
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,
Page 3 of 5
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<PAGE>
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,
Page 4 of 5
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.<PAGE>
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)
