SKS Saks Incorporated

Projected Financial Information

The Company does not as a matter of course make public projections as to future performance or earnings beyond the current fiscal year and is especially wary of making projections for extended earnings periods due to the unpredictability of the underlying assumptions and estimates. However, financial forecasts for fiscal years 2013, 2014, 2015 and 2016 prepared by management were made available to Hudson’s Bay and Merger Sub as well as to the board and our financial advisors Goldman Sachs and Morgan Stanley. We have included a summary of these projections below (the “Projections”) to give our shareholders access to certain nonpublic information provided to Hudson’s Bay, Merger Sub and our financial advisors for purposes of considering and evaluating the merger. The inclusion of the Projections should not be regarded as an indication that the board, the Company, Hudson’s Bay, Merger Sub, Goldman Sachs, or the Company’s other financial advisors, Morgan Stanley and Guggenheim Securities LLC, or any other recipient of this information considered, or now considers, it to be an assurance of the achievement of future results.

The Company advised the recipients of the Projections that its internal financial forecasts upon which the Projections were based are subjective in many respects. The Projections reflect numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, many of which are difficult to predict, subject to significant economic and competitive uncertainties and beyond the Company’s control. As a result, there can be no assurance that the Projections will be realized or that actual results will not be significantly higher or lower than projected. The Projections were prepared for internal use and to assist Hudson’s Bay, Merger Sub and the Company’s financial advisors with their respective due diligence investigations of the Company and were not prepared with a view toward public disclosure or toward compliance with United States generally accepted accounting principles (“GAAP”), published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. The prospective financial information included in this proxy statement has been prepared by, and is the responsibility of, the Company’s management. PricewaterhouseCoopers LLP, the Company’s independent registered public accounting firm, has neither examined, compiled nor performed any procedures with respect to the accompanying prospective financial information, and accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto. The PricewaterhouseCoopers LLP report incorporated by reference in this proxy statement relates to the Company’s historical financial information. It does not extend to the prospective financial information and should not be read to do so.

Projections of this type are based on estimates and assumptions that are inherently subject to factors such as industry performance, general business, economic, regulatory, market and financial conditions, as well as changes to the business, financial condition or results of operations of the Company, including the factors described under “ Cautionary Statement Concerning Forward-Looking Statements ,” which factors may cause the Projections or the underlying assumptions to be inaccurate. Since the Projections cover multiple years, such information by its nature becomes less reliable with each successive year. The Projections do not take into account any circumstances or events occurring after the date they were prepared.

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The following is a summary of the Projections:

Summary of the Projections

(dollars in millions)

Readers of this proxy statement are cautioned not to place undue reliance on the specific portions of the Projections set forth above. No one has made or makes any representation to any shareholder regarding the information included in the Projections.

For the foregoing reasons, as well as the basis and assumptions on which the Projections were compiled, the inclusion of specific portions of the Projections in this proxy statement should not be regarded as an indication that the Projections will be an accurate prediction of future events, and they should not be relied on as such. Except as required by applicable securities laws, the Company does not intend to update or otherwise revise the Projections or the specific portions presented to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions are shown to be in error.

Financing

The Company and Hudson’s Bay estimate that the total amount of funds required to complete the merger and related transactions and pay related fees and expenses will be approximately $3 billion. We understand that Hudson’s Bay intends to fund this amount through some portion of a combination of the following:

Equity Financing

On July 28, 2013, Hudson’s Bay entered into an equity investment agreement (the “equity investment agreement”) with Teachers’ and the Equity Provider, pursuant to which Hudson’s Bay agreed to issue an aggregate of up to the Canadian dollar equivalent of $500 million of Hudson’s Bay’s common shares (or, under certain circumstances set forth in the equity investment agreement, voting, convertible, participating preferred shares of Hudson’s Bay in substitution for such Hudson’s Bay common shares), as well as share purchase warrants for an additional 5 million Hudson’s Bay common shares. Pursuant to the equity investment agreement, Teachers’ is providing to Hudson’s Bay a guarantee of the Equity Provider’s obligation to pay the aggregate purchase price for the Hudson’s Bay common shares and warrants to be issued to the Equity Provider thereunder.

The obligation of the Equity Provider to provide financing under the equity investment agreement is subject to certain conditions, including the following:

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The equity investment agreement may be terminated (1) by either Hudson’s Bay or the Equity Provider, if the merger agreement is terminated, (2) by the Equity Provider, if any of the conditions to its obligation to provide financing described above have not been fulfilled, or are not capable of fulfillment, by the end date (as defined in the merger agreement), so long as the failure is not caused by the Equity Provider’s failure to fulfill any of its obligations or breach of any of its representations and warranties in the equity investment agreement and (3) by either Hudson’s Bay or the Equity Provider, if a permanent injunction or other final non-appealable order, decree or ruling has been issued, or a law has been promulgated or enacted, which enjoins, prohibits or otherwise makes illegal the consummation of the sale of Hudson’s Bay’s common shares and issuance of warrants pursuant to the equity investment agreement.

Debt Financing

In connection with the entry into the merger agreement, Hudson’s Bay obtained a debt commitment letter (the “debt commitment letter”), pursuant to which Bank of America, N.A. and Royal Bank of Canada (and, in some cases, certain of their affiliates) (collectively, the “Lenders”) have agreed to provide debt financing comprised of (i) $1.9 billion of term loan facilities of Hudson’s Bay and the parent of Merger Sub, (ii) if certain amendments to Hudson’s Bay’s existing asset-based revolving facility are not approved by the requisite percentage of lenders thereunder, a Canadian Dollar 750 million asset-based revolving facility of Hudson’s Bay, (iii) a $950 million asset-based revolving facility of the parent of Merger Sub and (iv) a $900 million senior unsecured bridge facility of the parent of Merger Sub.

