<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 6, 1995
REGISTRATION NO. 33-59859
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
THE PEP BOYS -- MANNY, MOE & JACK
(Exact name of registrant as specified in its charter)
Pennsylvania 23-0962915
(State or other jurisdiction (I.R.S. EMPLOYER
of incorporation) IDENTIFICATION NO.)
----------------
3111 West Allegheny Avenue
Philadelphia, Pennsylvania 19132
(215) 229-9000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
----------------
Mitchell G. Leibovitz
Chairman of the Board,
President and Chief Executive Officer
3111 West Allegheny Avenue
Philadelphia, Pennsylvania 19132
(215) 229-9000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------
with copies to:
Daniel D. Rubino, Esq. Morton A. Pierce, Esq.
Willkie Farr & Gallagher Dewey Ballantine
One Citicorp Center 1301 Avenue of the Americas
153 East 53rd Street New York, New York 10019
New York, New York 10022 (212) 259-8000
(212) 821-8000
(Counsel for Registrant) (Counsel for Underwriters)
----------------
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
----------------
<PAGE> 2
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment that specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
=============================================================================
<PAGE> 3
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
SUBJECT TO COMPLETION, DATED JUNE 6, 1995
(LOGO)
PEP BOYS
$100,000,000
The Pep Boys -- Manny, Moe & Jack
% Notes Due 2005
Interest payable and Due , 2005
----------------
The Notes will not be redeemable prior to maturity and will not be subject
to any sinking fund.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Underwriting
Price to Discounts and Proceeds to
Public (1) Commissions Company (1)(2)
-------------- ----------------- ---------------
Per Note .... % % %
Total ....... $ $ $
(1) Plus accrued interest, if any, from , 1995.
(2) Before deduction of estimated expenses of $225,000 payable by the
Company.
----------------
The Notes are offered by the several Underwriters when, as and if issued
by the Company, delivered to and accepted by the Underwriters and subject to
their right to reject orders in whole or in part. It is expected that
delivery of the Notes, in book-entry form, will be made through the
facilities of The Depository Trust Company on or about , 1995.
CS First Boston
The date of this Prospectus is , 1995
<PAGE> 4
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
----------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files annual and quarterly reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Such reports, proxy statements and other information concerning the Company
may be inspected, and copies of such material may be obtained at prescribed
rates, at the Commission's Public Reference Section, Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, as well as at the Commission's Regional
Offices at Seven World Trade Center, New York, New York 10048 and
Northwestern Atrium Center, 500 West Madison Street, Room 1400, Chicago,
Illinois 60661-2511. The Company's Common Stock is listed on the New York
Stock Exchange (the "NYSE"). Reports, proxy statements and other information
concerning the Company may be inspected at the offices of the NYSE at 20
Broad Street, New York, New York 10005.
This Prospectus constitutes part of a Registration Statement on Form S-3
(the "Registration Statement") filed by the Company with the Commission under
the Securities Act of 1933, as amended (the "Securities Act"). This
Prospectus omits certain of the information contained in the Registration
Statement and the exhibits and schedules thereto, in accordance with the
rules and regulations of the Commission. For further information concerning
the Company and the Notes offered hereby, reference is made to the
Registration Statement and the exhibits and schedules filed therewith, which
may be inspected without charge at the office of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 and copies of which may be obtained from
the Commission at prescribed rates. Any statements contained herein
concerning the provisions of any document are not necessarily complete, and,
in each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended January 28,
1995 and the Company's Quarterly Report on Form 10-Q for the quarter ended
April 29, 1995, each as filed with the Commission pursuant to the Exchange
Act, are incorporated into this Prospectus by reference.
All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this Prospectus and prior to the termination of this Offering shall be deemed
to be incorporated by reference herein and to be a part hereof from the date
of filing of such reports and documents. Any statement incorporated herein
shall be deemed to be modified or superseded for purposes of this Prospectus
to the extent that a statement contained herein or in any other subsequently
filed document which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy
of any or all of the foregoing documents incorporated herein by reference
(other than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such document). Requests for such documents
should be submitted in writing to Mr. Michael J. Holden, Senior Vice
President -- Chief Financial Officer and Treasurer, The Pep Boys -- Manny,
Moe & Jack, 3111 West Allegheny Avenue, Philadelphia, Pennsylvania 19132,
telephone (215) 229-9000.
2
<PAGE> 5
THE COMPANY
The Pep Boys -- Manny, Moe & Jack (together with its subsidiaries, the
"Pep Boys" or the "Company") is a leading automotive aftermarket retail and
service chain. The Company is engaged principally in the retail sale of
automotive parts and accessories, automotive maintenance and service and the
installation of parts. Pep Boys operates its business through its chain of
436 Pep Boys stores (as of April 29, 1995) located in 32 states, of which 300
stores are owned and 136 stores are leased. Pep Boys' operations are supplied
by distribution facilities in five locations.
The Company operates approximately 8,900,000 gross square feet of retail
space for an average of approximately 20,500 gross square feet per store,
including an aggregate of 4,187 service bays. A typical new Pep Boys store is
a free-standing warehouse format Supercenter of approximately 22,000 square
feet. Each new Supercenter has approximately 12 service bays along with a
product offering of approximately 25,000 stock-keeping units ("SKUs") and is
generally located in an area with high automotive traffic count and
population density. Pep Boys believes that the operation of service bays in
its Supercenter stores differentiates it from most of its competitors by
providing its customers with the ability to purchase parts and have them
installed at the same location.
In 1994, the Company introduced a supplemental store format under the name
"Pep Boys -- PARTS USA" to operate in locations that the Company believes
will be better served by stores with an extensive selection of parts and
accessories but without tires or service bays. These locations will primarily
consist of certain urban areas, smaller markets and areas located between
Supercenters. PARTS USA stores will generally be approximately 10,000 to
13,000 square feet and will stock approximately 22,000 SKUs. As compared to
the Supercenters, these stores will have a higher percentage of hard parts
and accessories, the highest margin merchandise categories, in the sales mix.
By supplementing its Supercenter expansion with PARTS USA stores, the Company
seeks to increase its market penetration and share over time.
During fiscal years 1992, 1993 and 1994, Pep Boys added a net of 20, 29
and 49 stores, respectively, including the first PARTS USA store in fiscal
1994. In fiscal 1995, the Company plans to open approximately 50 new
warehouse format Supercenters and 25 PARTS USA stores, and expects to close
approximately four older stores. Included in the Company's expansion will be
its initial entry into Puerto Rico -- its first units outside of the
continental United States. In fiscal 1994, the Company's annual gross
revenues increased by more than $165 million to $1.41 billion (a 13%
increase) and earnings before the cumulative effect of a change in
accounting principle increased by $14 million to $80.0 million (a 22%
increase). See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
Although the Company's competition varies by geographical area, the
Company believes that it generally has a favorable competitive position in
terms of price, depth and breadth of merchandise, quality of personnel and
customer service. The Company believes that it provides customers with among
the lowest prices in each of its markets. Pep Boys employs an
everyday-low-price strategy which it believes provides its customers better
value and consistency on a day-to-day basis and improves inventory
management. In addition, Pep Boys believes that it carries among the largest
selection of parts, accessories and chemicals in the automotive aftermarket
retail industry, with approximately 25,000 SKUs per Supercenter. The Company
also believes it provides a high level of customer service through its
well-trained and knowledgeable employees. The Company's advertising strategy
consists primarily of television advertising and multi-page catalogs,
supplemented with radio advertising and various in-store promotions.
The Company utilizes electronic parts catalogs, enabling employees to
reference and access parts instantly while noting price, related items and
in-stock position. In addition, the Company monitors product sales by SKU
through its point-of-sale system which utilizes bar code slot scanning. This
system enables the Company to monitor its gross margins and set minimum and
maximum inventory levels for each store. The Company's centralized buying
system and a perpetual inventory-automatic replenishment system orders
additional inventory from one of the Company's warehouses when a store's
inventory on hand falls below the minimum level set for each SKU.
The Pep Boys -- Manny, Moe & Jack, a Pennsylvania corporation, was
incorporated in 1925. The Company's executive offices are located at 3111
West Allegheny Avenue, Philadelphia, Pennsylvania 19132, telephone (215)
229-9000.
3
<PAGE> 6
USE OF PROCEEDS
The net proceeds from the sale of the Notes due 2005 (the "Notes") offered
hereby will be used to repay portions of the Company's long-term variable-rate
bank debt, bearing interest at rates which range from 6.22% to 6.38%, and for
general corporate purposes. The long-term debt expected to be repaid was
incurred within one year of the date hereof to finance a portion of the capital
expenditures incurred in connection with the opening of new stores, to retire
the 9.33% Notes of the Company and for working capital purposes. The long-term
debt expected to be repaid matures in March 2000. See "Capitalization." Pending
use of the proceeds of the Offering, the Company expects to invest such funds in
short-term marketable securities.
CAPITALIZATION
The following table sets forth the capitalization of the Company at April
29, 1995, and as adjusted to give effect to the sale of the Notes offered
hereby. See "Use of Proceeds."
<TABLE>
<CAPTION>
Actual As Adjusted
---------- -------------
(amounts in thousands)
<S> <C> <C>
Short-term debt ...................................................... $ -- $ --
Current maturities of long-term debt ................................. 114,311 114,311
Long-term debt less current maturities: ..............................
Indebtedness to banks under revolving credit loan agreement ......... $150,000 $ 79,275
Other lines of credit with banks .................................... 28,400 --
Mortgage notes ...................................................... 2,554 2,554
8 7/8 % Notes ....................................................... 107,040 107,040
9.33% Notes(1) ...................................................... 16,072 16,072
6 5/8 % Notes ....................................................... 75,000 75,000
4% Convertible subordinated notes ................................... 86,250 86,250
Notes offered hereby ................................................ -- 100,000
--------- ----------
$465,316 $466,191
Less current maturities .......................................... 114,311 114,311
--------- ----------
Total long-term debt ............................................... $351,005 $351,880
--------- ----------
Stockholders' equity: ................................................
Common Stock, par value $1.00 per share: Authorized 500,000,000
shares; 61,559,559 shares issued and outstanding .................. 61,560 61,560
Paid-in capital ..................................................... 131,278 131,278
Retained earnings ................................................... 467,675 467,675
--------- ----------
660,513 660,513
Less: ...............................................................
Treasury Stock, 100,000 shares at cost ............................ 2,705 2,705
Shares held in benefits trust, 2,232,500 shares at cost ........... 60,269 60,269
--------- ----------
Total stockholders' equity ....................................... 597,539 597,539
--------- ----------
Total long-term debt and stockholders' equity ........................ $948,544 $949,419
========= ==========
</TABLE>
- ------
(1) On May 30, 1995, the Company retired the 9.33% Notes with borrowings
under the revolving credit loan agreement.
4
<PAGE> 7
SELECTED FINANCIAL DATA
The selected financial data for the five years ended January 28, 1995 (except
for "Number of retail outlets," "Ratio of earnings to fixed charges" and "Total
square footage") were derived from audited financial statements. The financial
statements for the three years ended January 28, 1995, which have been audited
by Deloitte & Touche LLP, independent auditors, are incorporated by reference
herein. The selected financial data for the 13-week periods ended April 29, 1995
and April 30, 1994, respectively, have been derived from unaudited financial
statements and reflect, in the opinion of the Company, all adjustments necessary
to present fairly the information for such periods. The results of operations in
the 13-week period ended April 29, 1995 are not necessarily indicative of the
operating results for the full year. The selected financial data should be read
in conjunction with the financial statements and other information contained in
the Company's Annual Report on Form 10-K for the year ended January 28, 1995,
the Company's Quarterly Report on Form 10-Q for the quarter ended April 29, 1995
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
13 Weeks Ended
--------------------------------
April 29, 1995 April 30, 1994
-------------- --------------
<S> <C> <C>
Earnings Statement Data
Merchandise sales ........ $ 307,549 $ 290,826
Service revenue .......... 53,660 46,874
---------- -----------
Total revenues ........... 361,209 337,700
Gross profit from
merchandise sales ...... 90,288 82,603
Gross profit from service
revenue ................ 10,099 7,924
---------- -----------
Total gross profit ....... 100,387 90,527
Selling, general and
administrative expenses 67,055 57,926
Operating profit ......... 33,332 32,601
Nonoperating income ...... 456 1,099
Interest expense ......... 7,965 5,720
Earnings before income
taxes and change in
accounting principle ... 25,823 27,980
Income taxes ............. 9,619 10,423
Earnings before change in
accounting principle ... 16,204 17,557
Cumulative effect of
change in accounting
principle .............. -- (4,300)
Net ernings.............. 16,204 13,257
Balance Sheet Data
Working capital .......... $ 77,666 $ 77,468
Total assets ............. 1,330,465 1,155,615
Long-term debt ........... 351,005 272,956
Stockholders' equity ..... 597,539 532,744
Other Statistics
Ratio of earnings to fixed
charges(1) ............. 3.6x 4.7x
Depreciation and
amortization ........... $ 12,407 $ 10,542
Capital expenditures ..... $ 39,211 $ 30,032
Number of retail outlets . 436 387
Total square footage ..... 8,940,000 7,813,000
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
Year Ended
---------------------------------------------------------------------------------------
Jan. 28, 1995 Jan. 29, 1994 Jan. 30, 1993 Feb. 1, 1992 Feb. 2, 1991
--------------- --------------- --------------- ------------- -------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Earnings Statement Data
Merchandise sales ..................... $ 1,211,536 $ 1,076,543 $ 1,008,191 $ 873,381 $ 774,502
Service revenue ....................... 195,449 164,590 147,403 128,127 110,172
----------- ----------- ----------- ----------- -----------
Total revenues ........................ 1,406,985 1,241,133 1,155,594 1,001,508 884,674
Gross profit from
merchandise sales .................... 364,378 307,861 272,412 240,199 217,052
Gross profit from service
revenue .............................. 32,417 27,457 24,528 19,726 17,854
----------- ----------- ----------- ----------- -----------
Total gross profit .................... 396,795 335,318 296,940 259,925 234,906
Selling, general and
administrative expenses .............. 247,872 214,710 194,160 176,275 157,468
Operating profit ...................... 148,923 120,608 102,780 83,650 77,438
Nonoperating income ................... 3,490 3,601 3,015 1,933 1,601
Interest expense ...................... 25,931 19,701 20,180 25,071 20,262
Earnings before income
taxes and change in
accounting principle ................. 126,482 104,508 85,615 60,512 58,777
Income taxes .......................... 46,474 38,996 31,036 21,640 21,247
Earnings before change in
accounting principle ................. 80,008 65,512 54,579 38,872 37,530
Cumulative effect of
change in accounting
principle ............................ (4,300) -- -- -- --
Net earnings .......................... 75,708 65,512 54,579 38,872 37,530
Balance Sheet Data
Working capital ....................... $ 121,858 $ 92,518 $ 104,622 $ 81,935 $ 91,801
Total assets .......................... 1,291,019 1,078,518 967,813 856,925 819,421
Long-term debt ........................ 380,787 253,000 209,347 279,250 285,868
Stockholders' equity .................. 586,253 547,759 509,763 378,514 344,603
Other Statistics
Ratio of earnings to fixed
charges(1) ........................... 4.7x 4.9x 4.3x 3.1x 3.3x
Depreciation and
amortization ......................... $ 44,402 $ 39,125 $ 36,674 $ 33,439 $ 27,838
Capital expenditures .................. $ 185,072 $ 135,165 $ 78,025 $ 65,801 $ 105,826
Number of retail outlets .............. 435 386 357 337 313
Total square footage .................. 8,900,000 7,771,000 7,039,000 6,522,000 5,950,000
</TABLE>
- ------
(1) Computed by dividing earnings by fixed charges. "Earnings" consist of
earnings before income taxes and change in accounting principle plus fixed
charges (exclusive of capitalized interest costs). "Fixed charges" consist
of interest costs (including capitalized interest costs) plus one-third of
rental expense (which amount is considered representative of the interest
factor in rental expense).
5
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table presents for the periods indicated certain items in
the consolidated statements of earnings as a percentage of total revenues
(except as otherwise provided) and the percentage change in dollar amounts of
such items compared to the indicated prior period.
<TABLE>
<CAPTION>
Percentage of Total Revenues
--------------------------------------------------------------------------------
13 Weeks Ended Fiscal Year Ended
-------------------------------- ----------------------------------------------
April 29, 1995 April 30, 1994 Jan. 28, 1995 Jan. 29, 1994 Jan. 30, 1993
-------------- -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Merchandise sales .......... 85.1% 86.1% 86.1% 86.7% 87.2%
Service revenue(1) ......... 14.9 13.9 13.9 13.3 12.8
------- ------- ------- ------ ------
Total revenues ............. 100.0 100.0 100.0 100.0 100.0
Costs of merchandise
sales(2) .................. 70.6(3) 71.6(3) 69.9(3) 71.4(3) 73.0(3)
Costs of service revenue(2) 81.2(3) 83.1(3) 83.4(3) 83.3(3) 83.4(3)
------- ------- ------- ------ ------
Total costs of revenues .... 72.2 73.2 71.8 73.0 74.3
Gross profit from
merchandise sales ......... 29.4(3) 28.4(3) 30.1(3) 28.6(3) 27.0(3)
Gross profit from service
revenue ................... 18.8(3) 16.9(3) 16.6(3) 16.7(3) 16.6(3)
------- ------- ------- ------ ------
Total gross profit ......... 27.8 26.8 28.2 27.0 25.7
Selling, general and
administrative expenses ... 18.6 17.1 17.6 17.3 16.8
------- ------- ------- ------ ------
Operating profit ........... 9.2 9.7 10.6 9.7 8.9
Nonoperating income ........ .1 .3 .2 .3 .3
Interest expense ........... 2.2 1.7 1.8 1.6 1.8
------- ------- ------- ------ ------
Earnings before income taxes
and cumulative effect of
change in accounting
principle ................. 7.1 8.3 9.0 8.4 7.4
Income taxes ............... 37.2(4) 37.3(4) 36.7(4) 37.3(4) 36.3(4)
------- ------- ------- ------ ------
Earnings before cumulative
effect of change in
accounting principle ...... 4.5 5.2 5.7 5.3 4.7
Cumulative effect of
change in accounting
principle ................. -- (1.3) (0.3) -- --
------- ------- ------- ------ ------
Net earnings ............... 4.5 3.9 5.4 5.3 4.7
======= ======= ======= ====== ======
</TABLE>
<PAGE> 10
<TABLE>
<CAPTION>
Percentage Change
-----------------------------------------------------------
1st Quarter 1995 vs. Fiscal 1994 vs. Fiscal 1993 vs.
1st Quarter 1994 Fiscal 1993 Fiscal 1992
-------------------- --------------- ---------------
<S> <C> <C> <C>
Merchandise sales .......... 5.8% 12.5% 6.8%
Service revenue(1) ......... 14.5 18.7 11.7
------ ------ ------
Total revenues ............. 7.0 13.4 7.4
Costs of merchandise
sales(2) .................. 4.3 10.2 4.5
Costs of service revenue(2) 11.8 18.9 11.6
------ ------ ------
Total costs of revenues .... 5.5 11.5 5.5
Gross profit from
merchandise sales ......... 9.3 18.4 13.0
Gross profit from service
revenue ................... 27.4 18.1 11.9
------ ------ ------
Total gross profit ......... 10.9 18.3 12.9
Selling, general and
administrative expenses ... 15.8 15.4 10.6
------ ------ ------
Operating profit ........... 2.2 23.5 17.3
Nonoperating income ........ (58.5) (3.1) 19.4
Interest expense ........... 39.2 31.6 (2.4)
------ ------ ------
Earnings before income taxes
and cumulative effect of
change in accounting
principle ................. (7.7) 21.0 22.1
Income taxes ............... (7.7) 19.2 25.6
------ ------ ------
Earnings before cumulative
effect of change in
accounting principle ...... (7.7) 22.1 20.0
Cumulative effect of
change in accounting
principle ................. -- -- --
------ ------ ------
Net earnings ............... 22.2 15.6 20.0
====== ====== ======
</TABLE>
- ------
(1) Service revenue consists of the labor charge for installing merchandise
or maintaining or repairing vehicles, excluding the sale of any installed
parts or materials.
(2) Costs of merchandise sales include the cost of products sold, buying,
warehousing and store occupancy costs. Costs of service revenue include
service center payroll and related employee benefits and service center
occupancy costs. Occupancy costs include utilities, rents, real estate
and property taxes, repairs and maintenance and depreciation and
amortization expenses.
(3) As a percentage of related sales or revenue, as applicable.
(4) As a percentage of earnings before income taxes.
THIRTEEN WEEKS ENDED APRIL 29, 1995 VS. THIRTEEN WEEKS ENDED APRIL 30, 1994
Total revenues for the first quarter increased 7% due to a higher store
count (436 at April 29, 1995 compared with 387 at April 30, 1994) while
comparable store revenues (revenues generated by stores in operation during
the same months of each period) decreased 2%. Comparable store merchandise
sales decreased 3% while comparable service revenue increased 3%.
