Sec v. Carter Hawley Hale Stores Inc., 760 F.2d 945

PROXY STATEMENT

CARTER HAWLEY HALE STORES, INC.

3880 North Mission Road
Los Angeles, California 90031

The accompanying proxy is solicited by the Board of Directors of Carter Hawley Hale Stores, Inc. (the “Company”) to be used at the Special Meeting of Stockholders on Friday, February 25, 1994 (the “Special Meeting”). This Proxy Statement and the enclosed form of proxy are being sent to stockholders on or about February 5, 1994.

At the Special Meeting, stockholders will be asked to consider and vote upon a proposal to approve the issuance of up to 11,792,453 shares (the “Conversion Shares”) of the Company’s common stock, par value $.01 per share (“Common Stock”), issuable upon conversion of $143,750,000 of the Company’s 6¼% Convertible Senior Subordinated Notes due 2000 (the “Notes”), for purposes of listing such shares on the New York Stock Exchange (the “Proposal”).

Any stockholder giving a proxy may revoke it at any time prior to its exercise at the Special Meeting by giving notice of such revocation either personally or in writing to the Secretary of the Company at the Company’s executive offices, by subsequently executing and delivering another proxy or by voting in person at the Special Meeting.

The Board of Directors of the Company believes that the approval of the Proposal is in the best interests of the Company and its stockholders and recommends that the stockholders approve the Proposal.

VOTING

Shares represented by duly executed and unrevoked proxies in the enclosed form received by the Board of Directors will be voted at the Special Meeting in accordance with the specifications made therein by the stockholders, unless authority to do so is withheld. If no specification is made, shares represented by duly executed and unrevoked proxies in the enclosed form will be voted FOR the approval of the Proposal.

The cost of preparing, assembling and mailing the proxy materials will be borne by the Company. The Company has not retained any firm to solicit proxies.

Only holders of record at the close of business on February 3, 1994 (the “Record Date”) of the Common Stock and the Company’s Series A Exchangeable Preferred Stock, $.01 par value (the “Preferred Stock”), will be entitled to vote at the Special Meeting. As of the Record Date, there were 45,582,865 shares of Common Stock and 870,861 shares of Preferred Stock outstanding.

Vote Required: The approval of the Proposal requires a majority of the votes cast in person or by proxy at the Special Meeting, provided that the total vote cast on the Proposal represents over 50% in interest of all outstanding Common Stock and Preferred Stock, voting as a single class.

The stockholders of the Company have no dissenters’ or appraisal rights in connection with the Proposal.

PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP

Principal Stockholders

Management Ownership

The Company entered into a Purchase Agreement, dated as of December 14, 1993, with Salomon Brothers Inc. under which the Company issued the Notes on December 21, 1993 in a private placement.

THE PROPOSAL

Background

The Notes are convertible at the option of the holders at any time after 90 days following the date of initial issuance and prior to maturity, at an initial conversion price of $12.19 per share, subject to adjustment from time to time upon the occurrence of certain events.

Description of the Notes

General. The Notes bear interest at the rate of 6¼%, payable semiannually on December 31 and June 30 of each year, commencing June 30, 1994. The Notes are due on December 31, 2000 and are issuable only in registered form, without coupons, in denominations of $1,000 and integral multiples thereof.

Registration Rights. The Company agreed to file and maintain a shelf registration statement for the resale of the Notes and the Common Stock issuable upon conversion thereof.

Conversion. The holder of any Note has the right, exercisable at any time after 90 days following the date of original issuance thereof and prior to maturity, to convert the principal amount thereof into shares of Common Stock at $12.19, subject to adjustment.

Optional Redemption. The Notes may be redeemed at the option of the Company, in whole or from time to time in part, on and after December 31, 1998, on not less than 15 nor more than 60 days’ notice.

Change in Control. In the event of a Change in Control, each holder of Notes will have the right, at the holder’s option, to require the Company to purchase all or any part of the holder’s Notes.

Subordination of Notes. The Notes are subordinate in right of payment to all existing and future Senior Debt and pari passu in right of payment to all existing and future Senior Subordinated Indebtedness.

Events of Default and Notice Thereof. The term “Event of Default” includes failure to pay interest or principal when due, failure to perform covenants, default on other indebtedness, certain judgments, and certain bankruptcy or reorganization events.

Description of Capital Stock. The authorized capital stock consists of 100 million shares of Common Stock and 25 million shares of preferred stock. The Common Stock is listed on the New York Stock Exchange and the Pacific Stock Exchange. The Preferred Stock is not listed for trading on any national securities exchange.

Warrants. Each Warrant entitles the holder to purchase one share of Common Stock through October 8, 1999 at a purchase price of $17 per share, subject to adjustment from time to time.

Possible Dilutive Effect. Conversion of the Notes into shares of Common Stock would result in an increase in the number of shares of Common Stock outstanding and could have a dilutive effect on book value, earnings per share, and voting power.

OTHER MATTERS

The Board of Directors is not aware of any other matters to be presented at the meeting.

STOCKHOLDER PROPOSALS

As stated in the Company’s Proxy Statement for the 1993 Annual Meeting, the date by which stockholder proposals must have been received by the Company to be considered for inclusion in the Company’s proxy materials for the 1994 Annual Meeting was December 30, 1993.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by the Company with the Commission are incorporated into this Proxy Statement by reference: Annual Report on Form 10-K for the fifty-two week period ended January 30, 1993, as amended by Annual Report on Form 10-K/A No. 1 dated May 14, 1993; and Quarterly Reports on Form 10-Q for the thirteen-week periods ended May 1, 1993, July 31, 1993, and October 30, 1993.

Carter Hawley Hale Stores, Inc. 2/4/94