The obligations of the Lenders to provide financing under the debt commitment letter are subject to certain conditions, including, without limitation, the following (subject to certain exceptions and qualifications as set forth in the debt commitment letter):

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The commitments of the Lenders under the debt commitment letter expire upon the earliest to occur of (1) the end date under the merger agreement, (2) as to any facility under the debt commitment letter, the consummation of the merger without the use of such facility, (3) the termination of the merger agreement and (4) with respect to the Canadian Dollar 750 million asset-based revolving facility of Hudson’s Bay, upon the approval of certain amendments to Hudson’s Bay’s existing Canadian Dollar 750 million asset-based revolving facility by the requisite percentage of lenders under such existing facility.

Interests of the Company’s Directors and Executive Officers in the Merger

In considering the recommendation of the board that you vote to approve the merger agreement, you should be aware that aside from their interests as shareholders of the Company, the Company’s directors and executive officers have interests in the merger that are different from, or in addition to, those of other shareholders of the Company generally. Members of the board were aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending to the shareholders of the Company that the merger agreement be approved. See the section entitled “ The Merger (Proposal 1)—Background of the Merger ” and the section entitled “ The Merger (Proposal 1)—Reasons for the Merger . ” The Company’s shareholders should take these interests into account in deciding whether to vote “ FOR ” the proposal to approve the merger agreement. These interests are described in more detail below, and certain of them are quantified in the narrative and the table below.

Treatment of Company Equity Awards

Under the merger agreement, equity-based awards held by the Company’s directors and executive officers as of the effective time will be treated at the effective time as follows:

Options. Each option to purchase shares of common stock that is outstanding immediately prior to the effective time, whether vested or unvested, will, as of the effective time, become fully vested (to the extent not already vested) and be converted into the right to receive an amount in cash equal to the product obtained by multiplying (1) the excess, if any, of the merger consideration of $16 per share over the exercise price per share of that option by (2) the total number of shares subject to that option, less applicable tax withholdings. Each option that has an exercise price per share greater than the merger consideration of $16 per share will be cancelled and terminated as of the effective time without any payment or additional consideration.

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Restricted Stock. Each share of common stock that is subject to vesting or other lapse restrictions (other than any shares of common stock underlying performance shares) that is outstanding immediately prior to the effective time will, as of the effective time, become fully vested (to the extent not already vested and without regard to the satisfaction of any vesting or other lapse restriction) and be converted into the right to receive an amount in cash equal to the merger consideration of $16 per share, less applicable tax withholdings.

Performance Shares . Each award of performance shares that is outstanding immediately prior to the effective time, whether vested or unvested, will, as of the effective time, become fully vested (to the extent not already vested) and converted into the right to receive an amount in cash equal to the product obtained by multiplying (1) the total number of shares of common stock subject to that performance share award by (2) the merger consideration of $16 per share, less applicable tax withholdings. For any performance share award for which the applicable performance period is complete as of the effective time, the number of shares of common stock subject to that award will be determined based upon actual performance. For any performance share award for which the applicable performance period is not complete as of the effective time, the number of shares of common stock subject to that award will equal the target number of shares of common stock subject to that award.

Performance Units . Each award of performance units (cash) that is outstanding immediately prior to the effective time, whether vested or unvested, will, as of the effective time, become fully vested (to the extent not already vested) and converted into the right to receive an amount in cash equal to the product obtained by multiplying (1) the total number of units subject to that performance unit award by (2) $1, less applicable tax withholdings. For any performance unit award for which the applicable performance period is complete as of the effective time, the number of units subject to that award will be determined based upon actual performance. For any performance unit award for which the applicable performance period is not complete as of the effective time, the number of units subject to that award will equal the target number of units subject to that award.

Quantification of Payments . For an estimate of the amounts that would be payable to each of the Company’s named executive officers on settlement of their unvested equity-based awards, see “— Quantification of Payments and Benefits to the Company’s Named Executive Officers ” below. The estimated aggregate amount that would be payable to the Company’s five executive officers who are not named executive officers in settlement of their unvested equity-based awards if the merger were completed on August 19, 2013 is $10,051,467. We estimate that the aggregate amount that would be payable to the Company’s eight non-employee directors for their unvested equity-based awards if the merger were completed on August 19, 2013 is $1,840,000.

Special Cash Award

The Human Resources and Compensation Committee of the board previously granted to Ronald Frasch, our President and Chief Merchandising Officer, a special cash award on February 25, 2009, with vesting and payment of the award to occur in three equal installments on each of the third, fourth, and fifth anniversaries of the grant date, provided that Mr. Frasch is employed by the Company on each such date. If Mr. Frasch is terminated in connection with or following the merger, the unvested portion of the award will fully vest. For the value of the payment described above that would be payable to Mr. Frasch, see “— Quantification of Payments and Benefits to the Company’s Named Executive Officers. ”

2013 Fiscal Year Bonuses

As described under “ The Merger Agreement—Other Covenants and Agreements—Employee Matters ” below, the Company has the right under the merger agreement to pay full year annual bonus awards in respect of the 2013 fiscal year upon the earlier of (1) immediately prior to the effective time and (2) following the completion of the 2013 fiscal year. These bonus payments will be based on the greater of actual performance (linearly extrapolating in good faith the Company’s performance as of the closing date of the merger through the end of the 2013 fiscal year) and target performance.