Gross profit from merchandise sales increased, as a percentage of
merchandise sales, due primarily to higher merchandise margins, offset, in
part, by an increase in store occupancy costs.
6
<PAGE> 11
Gross profit from service revenue increased, as a percentage of service
revenue, due primarily to a decrease in service employee benefits costs.
Selling, general and administrative expenses increased, as a percentage of
total revenues, due primarily to higher store expenses.
The 39% increase in interest expense was due primarily to higher debt
levels coupled with higher interest rates.
The 8% decrease in earnings before the cumulative effect of a change in
accounting principle in 1995 as compared with 1994, was due primarily to a
decrease in comparable store sales coupled with increases, as a percentage of
total revenues, in selling, general and administrative expenses and interest
expense, offset, in part, by increases in gross profit from merchandise sales
and gross profit from service revenue, as a percentage of related sales and
revenues.
On January 30, 1994, the Company adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." This statement establishes accrual
accounting standards for employer-provided benefits which cover former or
inactive employees after employment, but before retirement. Adoption of this
accounting standard on January 30, 1994 resulted in a one-time charge to
earnings of $4,300,000 (net of income tax benefit of $2,552,000) or $.07 per
share recognized as a cumulative effect of a change in accounting principle.
FISCAL 1994 VS. FISCAL 1993
Total revenues for fiscal 1994 increased 13% over fiscal 1993 due to a
higher store count (435 at January 28, 1995 compared with 386 at January 29,
1994) coupled with a 5% increase in comparable store revenues (revenues
generated by stores in operation during the same months of each period).
Comparable store merchandise sales increased 5% while comparable store
service revenue increased 8% over fiscal 1993.
The increase in gross profit from merchandise sales, as a percentage of
merchandise sales, was due primarily to significantly higher merchandise
margins and a slight decrease in store occupancy costs.
The small decrease in gross profit from service revenue, as a percentage
of service revenue, was due primarily to an increase in service payroll
costs, offset, in part, by a decrease in service employee benefits costs.
The increase in selling, general and administrative expenses, as a
percentage of total revenues, was due primarily to an increase in store
expenses, offset, in part, by a decrease in employee benefits costs.
The 32% increase in interest expense was due to higher debt levels
incurred to fund the Company's store expansion program coupled with higher
interest rates.
The 22% increase in earnings before cumulative effect of change in
accounting principle in fiscal 1994, as compared with fiscal 1993, was due to
increases in comparable store revenues and gross profit from merchandise
sales, as a percentage of merchandise sales, offset, in part, by increases in
selling, general and administrative expenses and interest expense, as a
percentage of total revenues.
FISCAL 1993 VS. FISCAL 1992
Total revenues for fiscal 1993 increased 7% over fiscal 1992 due to a
higher store count (386 at January 29, 1994 compared with 357 at January 30,
1993) coupled with a 1% increase in comparable store revenues. Comparable
store merchandise sales remained constant while comparable store service
revenue increased 3% over fiscal 1992.
The increase in gross profit from merchandise sales, as a percentage of
merchandise sales, was due primarily to significantly higher merchandise
margins, offset, in part, by increases in store occupancy costs and warehousing
costs.
The small increase in gross profit from service revenue, as a percentage
of service revenue, was due primarily to a decrease in service employee
benefits costs, offset, in part, by an increase in service payroll and
occupancy costs.
7
<PAGE> 12
The increase in selling, general and administrative expenses, as a
percentage of total revenues, was due primarily to an increase in store
expenses.
The 2% decrease in interest expense was due to lower interest rates, offset,
in part, by higher debt levels incurred to fund the Company's store expansion
program.
The increase in income taxes, as a percentage of earnings before income
taxes, and cumulative effect of change in accounting principle was due primarily
to a 1% increase in the federal statutory tax rate from 34% to 35%.
The 20% increase in net earnings in fiscal 1993, as compared with fiscal
1992, was due to a substantial increase in gross profit from merchandise
sales, as a percentage of merchandise sales, offset, in part, by an increase
in selling, general and administrative expenses, as a percentage of total
revenues.
EFFECTS OF INFLATION
The Company uses the LIFO method of inventory valuation. Thus, the cost of
merchandise sold approximates current cost. Although the Company cannot
accurately determine the precise effect of inflation on its operations, it
does not believe inflation has had a material effect on revenues or results
of operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash requirements arise principally from the need to finance
the acquisition, construction and equipping of new stores and to purchase
inventory. The Company opened 51 stores in fiscal 1994, 37 stores in fiscal 1993
and 29 stores in fiscal 1992. In fiscal 1994, with increased levels of capital
expenditures coupled with cash from operating activities and lines of credit
utilized to purchase its stock for transfer to the benefits trust, the Company
increased its debt by $182,859,000. In fiscal 1993, with increased levels of
capital expenditures coupled with cash from operating activities and lines of
credit utilized to purchase its stock for transfer to the benefits trust, the
Company increased its debt by $77,525,000. In fiscal 1992, with substantial cash
flows from operating activities and the conversion of substantially all its
$75,000,000 convertible subordinated debentures, the Company reduced its debt by
$72,639,000.
The following table indicates the Company's principal cash requirements
for the past three years.
<TABLE>
<CAPTION>
Fiscal 1994 Fiscal 1993 Fiscal 1992 Total
------------- ------------- ------------- ----------
(dollar amounts in thousands)
<S> <C> <C> <C> <C>
Capital expenditures .............. $185,072 $135,165 $ 78,025 $398,262
Net inventory (1) ................. 87,248 26,487 24,001 137,736
------------- ------------- ------------- ----------
Total cash requirements ........... $272,320 $161,652 $102,026 $535,998
============= ============= ============= ==========
Net cash provided by operating
activities (excluding net
inventory) ....................... $124,474 $111,595 $100,415 $336,484
============= ============= ============= ==========
</TABLE>
- ------
(1) Net inventory includes the increase in inventory less the net change in
checks outstanding and accounts payable.
Inventories have increased in the past three years as the Company added a
net of 98 stores while stock-keeping units per store rose during the period
from approximately 22,000 to approximately 25,000, many of which were higher
cost hard parts.
During the first quarter of 1995, the Company invested $39,211,000 in
property and equipment while net inventory decreased by $29,921,000.
The Company currently plans to open approximately 75 stores in fiscal
1995, four of which have been opened in the first quarter. Management
estimates that the cost to open all 75 stores, coupled with capital
expenditures relating to existing stores, warehouses and offices during
fiscal 1995 will be approximately $200,000,000. In addition to the funds
required to finance the Company's store expansion, the Company has
authorization to purchase Common Stock having a value of up to $75,000,000
for sale to the benefits trust, of which Common Stock having a value of
8
<PAGE> 13
$60,269,000 had been purchased as of April 29, 1995. Funds required to finance
the store expansion, including related inventory requirements, and the stock
repurchase are expected to come from operating activities with the remainder
provided by unused lines of credit, which totalled $140,600,000 at April 29,
1995, or from accessing traditional lending sources which may include the public
capital markets.
During the thirteen weeks ended April 29, 1995, the Company amended and
restated a revolving credit agreement it had with several major banks to
increase the amount of borrowings provided from up to $100,000,000 to up to
$200,000,000.
The Company's working capital was $77,666,000 at April 29, 1995,
$121,858,000 at January 28, 1995 and $92,518,000 at January 29, 1994. The
Company's long-term debt, as a percentage of its total capitalization, was
37% at April 29, 1995, 39% at January 28, 1995 and 32% at January 29, 1994.
9
<PAGE> 14
DESCRIPTION OF NOTES
The Notes will be issued under an Indenture, dated as of June __, 1995 (the
"Indenture") between the Company and First Fidelity Bank, National Association,
as Trustee (the "Trustee"), a form of which is filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The following
summaries of certain provisions of the Indenture do not purport to be complete,
and where particular provisions of the Indenture are referred to, such
provisions, including definitions of certain terms, are incorporated by
reference as a part of such summaries or terms, which are qualified in their
entirety by reference to the provisions of the Indenture. The section references
appearing below are to sections in the Indenture.
GENERAL
The Notes will be unsecured obligations of the Company, will mature on
________ __, 2005 and will be limited to $100,000,000 aggregate principal
amount and will rank on a parity with all other unsecured and unsubordinated
indebtedness of the Company. The Notes are not redeemable prior to maturity
by the Company and do not provide for any sinking fund. The Notes will bear
interest at the rate per annum stated on the cover page of this Prospectus
from the date of issuance, payable semi-annually on ________ ____ and
________ ____ of each year, commencing _____________ __, 1995, to the person
in whose name such Note is registered at the close of business on the _____
__ or __________ __, respectively, prior to the payment date.
Principal of and interest on the Notes will be payable, and the Notes will be
exchangeable and transfers thereof will be registrable, at the corporate trust
office of the Trustee in New York, New York, provided that, at the option of the
Company, payment of any interest may be made by check mailed to the address of
the person entitled thereto as it appears in the Note Register. Payment of any
interest due on any Note will be made to the person in whose name such Note is
registered at the close of business on the Regular Record Date for such
interest. (Sections 301, 305, 307 and 1002)
FORM OF NOTES
The Notes will be represented by one or more global securities
(collectively, a "Global Note") registered in the name of The Depository
Trust Company (the "Depositary"). Except as set forth below, a Global Note
may be transferred in whole and not in part, only to the Depositary or
another nominee of the Depositary or to a successor of the Depositary or its
nominee.
Upon the issuance of a Global Note, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts
of the Notes represented by such Global Note to the accounts of institutions
that have accounts with the Depositary or its nominee ("Participants"). The
accounts to be credited will be designated by the Underwriters, dealers or
agents. Ownership of beneficial interests in a Global Note will be limited to
Participants or persons that may hold interests through Participants.
Ownership of interests in such Global Note will be shown on, and the transfer
of those ownership interests will be effected only through, records
maintained by the Depositary (with respect to Participants' interests) and
such Participants (with respect to the owners of beneficial interests in such
Global Note). The laws of some jurisdictions may require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such limits and laws may impair the ability to transfer or
pledge beneficial interests in a Global Note.
So long as the Depositary, or its nominee, is the registered holder and
owner of such Global Note, the Depositary or such nominee, as the case may
be, will be considered the sole owner and holder of the related Notes for all
purposes of such Notes and for all purposes under the Indenture. Except as
set forth below, owners of beneficial interests in a Global Note will not be
entitled to have the Notes represented by such Global Note registered in
their names, will not receive or be entitled to receive physical delivery of
Notes in definitive form and will not be considered to be the owners or
holders of any Notes under the Indenture or such Global Note.
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<PAGE> 15
Accordingly, each person owning a beneficial interest in a Global Note
must rely on the procedures of the Depositary and, if such person is not a
Participant, on the procedures of the Participant through which such person
owns its interest, to exercise all rights of a holder of Notes under the
Indenture or such Global Note. The Company understands that under existing
industry practice, in the event the Company requests any action of holders of
Notes or an owner of a beneficial interest in a Global Note desires to take
any action that the Depositary, as the holder of such Global Note, is
entitled to take, the Depositary would authorize the Participants to take
such action, and that the Participants would authorize beneficial owners
owning through such Participants to take such action or would otherwise act
upon the instructions of beneficial owners owning through them.
Payment of principal and interest on Notes represented by a Global Note will
be made to the Depositary or its nominee, as the case may be, as the registered
owner and holder of such Global Note.
The Company expects that the Depositary, upon receipt of any payment of
principal or interest, will immediately credit the accounts of the Participants
with such payment in amounts proportionate to their respective holdings in
principal amount of beneficial interest in the Global Note as shown in the
records of the Depositary. Payments by Participants to owners of beneficial
interests in a Global Note held through such Participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in "street name", and
will be the responsibility of such Participants. The Company and the Trustee
will not have any responsibility or liability for any aspect of the records
relating to, or payments made on account of, beneficial ownership interests in a
Global Note for any Notes or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests or for any other aspect
of the relationship between the Depositary and its Participants or the
relationship between such Participants and the owners of beneficial interests in
such Global Note owned through such Participants.
Unless and until it is exchanged in whole or in part for Notes in
definitive form, a Global Note may not be transferred except as a whole by
the Depositary to a nominee of such Depositary, by a nominee of such
Depositary to such Depositary or another nominee of such Depositary, or to a
successor of the Depositary or in its nominee.
Notes represented by a Global Note will be exchangeable for Notes in
definitive form of like tenor as such Global Note in denominations of $1,000
and in any greater amount that is an integral multiple thereof if (i) the
Depositary notifies the Company that it is unwilling or unable to continue as
Depositary for such Global Note or if at any time the Depositary ceases to be
qualified to act as Depositary under applicable law and the Company does not
appoint a successor depositary within 90 days or (ii) the Company in its
discretion at any time determines not to have such Notes represented by a
Global Note and notifies the Trustee thereof. Any Global Note that is
exchangeable pursuant to the preceding sentence is exchangeable for Notes
issuable in authorized denominations and registered in such names as the
Depositary shall direct and an owner of a beneficial interest in a Global
Note will be entitled to physical delivery of such Notes in definitive form.
Subject to the foregoing, a Global Note is not exchangeable except for a
Global Note or Global Notes of the same aggregate denominations to be
registered in the name of the Depositary or its nominee.
The Depositary has advised the Company and the Underwriters as follows:
The Depositary is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The Depositary was created to hold securities of Participants and to
facilitate the clearance and settlement of securities transactions among the
Participants in deposited securities through electronic book-entry changes in
accounts of the Participants, thereby eliminating the need for physical
movement of securities and certificates. Participants include securities
brokers and dealers (including the Underwriters), banks, trust companies,
clearing corporations and certain other organizations, some of which (and/or
their representatives) own the Depositary. Access to the Depositary's
book-entry system is also available to others such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship
with a Participant, either directly or indirectly ("indirect participants").
Persons who are not Participants may beneficially own securities held by the
Depositary only through Participants or indirect Participants. The rules
applicable to the Depositary and the Participants are on file with the
Commission. The Depositary currently accepts only notes denominated and
payable in U.S. dollars.
11
<PAGE> 16
CERTAIN COVENANTS OF THE COMPANY
RESTRICTIONS ON LIENS
The Company will not, and will not permit any Restricted Subsidiary to,
issue, assume or guarantee any Indebtedness secured by any mortgage, security
interest, pledge, lien or other encumbrance upon, or any interest or title of
any lessor, lender or other secured party to, or under any Capital Lease with
respect to, any Operating Property or Operating Asset of the Company or any
Restricted Subsidiary, whether such assets are now owned or hereafter
acquired (herein referred to as a "Mortgage" or "Mortgages"), without in any
such case effectively providing that the Notes (together with, if the Company
shall so determine, any other Indebtedness ranking equally with the Notes)
shall be secured equally and ratably with such Indebtedness, except that the
foregoing restrictions shall not apply to: (a) Mortgages incurred or created
in the ordinary course of business not arising in connection with
Indebtedness that do not in the aggregate materially impair the use or value
of the properties or assets of the Company and its Restricted Subsidiaries
taken as a whole, (b) Mortgages existing as of the date of the Indenture, (c)
Mortgages (other than Capital Leases) to secure the payment of all or any
part of the purchase price or construction costs in respect of property or
properties acquired by the Company or a Restricted Subsidiary after the date
of the Indenture securing Indebtedness incurred prior to, at the time of, or
within 360 days after, the acquisition of any such property or the completion
of any such construction and which secures Indebtedness not in excess of the
amount expended in the acquisition and improvements thereof, (d) Mortgages
upon any property or assets owned by any Restricted Subsidiary when it
becomes a Restricted Subsidiary, (e) Mortgages upon any property or assets of
any corporation existing at the time such corporation is merged into or
consolidated with the Company or any Restricted Subsidiary, or at the time of
a sale, lease or other disposition of the properties of an entity as an
entirety or substantially as an entirety to the Company or any Restricted
Subsidiary, (f) Mortgages upon any property when the property is acquired by
the Company or a Restricted Subsidiary, (g) Mortgages to secure the payment
of all or any part of the cost of improvements to any property owned by the
Company or a Restricted Subsidiary, (h) the extension, renewal or replacement
of any Mortgage permitted by subparagraph (b), (c), (d), (e), (f) or (g)
above, but only if the principal amount of Indebtedness secured by the
Mortgage immediately prior thereto is not increased and the Mortgage is not
extended to other property, (i) Mortgages for certain taxes or other
governmental charges, (j) Mortgages arising out of any final judgment for the
payment of money aggregating not in excess of $10,000,000, (k) Mortgages
arising out of any legal proceeding or final judgment which is being
contested in good faith, provided enforcement of any such lien has been
stayed, (l) easements or similar encumbrances, the existence of which do not
materially impair the use of the property subject thereto and (m) Mortgages
securing Indebtedness of a Restricted Subsidiary to the Company or to another
Restricted Subsidiary. (Section 1007(a) Notwithstanding the foregoing, the
Company or any Restricted Subsidiary may create or assume Mortgages in
addition to those permitted above, and renew, extend or replace such
Mortgages provided that at the time of such creation, assumption, renewal,
extension or replacement, and after giving effect thereto, Exempted Debt does
not exceed 15% of Consolidated Net Tangible Assets. (Section 1007(b)
RESTRICTIONS ON SALE AND LEASEBACK TRANSACTIONS
The Company will not, nor will it permit any Restricted Subsidiary to,
enter into any arrangement with any person providing for the leasing by the
Company or any Restricted Subsidiary of any Operating Property or Operating
Asset, whether now owned or hereafter acquired, which has been or is to be
sold or transferred by the Company or such Restricted Subsidiary to such
persons with the intention of taking back a lease on such property (a "Sale
and Leaseback Transaction") unless (a) such transaction involves a lease or
right to possession or use for a temporary period not to exceed three years
following such sale, by the end of which it is intended that the use of such
property by the lessee will be discontinued, (b) the Company or a Restricted
Subsidiary would, on the effective date of such transaction, be entitled to
issue, assume or guarantee indebtedness secured by a Mortgage on such
property at least equal in an amount to the Attributable Debt in respect
thereof, without equally and ratably securing the Notes as set forth in the
Indenture, or (c) if the proceeds of such sale (i) are equal to or greater
than the fair market value of such property and (ii) are applied within 360
days after the receipt of the proceeds of sale or transfer to either the
purchase or acquisition of fixed assets or equipment used in the operation of
the business or the construction of improvements on real property or to the
repayment of Senior Funded Debt of the Company or any Restricted Subsidiary.
The preceding restriction shall not apply to any Sale and Leaseback Transaction
12
<PAGE> 17
between the Company and a Restricted Subsidiary or between Restricted
Subsidiaries. (Section 1008(a) The Company or any Restricted Subsidiary may
enter into Sale and Leaseback Transactions in addition to those permitted above,
and without any obligation to retire any Senior Funded Debt of the Company or a
Restricted Subsidiary, provided that, at the time of entering into such Sale and
Leaseback Transactions, and after giving effect thereto, Exempted Debt does not
exceed 15% of Consolidated Net Tangible Assets. (Section 1008(b))
CERTAIN DEFINITIONS
Set forth below are certain significant terms which are defined in Section
101 of the Indenture:
"Attributable Debt" in respect of a Sale and Leaseback Transaction means,
at the time of determination, the present value (discounted at the actual
rate of interest of such transaction) of the obligation of the lessee for net
rental payments during the remaining term of the lease included in such Sale
and Leaseback Transaction (including any period for which such lease has been
extended or may, at the option of the lessor, be extended).
"Capital Lease" means any lease of property which, in accordance with
generally accepted accounting principles, should be capitalized on the
lessee's balance sheet or for which the amount of the asset and liability
thereunder as if so capitalized should be disclosed in a note to such balance
sheet.
"Consolidated" when used with respect to any of the terms defined in the
Indenture, refers to such terms as reflected in a consolidation of the
accounts of the Company and its Restricted Subsidiaries in accordance with
generally accepted accounting principles.
"Exempted Debt" means the sum of the following items outstanding as of the
date Exempted Debt is being determined: (i) Indebtedness for money borrowed
of the Company and its Restricted Subsidiaries incurred after the date of the
Indenture and secured by liens created or assumed or permitted to exist
pursuant to Section 1007(b) (excluding Indebtedness incurred in connection
with pollution control financings and industrial revenue bond financings) and
(ii) Attributable Debt of the Company and its Restricted Subsidiaries in
respect of all Sale and Leaseback Transactions entered into pursuant to
Section 1008(b).
"Funded Debt" means Indebtedness, whether incurred, assumed or guaranteed,
which matures more than one year from the date of creation thereof, or which
is extendable or renewable at the sole option of the obligor so that it may
become payable more than one year from such date.