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For an estimate of the value of the bonus payments described above that would be payable to each of the Company’s named executive officers, see “— Quantification of Payments and Benefits to the Company’s Named Executive Officers ” below. We estimate that the aggregate amount of the bonus payments described above that would be payable to the Company’s five other executive officers, assuming target performance, is $1,270,636.

Retention Program

Under the merger agreement, the Company may establish a cash-based retention program in an aggregate amount of $3.75 million for Company employees identified by the chief executive officer of the Company (or his designee). Awards under the program will become payable 60 days following the effective time or upon an earlier qualifying termination. As of the date of this proxy, no awards under this program had been allocated to an executive officer of the Company.

Employment Agreements

Certain executives, including all but one of the Company’s executive officers, are party to employment agreements that provide for severance benefits in the event of a termination of employment by the Company without cause or by the executive officer for “good reason” (as defined in each of the agreements) in anticipation of, upon or following a change in control (a “qualifying termination”). The merger would constitute a change in control under the executive officers’ employment agreements.

The employment agreements provide that in the event of a qualifying termination, the executive officer would be entitled to:

Each of the employment agreements with our named executive officers provides that the Company’s obligation to pay, and otherwise make available to, the executive the severance payments and benefits described above is subject to the Company’s receipt of a written release of claims, executed and delivered by the executive, in which the executive releases the Company and its affiliates from all claims of, and liabilities and obligations to, the executive arising out of his or her employment agreement.

In the event of a qualifying termination, the employment agreement with Kevin Wills, our Executive Vice President and Chief Financial Officer, also provides for a lump sum cash payment, not to exceed $250,000, sufficient to enable him to obtain equivalent medical coverage for an additional 18-month period if he has not obtained equivalent medical coverage at the end of the initial 18-month period following his termination of employment, and outplacement services for a six-month period following termination of employment.

Each of the employment agreements also provides for specified tax gross-up payments for excise taxes incurred under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) to the extent any “parachute payments” (within the meaning of Section 280G of the Code) received in connection with the merger exceed 330% of the executive’s “base amount” (as determined under Section 280G of the Code).

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In consideration of the payments and benefits under their employment agreements, each executive officer who is party to an employment agreement is restricted from engaging in competitive activities and prohibited from soliciting the Company’s clients and employees for 12 months after termination of employment, and all of the executive officers are prohibited from disclosing the Company’s confidential information.

For an estimate of the value of the payments and benefits described above that would be payable to each of the Company’s named executive officers, see “— Quantification of Payments and Benefits to the Company’s Named Executive Officers ”. The estimated aggregate amount that would be payable to the Company’s five other executive officers under their employment agreements if the merger were to be completed and they were to experience a qualifying termination on August 19, 2013 is $5,496,417.

Severance Plan

The Company maintains the Saks Incorporated Severance Plan, which provides eligible employees who experience a qualifying termination with certain severance benefits. The executive officer who is not party to an employment agreement with the Company is covered by the Company’s severance plan. Under the terms of the severance plan, each eligible executive officer who experiences a qualifying termination, provided such executive officer executes a release of claims in favor of the Company and its affiliates, would receive:

The severance plan also provides for specified tax gross-up payments for excise taxes incurred under Section 4999 of the Code to the extent the parachute payments exceed 330% of the executive’s base amount as determined under Section 280G of the Code.

The estimated aggregate amount that would be payable to the Company’s executive officer under the severance plan if the merger were to be completed and they were to experience a qualifying termination on August 19, 2013 is $922,500.

Indemnification and Insurance

The Company is party to indemnification agreements with each of its directors and executive officers that require the Company, among other things, to indemnify the directors and executive officers against certain liabilities that may arise by reason of their status or service as directors or officers. In addition, pursuant to the terms of the merger agreement, the Company’s directors and executive officers will be entitled to certain ongoing indemnification and coverage under directors’ and officers’ liability insurance policies from the surviving corporation. Such indemnification and insurance coverage is further described in the section entitled “ The Merger Agreement—Other Covenants and Agreements—Indemnification of Directors and Officers; Insurance .”

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Quantification of Payments and Benefits to the Company’s Named Executive Officers

The table below sets forth the amount of payments and benefits that each of the Company’s named executive officers would receive in connection with the merger, assuming that the merger were consummated and each such executive officer experienced a qualifying termination on August 19, 2013.

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Material U.S. Federal Income Tax Consequences of the Merger

The following is a general discussion of the material U.S. federal income tax consequences of the merger to U.S. holders of common stock whose shares are exchanged for cash pursuant to the merger. This discussion is based on the provisions of the Code, applicable U.S. Treasury regulations, judicial opinions, and administrative rulings and published positions of the Internal Revenue Service, each as in effect as of the date hereof. These authorities are subject to change, possibly on a retroactive basis, and any such change could affect the accuracy of the statements and conclusions set forth in this discussion. This discussion does not address any tax consequences arising under the unearned income Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010, nor does it address any tax considerations under state, local or foreign laws or U.S. federal laws other than those pertaining to the U.S. federal income tax. This discussion is not binding on the Internal Revenue Service or the courts and, therefore, could be subject to challenge, which could be sustained. No ruling is intended to be sought from the Internal Revenue Service with respect to the merger.

For purposes of this discussion, the term “U.S. holder” means a beneficial owner of common stock that is:

For purposes of this discussion, a “non-U.S. holder” is a beneficial owner of common stock, other than a partnership or other entity taxable as a partnership for U.S. federal income tax purposes, that is not a U.S. holder.

This discussion applies only to holders of shares of common stock who hold such shares as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment). Further, this discussion does not purport to consider all aspects of U.S. federal income taxation that may be relevant to a holder in light of its particular circumstances, or that may apply to a holder that is subject to special treatment under the U.S. federal income tax laws (including, for example, insurance companies, controlled foreign corporations, passive foreign investment companies, dealers or brokers in securities or foreign currencies, traders in securities who elect the mark-to-market method of accounting, holders subject to the alternative minimum tax, U.S. holders that have a functional currency other than the U.S. dollar, tax-exempt organizations, banks and certain other financial

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institutions, mutual funds, certain expatriates, partnerships, S corporations, or other pass-through entities or investors in partnerships or such other entities, holders who hold shares of common stock as part of a hedge, straddle, constructive sale or conversion transaction, holders who will hold, directly or indirectly, an equity interest in the surviving corporation, holders who acquired their shares of common stock through the exercise of employee stock options or other compensation arrangements and holders who own or have owned (directly, indirectly or constructively) five percent or more of our common stock (by vote or value)).

If a partnership (including for this purpose any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds shares of common stock, the tax treatment of a partner in such partnership will generally depend on the status of the partners and the activities of the partnership. If you are a partner of a partnership holding shares of common stock, you should consult your tax advisor.

Holders of common stock are urged to consult their own tax advisors to determine the particular tax consequences to them of the merger, including the applicability and effect of the alternative minimum tax, and any state, local, foreign or other tax laws.

Consequences to U.S. Holders

The receipt of cash by U.S. holders in exchange for shares of common stock pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes. In general, for U.S. federal income tax purposes, a U.S. holder who receives cash in exchange for shares of common stock pursuant to the merger will recognize gain or loss in an amount equal to the difference, if any, between (1) the amount of cash received and (2) the U.S. holder’s adjusted tax basis in such shares.

If a U.S. holder’s holding period in the shares of common stock surrendered in the merger is greater than one year as of the date of the merger, the gain or loss will be long-term capital gain or loss. Long-term capital gains of certain non-corporate holders, including individuals, are generally subject to U.S. federal income tax at preferential rates. The deductibility of a capital loss recognized on the exchange is subject to limitations. If a U.S. holder acquired different blocks of common stock at different times and different prices, such U.S. holder must determine its adjusted tax basis and holding period separately with respect to each block of common stock.

Consequences to Non-U.S. Holders

A non-U.S. holder whose shares of common stock are converted into the right to receive cash in the merger generally will not be subject to U.S. federal income taxation unless:

Any gain recognized by a non-U.S. holder described in the first bullet above generally will be subject to U.S. federal income tax on a net income basis at regular graduated U.S. federal income tax rates in the same manner as if such holder were a “U.S. person” as defined under the Code. A non-U.S. holder that is a corporation may also be subject to an additional “branch profits tax” at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty) on after-tax profits effectively connected with a U.S. trade or business to the extent that such after-tax profits are not reinvested and maintained in the U.S. business.

Gain described in the second bullet above generally will be subject to U.S. federal income tax at a flat 30% rate, but may be offset by certain U.S. source capital losses, if any, of the non-U.S. holder.

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Information Reporting and Backup Withholding

Payments made in exchange for shares of common stock pursuant to the merger may be subject, under certain circumstances, to information reporting and backup withholding (currently at a rate of 28%). To avoid backup withholding, a U.S. holder that does not otherwise establish an exemption should complete and return Internal Revenue Service Form W-9, certifying that such U.S. holder is a U.S. person, the taxpayer identification number provided is correct and such U.S. holder is not subject to backup withholding. In general, a non-U.S. holder will not be subject to U.S. federal backup withholding and information reporting with respect to cash payments to the non-U.S. holder pursuant to the merger if the non-U.S. holder has provided an Internal Revenue Service Form W-8BEN (or an Internal Revenue Service Form W-8ECI if the non-U.S. holder’s gain is effectively connected with the conduct of a U.S. trade or business).

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against a holder’s U.S. federal income tax liability, if any, provided that such holder furnishes the required information to the Internal Revenue Service in a timely manner.

This summary of the material U.S. federal income tax consequences is for general information purposes only and is not tax advice. Holders of common stock should consult their tax advisors as to the specific tax consequences to them of the merger, including the applicability and effect of the alternative minimum tax and the effect of any federal, state, local, foreign and other tax laws.

Regulatory Approvals

Antitrust Approval in the U.S.

Under the HSR Act and related rules, certain transactions, including the merger, may not be completed until notifications have been given and information furnished to the Antitrust Division and the FTC and all statutory waiting period requirements have been satisfied. On August 8, 2013, both the Company and Hudson’s Bay filed their respective Notification and Report Forms under the HSR Act with the Antitrust Division and the FTC. As a result, assuming the Notification and Report Forms are deemed complete, the required waiting period will expire on September 9, 2013, unless earlier terminated or extended by a request for additional information.