"Indebtedness" of any person means, without duplication, indebtedness for
borrowed money and all indebtedness under purchase money mortgages or other
purchase money liens or conditional sales or similar title retention
agreements, in each case where such indebtedness has been created, incurred,
assumed or guaranteed by such person or where such person is otherwise liable
therefor, and indebtedness for borrowed money secured by any mortgage, pledge
or other lien or encumbrance upon property owned by such person even though
such person has not assumed or become liable for the payment of such
indebtedness.
"Investment" means and includes any investment in stock, evidences of
indebtedness, loans or advances, however made or acquired, but shall not
include accounts receivable of the Company or of any Restricted Subsidiary
arising from transactions in the ordinary course of business, or any
evidences of indebtedness, loans or advances made in connection with the sale
to any Restricted Subsidiary of accounts receivable of the Company or any
Restricted Subsidiary arising from transactions in the ordinary course of
business of the Company or any Restricted Subsidiary.
"Net Tangible Assets" means the total amounts of assets (less depreciation
and valuation reserves and other reserves and items deductible from gross
book value of specific asset accounts under generally accepted accounting
principles) which under generally accepted accounting principles would be
included on a balance sheet after deducting therefrom (a) all liability items
except Funded Debt, Capitalized Lease Obligations, stockholders' equity and
reserves for deferred income taxes and (b) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles, which in each such case would be so included on such balance
sheet.
13
<PAGE> 18
"Operating Assets" means all merchandise inventories, furniture, fixtures
and equipment (including all transportation and warehousing equipment but
excluding office equipment and data processing equipment) owned or leased
pursuant to Capital Leases by the Company or a Restricted Subsidiary.
"Operating Property" means all real property and improvements thereon
owned or leased pursuant to Capital Leases by the Company or a Restricted
Subsidiary and constituting, without limitation, any store, warehouse,
service center or distribution center wherever located, provided that such
term shall not include any store, warehouse, service center or distribution
center which the Company's Board of Directors declares by resolution not to
be of material importance to the business of the Company and its Restricted
Subsidiaries.
"Restricted Subsidiaries" means all Subsidiaries other than Non-Restricted
Subsidiaries. "Non-Restricted Subsidiaries" means (a) any Subsidiary so
designated by the Board of Directors of the Company in accordance with the
Indenture and (b) any other Subsidiary of which the majority of the voting
stock is owned directly or indirectly by one or more Non-Restricted
Subsidiaries. The Indenture provides that, subject to certain restrictions,
the Company's Board of Directors may change the designations of Restricted
Subsidiaries and Non-Restricted Subsidiaries. (Section 1009) Initially the
Company will have no Non-Restricted Subsidiaries.
"Senior Funded Debt" means all Funded Debt, except Funded Debt the payment
of which is subordinated to the payment of the Notes.
"Subsidiary" means any corporation of which at least a majority of the
outstanding stock having voting power under ordinary circumstances for the
election of directors of said corporation is at the time owned by the
Company, or by the Company and one or more Subsidiaries, or by any one or
more Subsidiaries.
MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS
The Company will not consolidate with or merge into any other corporation
or convey, transfer or lease its properties and assets substantially as an
entirety to any person, and the Company will not permit any person to
consolidate with or merge into the Company or convey, transfer or lease its
assets and properties substantially as an entirety to the Company, unless (a)
the successor shall be a corporation organized under the laws of the United
States or a jurisdiction thereof, and such successor shall expressly assume
the Company's obligations under the Indenture and the Notes, (b) immediately
after giving effect to such transaction, no Event of Default under the
Indenture or event which, after notice or lapse of time or both, would become
an Event of Default thereunder would exist and be continuing, (c) if, as a
result of such transaction, properties or assets of the Company would become
subject to a Mortgage not permitted by the Indenture, the successor shall
cause the Notes to be secured equally and ratably with (or prior to) all
indebtedness secured by such Mortgage and (d) the Company has delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that such transaction complies with the Indenture. Upon compliance with these
provisions by a successor corporation, the Company will be relieved (except
in the case of a lease) of its obligations under the Indenture and the Notes.
(Sections 801 and 802)
The Indenture would not necessarily afford holders of the Notes protection
in the event of a highly leveraged transaction involving the Company, such as
a leveraged buyout.
MODIFICATION OF THE INDENTURE; WAIVERS
The Indenture provides that the Company and the Trustee, with the consent
of not less than a majority in principal amount of the Notes at the time
outstanding, may execute supplemental indentures adding any provisions to, or
changing or eliminating any of the provisions of, the Indenture or modifying
the rights of the holders of the Notes at the time outstanding, except that
no such supplemental indenture may, without the consent of the holders of all
the Notes at the time outstanding, (a) change the stated maturity date of the
principal of, or any installment of principal of or any interest on, any Note
or reduce the principal amount thereof or the rate of interest thereon, or
change the place of payment or the currency in which payment is to be made,
or impair the right to institute suit for the enforcement of any such payment
on or after the due date thereof, (b) reduce the percentage of outstanding
Notes, the consent of the holders of which is required for any supplemental
indenture, (c) reduce the percentage of outstanding Notes required to waive
certain provisions of the Indenture or (d) modify certain provisions of the
Indenture. (Section 902)
14
<PAGE> 19
The Holders of a majority in principal amount of the Notes at the time
outstanding may on behalf of the holders of all Notes waive compliance by the
Company with certain restrictive provisions of the Indenture. (Section 1011) The
holders of a majority in principal amount of the Notes at the time outstanding
may on behalf of the Holders of all Notes waive any past default under the
Indenture except a default not heretofore cured in the payment of the principal
of or any interest on any Note or in respect of a provision under which the
Indenture cannot be modified or amended without the consent of the holder of
each outstanding Note. (Section 513)
EVENTS OF DEFAULT, WAIVER, AND NOTICE
"Event of Default" is defined in the Indenture with respect to the Notes as
being (a) default for 30 days in the payment of any interest installment any
Notes, (b) default in the payment when due of principal of any Note, (c) default
for 60 days, after notice to the Company by the Trustee or to the Company and
the Trustee by the holders of not less than 25% in principal amount of the Notes
at that time outstanding, in the performance, or breach, of any covenant or
warranty of the Indenture (other than covenants and warranties specifically
dealt with elsewhere), (d) default in respect to certain indebtedness in excess
of $10,000,000 for money borrowed by the Company, which indebtedness shall have
been accelerated for 30 days after notice specified in the next preceding clause
and (e) certain events of bankruptcy, insolvency and reorganization. (Section
501)
If an Event of Default with respect to the Notes at that time outstanding
shall occur and be continuing, either the Trustee or the holders of not less
than 25% in principal amount of the outstanding Notes may, by notice in writing
to the Company (and to the Trustee if given by holders), declare the principal
amount of all Notes to be due and payable. (Section 502) In certain cases, the
holders of a majority in principal amount of the outstanding Notes may, on
behalf of the holders of all the Notes, rescind and annul such acceleration or
waive any past default or Event of Default, except a default not theretofore
cured in payment of the principal of or interest on any of the Notes or a
default relating to a covenant or provision of the Indenture which could not be
modified or amended without the consent of all holders of Notes. (Sections 502
and 513) See "-- Modification of the Indenture; Waivers."
The Indenture provides that the Trustee shall, within 90 days after the
occurrence of a default with respect to the Notes, give to the holders of the
Notes notice of such default known to it, unless such default shall have been
cured or waived; but the Trustee shall be protected in withholding such notice
if in good faith it determines that the withholding of such notice is in the
interest of such holders, except in the case of a default in the payment of the
principal ofor interest on any of the Notes and except that in the case of a
default in respect of certain covenants and warranties, no such notice shall be
given until at least 60 days after the occurrence of such default. (Section 602)
The Indenture contains a provision entitling the Trustee, subject to the duty of
the Trustee during a default to act with the required standard of care, to be
indemnified by holders of the Notes before proceeding to exercise any right or
power under the Indenture at the request of such holders. (Sections 601 and 603)
The Indenture provides that the holders of a majority in principal amount of the
outstanding Notes may direct the time, method and place of conducting
proceedings for remedies available to the Trustee or of exercising any trust or
power conferred on the Trustee with respect to the Notes. (Section 512)
No holder of any Notes will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless (a) such holder
shall have previously given to the Trustee written notice of a continuing Event
of Default with respect to the Notes, (b) the holders of at least 25% in
aggregate principal amount of the outstanding Notes shall have made written
request to the Trustee to institute proceedings as Trustee, (c) such holder or
holders shall have offered to the Trustee reasonable indemnity, (d) the Trustee
shall have failed to institute such proceeding within 60 days thereafter and (e)
the Trustee shall not have received from the holders of a majority in aggregate
principal amount of the outstanding Notes a direction inconsistent with such
request. (Section 507) However, the holder of any Notes will have an absolute
right to receive payment of the principal of and any interest on such Notes on
or after the due dates expressed in such Notes and to institute suit for the
enforcement of any such payment. (Section 508)
The Company will be required to file with the Trustee annually, within 120
days of the end of each fiscal year of the Company, a certificate as to the
compliance with all conditions and covenants of the Indenture. (Section 704)
15
<PAGE> 20
DISCHARGE AND DEFEASANCE OF NOTES OR CERTAIN COVENANTS
DEFEASANCE AND DISCHARGE
The Indenture provides that the Company, at its option, (a) will be
discharged from any and all obligations with respect to the Notes (except for
certain obligations which include registering the transfer or exchange of the
Notes, replacing stolen, lost or mutilated Notes, maintaining paying agencies
and holding monies for payment in trust), or (b) need not comply with certain
restrictive covenants of the Indenture, upon the deposit with the Trustee (and
in the case of a discharge, 91 days after such deposit), in trust, cash in U.S.
dollars or U.S. Government Obligations, or a combination thereof, which through
the payment of interest thereon and principal thereof in accordance with their
terms will provide money in an amount sufficient to pay each installment of
principal of and any interest on the Notes on the dates such payments are due in
accordance with the terms of the Indenture. To exercise any such option, the
Company is required to meet certain conditions, including delivery to the
Trustee of an Opinion of Counsel to the effect that the deposit and related
defeasance and discharge would not cause the holders of the Notes to recognize
income, gain or loss for Federal income tax purposes which, in the case of a
discharge pursuant to clause (a), must refer to and be based upon a ruling or
administrative pronouncement of the Internal Revenue Service. (Sections 403 and
1010)
DEFEASANCE AND EVENTS OF DEFAULT
In the event the Company exercises its option to omit compliance with
certain covenants of the Indenture and the Notes are declared due and payable
because of the occurrence of any Event of Default, the amount of money and U.S.
Government Obligations on deposit with the Trustee should be sufficient to pay
amounts due on the Notes at the time of their Stated Maturity but may not be
sufficient to pay amounts due on the Notes at the time of the acceleration
resulting from such Event of Default. However, the Company shall remain liable
for such payments.
CONCERNING THE TRUSTEE
The Trustee acts as trustee under the indenture in connection with the
Company's 4% Convertible Subordinated Notes due 1999. In the ordinary course of
business, the Company maintains deposits with the Trustee and the Trustee has
also from time to time provided other banking services to the Company.
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated June , 1995 (the "Underwriting Agreement"), the Underwriters
named below (the "Underwriters"), for whom CS First Boston Corporation is
acting as representative (the "Representative"), have severally but not
jointly agreed to purchase from the Company the following respective
principal amounts of the Notes:
Principal
Underwriter Amount
----------- --------------
CS First Boston Corporation $
--------------
Total ................ $100,000,000
==============
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will be
obligated to purchase all of the Notes being offered hereby if any are
purchased. The Underwriting Agreement provides that, in the event of a default
by an Underwriter, in certain circumstances the purchase commitments of
non-defaulting Underwriters may be increased or the Underwriting Agreement may
be terminated.
The Company has been advised by the Representative that the Underwriters
propose to offer the Notes to the public initially at the public offering price
set forth on the cover page of this Prospectus and, through the Representative,
16
<PAGE> 21
to certain dealers at such price less a concession of % of the principal
amount per Note and the Underwriters and such dealers may allow a discount of %
of such principal amount per Note on sales to certain other dealers. After the
initial public offering, the public offering price and concession and discount
to dealers may be changed by the Representative.
The Notes are a new issue of securities with no established trading
market. The Representative has advised the Company that it intends to act as
a market maker for the Notes. However, the Representative is not obligated to
do so and may discontinue any market making at any time without notice. No
assurance can be given as to the liquidity of the trading market for the
Notes.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act, and under
certain circumstances, to contribute to payments which the Underwriters may be
required to make in respect thereof.
CS First Boston Corporation from time to time performs investment banking
services for the Company for customary fees.
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Notes in Canada is being made only on a private
placement basis exempt from the requirement that the Company prepare and file
a prospectus with the securities regulatory authorities in each province
where trades of Notes are effected. Accordingly, any resale of the Notes in
Canada must be made in accordance with applicable securities laws which will
vary depending on the relevant jurisdiction, and which may require resales to
be made in accordance with available statutory exemptions or pursuant to a
discretionary exemption granted by the applicable Canadian securities
regulatory authority. Purchasers are advised to seek legal advice prior to
any resale of the Notes.
REPRESENTATIONS OF PURCHASERS
Each purchaser of Notes in Canada who receives a purchase confirmation
will be deemed to represent to the Company and the dealer from whom such
purchase confirmation is received that (i) such purchaser is entitled under
applicable provincial securities laws to purchase such Notes without the
benefit of a prospectus qualified under such securities laws, (ii) where
required by law, such purchaser is purchasing as principal and not as agent,
and (iii) such purchaser has reviewed the text above under "Resale
Restrictions."
RIGHTS OF ACTION AND ENFORCEMENT
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available,
including common law rights of action for damages or rescission or rights of
action under the civil liability provisions of the U.S. federal securities
laws.
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be
possible for Ontario purchasers to effect service of process within Canada
upon the issuer or such persons. All or a substantial portion of the assets
of the issuer and such persons may be located outside Canada and, as a
result, it may not be possible to satisfy a judgment against the issuer or
such persons in Canada or to enforce a judgment obtained in Canadian courts
against such issuer or person outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Notes to whom the Securities Act (British Columbia) applies
is advised that such purchaser is required to file with the British Columbia
Securities Commission a report within ten days of the sale of any Notes
17
<PAGE> 22
acquired by such purchaser pursuant to this offering. Such report must be in the
form attached to British Columbia Securities Commission Blanket Order BOR #88/5,
a copy of which may be obtained from the Company. Only one such report must be
filed in respect of Notes acquired on the same date and under the same
prospectus exemption.
LEGAL MATTERS
The validity of the authorization and issuance of the Notes offered hereby
is being passed upon for the Company by Willkie Farr & Gallagher, New York,
New York, and for the Underwriters by Dewey Ballantine, New York, New York.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this Prospectus by reference from the Company's Annual Report
on Form 10-K for the year ended January 28, 1995 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report which
is incorporated herein by reference, and have been so incorporated in
reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
18
<PAGE> 23
- -----------------------------------------------------------------------------
No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained in this Prospectus
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Company or any Underwriter. This
Prospectus does not constitute an offer to sell or a solicitation of an offer
to buy any of the securities offered hereby in any jurisdiction to any person
to whom it is unlawful to make such offer in such jurisdiction. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that the information herein is correct
as of any time subsequent to the date hereof or that there has been no change
in the affairs of the Company since such date.
------
TABLE OF CONTENTS
Page
--------
Available Information ..................... 2
Incorporation of Certain Documents by
Reference ................................ 2
The Company ............................... 3
Use of Proceeds ........................... 4
Capitalization ............................ 4
Selected Financial Data ................... 5
Management's Discussion and Analysis of
Financial Condition and Results of
Operations ............................... 6
Description of Notes ...................... 10
Underwriting .............................. 16
Notice to Canadian Residents .............. 17
Legal Matters ............................. 18
Experts ................................... 18
- -----------------------------------------------------------------------------
<PAGE> 24
- ----------------------------------------------------------------------------
LOGO
PEP BOYS
$100,000,000
% Notes Due 2005
PROSPECTUS
LOGO CS FIRST BOSTON
----------------------------------------------------------------------------
<PAGE> 25
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses (other than the underwriting
discounts and commissions) in connection with the sale and distribution of
the securities being registered, which will be paid solely by the Company.
All the amounts shown are estimates, except the Commission registration fee
and the NASD fee:
SEC Registration Fee ......................... $ 34,483
NASD Fee ..................................... 10,500
Printing and Engraving Expenses .............. 15,000
Legal Fees and Expenses ...................... 80,000
Accounting Fees and Expenses ................. 10,000
Blue Sky Fees and Expenses ................... 10,000
Trustee Fees ................................. 8,500
Rating Agency Fees ........................... 50,000
Miscellaneous Expenses ....................... 6,517
--------
Total ................................... $225,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 1741 through 1750 of Subchapter D, Chapter 17, of the BCL contain
provisions for mandatory and discretionary indemnification of a corporation's
directors, officers and other personnel, and related matters.
Under Section 1741, subject to certain limitations, a corporation has the
power to indemnify directors and officers under certain prescribed
circumstances against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred in connection
with an action or proceeding, whether civil, criminal, administrative or
investigative (other than derivative actions), to which any of them is a
party or is threatened to be made a party by reason of his being a
representative of the corporation or serving at the request of the
corporation as a representative of another corporation, partnership, joint
venture, trust or other enterprise, if he acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal proceeding, had no reasonable
cause to believe his conduct was unlawful.
Section 1742 permits indemnification in derivative actions if the
appropriate standard of conduct is met, except in respect of any claim, issue
or matter as to which the person has been adjudged to be liable to the
corporation unless and only to the extent that the proper court determines
upon application that, despite the adjudication of liability but in view of
all the circumstances of the case, the person is fairly and reasonably
entitled to indemnity for the expenses that the court deems proper.
Under Section 1743, indemnification is mandatory to the extent that the
officer or director has been successful on the merits or otherwise in defense
of any action or proceeding referred to in Section 1741 or 1742.
Section 1744 provides that, unless ordered by a court, any indemnification
under Section 1741 or 1742 shall be made by the corporation only as
authorized in the specific case upon a determination that the representative
met the applicable standard of conduct and that such determination will be
made (i) by the board of directors by a majority vote of a quorum of
directors not parties to the action or proceeding; (ii) if a quorum is not
obtainable, or if obtainable and a majority of disinterested directors so
directs, by independent legal counsel; or (iii) by the shareholders.
Section 1745 provides that expenses incurred by an officer or director in
defending an action or proceeding may be paid by the corporation in advance
of the final disposition of such action or proceeding upon receipt of an
undertaking by or on behalf of such person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
corporation.
II-1
<PAGE> 26
Section 1746 provides generally that the indemnification and advancement
of expenses provided by Subchapter 17D of the BCL (i) will not be deemed
exclusive of any other rights to which a person seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity while holding that
office, and (ii) may not be made in any case where the act or failure to act
giving rise to the claim for indemnification is determined by a court to have
constituted willful misconduct or recklessness.
Section 1747 grants a corporation the power to purchase and maintain
insurance on behalf of any director or officer against any liability incurred
by him in his capacity as officer or director, whether or not the corporation
would have the power to indemnify him against that liability under Subchapter
17D of BCL.
Sections 1748 and 1749 extend the indemnification and advancement of
expenses provisions contained in Subchapter 17D of the BCL to successor
corporations in fundamental corporate changes and to representatives serving
as fiduciaries of employee benefit plans.
Section 1750 provides that the indemnification and advancement of expenses
provided by, or granted pursuant to, Subchapter 17D of the BCL shall, unless
otherwise provided when authorized or ratified, continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs and personal representative of such person.
Article VII of the Company's Bylaws provides in general that the Company
shall indemnify its officers and directors to the fullest extent permitted by
law. The Bylaws further provide that any alteration, amendment, or repeal of
the indemnification provisions, if not approved by 80% of the Board of
Directors, requires the affirmative vote of shareholders owning at least 80%
of the outstanding shares entitled to vote.
The Company has purchased liability insurance on behalf of its directors
and officers. A form of such policy is filed as Exhibit 10.5 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended February 3,
1990.
See Section 7 of the Underwriting Agreement, filed as Exhibit 1 hereto,
pursuant to which the Underwriters agree to indemnify the Company, its
directors, certain officers and controlling persons against certain
liabilities, including liabilities under the Securities Act.
II-2
<PAGE> 27
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
----------- ----------------------
<S> <C>
1 Form of Underwriting Agreement
4 Form of Indenture between the Company and First Fidelity Bank, National Association, as Trustee,
including form of Note
5 Opinion of Willkie Farr & Gallagher
*12.1 Calculation of Ratio of Earnings to Fixed Charges (incorporated
by reference to Exhibit 12 to the
Company's Annual Report on Form 10-K for the year ended January 28, 1995)
*12.2 Calculation of Ratio of Earnings to Fixed Charges for the 13 weeks ended April 29, 1995
23.1 Consent of Willkie Farr & Gallagher (included as part of Exhibit 5)
23.2 Consent of Deloitte & Touche LLP
*24 Power of Attorney
25 Form T-1, Statement of Eligibility under the Trust Indenture Act of
1939 of the Trustee
</TABLE>
- ------
*Previously filed.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be
a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that, in the opinion of the Commission, such indemnification
is against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion
of counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such
indemnification by them is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that: (1) for purposes of
determining any liability under the Securities Act, the information omitted
from the form of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of this registration statement as of the time
it was declared effective; and (2) for the purpose of determining any
liability under the Securities Act, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-3
<PAGE> 28
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant certifies
that is has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Philadelphia, Commonwealth of Pennsylvania, on June
5, 1995.