At any time before or after the expiration of the statutory waiting periods under the HSR Act, or before or after the effective time, the Antitrust Division or the FTC may take action under the antitrust laws, including seeking to enjoin the completion of the merger, to rescind the merger or to conditionally approve the merger upon the divestiture of assets of the Company or Hudson’s Bay or subject to regulatory conditions or other remedies. In addition, U.S. state attorneys general could take action under the antitrust laws as they deem necessary or desirable in the public interest, including, without limitation, seeking to enjoin the completion of the merger or permitting completion subject to regulatory conditions. Private parties may also seek to take legal action under the antitrust laws under some circumstances. Although neither the Company nor Hudson’s Bay believes that the merger will violate federal antitrust laws, there can be no assurance that a challenge to the merger on antitrust grounds will not be made or, if such a challenge is made, that it would not be successful.

Litigation

Following the announcement of the execution of the merger agreement on July 29, 2013, five putative class action lawsuits challenging the proposed acquisition of the Company were filed in the Supreme Court of the State of New York, New York County: Cohen v. Saks Inc. et al., Index No. 652724/2013, filed Aug. 2, 2013; Jennings v. Arredondo et al., Index No. 652725/2013, filed Aug. 2, 2013; Oliver v. Saks Inc. et al., Index No. 652758/2013, filed Aug. 6, 2013; Teitelbaum v. Arredondo et al., Index No. 652793/2013, filed Aug. 8, 2013; and Sabattini v. Saks Inc., et al., Index No. 652817/2013, filed Aug. 9, 2013. A sixth such lawsuit, Golding v. Saks Inc., Case No. 13-1127-II, was filed on August 9, 2013 in the Chancery Court for Davidson County, Tennessee, and a seventh such lawsuit, Firemen’s Retirement System of St. Louis v. Saks Inc., et al., Case No.

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13-C3299, was filed on August 15, 2013 in the Circuit Court for Davidson County, Tennessee. On August 12, 2013, the plaintiff in the Golding case filed a notice of voluntary dismissal. The complaints allege that the Company’s directors breached their fiduciary duties to the Company’s shareholders in connection with the merger by agreeing to sell the Company for inadequate merger consideration and by agreeing to terms in the merger agreement that discourage competing bidders. The complaints also allege that Hudson’s Bay aided and abetted the directors’ breach of their fiduciary duties. These lawsuits seek, among other relief, an injunction barring the merger and damages.

The outcome of these lawsuits is uncertain. An adverse monetary judgment could have a material adverse effect on the operations and liquidity of the Company, a preliminary injunction could delay or jeopardize the completion of the merger, and an adverse judgment granting permanent injunctive relief could indefinitely enjoin completion of the merger. The Company believes these lawsuits are meritless.

Delisting and Deregistration of Company Common Stock

If the merger is completed, the common stock of the Company will be delisted from the New York Stock Exchange, or the NYSE, and deregistered under the Securities Exchange Act of 1934, as amended, or the Exchange Act. As such, we would no longer file periodic reports with the SEC on account of our common stock.

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THE MERGER AGREEMENT

The following is a summary of the material provisions of the merger agreement, a copy of which is attached to this proxy statement as Annex A and is incorporated by reference into this proxy statement. This summary may not contain all of the information about the merger agreement that is important to you. We encourage you to read carefully the merger agreement in its entirety, as the rights and obligations of the parties thereto are governed by the express terms of the merger agreement and not by this summary or any other information contained in this proxy statement.

Explanatory Note Regarding the Merger Agreement

The following summary of the merger agreement, and the copy of the merger agreement attached hereto as Annex A to this proxy statement, are intended to provide information regarding the terms of the merger agreement and are not intended to modify or supplement any factual disclosures about the Company in its public reports filed with the SEC. In particular, the merger agreement and the related summary are not intended to be, and should not be relied upon as, disclosures regarding any facts and circumstances relating to the Company or any of its subsidiaries or affiliates. The merger agreement contains representations and warranties by the Company, Hudson’s Bay and Merger Sub which were made only for purposes of that agreement and as of specified dates. The representations, warranties and covenants in the merger agreement were made solely for the benefit of the parties to the merger agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the merger agreement instead of establishing these matters as facts, and may apply contractual standards of materiality or material adverse effect that generally differ from those applicable to investors. In addition, information concerning the subject matter of the representations, warranties and covenants may change after the date of the merger agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures. Moreover, the description of the merger agreement below does not purport to describe all of the terms of such agreement and is qualified in its entirety by reference to the full text of such agreement, a copy of which is attached hereto as Annex A and is incorporated herein by reference.

Additional information about the Company may be found elsewhere in this proxy statement and the Company’s other public filings. See “ Where You Can Find Additional Information. ”

Structure of the Merger; Certificate of Incorporation; Bylaws; Directors and Officers

At the effective time, Merger Sub will merge with and into the Company and the separate corporate existence of Merger Sub will cease. The Company will be the surviving corporation in the merger and will continue its corporate existence as a Tennessee corporation after the merger. The certificate of incorporation of Merger Sub as in effect immediately prior to the effective time will be the certificate of incorporation of the surviving corporation until thereafter amended. The bylaws of the Merger Sub as in effect immediately prior to the effective time will be the bylaws of the surviving corporation until thereafter amended. Subject to applicable law, the directors of Merger Sub immediately prior to the effective time will be the initial directors of the surviving corporation and will hold office until their respective successors are duly elected and qualified, or their earlier death, incapacitation, retirement, resignation or removal. The officers of the Company immediately prior to the effective time will be the initial officers of the surviving corporation and will hold office until their respective successors are duly elected or appointed and qualified, or their earlier death, incapacitation, retirement, resignation or removal.