THE PEP BOYS - MANNY, MOE & JACK
By: /s/ MITCHELL G. LEIBOVITZ
------------------------------
Mitchell G. Leibovitz
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ------- ---------
<S> <C> <C>
/s/ MITCHELL G. LEIBOVITZ Chairman of the Board, President and June 5, 1995
---------------------------- Chief Executive Officer and Director
Mitchell G. Leibovitz (Principal Executive Officer)
/s/ MICHAEL J. HOLDEN Senior Vice President and Chief Financial June 5, 1995
---------------------------- Officer (Principal Financial and
Michael J. Holden Accounting Officer)
* Director June 5, 1995
----------------------------
Lennox K. Black
* Director June 5, 1995
----------------------------
Pemberton Hutchinson
Director
----------------------------
Bernard J. Korman
Director
----------------------------
J. Richard Leaman, Jr.
* Director June 5, 1995
----------------------------
Malcolmn D. Pryor
* Director June 5, 1995
----------------------------
Lester Rosenfeld
* Director June 5, 1995
----------------------------
Benjamin Strauss
* Director June 5, 1995
----------------------------
Myles H. Tanenbaum
* Director June 5, 1995
----------------------------
David V. Wachs
*By: /s/ MICHAEL J. HOLDEN
--------------------------
Michael J. Holden
Attorney-in-Fact
</TABLE>
II-4
<PAGE> 29
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
----------- --------------
<S> <C> <C>
1 Form of Underwriting Agreement
4 Form of Indenture between the Company and First Fidelity Bank, National
Association, as Trustee, including form of Note
5 Opinion of Willkie Farr & Gallagher
*12.1 Calculation of Ratio of Earnings to Fixed Charges (incorporated by reference to
Exhibit 12 to the Company's Annual Report on Form 10-K for the year ended
January 28, 1995)
*12.2 Calculation of Ratio of Earnings to Fixed Charges for the 13 weeks ended
April 29, 1995
23.1 Consent of Willkie Farr & Gallagher (included as part of Exhibit 5)
23.2 Consent of Deloitte & Touche LLP
*24 Power of Attorney
25 Form T-1, Statement of Eligibility under the Trust Indenture Act of 1939
of the Trustee
</TABLE>
- ------
*Previously filed.
<PAGE> 30
Draft of June 6, 1995
$100,000,000
THE PEP BOYS -- MANNY, MOE & JACK
_____% Notes Due 2005
UNDERWRITING AGREEMENT
----------------------
June , 1995
CS FIRST BOSTON CORPORATION,
As Representative of the Several Underwriters,
Park Avenue Plaza
New York, NY 10055
Ladies and Gentlemen:
1. Introductory. The Pep Boys -- Manny, Moe & Jack, a Pennsylvania
corporation (the "Company"), proposes to issue and sell $100,000,000
principal amount of its _____% Notes Due 2005 (the "Securities") to be issued
under an indenture, dated as of June __, 1995 ("Indenture"), between the
Company and First Fidelity Bank, National Association, as Trustee. The
Company hereby agrees with the several Underwriters named in Schedule A
hereto ("Underwriters") as follows:
2. Representations and Warranties of the Company. (a) The Company
represents and warrants to, and agrees with, the several Underwriters that:
(i) A registration statement on Form S-3 (No. 33-__________),
including a form of prospectus, relating to the Securities has been
filed with the Securities and Exchange Commission ("Commission") and
either (A) has been declared effective under the Securities Act of 1933,
as amended ("Act"), and is not proposed to be amended or (B) is proposed
to be amended by amendment or post-effective amendment. If the Company
does not propose to amend such registration statement and if any
post-effective amendment to such registration statement has been filed
with the Commission prior to the execution and delivery of this
Agreement, the most recent such amendment has been declared effective by
the Commission. For purposes of this Agreement, "Effective Time" means
(A) if the Company has advised CS First Boston Corporation ("CS First
Boston") that it does not propose to amend such registration statement,
the date and time as of which such registration statement, or the most
recent post-effective amendment thereto (if any) filed prior to the
execution and delivery of this Agreement, was declared effective by the
Commission or (B) if the Company has advised CS First Boston that it
proposes to file an amendment or post-effective amendment to such
registration statement, the date and time as of which such registration
statement, as amended by such amendment or post-effective amendment, as
the case may be, is declared effective by the Commission. "Effective
Date" means the date of the Effective Time. Such registration statement,
<PAGE> 31
as amended at the Effective Time, including all material incorporated by
reference therein and including all information (if any) deemed to be a
part of such registration statement as of the Effective Time pursuant to
Rule 430A(b) under the Act, is hereinafter referred to as the
"Registration Statement," and the form of prospectus relating to the
Securities, as first filed with the Commission pursuant to and in
accordance with Rule 424(b) ("Rule 424(b)") under the Act or (if no such
filing is required) as included in the Registration Statement, including
all material incorporated by reference in such prospectus, is
hereinafter referred to as the "Prospectus". No stop order suspending
the effectiveness of such Registration Statement or any part thereof has
been issued and no proceeding for that purpose has been instituted or,
to the Company's knowledge, threatened by the Commission.
(ii) If the Effective Time is prior to the execution and delivery of
this Agreement: (A) at the Effective Time, the Registration Statement
conformed in all material respects to the requirements of the Act, the
Trust Indenture Act of 1939 ("Trust Indenture Act") and the rules and
regulations of the Commission ("Rules and Regulations") and did not
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading and (B) on the date of this Agreement,
the Registration Statement conforms, and at the time of filing of the
Prospectus pursuant to Rule 424(b) and on the Closing Date (as
hereinafter defined), the Registration Statement and the Prospectus will
conform, in all material respects to the requirements of the Act, the
Trust Indenture Act and the Rules and Regulations, and neither of such
documents includes, or will include, any untrue statement of a material
fact or omits, or will omit, to state any 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. If the
Effective Time is subsequent to the execution and delivery of this
Agreement: (A) at the Effective Time, the Registration Statement and the
Prospectus will conform in all material respects to the requirements of
the Act, the Trust Indenture Act and the Rules and Regulations, and
neither of such documents includes, or will include, any untrue
statement of a material fact or omits, or will omit, to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading and (B) on the Closing Date, the
Registration Statement and the Prospectus will conform in all material
respects to the requirements of the Act, the Trust Indenture Act and the
Rules and Regulations, and neither of such documents will include any
untrue statement of a material fact or will omit to state any 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 two preceding sentences do not apply to statements in or
omissions from the Registration Statement or Prospectus based upon
written information furnished to the Company by any Underwriter through
CS First Boston specifically for use therein, it being understood and
agreed that the only such information is that described as such in
Section 2(b).
(iii) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or
filed pursuant to Rule 424 under the Act, conformed when so filed in all
material respects to the requirements of the Act and the Rules and
Regulations.
(iv) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the Commonwealth of
Pennsylvania, and has the corporate power and authority to own, lease
and operate its properties and to conduct its business as described in
2
<PAGE> 32
the Prospectus; and the Company is duly qualified to transact business
and is in good standing in each jurisdiction in which the conduct of its
business or its ownership, leasing or operation of property requires
such qualification, except to the extent that the failure to be so
qualified or in good standing would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole.
(v) Each "Significant Subsidiary" (as such term is defined in Rule
405 of the Act, except that for purposes of this Agreement, each
reference in such Rule 405 definition to "10 percent" shall be replaced
with "5 percent") is listed on Schedule B hereto. Each Significant
Subsidiary of the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus and is duly qualified to transact business
and is in good standing in each jurisdiction in which the conduct of its
business or its ownership, leasing or operation of property requires
such qualification, except to the extent that the failure to be so
qualified or in good standing would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole. All of the
outstanding capital stock of each Significant Subsidiary has been duly
authorized and validly issued and is fully paid and non-assessable and
is owned by the Company, directly or through subsidiaries, free and
clear of any mortgage, pledge, lien, perfected security interest, claim
or encumbrance of any kind or, to the knowledge of the Company, any
unperfected security interest.
(vi) All outstanding shares of capital stock of the Company have been
duly authorized, are validly issued, fully paid and non-assessable and
have been issued in compliance with applicable federal and state
securities laws; the Company has an authorized and outstanding capital
stock as set forth in the Prospectus under the caption "Capitalization";
and the stockholders of the Company have no preemptive or similar rights
with respect to the capital stock or any other securities of the
Company.
(vii) There are no contracts, agreements or understandings between
the Company and any third party granting such third party the right to
require the Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned by such
third party or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
other securities being registered pursuant to any other registration
statement filed by the Company under the Act.
(viii) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the legal, valid and binding
obligation of the Company enforceable against the Company in accordance
with its terms, except to the extent that (A) enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors' rights generally and by general
principles of equity and (B) rights to indemnity and contribution may be
limited by federal or state securities laws or policies underlying such
laws.
(ix) The Indenture has been duly authorized by the Company, will be
substantially in the form heretofore delivered to CS First Boston and,
when duly executed and delivered by the Company and the Trustee, will
constitute a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except to the extent
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that enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors'
rights generally and by general principles of equity; the Indenture is
(or, if the Effective Time is subsequent to the execution and delivery
of this Agreement, at the Effective Time the Indenture will be) duly
qualified under the Trust Indenture Act; and the Indenture conforms in
all material respects to the description thereof contained in the
Prospectus.
(x) The Securities have been duly authorized by the Company, and when
executed, authenticated, issued and delivered in the manner provided for
in the Indenture and sold and paid for as provided in this Agreement,
the Securities will constitute valid and binding obligations of the
Company entitled to the benefits of the Indenture and enforceable
against the Company in accordance with their terms, except to the extent
that enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors'
rights generally and by general principles of equity; and the Securities
conform in all material respects to the description thereof contained in
the Prospectus.
(xi) No consent, approval or authorization, and no order,
registration or qualification of or with any natural person,
corporation, partnership, trust, firm, association or other entity,
whether acting in an individual, fiduciary or other capacity ("Person"),
or any court or government agency or body, is required for the issuance
of the Securities or for the consummation of the other transactions
contemplated by this Agreement, except such as have been obtained and
made under the Act, the Trust Indenture Act or the Rules and Regulations
and such as may be required under state securities laws in connection
with the offer and sale of the Securities.
(xii) The execution, delivery and performance of the Indenture and
this Agreement and the consummation of the transactions herein and
therein contemplated have been duly authorized by all necessary
corporate action on the part of the Company and its subsidiaries and
will not (A) contravene any provision of the charter or by-laws of the
Company or any of its subsidiaries, or (B) conflict with or result in a
breach or violation of any of the terms and provisions of, or constitute
a default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any assets or property of the Company or any
of its subsidiaries under, any statute, rule, regulation, order or
decree of any governmental agency or body or any court having
jurisdiction over the Company or any of its subsidiaries or any of their
properties or any indenture, mortgage, loan agreement, note, lease,
permit, license or other agreement or instrument to which the Company or
any such subsidiary is bound or to which any of the properties of the
Company or any such subsidiary is subject, except, in the case of clause
(B), as would not, singly or in the aggregate, have a material adverse
effect on the condition (financial or other), business, prospects,
results of operations or general affairs of the Company and its
subsidiaries, taken as a whole, or on the transactions contemplated by
this Agreement and the Indenture; and the Company has full power and
authority to authorize, issue and sell the Securities as contemplated by
this Agreement.
(xiii) (A) Neither the Company nor any of its Significant
Subsidiaries is in violation of its charter or by-laws, (B) neither the
Company nor any of its subsidiaries is in violation of any applicable
law, ordinance, administrative or governmental rule or regulation, or
any order of any court or governmental agency or body having
jurisdiction over the Company or any subsidiary and (C) no event of
default or event that, but for the giving of notice or the lapse of
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<PAGE> 34
time or both, would constitute an event of default exists, or upon the
use of proceeds from the sale of the Securities in the manner
contemplated by the description under the caption "Use of Proceeds"
contained in the Prospectus or upon the consummation of the other
transactions contemplated by the Prospectus will exist, under any
agreement or instrument for borrowed money, any guarantee of any
agreement or instrument for borrowed money or any lease, permit, license
or other agreement or instrument to which the Company or any of its
subsidiaries is a party or to which any of the properties or assets of
the Company or any such subsidiary is subject, except, in the case of
clauses (B) and (C), for such violations and defaults that would not,
singly or in the aggregate, have a material adverse effect on the
condition (financial or other), business, prospects, results of
operations or general affairs of the Company and its subsidiaries, taken
as a whole.
(xiv) The Company and its subsidiaries have such permits, licenses,
franchises, consents, approvals, authorizations and clearances
("Licenses") and are in compliance with all applicable laws and
regulations of federal, state, local and foreign governmental or
regulatory authorities, as are necessary to own, lease or operate their
properties and to conduct their businesses in the manner described in
the Prospectus and all such Licenses are in full force and effect, in
each case except as would not, singly or in the aggregate, have a
material adverse effect on the condition (financial or other), business,
prospects, results of operations or general affairs of the Company and
its subsidiaries, taken as a whole.
(xv) The Company and its Significant Subsidiaries have good and
marketable title to all properties (real and personal) owned by the
Company and its Significant Subsidiaries, free and clear of all liens,
claims, security interests or other encumbrances that are material or
that may interfere with the conduct of the business of the Company and
its subsidiaries, taken as a whole; all properties held under lease or
sublease by the Company and its Significant Subsidiaries are held under
valid, subsisting and enforceable leases or subleases with such
exceptions as are not material and do not interfere with the use made or
proposed to be made of such property by the Company and its Significant
Subsidiaries; neither the Company nor any of its Significant
Subsidiaries is in default under any such lease or sublease, except for
defaults which are not material and will not interfere with the conduct
of the business of the Company and its subsidiaries, taken as a whole;
and no material claim of any sort has been asserted by anyone adverse to
the rights of the Company or any Significant Subsidiary under any such
lease or subleases or affecting or questioning the right of such entity
to the continued possession of the leased or subleased properties under
any such lease or sublease.
(xvi) The Company and its Significant Subsidiaries carry or are
entitled to the benefits of insurance, including, without limitation,
product liability and business interruption insurance, in such amounts
and covering such risks as the Company reasonably believes is generally
maintained by companies of established repute engaged in the same or
similar business, and all such insurance is in full force and effect.
(xvii) The properties, assets and operations of the Company 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
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<PAGE> 35
to public and worker health and safety and to the protection and
clean-up of the natural 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"). 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, to the knowledge of the Company or any of its subsidiaries,
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 with applicable Environmental Laws in any material
respect. Neither the Company nor any of its subsidiaries is the subject
of any federal, state, local or foreign investigation, and neither the
Company nor any of its subsidiaries has received any notice or claim (or
is aware of any facts that would form a reasonable basis for any claim),
or entered into any negotiations or agreements with any third party
relating to any liability or remedial action or potential liability or
remedial action under Environmental Laws, nor are there any pending,
reasonably anticipated or, to the best knowledge of the Company or any
of its subsidiaries, threatened actions, suits or proceedings against or
affecting the Company, any of its subsidiaries or their properties,
assets or operations, in connection with any such Environmental Laws.
The term "hazardous materials" shall mean those substances that are
regulated by or form the basis for liability under any applicable
Environmental Laws.
(xviii) There are no pending actions, suits or proceedings against or
affecting the Company, any of its subsidiaries or any of their
properties that are required under the Act to be described in the
Registration Statement and the Prospectus (other than as described
therein) or that could, singly or in the aggregate, have a material
adverse effect on the condition (financial or other), business,
prospects, results of operations or general affairs of the Company and
its subsidiaries, taken as a whole, or could have a material adverse
effect on the ability of the Company to perform its obligations under
this Agreement, the Indenture or the Securities, or that are otherwise
material in the context of the sale of the Securities; and, to the
Company's knowledge, no such actions, suits or proceedings are
threatened or contemplated.
(xix) The Company and its subsidiaries own or possess all the
patents, trademarks, service marks, trade names, copyrights, licenses
and rights with respect thereto (collectively, "Intellectual Property")
necessary for the conduct of their businesses as described in the
Prospectus, except where the failure to own or possess the same would
not, singly or in the aggregate, have a material adverse effect on the
condition (financial or other), business, prospects, results of
operations or general affairs of the Company and its subsidiaries, taken
as a whole; and to the knowledge of the Company and its subsidiaries, no
conflict with the rights of others exists with respect to any such
Intellectual Property.
(xx) The Company and its subsidiaries have filed all federal, state,
local and foreign tax returns required to be filed, such returns are
complete and correct in all material respects, and all taxes shown by
such returns or otherwise assessed or due and payable have been paid,
except such taxes as are being contested in good faith and as to which
adequate reserves have been provided. The charges, accruals and reserves
on the books of the Company and its subsidiaries in respect of any tax
6
<PAGE> 36
liability for any year not finally determined are adequate to meet any
assessments or reassessments for additional taxes, and there has been no
tax deficiency asserted and, to the knowledge of the Company and its
subsidiaries, no tax deficiency might be asserted against the Company or
any of its subsidiaries, except for such inadequacies or deficiencies
that could not, singly or in the aggregate, have a material adverse
effect on the condition (financial or other), business, prospects,
results of operations or general affairs of the Company and its
subsidiaries, taken as a whole.
(xxi) There are no contracts, agreements or understandings between
the Company and any person entitling such person to any fee, commission
or payment from the Company or, to the Company's knowledge, any
Underwriter in connection with the Securities to be sold by the Company,
other than the compensation due and payable to the Underwriters as
described in the Prospectus.
(xxii) No labor disturbance by the employees of the Company exists,
or to the knowledge of the Company, is threatened, that could, singly or
in the aggregate, have a material adverse effect on the condition
(financial or other), business, prospects, results of operations or
general affairs of the Company and its subsidiaries, taken as a whole.
(xxiii) The financial statements and related schedules and notes
included or incorporated by reference in the Registration Statement and
the Prospectus comply, in all material respects, with the requirements
of the Act and the Rules and Regulations, were prepared in accordance
with generally accepted accounting principles consistently applied
throughout the periods involved and fairly present the financial
condition and results of operations of the Company and its subsidiaries,
on a consolidated basis, at the dates and for the periods presented. The
financial information and statistical data set forth in the Prospectus
under the captions "Selected Financial Data" and "Capitalization" are
fairly stated in all material respects in relation to the consolidated
financial statements of the Company from which they have been derived.
(xxiv) Since the dates as of which information is given in the
Registration Statement and the Prospectus, (A) neither the Company nor
its subsidiaries has incurred any material liability or obligation
(indirect, direct or contingent) or entered into any material verbal or
written agreement or other transaction that is not in the ordinary
course of business or that could result in a material reduction in the
future earnings of the Company; (B) neither the Company nor its
subsidiaries has sustained any material loss or interference with its
business or properties from fire, flood, windstorm, accident or other
calamity (whether or not covered by insurance); (C) there has been no
change in the indebtedness of the Company and, except as contemplated by
the Prospectus, no change in the capital stock of the Company and no
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock; and (D) there has been no
material adverse change, nor any development reasonably likely to result
in a material adverse change, in the condition (financial or other),
business, prospects, results of operations or general affairs of the
Company and its subsidiaries, taken as a whole.
(xxv) On the date the registration statement was first filed with the
Commission, and at the Effective Time, the Company met the conditions
for use of Form S-3 under the Act and the Rules and Regulations.
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<PAGE> 37
(xxvi) The Company has complied, and will continue to comply, with
all provisions of Section 517.075, Florida Statutes (Chapter 92-198,
Laws of Florida), and the regulations thereunder.
(b) The Company hereby acknowledges and agrees with the Underwriters
that, for all purposes of this Agreement and the transactions herein
contemplated, the only information furnished to the Company by any
Underwriter through CS First Boston specifically for use in the Registration
Statement, the Prospectus or any amendment or supplement thereto, or any
related preliminary prospectus, are (i) the statements with respect to
stabilization appearing on the inside front cover page of the preliminary
prospectus and the Prospectus, (ii) the first sentence of the last paragraph
of text appearing on the front cover page of the preliminary prospectus and
the Prospectus and (iii) the information appearing in the preliminary
prospectus and the Prospectus in the third and fourth paragraphs under the
caption "Underwriting."
3. Purchase, Sale and Delivery of Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to
purchase from the Company, at a purchase price of _____% of the principal
amount thereof plus accrued interest, if any, from __________ __, 1995 to the
Closing Date, the respective principal amounts of Securities set forth
opposite the names of the Underwriters in Schedule A hereto.
The Company will deliver against payment of the purchase price the
Securities in the form of one or more permanent global Securities in
definitive form (the "Global Securities") deposited with the Trustee as
custodian for The Depository Trust Company ("DTC") and registered in the name
of Cede & Co., as nominee for DTC. Interests in any permanent Global
Securities will be held only in book-entry form through DTC, except in the
limited circumstances described in the Prospectus. Payment for the Securities
shall be made by the Underwriters by certified or official bank check or
checks in New York Clearing House (next day) funds drawn to the order of the
Company at the offices of Dewey Ballantine, 1301 Avenue of the Americas, New
York, New York at 10:00 A.M., (New York time), on _____________, 1995 , or at
such other time not later than seven full business days thereafter as CS
First Boston Corporation ("CS First Boston") and the Company determine, such
time being herein referred to as the "Closing Date", against delivery to the
Trustee as custodian for DTC of the Global Securities representing all of the
Securities. The Global Securities will be made available for checking at the
offices of CS First Boston Corporation, Park Avenue Plaza, New York, New York
10055 at least 24 hours prior to the Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set
forth in the Prospectus.
5. Certain Agreements of the Company. The Company agrees with the
several Underwriters that:
(a) If the Effective Time is prior to the execution and delivery of
this Agreement, the Company will file the Prospectus with the Commission
pursuant to and in accordance with subparagraph (1) (or, if applicable
and if consented to by CS First Boston, subparagraph (4)) of Rule 424(b)
not later than the earlier of (A) the second business day following the
execution and delivery of this Agreement or (B) the fifth business day
after the Effective Date. The Company will advise CS First Boston
promptly of any such filing pursuant to Rule 424(b).
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<PAGE> 38
(b) The Company will advise CS First Boston promptly of any proposal
to amend or supplement the registration statement as filed or the
related prospectus or the Registration Statement or the Prospectus and
will not effect such amendment or supplementation without CS First
Boston's prior consent, which consent shall not be unreasonably
withheld; and the Company will also advise CS First Boston promptly of
the effectiveness of the Registration Statement (if the Effective Time
is subsequent to the execution and delivery of this Agreement) and of
any amendment or supplementation of the Registration Statement or the
Prospectus and of the institution by the Commission of any stop order
proceedings in respect of the Registration Statement and will use its
best efforts to prevent the issuance of any such stop order and to
obtain as soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs or a condition
exists as a result of which it is necessary, in the reasonable opinion
of counsel to the Underwriters or counsel to the Company, to amend the
Registration Statement or amend or supplement the Prospectus in order
that the Prospectus would not include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or if it is necessary, in the reasonable opinion of
either such counsel, at any time to amend the Registration Statement or
amend or supplement the Prospectus to comply with the Act, the Company
will promptly notify CS First Boston of such event and will promptly
prepare and file with the Commission an amendment or supplement that
will correct such statement or omission or an amendment that will effect
such compliance. Neither CS First Boston's consent to, nor the
Underwriters' delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 6 of
this Agreement.
(d) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
securityholders an earnings statement covering a period of at least 12
months beginning after the Effective Date that will satisfy the
provisions of Section 11(a) of the Act and Rule 158 thereunder. For the
purpose of the preceding sentence, "Availability Date" means the 45th
day after the end of the fourth fiscal quarter following the fiscal
quarter that includes the Effective Date, except that, if such fourth
fiscal quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth
fiscal quarter.
(e) The Company will furnish to CS First Boston copies of the
Registration Statement (at least two of which will be signed and will
include all exhibits and a signed accountant's report of Deloitte &
Touche), each related preliminary prospectus, the Prospectus and all
amendments and supplements to such documents, in each case as soon as
available and in such quantities as CS First Boston reasonably requests.
(f) The Company will arrange for the qualification of the Securities
for sale and the determination of their eligibility for investment under
the laws of such jurisdictions as CS First Boston designates and will
continue such qualifications in effect so long as required for the
distribution thereof.
(g) During the period of five years hereafter, the Company will
furnish to CS First Boston, as soon as practicable after the end of each
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<PAGE> 39
fiscal year, a copy of its annual report to stockholders for such year;
and the Company will furnish to CS First Boston (i) as soon as
available, a copy of each report or definitive proxy statement of the
Company filed with the Commission under the Securities Exchange Act of
1934, as amended, or mailed to stockholders and (ii) from time to time,
such other information concerning the Company as CS First Boston may
reasonably request.
The Company agrees with the Underwriters that the Company will pay all
expenses incident to the performance of its obligations under this Agreement,
and will reimburse the Underwriters for any expenses (including reasonable
fees and disbursements of counsel) incurred by them in connection with the
qualification of the Securities for sale under the laws of such jurisdictions
as CS First Boston designates and the printing of memoranda relating thereto,
for the filing fee of and the related reasonable fees and expenses of counsel
for the Underwriters in connection with any filings required to be made with
the National Association of Securities Dealers, Inc. relating to the
Securities, any fees charged by investment rating agencies for the rating of
the Securities and for expenses incurred in printing and distributing the
Registration Statement, preliminary prospectuses and the Prospectus
(including any amendments and supplements thereto) or related documents.
6. Conditions of the Obligations of the Underwriters. The obligations
of the several Underwriters to purchase and pay for the Securities on the
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company herein, to the accuracy of the
statements of Company officers made pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder and to the following
additional conditions precedent:
(a) CS First Boston shall have received a letter, dated the date of
delivery thereof (which, if the Effective Time is prior to the execution
and delivery of this Agreement, shall be on or prior to the date of this
Agreement or, if the Effective Time is subsequent to the execution and
delivery of this Agreement, shall be prior to the filing of the
amendment or post-effective amendment to the registration statement to
be filed shortly prior to the Effective Time), of Deloitte & Touche
confirming that they are independent public accountants within the
meaning of the Act and the applicable published Rules and Regulations
thereunder and stating in effect that:
(i) in their opinion the financial statements and schedules
examined by them and included or incorporated by reference in the
Registration Statement comply as to form in all material respects
with the applicable accounting requirements of the Act and the
related published Rules and Regulations;
(ii) they have made a review of the unaudited financial
statements included or incorporated by reference in the
Registration Statement in accordance with standards established by
the American Institute of Certified Public Accountants, as
indicated in their report attached to such letter;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial
statements of the Company, a reading of the minutes of all meetings
of the stockholders and directors (including each committee
thereof) of the Company and its subsidiaries, inquiries of
officials of the Company who have responsibility for financial and
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accounting matters and other specified procedures, nothing came to
their attention that caused them to believe that:
(A) the unaudited financial statements included or
incorporated by reference in the Registration Statement do not
comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published
Rules and Regulations or are not in conformity with generally
accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements included or incorporated by reference in the
Registration Statement;
(B) the information set forth under the caption "Selected
Financial Data" in the Prospectus does not agree with the
amounts set forth in the financial statements from which it
was derived or was not determined on a basis substantially
consistent with that of the corresponding amounts in the
audited financial statements included or incorporated by
reference in the Registration Statement;
(C) at the date of the latest available balance sheet read
by such accountants, and at a subsequent specified date not
more than five days prior to the date of such letter, there
was any decrease in stockholders' equity or change in the
capital stock or any increase in short-term indebtedness or
long-term debt of the Company and its consolidated
subsidiaries or, at the date of the latest available balance
sheet read by such accountants, there was any decrease in
consolidated net current assets or total assets, as compared
with amounts shown on the latest balance sheet included in the
Prospectus; or
(D) for the period from the closing date of the latest
income statement included or incorporated by reference in the
Prospectus to the closing date of the latest available income
statement read by such accountants there were any decreases,
as compared with the corresponding period of the previous year
and with the period of corresponding length ended the date of
the latest income statement included or incorporated by
reference in the Prospectus, in merchandise sales, service
revenue, total gross profit or operating profit or in the
total or per share amounts of net earnings, or any increases
or decreases, as the case may be, in other items specified by
the Underwriters;
except in all cases set forth in clauses (C) and (D) above for changes,
increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter;
(iv) they have compared specified dollar amounts (or percentages
derived from such dollar amounts), numerical data and other
financial information contained in the Registration Statement (in
each case to the extent that such dollar amounts, percentages,
numerical data and other financial information are derived from the
general accounting records of the Company and its subsidiaries
subject to the internal controls of the Company's accounting system
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or are derived directly from such records by analysis or
computation) with the results obtained from inquiries, a reading of
such general accounting records and other procedures specified in
such letter and have found such dollar amounts, percentages,
numerical data and other financial information to be in agreement
with such results.
For purposes of this subsection, if the Effective Time is subsequent
to the execution and delivery of this Agreement, "Registration Statement"
shall mean the registration statement as proposed to be amended by the
amendment or post-effective amendment to be filed shortly prior to the
Effective Time, and "Prospectus" shall mean the prospectus included in the
Registration Statement. All financial statements and schedules included in
material incorporated by reference into the Prospectus shall be deemed
included in the Registration Statement for purposes of this subsection.
(b) If the Effective Time is not prior to the execution and delivery
of this Agreement, the Effective Time shall have occurred not later than
10:00 P.M., New York time, on the date of this Agreement or such later
date as shall have been consented to by CS First Boston. If the
Effective Time is prior to the execution and delivery of this Agreement,
the Prospectus shall have been filed with the Commission in accordance
with the Rules and Regulations and Section 5(a) of this Agreement. On or
prior to the Closing Date, no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for
that purpose shall have been instituted or, to the knowledge of the
Company or CS First Boston, shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting particularly the business or
properties of the Company or any of its subsidiaries that, in the
judgment of a majority in interest of the Underwriters including CS
First Boston, materially impairs the investment quality of the
Securities; (ii) any downgrading in the rating of any debt securities of
the Company by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act), or
any public announcement that any such organization has under
surveillance or review its rating of any debt securities of the Company
(other than an announcement with positive implications of a possible
upgrading, and no implications of a possible downgrading, of such
rating); (iii) any suspension or limitation of trading in securities
generally on the New York Stock Exchange, or any setting of minimum
prices for trading on such exchange, or any suspension of trading of any
securities of the Company on any exchange or in the over-the-counter
market; (iv) any banking moratorium declared by Federal or New York
authorities; or (v) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by Congress
or any other substantial national or international calamity or emergency
if, in the judgment of a majority in interest of the Underwriters
including CS First Boston, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable
to proceed with completion of the sale of and payment for the
Securities.
(d) CS First Boston shall have received an opinion, dated the Closing
Date, of Willkie Farr & Gallagher, counsel for the Company, to the
effect that:
(i) Each of the Company and its Significant Subsidiaries has been
duly incorporated and is a validly existing corporation in good
standing under the laws of the jurisdiction of its incorporation,
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with corporate power and authority to own, lease and operate its
properties and conduct its business as described in the
Prospectus; and each of the Company and its Significant
Subsidiaries is duly qualified to transact business as a foreign
corporation in good standing in all other jurisdictions in which
it owns, leases or operates property or in which the conduct of
its business requires such qualification, except to the extent
that the failure to be so qualified or in good standing would not
have a material adverse effect on the Company and its
subsidiaries, taken as a whole; and all of the outstanding shares
of capital stock of the Company's Significant Subsidiaries have
been duly authorized and validly issued, are fully paid and
non-assessable and are owned by the Company, directly or through
subsidiaries, free and clear, to the knowledge of such counsel
after reasonable inquiry, of any mortgage, pledge, lien, claim,
security interest or other encumbrance.
(ii) The authorized and outstanding shares of capital stock of the
Company are as set forth in the Prospectus under the caption
"Capitalization"; and the stockholders of the Company have no
preemptive or similar rights with respect to the capital stock or
any other securities of the Company.
(iii) This Agreement has been duly authorized, executed and delivered
by the Company.
(iv) The Indenture has been duly authorized, executed and delivered by
the Company and has been duly qualified under the Trust Indenture
Act and, assuming due authorization, execution and delivery by
the Trustee, constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms, except to the extent that enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors' rights generally and by
general principles of equity; and the Securities have been duly
authorized, executed and (assuming they have been duly
authenticated in accordance with the terms of the Indenture)
issued, constitute legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their
terms, and are entitled to the benefits provided by the
Indenture, except to the extent that enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to creditors' rights generally and by
general principles of equity; and the Indenture and the
Securities conform in all material respects to the descriptions
thereof contained in the Prospectus.
(v) No consent, approval or authorization, and no order, registration
or qualification of or with any Person or any court or
governmental agency or body is required for the issuance of the
Securities sold by the Company or for the consummation of the
other transactions contemplated by this Agreement, except such as
have been obtained and made under the Act, the Trust Indenture
13
<PAGE> 43
Act or the Rules and Regulations and such as may be required
under state securities laws in connection with the offer and sale
of the Securities.
(vi) The execution, delivery and performance of the Indenture and this
Agreement and the consummation of the transactions herein and
therein contemplated have been duly authorized by all necessary
corporate action on the part of the Company and its subsidiaries
and will not (A) contravene any provision of the charter or
by-laws of the Company or any of its subsidiaries, or (B)
conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default under, or result
in the creation or imposition or encumbrance upon any assets or
property of the Company or any of its subsidiaries under, any
statute, rule, regulation, order or decree of any governmental
agency or body or any court having jurisdiction over the Company
or any of its subsidiaries or any of their properties, or any
indenture, mortgage, loan agreement, note, lease, permit, license
or other agreement or instrument known to such counsel after
reasonable inquiry to which the Company or any such subsidiary is
bound or to which any of the properties of the Company or any
such subsidiary is subject, except, in the case of clause (B), as
would not, singly or in the aggregate, have a material adverse
effect on the condition (financial or other), business,
prospects, results of operations or general affairs of the
Company and its subsidiaries, taken as a whole, or on the
transactions contemplated by this Agreement and the Indenture;
and the Company has full power and authority to authorize, issue
and sell the Securities as contemplated by this Agreement.
(vii) Neither the Company nor any of its Significant Subsidiaries is in
violation of its charter or by-laws or, to the knowledge of such
counsel after reasonable inquiry, any applicable law, ordinance,
administrative or governmental rule or regulation, or any order
of any court or governmental agency or body having jurisdiction
over the Company or any Significant Subsidiary or, to the
knowledge of such counsel after reasonable inquiry, in default in
the performance or observance of any material obligation,
agreement or condition in any agreement or instrument to which
the Company or any of its Significant Subsidiaries is a party or
to which any of the properties or assets of the Company or any
such Significant Subsidiary is subject.
(viii) To the knowledge of such counsel after reasonable inquiry, there
are no pending or threatened actions, suits or proceedings
against or affecting the Company, any of the subsidiaries or any
of their properties that are required under the Act to be
described in the Registration Statement and the Prospectus (other
than as described therein) or that could have a material effect
on the ability of the Company to perform its obligations under
this Agreement, the Indenture or the Securities, or that are
otherwise material in the context of the sale of the Securities.
(ix) To the knowledge of such counsel after reasonable inquiry, there
are no contracts, agreements or understandings between the
14
<PAGE> 44
Company and any third party granting such third party the right
to require the Company to file a registration statement under the
Act with respect to any securities of the Company owned or to be
owned by such third party or to require the Company to include
such securities in the securities registered pursuant to the
Registration Statement or in any other securities being
registered pursuant to any other registration statement filed by
the Company under the Act.
(x) The descriptions in the Registration Statement and the Prospectus
of contracts and other documents are accurate and fairly present
the information required to be shown; and such counsel does not
know of any statutes, regulations or legal or governmental
proceedings required to be described in the Registration
Statement or the Prospectus that are not described as required or
that could materially and adversely affect the ability of the
Company to perform its obligations under the Indenture, the
Securities or this Agreement, or of any contracts or documents of
a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described and filed as
required; it being understood that such counsel need express no
opinion as to the financial statements or other financial data
contained in the Registration Statement or the Prospectus.
(xi) The Registration Statement was declared effective under the Act
as of the date and time specified in such opinion, the Prospectus
either was filed with the Commission pursuant to the subparagraph
of Rule 424(b) specified in such opinion on the date specified
therein or was included in the Registration Statement (as the
case may be) and, to the knowledge of such counsel after
reasonable inquiry, no stop order suspending the effectiveness of
the Registration Statement or any part thereof has been issued
and no proceedings for that purpose have been instituted or are
pending or contemplated under the Act.
(xii) The Registration Statement and the Prospectus, and each
amendment or supplement thereto, as of their respective
effective or issue dates and as of the Closing Date, complied
as to form in all material respects with the requirements of
the Act, the Trust Indenture Act and the Rules and
Regulations.
Such counsel shall also state that such counsel have no reason to
believe that either the Registration Statement at the time the
Registration Statement became effective contained an untrue
statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus or any
amendment or supplement thereto, as of their respective dates and
as of the Closing Date, as the case may be, contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated in the Prospectus or necessary in order to
make the statements in the Prospectus, in light of the
circumstances under which they were made, not misleading; it
15
<PAGE> 45
being understood that such counsel need express no view as to the
financial statements or other financial data contained in the
Registration Statement or the Prospectus.
(e) CS First Boston shall have received from Dewey Ballantine, counsel
for the Underwriters, such opinion or opinions, dated the Closing Date,
with respect to the validity of the Securities, the Registration
Statement, the Prospectus and other related matters as CS First Boston
may require, and the Company shall have furnished to such counsel such
documents or certificates as they reasonably request for the purpose of
enabling them to pass upon such matters.
(f) CS First Boston shall have received a certificate, dated the
Closing Date, of the President and the principal financial officer of
the Company in which such officers, to the best of their knowledge after
reasonable investigation, shall state that (A) the representations and
warranties of the Company in this Agreement are true and correct, (B)
the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or
prior to the Closing Date, (C) no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are contemplated by
the Commission, (D) they have carefully examined the Registration
Statement and the Prospectus and neither the Registration Statement nor
the Prospectus or any amendment or supplement thereto, (i) as of the
Effective Time, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and (ii) as of
their respective issue dates and as of the Closing Date, contained any
untrue statement of a material fact or omitted to state any 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 and (E) subsequent to the dates as of which information is
given in the Registration Statement and the Prospectus, there has been
no material adverse change, nor any development reasonably likely,
singly or in the aggregate, to result in a material adverse change, in
the condition (financial or other), business, prospects, results of
operations or general affairs of the Company and its subsidiaries, taken
as a whole.
(g) CS First Boston shall have received a letter, dated the Closing
Date, of Deloitte & Touche that meets the requirements of subsection (a)
of this Section, except that the specified date referred to in such
subsection will be a date not more than five days prior to the Closing
Date for the purposes of this subsection.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to CS First Boston and counsel for the
Underwriters. The Company will furnish CS First Boston with such conformed
copies of such opinions, certificates, letters and documents as CS First
Boston reasonably requests.
7. Indemnification and Contribution. (a) The Company will indemnify
and hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
16
<PAGE> 46
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action
as such expenses are incurred; provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged
untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through CS First Boston
specifically for use therein, it being understood and agreed that the only
such information furnished by any Underwriter consists of the information
described as such in Section 2(b); and provided, further, that with respect
to any untrue statement or omission or alleged untrue statement or omission
made in any preliminary prospectus, the indemnity agreement contained in this
subsection (a) shall not inure to the benefit of any Underwriter to the
extent that any such loss, claim, damage or liability of such Underwriter
results from the fact that there was not sent or given to such person, if
required by law, at or prior to the written confirmation of the sale of such
Securities to the person asserting any such loss, claim, damage or liability,
a copy of the Prospectus (exclusive of material incorporated by reference
therein) if the Company had previously furnished copies thereof in requisite
quantities to such Underwriter.
(b) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company against any losses, claims, damages or liabilities to
which the Company may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, the
Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by
such Underwriter through CS First Boston specifically for use therein, and
will reimburse any legal or other expenses reasonably incurred by the Company
in connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred, it being understood and
agreed that the only such information furnished by any Underwriter consists
of the information described as such in Section 2(b).
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against an indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party otherwise than under subsection (a) or (b) above, except to the extent
that the omission so to notify the indemnifying party actually prejudices the
indemnifying party's ability to defend the action. In case any such action is
brought against any indemnified party and it notifies an indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, to assume the
defense thereof, with counsel satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to
the indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
17
<PAGE> 47
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by
such indemnified party unless such settlement includes an unconditional
release of such indemnified party from all liability on any claims that are
the subject matter of such action.