When the Merger Becomes Effective

Closing; Effective Time

The closing of the merger will take place at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York, at 10:00 a.m., local time, on the third business day after the satisfaction or waiver (by the

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party having the benefit of the applicable condition) of the closing conditions set forth in the merger agreement (other than those conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or waiver (by the party having the benefit of the applicable condition) of such conditions) or at such other place, date and time as the Company and Hudson’s Bay may agree in writing. However, the closing will not occur prior to the earlier of (1) a date during the marketing period (as defined below under “—Marketing Period”) specified by Hudson’s Bay on no fewer than five business days’ notice to the Company or (2) the third business day following the final day of the marketing period.

The merger will become effective on the effective date of articles of merger filed with the Secretary of State of the State of Tennessee and a certificate of merger filed with the Secretary of State of the State of Delaware (which we refer to as the effective time), which the parties shall cause to be filed on the closing date.

Marketing Period

Pursuant to the merger agreement, “marketing period” means the first period of 18 consecutive business days after the date of execution of the merger agreement throughout which (1) Hudson’s Bay has received the required information (as defined under “— Other Covenants and Agreements — Financing ”) and the required information is compliant (as defined below) and (2) all conditions to the obligations of the parties to complete the merger have been and remain satisfied, other than those conditions that by their nature are to be satisfied at closing. However, (a) the marketing period will not commence before September 6, 2013, (b) the marketing period will not be deemed to have commenced if, before its completion, the Company announces that it intends to restate, or is considering restating, material financial information included in the required information, or the required information is not compliant (except that if the required information is at any time during such period not compliant pursuant to clause (1) of the definition thereof, but during the period becomes compliant as a result of a supplement to the required information, the marketing period will be extended by eight business days, but will not restart), (c) November 29, 2013 and December 1, 2013 will not be considered business days for the purposes of the marketing period, (d) the marketing period will either end on or prior to August 16, 2013 or, if the marketing period has not ended on or prior to August 16, 2013, then the marketing period will commence no earlier than September 3, 2013, and (e) the marketing period will either end on or prior to December 20, 2013 or, if the marketing period has not ended on or prior to December 20, 2013, then the marketing period will commence no earlier than January 2, 2014.

In accordance with the merger agreement, “compliant” means, with respect to the required information, that: (1) the required information does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statement contained in such required information not misleading; (2) the Company’s auditors have not withdrawn, or advised the Company in writing that they intend to withdraw, any audit opinion with respect to any financial statements contained in the required information; and (3) the required information is, and remains throughout the marketing period, in a form sufficient for, and the financial statements and information included on the first day of the marketing period would be sufficiently current throughout the marketing period to satisfy the requirements of Rule 3-12 of Regulation S-X to permit, a registration statement on Form S-1 for an offering of debt securities (other than provisions for which compliance is not customary in so-called Rule 144A offerings of high yield debt) to be declared effective by the SEC on the last day of the marketing period.

Effect of the Merger on the Common Stock

At the effective time, each share of the common stock outstanding immediately prior to the effective time (other than shares owned by the Company (or any subsidiary of the Company), Hudson’s Bay and Merger Sub), will be converted automatically into and will represent the right to receive $16 in cash, without interest and less any applicable withholding taxes.

At the effective time, each share that is owned directly by the Company (or any direct or indirect subsidiary of the Company), Hudson’s Bay or Merger Sub immediately prior to the effective time will be cancelled and retired

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and will cease to exist (such shares are referred to as the “excluded shares”), and no consideration will be delivered in exchange for such cancellation and retirement.

At the effective time, each share of common stock of Merger Sub issued and outstanding immediately prior to the effective time will be converted into and become one validly issued, fully paid and nonassessable share of common stock of the surviving corporation and will constitute the only outstanding shares of capital stock of the surviving corporation.

Treatment of Company Equity Awards

Under the merger agreement, awards outstanding under the Company’s stock plans as of the will be treated at the effective time as follows:

Options. Each option to purchase shares of common stock that is outstanding immediately prior to the effective time, whether vested or unvested, will, as of the effective time, become fully vested (to the extent not already vested) and be converted into the right to receive an amount in cash equal to the product obtained by multiplying (1) the excess, if any, of the merger consideration of $16 per share over the exercise price per share of that option by (2) the total number of shares subject to that option, less applicable tax withholdings. Each option that has an exercise price per share greater than the merger consideration of $16 per share will be cancelled and terminated as of the effective time without any payment or additional consideration.

Restricted Stock. Each share of common stock that is subject to vesting or other lapse restrictions (other than any shares of common stock underlying performance shares) that is outstanding immediately prior to the effective time will, as of the effective time, become fully vested (to the extent not already vested and without regard to the satisfaction of any vesting or other lapse restriction) and be converted into the right to receive an amount in cash equal to the merger consideration of $16 per share, less applicable tax withholdings.

Performance Shares . Each award of performance shares that is outstanding immediately prior to the effective time, whether vested or unvested, will, as of the effective time, become fully vested (to the extent not already vested) and converted into the right to receive an amount in cash equal to the product obtained by multiplying (1) the total number of shares of common stock subject to that performance share award by (2) the merger consideration of $16 per share, less applicable tax withholdings. For any performance share award for which the applicable performance period is complete as of the effective time, the number of shares of common stock subject to that award will be determined based upon actual performance. For any performance share award for which the applicable performance period is not complete as of the effective time, the number of shares of common stock subject to that award will equal the target number of shares of common stock subject to that award.