(d) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above, then the indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages
or liabilities referred to in subsection (a) or (b) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other from the offering
of the Securities or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Underwriters
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities as well as any other relevant
equitable considerations. The relative benefits received by the Company on
the one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts
and commissions received by the Underwriters. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Securities underwritten by it
and distributed to the public were offered to the public exceeds the amount
of any damages which such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act; and the obligations
of the Underwriters under this Section shall be in addition to any liability
which the respective Underwriters may otherwise have and shall extend, upon
the same terms and conditions, to each director of the Company, to each
officer of the Company who has signed the Registration Statement and to each
person, if any, who controls the Company within the meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters default
in their obligations to purchase Securities hereunder on the Closing Date and
the aggregate principal amount of Securities that such defaulting Underwriter
or Underwriters agreed but failed to purchase does not exceed 10% of the
total principal amount of Securities that the Underwriters are obligated to
purchase on the Closing Date, CS First Boston may make arrangements
satisfactory to the Company for the purchase of such Securities by other
18
<PAGE> 48
persons, including any of the Underwriters, but if no such arrangements are
made by the Closing Date, the non-defaulting Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to
purchase the Securities that such defaulting Underwriters agreed but failed
to purchase on the Closing Date. If any Underwriter or Underwriters so
default and the aggregate principal amount of Securities with respect to
which such default or defaults occur exceeds 10% of the total principal
amount of Securities that the Underwriters are obligated to purchase on the
Closing Date and arrangements satisfactory to CS First Boston and the Company
for the purchase of such Securities by other persons are not made within 36
hours after such default, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter or the Company, except as provided
in Section 9. As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section. Nothing herein will
relieve a defaulting Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of
the Company or its officers and of the several Underwriters set forth in or
made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation, or statement as to the results thereof, made
by or on behalf of any Underwriter, the Company or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Securities. If this Agreement is
terminated pursuant to Section 8 or if for any reason the purchase of the
Securities by the Underwriters is not consummated, the Company shall remain
responsible for the expenses to be paid or reimbursed by it pursuant to
Section 5 and the respective obligations of the Company and the Underwriters
under Section 7 shall remain in effect, and if any Securities have been
purchased hereunder the representations and warranties in Section 2 and all
obligations under Section 5 shall also remain in effect. If the purchase of
the Securities by the Underwriters is not consummated for any reason other
than solely because of the termination of this Agreement pursuant to Section
8 or the occurrence of any event specified in clause (iii), (iv) or (v) of
Section 6(c), the Company will reimburse the Underwriters for all
out-of-pocket expenses (including fees and disbursements of counsel)
reasonably incurred by them in connection with the offering of the
Securities.
10. Notices. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and
confirmed to CS First Boston at Park Avenue Plaza, New York, N.Y. 10055,
Attention: Investment Banking Department - Transactions Advisory Group, or,
if sent to the Company, will be mailed, delivered or telegraphed and
confirmed to it at The Pep Boys -- Manny, Moe & Jack, 3111 West Allegheny
Avenue, Philadelphia, Pennsylvania, 19132, Attention: Chief Financial
Officer; provided, however, that any notice to an Underwriter pursuant to
Section 7 will be mailed, delivered or telegraphed and confirmed to such
Underwriter.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective personal representatives
and successors and the officers and directors and controlling persons
referred to in Section 7, and no other person will have any right or
obligation hereunder.
12. Representation of Underwriters. CS First Boston will act for the
several Underwriters in connection with this financing, and any action under
this Agreement taken by CS First Boston will be binding upon all the
Underwriters.
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<PAGE> 49
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. Applicable Law; Consent to Jurisdiction. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York, without regard to principles of conflicts of laws. The Company hereby
submits to the non-exclusive jurisdiction of the Federal and state courts in
the Borough of Manhattan in The City of New York in any suit or proceeding
arising out of or relating to this Agreement or the transactions
contemplated hereby.
20
<PAGE> 50
If the foregoing is in accordance with CS First Boston's understanding
of our agreement, kindly sign and return to us one of the counterparts
hereof, whereupon it will become a binding agreement among the Company and
the several Underwriters in accordance with its terms.
Very truly yours,
THE PEP BOYS -- MANNY, MOE & JACK
By
--------------------------------------------
Name: Michael J. Holden
Title: Senior Vice President - Finance
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
CS FIRST BOSTON CORPORATION
By
-------------------------
Name: Andrew R. Taussig
Title: Managing Director
Acting on behalf of itself and as the
Representative of the several Underwriters.
21
<PAGE> 51
SCHEDULE A
Principal Amount
Underwriter of Securities
----------- -----------------
CS First Boston Corporation . . . . . . . . . . . $
------------
Total . . . . . . . . . . . . . . . . . . . . . $100,000,000
============
22
<PAGE> 52
SCHEDULE B
Significant Subsidiaries of the Company
---------------------------------------
The Pep Boys -- Manny, Moe & Jack of California
Pep Boys -- Manny, Moe & Jack of Delaware, Inc.
Pep Boys -- Manny, Moe & Jack of Puerto Rico, Inc.
Colchester Insurance Company
23
<PAGE> 53
Draft of June 6, 1995
===============================================================================
THE PEP BOYS-MANNY, MOE & JACK,
Issuer
------
TO
FIRST FIDELITY BANK, NATIONAL ASSOCIATION,
Trustee
------------------------
INDENTURE
Dated as of June __, 1995
$100,000,000
__% Notes Due 2005
===============================================================================
<PAGE> 54
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION. . . . . . . . . 1
SECTION 101. Definitions . . . . . . . . . . . . . . . . . . . . . 1
SECTION 102. Compliance Certificates and Opinions. . . . . . . . . 11
SECTION 103. Form of Documents Delivered to Trustee. . . . . . . . 12
SECTION 104. Acts of Holders . . . . . . . . . . . . . . . . . . . 13
SECTION 105. Notices, Etc., to Trustee and Company . . . . . . . . 14
SECTION 106. Notice to Holders; Waiver . . . . . . . . . . . . . . 14
SECTION 107. Conflict with Trust Indenture Act . . . . . . . . . . 15
SECTION 108. Effect of Headings and Table of Contents. . . . . . . 15
SECTION 109. Successors and Assigns. . . . . . . . . . . . . . . . 15
SECTION 110. Separability Clause . . . . . . . . . . . . . . . . . 15
SECTION 111. Benefits of Indenture . . . . . . . . . . . . . . . . 15
SECTION 112. Governing Law . . . . . . . . . . . . . . . . . . . . 15
SECTION 113. Legal Holidays. . . . . . . . . . . . . . . . . . . . 16
ARTICLE II
SECURITY FORM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 201. Form Generally. . . . . . . . . . . . . . . . . . . . 16
SECTION 202. Form of Face of Security. . . . . . . . . . . . . . . 16
SECTION 203. Form of Reverse of Security . . . . . . . . . . . . . 19
SECTION 204. Form of Trustee's Certificate of Authentication . . . 20
ARTICLE III
THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 301. Title and Terms . . . . . . . . . . . . . . . . . . . 22
SECTION 302. Denominations . . . . . . . . . . . . . . . . . . . . 22
SECTION 303. Execution, Authentication, Delivery and Dating. . . . 23
SECTION 304. Temporary Securities. . . . . . . . . . . . . . . . . 24
SECTION 305. Registration, Registration of Transfer and Exchange. 24
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities. . . 26
SECTION 307. Payment of Interest; Interest Rights Preserved. . . . 27
SECTION 308. Persons Deemed Owners . . . . . . . . . . . . . . . . 29
SECTION 309. Cancellation. . . . . . . . . . . . . . . . . . . . . 29
SECTION 310. Computation of Interest . . . . . . . . . . . . . . . 29
ARTICLE IV.
SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 401. Satisfaction and Discharge of Indenture . . . . . . . 30
SECTION 402. Application of Trust Funds; Indemnification . . . . . 31
SECTION 403. Satisfaction, Discharge and Defeasance of Securities. 32
i
<PAGE> 55
ARTICLE V
REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 501. Events of Default . . . . . . . . . . . . . . . . . . 33
SECTION 502. Acceleration of Maturity; Recision and Annulment. . . 35
SECTION 503. Collection of Indebtedness and Suits for Enforcement
by Trustee. . . . . . . . . . . . . . . . . . . . . . 36
SECTION 504. Trustee May File Proofs of Claim. . . . . . . . . . . 37
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities. . . . . . . . . . . . . . . . . . . . . . 38
SECTION 506. Application of Money Collected. . . . . . . . . . . . 38
SECTION 507. Limitation on Suits.. . . . . . . . . . . . . . . . . 39
SECTION 508. Unconditional Right of Holders to Receive Principal
and Interest. . . . . . . . . . . . . . . . . . . . . 40
SECTION 509. Restoration of Rights and Remedies. . . . . . . . . . 40
SECTION 510. Rights and Remedies Cumulative. . . . . . . . . . . . 40
SECTION 511. Delay or Omission Not Waiver. . . . . . . . . . . . . 40
SECTION 512. Control by Holders. . . . . . . . . . . . . . . . . . 41
SECTION 513. Waiver of Past Defaults.. . . . . . . . . . . . . . . 41
SECTION 514. Undertaking for Costs.. . . . . . . . . . . . . . . . 42
SECTION 515. Waiver of Stay or Extension Laws. . . . . . . . . . . 42
ARTICLE VI
THE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 601. Certain Duties and Responsibilities.. . . . . . . . . 42
SECTION 602. Notice of Defaults. . . . . . . . . . . . . . . . . . 44
SECTION 603. Certain Rights of Trustee . . . . . . . . . . . . . . 44
SECTION 604. Not Responsible for Recitals or Issuance of
Securities. . . . . . . . . . . . . . . . . . . . . . 45
SECTION 605. May Hold Securities . . . . . . . . . . . . . . . . . 46
SECTION 606. Money Held in Trust.. . . . . . . . . . . . . . . . . 46
SECTION 607. Compensation and Reimbursement. . . . . . . . . . . . 46
SECTION 608. Disqualification; Conflicting Interests.. . . . . . . 47
SECTION 609. Corporate Trustee Required; Eligibility . . . . . . . 47
SECTION 610. Resignation and Removal; Appointment of Successor . . 47
SECTION 611. Acceptance of Appointment by Successor. . . . . . . . 49
SECTION 612. Merger, Conversion, Consolidation
or Succession to Business . . . . . . . . . . . . . . 49
SECTION 613. Preferential Collection of Claims Against Company . . 50
SECTION 614. Appointment of Authenticating Agent . . . . . . . . . 55
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY. . . . . . . . . . . . 56
SECTION 701. Company to Furnish Trustee Names and Addresses of
Holders . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 702. Preservation of Information; Communications to
Holders . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 703. Reports by Trustee. . . . . . . . . . . . . . . . . . 57
SECTION 704. Reports by Company. . . . . . . . . . . . . . . . . . 59
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE . . . . . . . . . . 60
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms. 60
SECTION 802. Successor Corporation Substituted.. . . . . . . . . . 61
ii
<PAGE> 56
ARTICLE IX
SUPPLEMENTAL INDENTURES. . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 901. Supplemental Indentures Without Consent of Holders. . 62
SECTION 902. Supplemental Indentures with Consent of Holders.. . . 62
SECTION 903. Execution of Supplemental Indentures. . . . . . . . . 63
SECTION 904. Effect of Supplemental Indentures.. . . . . . . . . . 63
SECTION 905. Conformity with Trust Indenture Act.. . . . . . . . . 64
SECTION 906. Reference in Securities to Supplemental Indentures. . 64
ARTICLE X
COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 1001. Payment of Principal and Interest.. . . . . . . . . . 64
SECTION 1002. Maintenance of Office or Agency.. . . . . . . . . . . 64
SECTION 1003. Money for Securities Payments to Be Held in Trust . . 65
SECTION 1004. Corporate Existence.. . . . . . . . . . . . . . . . . 66
SECTION 1005. [Intentionally Omitted].. . . . . . . . . . . . . . . 67
SECTION 1006. [Intentionally Omitted].. . . . . . . . . . . . . . . 67
SECTION 1007. Limitation Upon Liens.. . . . . . . . . . . . . . . . 67
SECTION 1008. Limitation Upon Sale and Leaseback Transactions . . . 69
SECTION 1009. Limitations Upon Permitting Restricted Subsidiaries
to become Non-Restricted Subsidiaries and
Non-Restricted Subsidiaries to become Restricted
Subsidiaries. . . . . . . . . . . . . . . . . . . . . 70
SECTION 1010. Defeasance of Certain Obligations . . . . . . . . . . 70
SECTION 1011. Waiver of Certain Covenants . . . . . . . . . . . . . 71
ARTICLE XI
REDEMPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 1101. No Right of Redemption. . . . . . . . 72
iii
<PAGE>
THE PEP BOYS-MANNY, MOE & JACK
Reconciliation and tie between Trust Indenture Act of 1939 and
Indenture, dated as of June ___, 1995
Trust Indenture Indenture
Act Section Section
Section 310(a)(1) . . . . . . . . . . . . . . . . . . 609
(a)(2) . . . . . . . . . . . . . . . . . . 609
(a)(3) . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . 608, 610
Section 311(a) . . . . . . . . . . . . . . . . . . 613(a)
(b) . . . . . . . . . . . . . . . . . . 613(b)
Section 312(a) . . . . . . . . . . . . . . . . . . 701, 702(a)
(b) . . . . . . . . . . . . . . . . . . 702(b)
(c) . . . . . . . . . . . . . . . . . . 702(c)
Section 313(a) . . . . . . . . . . . . . . . . . . 703(a)
(b) . . . . . . . . . . . . . . . . . . 703(b)
(c) . . . . . . . . . . . . . . . . . . 703(a), 703(b)
(d) . . . . . . . . . . . . . . . . . . 703(c)
Section 314(a) . . . . . . . . . . . . . . . . . . 704
(b) . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . 102
Section 315(a) . . . . . . . . . . . . . . . . . . 601(a)
(b) . . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . . 601(b)
(d) . . . . . . . . . . . . . . . . . . 601(c)
(d)(1) . . . . . . . . . . . . . . . . . . 601(a)(1), 601(c)(1)
(d)(2) . . . . . . . . . . . . . . . . . . 601(c)(2)
(d)(3) . . . . . . . . . . . . . . . . . . 601(c)(3)
(e) . . . . . . . . . . . . . . . . . . 514
Section 316(a)(1)(A). . . . . . . . . . . . . . . . . . 502, 512
(a)(1)(B). . . . . . . . . . . . . . . . . . 513
(a)(2) . . . . . . . . . . . . . . . . . . Not Required
(b) . . . . . . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . . . . . . 512
Section 317(a)(1) . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . 1003
Section 318(a) . . . . . . . . . . . . . . . . . . 107
- ------------------------
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
iv
<PAGE> 57
INDENTURE, dated as of June __, 1995, between The Pep Boys-Manny, Moe
& Jack, a corporation duly organized and existing under the laws of the
Commonwealth of Pennsylvania (herein called the "Company"), having its
principal office at 3111 West Allegheny Avenue, Philadelphia, Pennsylvania
19132, and First Fidelity Bank, National Association, Philadelphia,
Pennsylvania, as Trustee (herein called the "Trustee").
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions
-----------
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with
respect to any computation required or permitted hereunder shall mean
such accounting principles as are generally accepted at the date of such
computation; and
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
"Act" when used with respect to any Holder, has the meaning specified
in Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
<PAGE> 58
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Attributable Debt" means in respect of a Sale and Leaseback
Transaction referred to in Section 1008, at the time of determination, the
present value (discounted at the actual rate of interest of such transaction)
of the obligation of the lessee for net rental payments during the remaining
term of the lease included in such arrangement (including any period for
which such lease has been extended or may, at the option of the lessor, be
extended). The term "net rental payments" under any lease for any period
shall mean the sum of the rental and other payments required to be paid in
such period by the lessee thereunder, not including, however, any amounts
required to be paid by such lessee (whether or not designated as rental or
additional rental) on account of maintenance and repairs, insurance, taxes,
assessments, water rates or similar charges required to be paid by such
lessee thereunder or any amounts required to be paid by such lessee
thereunder contingent upon the amount of sales, maintenance and repairs,
insurance, taxes, assessments, water rates or similar charges.
"Authenticating Agent" means any Person authorized by the Trustee to
act on behalf of the Trustee to authenticate Securities.
"Authorized Newspaper" means a newspaper of general circulation in the
relevant area, printed in the English language and customarily published on
each Business Day, whether or not published on Saturdays, Sundays or
holidays. Whenever successive weekly publications in an Authorized Newspaper
are required hereunder they may be made (unless otherwise expressly provided
herein) on the same or different days of the week and in the same or in
different Authorized Newspapers.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board to which the powers of
that board have been lawfully delegated.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of
such certification, and delivered to the Trustee.
2
<PAGE> 59
"Business Day", when used with respect to any place of payment
designated pursuant to Section 1002, means any day which is not a Saturday, a
Sunday, or a day on which banks and trust companies in that place of payment
are authorized or obligated by law, regulation or executive order to remain
closed.
"Capital Lease" means any lease of property which, in accordance with
generally accepted accounting principles, should be capitalized on the
lessee's balance sheet or for which the amount of the asset and liability
thereunder as if so capitalized should be disclosed in a note to such balance
sheet; and "Capitalized Lease Obligation" means the amount of the liability
which should be so capitalized or disclosed.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934,
or, if at any time after the execution of this instrument such Commission is
not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
"Company Request" or "Company Order" means, respectively, a written
request or order signed in the name of the Company by its Chairman of the
Board, its President or a Vice President, and by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
"Consolidated" when used with respect to any of the terms defined
herein refers to such terms as reflected in a consolidation of the accounts
of the Company and its Restricted Subsidiaries in accordance with generally
accepted accounting principles.
"Corporate Trust Office" means the principal office of the Trustee in
Philadelphia, Pennsylvania, at which at any particular time its corporate
trust business shall be administered.
"corporation" includes corporations, associations, companies and
business trusts.
3
<PAGE> 60
"Default" means any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.
"Defaulted Interest" has the meaning specified in Section 307.
"Depositary" means, with respect to the Securities issuable or issued
in whole or in part in the form of one or more Global Securities, initially
The Depository Trust Company, a limited-purpose trust company organized under
the Banking Law of the State of New York ("DTC"), or any successor Depositary
which shall succeed DTC pursuant to the applicable provisions of Article III
of this Indenture.
"Event of Default" has the meaning specified in Section 501.
"Exempted Debt" means the sum of the following items outstanding as of
the date Exempted Debt is being determined: (i) Indebtedness for money
borrowed of the Company and its Restricted Subsidiaries incurred after the
date of this Indenture and secured by liens created or assumed or permitted
to exist pursuant to Section 1007(b) (excluding Indebtedness incurred in
connection with pollution control financings and industrial revenue bond
financings), and (ii) Attributable Debt of the Company and its Restricted
Subsidiaries in respect of all Sale and Leaseback Transactions entered into
pursuant to Section 1008(b).
"Funded Debt" of any Person means Indebtedness, whether incurred,
assumed or guaranteed, maturing by its terms more than one year from the date
of creation thereof or which is extendable or renewable at the sole option of
the obligor in such manner that it may become payable more than one year from
the date of creation thereof.
"Global Security" means a Security evidencing all or part of the
Securities, issued to the Depositary or its nominee and registered in the
name of such Depositary or nominee.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indebtedness" of any Person means, without duplication, indebtedness
for borrowed money and all indebtedness under purchase money mortgages or
other purchase money liens or conditional sales or similar title retention
agreements, in each case where such indebtedness has been created, incurred,
assumed or guaranteed by such Person or where such Person is otherwise liable
4
<PAGE>
therefor, and indebtedness for borrowed money secured by any mortgage, pledge
or other lien or encumbrance upon property owned by such Person, even though
such Person has not assumed or become liable for the payment of such
indebtedness.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
including, for all purposes of this instrument, the provisions of the Trust
Indenture Act that are deemed to be a part of and govern this instrument.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Security.
"Investment" means and includes any investment in stock, evidences of
indebtedness, loans or advances, however made or acquired, but shall not
include accounts receivable of the Company or of any Restricted Subsidiary
arising from transactions in the ordinary course of business, or any
evidences of indebtedness, loans or advances made in connection with the sale
to any Restricted Subsidiary of accounts receivable of the Company or any
Restricted Subsidiary arising from transactions in the ordinary course of
business of the Company or any Restricted Subsidiary.
"Net Tangible Assets" of any Person means the total amount of assets
(less depreciation and valuation reserves and other reserves and items
deductible from the gross book value of specific asset accounts under
generally accepted accounting principles) which under generally accepted
accounting principles would be included on a balance sheet, after deducting
therefrom (i) all liability items except Funded Debt, Capitalized Lease
Obligations, stockholders' equity and reserves for deferred income taxes, and
(ii) all goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangibles, which in each such case
would be so included on such balance sheet.
"Non-Restricted Subsidiary" means (i) any Subsidiary which, subject to
Section 1009, shall be designated by the Board of Directors or by duly
authorized officers of the Company as a Non-Restricted Subsidiary, and (ii)
any other Subsidiary of which the majority of the voting stock is owned
directly or indirectly by one or more Non-Restricted Subsidiaries.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the President or a Vice President, and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company,
and delivered to the Trustee.
5
<PAGE> 61
"Operating Assets" means all merchandise inventories, furniture,
fixtures and equipment (including all transportation and warehousing
equipment but excluding office equipment and data processing equipment) owned
or leased pursuant to Capital Leases by the Company or a Restricted
Subsidiary.
"Operating Property" means all real property and improvements thereon
owned or leased pursuant to Capital Leases by the Company or a Restricted
Subsidiary constituting, without limitation, any store, warehouse, service
center or distribution center wherever located, provided that such term shall
not include any store, warehouse, service center or distribution center which
the Company's Board of Directors declares by resolution not to be of material
importance to the business of the Company and its Restricted Subsidiaries.
Operating Property is treated as having been "acquired" on the date the
Operating Property is placed in operation by the Company or a Restricted
Subsidiary after the later of (a) its acquisition from a third party,
including a Non-Restricted Subsidiary, (b) completion of its original
construction or (c) completion of its substantial reconstruction, renovation,
remodeling or expansion (whether or not constituting an Operating Property
prior to such reconstruction, renovation, remodeling or expansion).
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, and who shall be reasonably acceptable to the
Trustee.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities for whose payment money in the necessary amount has
been theretofore deposited with the Trustee or any Paying Agent (other
than the Company) in trust or set aside and segregated in trust by the
Company (if the Company shall act as its own Paying Agent) for the
Holders of such Securities; and
(iii) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
6
<PAGE> 62
the Trustee proof satisfactory to it that such Securities are held by a
bona fide purchaser in whose hands such Securities are valid obligations
of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Securities owned by the Company or any other obligor upon the Securities or
any Affiliate of the Company or of such other obligor shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which
the Trustee knows to be so owned shall be so disregarded. Securities so owned
which have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the Pledgee's right so
to act with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor.
"Paying Agent" means the Company or any Person authorized by the
Company to pay the principal of or interest on any Securities on behalf of
the Company.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
"Predecessor Security" of any Security means every previous Security
evidencing all or a portion of the same debt as that evidenced by such
Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities means the date specified for that purpose as
contemplated by Section 301.
"Responsible Officer", when used with respect to the Trustee, means
any officer within the Corporate Trust Office (or any successor group of the
Trustee) including any vice president, any assistant vice president, or any
other officer of the Trustee customarily performing functions similar to
7
<PAGE> 63
those performed by any of the above designated officers and also means, with
respect to a particular trust matter, any other officer to whom such matter
is referred because of his knowledge of and familiarity with the particular
subject.
"Restricted Subsidiary" means any Subsidiary of which the majority of
voting stock is owned by the Company; provided, however, that the Board of
Directors or duly authorized officers of the Company may, subject to and in
accordance with Section 1009, designate any Non-Restricted Subsidiary as a
Restricted Subsidiary and any Restricted Subsidiary as a Non-Restricted
Subsidiary.
"Securities" means the __% Notes Due 2005 of the Company authenticated
and delivered under this Indenture.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Senior Funded Debt" means all Funded Debt except Subordinated Funded
Debt.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to the Securities or any
installment of principal thereof or interest thereon, means the date
specified in the Security as the fixed date on which the principal of the
Security or such installment of principal or interest is due and payable.
"Subordinated Funded Debt" means any unsecured Indebtedness of the
Company which is expressly made subordinate and junior in rank and right of
payment to the Securities and such other Indebtedness of the Company as may
be specified or characterized in the instruments evidencing the Subordinated
Funded Debt or the indenture or other similar instrument under which it is
issued (which indenture or other instrument shall be binding on all holders
of such Subordinated Funded Debt) (the Securities and any other Indebtedness
of the Company to which the Subordinated Funded Debt is subordinate and
junior being hereinafter in this paragraph called "Superior Debt") by
provisions not substantially more favorable to the holders of the
Subordinated Funded Debt than the following:
(i) in the event of any insolvency or bankruptcy proceedings, any
receivership, liquidation, reorganization or other similar proceedings
in connection therewith, relative to the Company or to its creditors, as
such, or to its property, and in the event of any proceedings for
voluntary liquidation, dissolution or other winding up of the Company,
8
<PAGE> 64
whether or not involving insolvency or bankruptcy, then the holders of
Superior Debt shall be entitled to receive payment in full of all
principal and interest on all Superior Debt before the holders of the
Subordinated Funded Debt are entitled to receive any payment on account
of principal or interest upon the Subordinated Funded Debt, and to that
end (but subject to the power of a court of competent jurisdiction to
make other equitable provisions reflecting the rights conferred by the
provisions of the Subordinated Funded Debt upon the Superior Debt and
the holders thereof with respect to the Subordinated Funded Debt and the
holders thereof by a lawful plan or reorganization under applicable
bankruptcy or insolvency law) the holders of Superior Debt shall be
entitled to receive for application in payment thereof any payment or
distribution of any kind or character, whether in cash or property or
securities or by set-off or otherwise, which may be payable or
deliverable in any such proceedings in respect of the Subordinated
Funded Debt, except securities which are subordinate and junior in right
of payment to the payment of all Superior Debt then outstanding;
(ii) in the event that any Subordinated Funded Debt is declared due
and payable before its expressed maturity because of the occurrence of
an event of default with respect to such Subordinated Funded Debt (under
circumstances when the provisions of the foregoing clause (i) shall not
be applicable), the holders of the Superior Debt outstanding, at the
time such Subordinated Funded Debt so becomes due and payable because of
such occurrence of such an event of default, shall be entitled to
receive payment in full of all principal and interest on all Superior
Debt before the holders of such Subordinated Funded Debt are entitled to
receive any payment on account of the principal or interest upon such
Subordinated Funded Debt except payments at the expressed maturity of
such Subordinated Funded Debt, current interest payments as provided in
such Subordinated Funded Debt, payments pursuant to any mandatory
sinking fund (or analogous provision) in respect of such Subordinated
Funded Debt, and payments for the purpose of curing any such event of
default;
(iii) in the event that (x) there shall have occurred a default in the
payment of the principal of or interest on any Superior Debt, or (y)
there shall have occurred any other event of default with respect to any
Superior Debt permitting the holders thereof to accelerate the maturity
thereof and if written notice thereof shall have been given to the
Company by a holder or holders of such Superior Debt or their
representative or representatives or trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such
Superior Debt may have been issued, or (z) the payment hereinafter
referred to would itself constitute an event of default with respect to
9
<PAGE> 65
any Superior Debt, then, in any such case, unless or until such event of
default shall have been cured or waived or shall have ceased to exist,
no payment shall be made by the Company on account of principal of or
interest on any Subordinated Funded Debt (whether pursuant to any
sinking fund or otherwise) or on account of the purchase or other
acquisition of any Subordinated Funded Debt; and
(iv) no holder of Superior Debt or trustee for such holder shall be
prejudiced in his or her right to enforce subordination of the
Subordinated Funded Debt by any act or failure to act on the part of the
Company;
provided, however, that the Subordinated Funded Debt may provide that the
foregoing provisions are solely for the purposes of defining the relative
rights of the holders of Superior Debt on the one hand, and the holders of
the Subordinated Funded Debt on the other hand, and that nothing therein
shall impair, as between the Company and the holders of the Subordinated
Funded Debt, the obligation of the Company, which is unconditional and
absolute, to pay to the holders thereof the principal thereof and interest
thereon in accordance with its terms, nor shall anything therein prevent the
holders of the Subordinated Funded Debt from exercising all remedies
otherwise permitted by applicable law or thereunder upon default thereunder,
subject to the rights under clauses (i), (ii) and (iii) above of holders of
Superior Debt to receive cash, property or securities otherwise payable or
deliverable to the holders of the Subordinated Funded Debt; and provided,
further, that the Subordinated Funded Debt may provide that, insofar as a
trustee or paying agent for such Subordinated Funded Debt is concerned, the
foregoing provisions shall not prevent the application by such trustee or
paying agent of any moneys deposited with such trustee or paying agent for
the purpose of the payment of or on account of the principal and interest on
such Subordinated Funded Debt if such trustee or paying agent did not have
knowledge at the time of such application that such payment was prohibited by
the foregoing provisions.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by
one or more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means stock
10
<PAGE> 66
which ordinarily has voting power for the election of directors, whether at
all times or only so long as no senior class of stock has such voting power
by reason of any contingency.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each such Person who is then a Trustee
hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as in
force at the date as of which this instrument was executed, except as
provided in Section 905; provided that in the event the Trust Indenture Act
of 1939 is amended after such date, "Trust Indenture Act" means, to the
extent required by such amendment, the Trust Indenture Act of 1939 as so
amended.
"U.S. Government Obligations" means direct obligations of the United
States for the payment of which its full faith and credit is pledged, or
obligations of a person controlled or supervised by and acting as an agency
or instrumentality of the United States and the payment of which is
unconditionally guaranteed by the United States.
"Vice President" when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
SECTION 102. Compliance Certificates and Opinions.
-------------------------------------
Except as otherwise expressly provided by this Indenture, upon any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all
such conditions precedent, if any, have been complied with, except that in
the case of any such application or request as to which the furnishing of
such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate
or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than certificates
provided pursuant to Section 704(4)) shall include:
11
<PAGE> 67
(1) a statement that each such individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
---------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate of
opinion is based are erroneous. Any such certificate or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company
stating that the information with respect to such factual matters is in the
possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
12
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Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments, under this Indenture, they may, but need not, be consolidated
and form one Instrument.
SECTION 104. Acts of Holders.
----------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 601) conclusive in
favor of the Trustee and the Company, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized
by law to take acknowledgements of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the execution thereof.
Where such execution is by a signer acting in a capacity other than his
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the execution of any
such instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems
sufficient.
(c) The ownership of Securities shall be proved by the Security
Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every further
Holder of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof
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<PAGE> 69
in respect of anything done, omitted or suffered to be done by the Trustee or
the Company in reliance thereon, whether or not notation of such action is
made upon such Security.
SECTION 105. Notices, Etc., to Trustee and Company.
--------------------------------------
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture
to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in
writing (and, where specified, in the form so specified) to or with the
Trustee at its Corporate Trust Office, Attention: Corporate Trust
Administration Department, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this instrument or at any other address previously
furnished in writing to the Trustee by the Company.
SECTION 106. Notice to Holders; Waiver.
--------------------------
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each
Holder affected by such event, at his address as it appears in the Security
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not
be a condition precedent to the validity of any action taken in reliance upon
such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the
Trustee shall constitute a sufficient notification for every purpose
hereunder.
14
<PAGE> 70
In case, by reason of suspension of publication of any Authorized
Newspaper, or by reason of any other cause, it shall be impossible to make
publication of any notice in an Authorized Newspaper or Authorized Newspapers
as required by this Indenture, then such method of publication or
notification as shall be made with the approval of the Trustee shall
constitute a sufficient publication of such notice.
SECTION 107. Conflict with Trust Indenture Act.
----------------------------------
If any provision hereof limits, qualifies or conflicts with the duties
imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such
imposed duties shall control.
SECTION 108. Effect of Headings and Table of Contents.
-----------------------------------------
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
-----------------------
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
--------------------
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 111. Benefits of Indenture.
----------------------
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
and assigns hereunder and the Holders, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 112. Governing Law.
--------------
This Indenture and the Securities shall be governed by and construed
in accordance with the laws of the State of New York, without regard to
principles of conflicts of laws as applied in such state.
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<PAGE> 71
SECTION 113. Legal Holidays.
---------------
In any case where any Interest Payment Date or Stated Maturity of any
Security shall not be a Business Day at any place of payment designated
pursuant to Section 1002, then (notwithstanding any other provision of this
Indenture or of the Securities) payment of interest or principal need not be
made at such place of payment on such date, but may be made on the next
succeeding Business Day at such place of payment with the same force and
effect as if made on the Interest Payment Date, or at the Stated Maturity,
provided that no interest shall accrue for the period from and after such
Interest Payment Date or Stated Maturity, as the case may be.
ARTICLE II
SECURITY FORM
SECTION 201. Form Generally.
---------------
The Securities shall be in substantially the form set forth in this
Article, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of
any securities exchange or as may, consistently herewith, be determined by
the officers executing such Securities, as evidenced by their execution of
the Securities.
The Trustee's certificates of authentication shall be in substantially
the form set forth in this Article.
The Securities shall be typed, printed, lithographed, photocopied or
engraved or produced in any other manner, all as determined by the officers
executing such Securities, as evidenced by their section of such Securities.
SECTION 202. Form of Face of Security.
-------------------------
The form of the face of the Global Securities shall be as set forth
below; (If a Security is issued in definitive form, the form of such
definitive security will be identical to the form of the face of the Global
Security, except that the three legends appearing immediately beneath the
title of the Security shall be omitted):
16
<PAGE> 72
THE PEP BOYS - MANNY, MOE & JACK
--% Notes Due 2005
THIS NOTE IS A REGISTERED GLOBAL NOTE AND IS REGISTERED IN THE NAME
OF CEDE & CO., AS NOMINEE OF THE DEPOSITORY TRUST COMPANY ("DTC").
UNLESS THIS REGISTERED GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE REGISTERED FORM, THIS REGISTERED GLOBAL NOTE MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE OF DTC, OR BY A NOMINEE OF
DTC TO DTC OR ANOTHER NOMINEE OF DTC, OR BY DTC OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
No. ________________ $______________
CUSIP NO. __________
The Pep Boys-Manny, Moe & Jack, a corporation duly organized and existing
under the laws of the Commonwealth of Pennsylvania (herein called the
"Company", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
____________________, or registered assigns, the principal sum of
____________________ Dollars on ________ __, 2005, and to pay interest
thereon from ________________ or from the most recent Interest Payment Date
to which interest has been paid or duly provided for, semiannually on
_________ and _____ __, in each year, commencing___________________________
___________ ____at the rate of __% per annum, until the principal hereof is
paid or made available for payment. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which shall be the__________ or
__________ (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date. Any such interest not so punctually
paid or duly provided for will forthwith cease to be payable to the Holder on
such Regular Record Date and may either be paid to the Person in whose name
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<PAGE> 73
this Security (or one or more Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders
not less than 10 days prior to such Special Record Date, or be paid at any
time in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in
said Indenture.
Payment of the principal of and interest on this Security will be made
at the office or agency of the Company maintained for that purpose in the
Borough of Manhattan, the City of New York, or at any other office or agency
maintained by the Company for such purpose, in such coin or currency of the
United States of America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that at the option of
the Company, payment of interest may be made by check mailed to the address
of the Person entitled thereto as such address shall appear in the Security
Register.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
THE PEP BOYS-MANNY, MOE & JACK
By_____________________________________
Attest:
_________________________
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<PAGE> 74
SECTION 203. Form of Reverse of Security.
----------------------------
The form of the reverse of the Securities shall be as set forth below:
This Security is one of a duly authorized issue of securities of the
Company designated as its __% Notes Due 2005 (herein called the "Securities")
limited in aggregate principal amount to $100,000,000, issued and to be
issued under an Indenture, dated as of June __, 1995 (herein called the
"Indenture"), between the Company and First Fidelity Bank, National
Association, as Trustee (herein called the "Trustee", which term includes any
successor Trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties, obligations and immunities
thereunder of the Company, the Trustee and the Holders of the Securities and
of the terms upon which the Securities are, and are to be, authenticated and
delivered.
The Indenture contains provisions for defeasance of (a) the entire
indebtedness of this Security and (b) certain restrictive covenants upon
compliance by the Company with certain conditions set forth therein.
The Securities may not be redeemed prior to their maturity.
If an Event of Default shall occur and be continuing, the principal of
all the Securities may be declared due and payable in the manner and with the
effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
the Company and the rights of the Holders of the Securities to be affected
under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in aggregate principal amount of the
Securities at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount
of the Securities at the time outstanding, on behalf of the Holders of all
the Securities, to waive compliance by the Company with certain provisions of
the Indenture and certain past defaults under the Indenture and their
19
<PAGE> 75
consequences. Any such consent or waiver by the Holder of this Security shall
be conclusive and binding upon such Holder and upon all future Holders of
this Security and of any Security issued upon the registration of transfer
hereof or in exchange therefor or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and interest on
this Security at the times, place and rate, and in the coin or currency,
herein prescribed.
As provided in the Indenture and subject to certain limitations herein
set forth, the transfer of this Security is registrable on the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained for such purpose, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory
to the Company and the Security Registrar duly executed by the Holder hereof
or his attorney duly authorized in writing, and thereupon one or more new
Securities of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the
Securities are exchangeable for a like aggregate principal amount of
Securities of a different authorized denomination, as requested by the Holder
surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentation of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Security is registered as the
owner hereof for all purposes, whether or not this Security be overdue, and
neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
SECTION 204. Form of Trustee's Certificate of Authentication.
------------------------------------------------
This is one of the Securities referred to in the within-mentioned
Indenture.
20
<PAGE> 76
FIRST FIDELITY BANK,
NATIONAL ASSOCIATION
By:_______________________________________
Authorized Officer
Dated:____________________________________
21
<PAGE> 77
ARTICLE III
THE SECURITIES
SECTION 301. Title and Terms.
----------------
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $100,000,000
million, except for Securities authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Securities pursuant
to Section 304, 305, 306, or 906.
The Securities shall be known and designated as the __% Notes due
2005. Their Stated Maturity shall be _______ __, 2005. The Securities shall
bear interest at the rate of __% per annum from _______ __, 1995, or from the
most recent interest payment date to which interest has been paid, as the
case may be, payable on _______ __, 1995, and semiannually thereafter on
______ __ and _______ __ of each year to the Person in whose name the
Security or any Predecessor Security is registered at the close of business
on the ______ __ or ______ __ next preceding such interest payment date until
the principal thereof is paid or duly provided for.
The principal of, and interest on, the Securities shall be payable, at
the office or agency of the Company maintained for such purpose in the
Borough of Manhattan, the City of New York or at such other office or agency
of the Company as may be maintained for such purpose; provided, however,
that, at the option of the Company, interest may be paid by check mailed to
addresses of the Persons entitled thereto as such addresses shall appear on
the Security Registrar.
The Securities are not redeemable prior to Stated Maturity.
At the election of the Company, the entire indebtedness on the
Securities or certain of the Company's Obligations and covenants and certain
Events of Default thereunder may be defeased as provided in Article IV.
SECTION 302. Denominations.
--------------
The Securities shall be issuable only in fully registered form without
coupons and in denominations of $1,000 and any integral multiple thereof.
22
<PAGE> 78
SECTION 303. Execution, Authentication, Delivery and Dating.
-----------------------------------------------
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its President or one of its Vice Presidents, under its
corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the
Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individual
who were at any time the proper officers of the Company shall bind the
Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities
or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Securities for
original issue in an aggregate principal amount of up to $100,000,000, as
provided in this Indenture and not otherwise.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose, unless there appears on such Security
a certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder and is entitled
to the benefits of this Indenture. Notwithstanding the foregoing, if any
Security shall have been authenticated and delivered hereunder but never
issued and sold by the Company, and the Company shall deliver such Security
to the Trustee for cancellation as provided in Section 309 together with a
Company Order (which need not comply with Section 102 and need not be
accompanied by an Opinion of Counsel) directing such cancellation and stating
that such Security has never been issued and sold by the Company, for all
purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.
23
<PAGE> 79
SECTION 304. Temporary Securities.
---------------------
Pending the preparation of definitive Securities or a permanent Global
Security, the Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive
Securities on a permanent Global Security in lieu of which they are issued
and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation
of definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities or beneficial interests in a permanent Global Security,
as the case may be, upon surrender of the temporary Securities at any office
or agency of the Company designated pursuant to Section 1002, without charge
to the Holder. Upon surrender for cancellation of any one or more temporary
Securities the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like principal amount of definitive Securities
of authenticated denominations. Until so exchanged the temporary Securities
shall in all respects be entitled to the same benefits under this Indenture
as definitive Securities or beneficial interests in a permanent Global
Security, as the case may be.
SECTION 305. Registration, Registration of Transfer and Exchange.
----------------------------------------------------
The Company shall cause to be kept at one of its offices or agencies
maintained pursuant to Section 1002 a register or registers (being herein
sometimes collectively referred to as the "Security Register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Securities and of transfers of Securities.
The Corporate Trust Office of the Trustee is hereby appointed "Security
Registrar" for the purpose of registering Securities and transfers of
Securities as herein provided.
Upon surrender for registration of transfer of any Security at the
office or agency of the Company designated pursuant to Section 1002, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Securities
of any authorized denominations and of a like aggregate principal amount.
24
<PAGE> 80
At the option of the Holder, Securities (except Global Securities) may
be exchanged for other Securities of a like aggregate principal amount and of
a like Stated Maturity and with like terms and conditions, upon surrender of
the Securities to be exchanged at such office or agency. Whenever any
Securities are so surrendered for exchange, the Company shall execute, and
the Trustee shall authenticate and deliver, the Securities which the Holder
making the exchange is entitled to receive.
Notwithstanding any other provision of this Section, unless and until
it is exchanged in whole or in part for Securities in definitive form, a
Global Security representing all or a portion of the Securities may not be
transferred except as a whole by the Depositary or by a nominee of the
Depositary or another nominee of such Depositary or by such Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary.