Performance Units . Each award of performance units (cash) that is outstanding immediately prior to the effective time, whether vested or unvested, will, as of the effective time, become fully vested (to the extent not already vested) and converted into the right to receive an amount in cash equal to the product obtained by multiplying (1) the total number of units subject to that performance unit award by (2) $1, less applicable tax withholdings. For any performance unit award for which the applicable performance period is complete as of the effective time, the number of units subject to that award will be determined based upon actual performance. For any performance unit award for which the applicable performance period is not complete as of the effective time, the number of units subject to that award will equal the target number of units subject to that award.

Payment for Common Stock and Company Equity Awards in the Merger

At or prior to the effective time Hudson’s Bay will deposit, or cause to be deposited, with a U.S. bank or trust company that will be appointed by Hudson’s Bay (subject to the Company’s reasonable prior approval), as paying agent, in trust for the benefit of the holders of the common stock, sufficient cash to pay to the holders of

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the common stock (other than the excluded shares) the merger consideration of $16 in cash per share. As soon as reasonably practicable after the effective time and in any event not later than the second business day following the closing date, the paying agent will be required to mail to each record holder of shares of common stock that were converted into the merger consideration a letter of transmittal and instructions for use in effecting the surrender of certificates that formerly represented shares of the common stock or non-certificated shares represented by book-entry in exchange for the merger consideration (less any applicable withholding taxes). The surviving corporation or one of its subsidiaries will pay to each holder of Company options, restricted shares, performance shares, and performance units the cash amounts described above under “ — Treatment of Company Equity Awards ” no later than seven calendar days following the effective time.

Representations and Warranties

The merger agreement contains representations and warranties of each of the Company and of Hudson’s Bay and Merger Sub, subject to certain exceptions in the merger agreement and the disclosure schedules delivered in connection with the merger agreement, as to, among other things:

The merger agreement also contains representations and warranties of the Company, subject to certain exceptions in the merger agreement and the disclosure schedules delivered in connection with the merger agreement, as to, among other things:

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The merger agreement also contains representations and warranties of Hudson’s Bay and Merger Sub, subject to certain exceptions in the merger agreement and the disclosure schedules delivered in connection with the merger agreement, as to, among other things:

Some of the representations and warranties in the merger agreement are qualified by materiality qualifications or a “Company material adverse effect” or a “Hudson’s Bay material adverse effect” clause.

For purposes of the merger agreement, a “Company material adverse effect” means a fact, event, development, occurrence, effect or circumstance that has or would reasonably be expected to have, individually or in the aggregate, a materially adverse effect on the business, assets, results of operations or financial condition of the

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Company and its subsidiaries, taken as a whole, but each of the following will not in itself constitute or be taken into account in determining whether a Company material adverse effect has occurred:

however, with respect to the matters described in the first, third, seventh, ninth and tenth bullet points above, such facts, circumstances, events, changes or effects will be taken into account to the extent they disproportionately adversely affect the Company and its subsidiaries, taken as a whole, compared to other companies operating in the industries in which the Company and its subsidiaries operate or prevent or would reasonably be expected to prevent the Company’s ability to perform in all material respects its obligations under the merger agreement and consummate the merger.

For the purpose of the merger agreement, a “Hudson’s Bay material adverse effect” means a fact or circumstance that, individually or in the aggregate, would or would reasonably be expected to prevent or materially delay the closing or prevent or materially delay or materially impair the ability of Hudson’s Bay or Merger Sub to satisfy its obligations under the merger agreement, including the satisfaction of the conditions precedent to the merger, obtaining the financing and consummating the merger and other transactions contemplated by the merger agreement.

Conduct of Business Pending the Merger

The merger agreement provides that, subject to certain exceptions in the merger agreement and the disclosure schedules delivered by the Company in connection with the merger agreement, during the period from the signing of the merger agreement to the effective time, except as may be required by law or as consented to by Hudson’s Bay in writing or as expressly required or permitted by the merger agreement, the Company, among other things, will

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conduct the business of the Company and its subsidiaries in the ordinary course of business consistent with past practice and will not, and will not permit any of its subsidiaries to, take the following actions:

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The merger agreement also provides that, between the date of the merger agreement and the effective time, Hudson’s Bay and Merger Sub will not, and will not permit any of their subsidiaries or affiliates to, take or agree to take any action that would reasonably be expected to (1) result in, individually or in the aggregate, a Hudson’s Bay material adverse effect, (2) hinder or delay, if entering into agreements with respect to, or consummating, any acquisitions, mergers, consolidations or business combinations, or otherwise hinder or delay in any material

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respect the obtaining of any consent, approval, authorization or permit from a governmental entity necessary to be obtained prior to the closing or (3) hinder or delay the expiration of any applicable waiting period under the HSR Act.

Other Covenants and Agreements

Access and Information

Subject to certain exceptions and limitations, the Company must afford Hudson’s Bay, the Equity Provider and the parties to the debt commitment letter and certain of their affiliates, and their respective directors, officers, employees, accountants, consultants, legal counsel, financial advisors and other agents and other representatives reasonable access during normal business hours, throughout the period prior to the effective time, to the Company’s and its subsidiaries’ officers, employees, properties, contracts, commitments, books and records, other than any such matters that relate to the negotiation and execution of the merger agreement, or to transactions potentially competing with or alternative to the transactions contemplated by the merger agreement or proposals from other parties relating to any competing or alternative transactions.

Alternative Proposals; No Solicitation

Until 12:01 a.m., New York time, on September 6, 2013, the Company and its subsidiaries, and their respective representatives, are permitted to:

The Company is required to promptly (and in any event within two business days) notify Hudson’s Bay in writing of the identity of each person or group of persons from whom the Company receives a written alternative proposal after the execution of the merger agreement and prior to 12:01 a.m., New York time, on September 6, 2013, and must promptly (and in any event within two business days) provide Hudson’s Bay a copy of the written alternative proposal or any written amendment thereto.

As used in the merger agreement, “alternative proposal” means any bona fide proposal or offer made by any person (other than Hudson’s Bay and its affiliates) for:

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Subject to certain specified exceptions, any person or group, from whom the Company or any of its representatives has received prior to 12:01 a.m., New York time, on September 6, 2013 a written alternative proposal that the board determines (such determination to be made no later than five business days after such date) in good faith, after consultation with outside counsel and its financial advisors, is or could reasonably be expected to result in a superior proposal, will be deemed an “excluded party” for purpose of the merger agreement. However, (1) any such person will immediately and irrevocably cease to be an excluded party if, at any time after 12:01 a.m., New York time, on September 6, 2013, the alternative proposal submitted by such person is withdrawn or terminated and (2) any such group of persons or any member of such group will immediately and irrevocably cease to be an excluded party if, at any time after 12:01 a.m., New York time, on September 6, 2013, those persons who were members of such group immediately before such date cease to constitute at least 50% of the equity financing of such group.

As used in the merger agreement, “superior proposal” means a written alternative proposal, substituting “50%” for each reference to “20%” in the definition of alternative proposal, which did not result from or arise directly in connection with any material breach of the non-solicitation restrictions contained in the merger agreement, that the board determines in good faith, after consultation with the Company’s financial advisor and outside legal counsel, and taking into account all of the terms and conditions the board considers to be appropriate, and after taking into account any revisions to the terms and conditions to the merger agreement made or proposed and committed to in writing by Hudson’s Bay in response to such superior proposal, to be more favorable to the Company and its shareholders than the transactions contemplated by the merger agreement.

Except as may relate to any excluded party (but only for so long as such person or group is an excluded party) until September 26, 2013 or as otherwise permitted by the non-solicitation provisions of the merger agreement, after 12:01 a.m., New York time, on September 6, 2013, the Company and its subsidiaries are required, and the Company is required to cause its and its subsidiaries’ representatives, to cease any activities described above and any solicitation, encouragement, discussions or negotiations with any person or group that may be ongoing with respect to any alternative proposals or potential alternative proposals.

Except as may relate to any excluded party (but only for so long as such person or group is an excluded party) until September 26, 2013 or as expressly permitted by the non-solicitation provisions of the merger agreement, from after 12:01 a.m., New York time, on September 6, 2013 until the effective time or, if earlier, the termination of the merger agreement, the Company must not, and must cause its subsidiaries and its and their respective representatives not to, directly or indirectly:

In addition, except as expressly permitted under the non-solicitation provisions of the merger agreement, from the date of the merger agreement until the effective time, or, if earlier, the termination of the merger agreement, neither the board nor any committee thereof will:

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Notwithstanding the provisions of the merger agreement described above, if following 12:01 a.m., New York time, on September 6, 2013 and prior to obtaining the required vote of the Company’s shareholders to approve the merger agreement, the Company receives a written alternative proposal, the Company and its representatives may contact the person who has made the alternative proposal to clarify the terms and conditions thereof and, if the board determines in good faith that the alternative proposal constitutes or could reasonably be expected to result in a superior proposal, may:

Following 12:01 a.m., New York time, on September 6, 2013, the Company is required to promptly (and in any event within 48 hours) notify Hudson’s Bay of its entry into a confidentiality agreement meeting certain requirements or its receipt of an alternative proposal or amendment thereto, or a proposal or offer that could reasonably be expected to result in an alternative proposal (a “qualifying proposal”), indicating the identity of the person or group making the proposal and providing (1) a copy of such alternative proposal or amendment thereto or any other written qualifying proposal (including financing commitments with customary redaction) or (2) if the alternative proposal or amendment or qualifying proposal is not made in writing, a written summary of the material terms and conditions thereof, and thereafter to keep Hudson’s Bay informed, in reasonable detail and on a prompt basis (and in any event within 48 hours) of any material developments or modifications to the terms of any such alternative proposal or amendment or qualifying proposal and the status of discussions or negotiations relating thereto.

Except as described below, neither the board nor any committee thereof is permitted to (1) change, withhold, withdraw, qualify or modify, in a manner adverse to Hudson’s Bay (or publicly propose to do so), its recommendation that the Company’s shareholders approve the merger agreement, approve, adopt or recommend (or publicly propose to do so) an alternative proposal or fail to recommend against acceptance of any tender offer or exchange offer that constitutes an alternative proposal that may be commenced or (2) authorize, adopt or approve (or publicly propose to do so) an alternative proposal or cause or permit the Company or any of its subsidiaries to enter into an alternative acquisition agreement (a “change of recommendation”).

In addition and notwithstanding anything to the contrary in the merger agreement, if, prior to obtaining the required vote of the Company’s shareholders to approve the merger agreement, the Company receives an alternative proposal that the board determines in good faith after consultation with its outside counsel and financial advisors constitutes a superior proposal (taking into account any adjustment to the terms and conditions of the merger proposed by Hudson’s Bay in response to such alternative proposal), then the board may authorize, adopt or approve such superior proposal, cause the Company to enter into an alternative acquisition agreement with respect thereto and terminate the merger agreement if and only if:

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