If at any time the Depositary for the Securities notifies the Company
that it is unwilling or unable to continue as Depositary for the Securities
or if at any time the Depositary for the Securities shall no longer be
registered or in good standing under the Securities Exchange Act of 1934, or
other applicable statute or regulation, the Company shall appoint a successor
Depositary with respect to the Securities. If a successor Depositary for the
Securities is not appointed by the Company within 90 days after the Company
receives such notice or becomes aware of such condition, the Company will
execute, and the Trustee, upon receipt of a Company Order for the
authentication and delivery of definitive Securities, will authenticate and
deliver, Securities in definitive form in an aggregate principal amount equal
to the principal amount of the Global Security or Securities in exchange for
such Global Security or Securities.
The Company may at any time and in its sole discretion determine that
the Securities issued in the form of one or more Global Securities shall no
longer be represented by such Global Security or Securities. In such event,
the Company will execute, and the Trustee, upon receipt of a Company Order
for the authentication and delivery of definitive Securities, will
authenticate and deliver, Securities in definitive form and in an aggregate
principal amount equal to the principal amount of the Global Security or
Securities in exchange for such Global Security or Securities.
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<PAGE> 81
In any exchange provided for in either of the preceding two
paragraphs, the Company will execute and the Trustee will authenticate and
deliver Securities in definitive registered form in authorized denominations.
Upon the exchange of a Global Security for Securities in definitive
form, such Global Security shall be cancelled by the Trustee. Securities
issued in exchange for a Global Security pursuant to this Section shall be
registered in such names and in such authorized denominations as the
Depositary shall instruct the Trustee. The Trustee shall deliver such
Securities to the persons in whose names such Securities are so registered.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Securities,
other than exchanges pursuant to Section 303, 304, or 906 not involving any
transfer.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
-------------------------------------------------
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a
number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be required by them to
save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has been
26
<PAGE> 82
acquired by a bona fide purchaser, the Company shall execute and upon its
request the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately
with any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
-----------------------------------------------
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person
in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on
the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a
27
<PAGE> 83
Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be
paid on each Security and the date of the proposed payment, and at the
same time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this Clause provided.
Thereupon the Trustee shall fix a Special Record Date for the payment of
such Defaulted Interest which shall be not more than 15 days and not
less than 10 days prior to the date of the proposed payment and not less
than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first-class postage
prepaid, to each Holder at his address as it appears in the Security
Register, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose name the Securities (or
their respective Predecessor Securities) are registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange if,
after notice given by the Company to the Trustee of the proposed payment
pursuant to this Clause, such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
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SECTION 308. Persons Deemed Owners.
----------------------
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name such Security is registered as the owner of
such Security for the purpose of receiving payment of principal of and
(subject to Section 307) interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
No holder of any beneficial interest in any Global Security held on
its behalf by the Depositary shall have any rights under this Indenture with
respect to such Global Security, and the Depositary may be treated by the
Company, the Trustee, and any agent of the Company or the Trustee as the
owner of such Global Security for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall impair, as between the Depositary and
such holders of beneficial interests, the operation of customary practices
governing the exercise of the rights of the Depositary as holder of any
Security.
SECTION 309. Cancellation.
-------------
All Securities surrendered for payment, registration of transfer or
exchange shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly cancelled by it. The Company
may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever and may deliver to the Trustee (or to any
other Person for delivery to the Trustee) for cancellation any Securities
previously authenticated hereunder which the Company has not issued or sold,
and all Securities so delivered shall be promptly cancelled by the Trustee.
No Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section, except as expressly
permitted by this Indenture. All cancelled Securities held by the Trustee
shall be destroyed and a certificate of their destruction delivered to the
Company, unless by Company Order the Company shall direct that cancelled
Securities be returned to it.
SECTION 310. Computation of Interest.
------------------------
Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months.
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ARTICLE IV.
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
----------------------------------------
This Indenture shall upon Company Request cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for), and the Trustee, at
the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 306 and
(ii) Securities for whose payment money has theretofore been
deposited in trust, or segregated and held in trust by the Company
and thereafter repaid to the Company or discharged from such trust,
as provided in Section 1003) have been delivered to the Trustee for
cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their stated Maturity
within one year, or
(iii) are deemed paid and discharged pursuant to Section
403, as applicable,
and the Company, in the case of (i), (ii) or (iii) above, has deposited or
caused to be deposited with the Trustee as trust funds in trust for the
purpose an amount sufficient to pay and discharge the entire indebtedness on
such Securities not theretofore delivered to the Trustee for cancellation,
for principal and interest to the date of such deposit (in the case of
Securities which become due and payable) or to the Stated Maturity, as the
case may be;
(2) the Company has paid or caused to be paid all
other sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
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<PAGE> 86
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations
of the Trustee to any Authenticating Agent under Section 614, and, if money
shall have been deposited with the Trustee pursuant to subclause (B) of
clause (1) of this Section or if money or obligations shall have been
deposited with or received by the Trustee pursuant to Section 403, the
obligations of the Trustee under Section 402 and the last paragraph of
Section 1003, shall survive.
SECTION 402. Application of Trust Funds; Indemnification.
--------------------------------------------
(a) Subject to the provisions of the last paragraph of Section 1003,
all money deposited with the Trustee pursuant to Section 401, all money and
U.S. Government Obligations deposited with the Trustee pursuant to Section
403 or 1010 and all money received by the Trustee in respect of U.S.
Government Obligations deposited with the Trustee pursuant to Section 403 or
1010, shall be held in trust and applied by it, in accordance with the
provisions of the Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Persons entitled thereto,
of the principal and interest for whose payment such money has been deposited
with or received by the Trustee.
(b) The Company shall pay and shall indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against U.S. Government
Obligations deposited pursuant to Section 403 or 1010 or the interest and
principal received in respect of such obligations other than any payable by
or on behalf of Holders.
(c) The Trustee shall deliver or pay to the Company from time to time
upon Company Request any U.S. Government Obligations or money held by it as
provided in Section 403 or 1010 which, in the opinion of a nationally
recognized firm of independent certified public accountants expressed in a
written certification thereof delivered to the Trustee, are then in excess of
the amount thereof which then would have been required to be deposited for
the purpose for which such U.S. Government Obligations or money were
deposited or received. This provision shall not authorize the sale by the
Trustee of any U.S. Government Obligations held under this Indenture.
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<PAGE> 87
SECTION 403. Satisfaction, Discharge and Defeasance of Securities.
-----------------------------------------------------
The Company shall be deemed to have paid and discharged the entire
indebtedness on all the Outstanding Securities on the 91st day after the date
of the deposit referred to in Subparagraph (d) hereof, and the provisions of
this Indenture, as it relates to such Outstanding Securities, shall no longer
be in effect (and the Trustee, at the expense of the Company, shall at
Company Request, execute proper instruments acknowledging the same), except
as to:
(a) the rights of Holders of Securities to receive, from the trust
funds described in Subparagraph (d) hereof, payment of the principal of
and each installment of principal of or interest on the Outstanding
Securities on the Stated Maturity of such principal or installment of
principal or interest;
(b) the Company's obligations with respect to such Securities under
Sections 305, 306, 1002 and 1003 and the Company's obligations with
respect to the Trustee under Section 607; and
(c) the rights, powers, trust and immunities of the Trustee hereunder
and the duties of the Trustee under Section 402 and the duty of the
Trustee to authenticate Securities issued on registration of transfer or
exchange;
provided that, the following conditions shall have been satisfied:
(d) the Company shall have deposited or caused to be deposited
irrevocably with the Trustee as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for and
dedicated solely to the benefit of the Holders of such Securities, cash
in U.S. dollars (or such other money or currencies as shall then be
legal tender in the United States) and/or U.S. Government Obligations
which through the payment of interest and principal in respect thereof,
in accordance with their terms, will provide (and without reinvestment
and assuming no tax liability will be imposed on such Trustee), not
later than one day before the due date of any payment of money, an
32
<PAGE> 88
amount sufficient, in the opinion of a nationally recognized firm of
independent certified public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge
each installment of principal of and any interest on all the Securities
on the dates such installments of interest or principal are due;
(e) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or
instrument to which the Company is a party or by which it is bound which
breach, violation or default, in the case of any other such agreement or
instrument, individually or in the aggregate, would have a material
adverse effect upon the business of the Company and its Restricted
Subsidiaries taken as a whole or upon this Company's ability to perform
its obligations under this Section;
(f) such provision would not cause any Outstanding Securities then
listed on the New York Stock Exchange or other securities exchange to be
delisted as a result thereof;
(g) no Event of Default or event which with notice or lapse of time
would become an Event of Default with respect to the Securities shall
have occurred and be continuing on the date of such deposit or during
the period ending on the 91st day after such date;
(h) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel to the effect that the Company has received
from, or there has been published by, the Internal Revenue Service a
ruling to the effect that Holders of the Securities will not recognize
income, gain or loss for Federal income tax purposes as a result of such
deposits, defeasance and discharge and will be subject to Federal income
tax on the same amount and in the same manner and at the same times, as
would have been the case if such deposit, defeasance and discharge had
not occurred; and
(i) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
provided for relating to the defeasance contemplated by this Section
have been complied with.
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ARTICLE V
REMEDIES
SECTION 501. Events of Default.
------------------
"Event of Default", wherever used herein means any one of the
following events (whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security when it
becomes due and payable, and continuance of such default for a period of 30
days; or
(2) default in the payment of the principal of any Security at its
Stated Maturity; or
(3) default in the performance, or breach, of any covenant or warranty
of the Company in this Indenture (other than a covenant or warranty a default
in whose performance or whose breach is elsewhere in this Section
specifically dealt with), and continuance of such default or breach for a
period of 60 days after there has been given, by registered or certified
mail, to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in principal amount of the Outstanding Securities a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder; or
(4) a default under any bond, debenture, note or other evidence of
indebtedness in excess of $10,000,000 for money borrowed by the Company or
under any mortgage, indenture or instrument under which there may be issued
or by which there may be secured or evidenced any indebtedness in excess of
$10,000,000 for money borrowed by the Company (including this Indenture),
whether such indebtedness now exists or shall hereafter be created, which
default shall have resulted in such indebtedness becoming or being declared
due and payable prior to the date on which it would otherwise have become due
and payable, without such acceleration having been rescinded or annulled,
within a period of 30 days after there shall have been given, by registered
or certified mail, to the Company by the Trustee or to the Company and the
34
<PAGE> 90
Trustee by the Holders of at least 25% in principal amount of the Outstanding
Securities a written notice specifying such default and requiring the Company
to cause such acceleration to be rescinded or annulled and stating that such
notice is a "Notice of Default" hereunder; or
(5) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case
or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable Federal or State law, or
appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator
or other similar official of the Company or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other decree
or order unstayed and in effect for a period of 90 consecutive days; or
(6) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization
or other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a decree or order
for relief in respect of the Company in an involuntary case or proceeding
against it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or State law, or the
consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Company or of any substantial part of
its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its
debts generally as they become due, or the taking of corporate action by the
Company in furtherance of any such action.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
-------------------------------------------------
If an Event of Default occurs and is continuing, then in every such
case the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Securities may declare the principal amount of all of the
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<PAGE> 91
Securities to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), and upon any such
declaration such principal amount (or specified amount) shall become
immediately due and payable.
At any time after such declaration of acceleration has been made and before
a judgment or decree for payment of the money due has been obtained by the
Trustee as hereinafter in this Article provided, the Holders of a majority in
principal amount of the Outstanding Securities, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequence if
(1) the Company has paid or deposited with the
Trustee a sum sufficient to pay
(A) all overdue interest on all Securities;
(B) the principal of any Securities which have become due
otherwise than by such declaration of acceleration and interest
thereon at the rate borne by the Securities;
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities;
and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel;
and
(2) all Events of Default, other than the non-payment of the principal
of Securities which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement
by Trustee.
----------------------------------------------------
The Company covenants that if
(1) default is made in the payment of any installment of interest on
any Security when such interest becomes due and payable and such default
continues for a period of 60 days, or
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<PAGE> 92
(2) default is made in the payment of the principal of any Security
at the Stated Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of
the Holders of such Securities, the whole amount then due and payable on such
Securities for principal and interest and, to the extent that payment of such
interest shall be legally enforceable, interest on any overdue principal and
on any overdue interest, at the rate borne by the Securities; and, in
addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee in its own name and as trustee of an express trust, may institute
a judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the
same against the Company or any other obligor upon the Securities and collect
the moneys adjudged or decreed to be payable in the manner provided by law
out of the property of the Company or any other obligor upon the Securities,
wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of
the Holders by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid
of the exercise of any power granted herein, or to enforce any other proper
remedy.
SECTION 504. Trustee May File Proofs of Claim.
---------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or by
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<PAGE> 93
declaration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of overdue principal or
interest, if any) shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Securities and to file such
other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel) and of the Holders allowed in such judicial
proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee and, in the event that
the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities.
------------------------------------------------
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any
of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought
in its own name as trustee of an express trust, and any recovery of judgment
shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
be for the ratable benefit of the Holders of the Securities in respect of
which such judgment has been recovered.
SECTION 506. Application of Money Collected.
-------------------------------
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee,
and, in case of the distribution of such money on account of principal or
interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
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<PAGE> 94
FIRST: To the payment of all amounts due the Trustee under Section
607; and
SECOND: To the payment of the amounts then due and unpaid for
principal of and interest on the Securities in respect of which or for the
benefit of which such money has been collected, ratably, without preference
or priority of any kind, according to the amounts due and payable on such
Securities for principal and interest, respectively.
SECTION 507. Limitation on Suits.
--------------------
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60- day period by the Holders of a majority
in principal amount of the Outstanding Securities;
it being understood and intended that no one or more of such Holders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other of such Holders, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all such Holders.
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SECTION 508. Unconditional Right of Holders to Receive Principal
and Interest.
---------------------------------------------------
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and (subject to Section 307) interest on,
such Security on the Stated Maturities expressed in such Security and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
-----------------------------------
If the Trustee or any Holder, as permitted hereunder, has instituted
any proceeding to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case, subject to any determination in such proceeding, the Company, the
Trustee and the Holder shall be restored severally and respectively to their
former positions hereunder and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
SECTION 510. Rights and Remedies Cumulative.
-------------------------------
Except as otherwise provided in Section 507 or with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities in
the last paragraph of Section 306, no right or remedy herein conferred upon
or reserved to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
-----------------------------
No delay or omission of the Trustee or of any Holder of any Securities
to exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be exercised from time
to time, and as often as may be deemed expedient, by the Trustee or by the
Holders, as the case may be.
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SECTION 512. Control by Holders.
-------------------
The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee provided that:
(1) such direction shall not be in conflict with any rule of law or
with this Indenture or expose the Trustee to personal liability, and
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders of Securities entitled to direct the
time, method and place of conducting any such proceeding, or exercising any
such trust or power, or to waive any past default pursuant to Section 513. If
fixed, such record date shall be the later of 30 days prior to the first
solicitation of such consent or the date of the most recent list of Holders
of Securities furnished to the Trustee pursuant to Section 701 prior to such
solicitation.
SECTION 513. Waiver of Past Defaults.
------------------------
The Holders of not less than a majority in principal amount of the
Outstanding Securities may on behalf of the Holders of all the Securities
waive any past default hereunder and its consequences, except a default
(1) in the payment of the principal or interest, on any Security,
not heretofore cured, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture, but no such waiver shall extend to any subsequent
or other default or impair any right consequent thereon.
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SECTION 514. Undertaking for Costs.
----------------------
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may
in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by
such party litigant, but the provisions of this Section shall not apply to
any suit instituted by the Trustee, to any suit instituted by any Holder, or
group of Holders, holding in the aggregate more than 10% in principal amount
of the Outstanding Securities, or to any suit instituted by any Holder for
the enforcement of the payment of the principal of or interest on any
Security on or after the Stated Maturities expressed in such Security.
SECTION 515. Waiver of Stay or Extension Laws.
---------------------------------
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
ARTICLE VI
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
------------------------------------
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
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(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture, but in the case of any such certificates or opinions which by
any provision hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act, or its own wilful misconduct, except that
(1) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in principal amount of the
Outstanding Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture; and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder, or in the exercise of
any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
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<PAGE> 99
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
this Section.
SECTION 602. Notice of Defaults.
-------------------
Within 90 days after the occurrence of any default hereunder, the
Trustee shall transmit by mail to all Holders, as provided in Section 703(c),
notice of such default hereunder known to the Trustee, unless such default
shall have been cured or waived; provided, however, that, except in the case
of a default in the payment of the principal of or interest on any Security,
the Trustee shall be protected in withholding such notice if and so long as
Responsible Officers of the Trustee in good faith determine that the
withholding of such notice is in the interest of the Holders; and provided,
further, that in the case of any default of the character specified in
Section 501(3), no such notice to Holders shall be given until at least 60
days after the occurrence thereof. For the purpose of this Section, the term
"default" means any event which is, or after notice or lapse of time or both
would become an Event of Default.
SECTION 603. Certain Rights of Trustee.
--------------------------
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order or as otherwise
expressly provided herein and any resolution of the Board of Directors may be
sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith
on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
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(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
SECTION 604. Not Responsible for Recitals or Issuance of
Securities
-------------------------------------------
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee or any Authenticating Agent assumes no
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Securities. The
Trustee or any Authenticating Agent shall not be accountable for the use or
application by the Company of the Securities or the proceeds thereof.
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<PAGE> 101
SECTION 605. May Hold Securities
-------------------
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to
Sections 608 and 613, may otherwise deal with the Company with the same
rights it would have if it were not Trustee, Authenticating Agent, Paying
Agent, Security Registrar or such other agent.
SECTION 606. Money Held in Trust.
--------------------
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except
as otherwise agreed with the Company.
SECTION 607. Compensation and Reimbursement.
-------------------------------
The Company agrees
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance
with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and
counsel and/or the allocated costs of its in-house counsel), except any
such expense, disbursement or advance as may be attributable to any
action or failure to act by the Trustee that breaches the applicable
standard of care relating thereto; and
(3) to indemnify the Trustee and any of its agents
designated in accordance with this Indenture for, and to hold each of
them harmless against any loss, liability or expense incurred unless
incurred in connection with any action or failure to act by the Trustee
that breaches the applicable standard of care relating thereto, arising
out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
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<PAGE> 102
When the Trustee incurs expenses or renders services after an Event of
Default, the expenses and the compensation for the services are intended to
constitute expenses of administration under any bankruptcy law.
The provisions of this Section shall survive the termination of this
Indenture.
SECTION 608. Disqualification; Conflicting Interests.
----------------------------------------
The Trustee shall be subject to the provisions of Section 310(b) of
the Trust Indenture Act. Nothing herein shall prevent the Trustee from filing
with the Commission the application referred to in the penultimate paragraph
of Section 310(b) of the Trust Indenture Act.
SECTION 609. Corporate Trustee Required; Eligibility.
----------------------------------------
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States
of America, any State thereof or the District of Columbia or a corporation or
other Person permitted to exercise corporate trust powers, having a combined
capital and surplus of at least $100,000,000 and which is subject to
supervision or examination by Federal or State authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. The Company may
not, nor may any Person directly or indirectly controlling, controlled by, or
under common control with the Company, serve as Trustee. If at any time the
Trustee shall cease to be eligible in accordance with the provision of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
--------------------------------------------------
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
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(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
required by Section 611 shall not have been delivered to the Trustee within
30 days after the giving of such notice of resignation, the resigning Trustee
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Securities delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after
written request therefor by the Company or by any Holder who has
been a bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609
and shall fail to resign after written request therefor by the
Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 514, unless the Trustee's duty to resign
is stayed as provided herein, any Holder who has been a bona fide Holder of a
Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee or
Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause,
the Company, by a Board Resolution, shall promptly appoint a successor
Trustee or Trustees and shall comply with the applicable requirements of
Section 611. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities delivered to the Company and the retiring Trustee, the
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<PAGE> 104
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment in accordance with the applicable requirements of Section 611,
become the successor Trustee and supersede the successor Trustee appointed by
the Company. If no successor Trustee shall have been so appointed by the
Company or the Holders and accepted appointment in the manner required by
Section 611, any Holder who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee by mailing written
notice of such event by first-class mail, postage prepaid, to all Holders of
Securities as their names and addresses appear in the Security Register. Each
notice shall include the name of the successor Trustee with respect to the
Securities and the address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
---------------------------------------
In case of the appointment hereunder of a successor Trustee, every
such successor Trustee so appointed shall execute, acknowledge and deliver to
the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all
the rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee,
the Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such
rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
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SECTION 612. Merger, Conversion, Consolidation or Succession to
Business.
---------------------------------------------------
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under
this Article, without the execution or filing of any paper or any further act
on the part of any of the parties hereto. In case any Securities shall have
been authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating
Trustee may adopt such authentication and deliver the Securities so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities.
SECTION 613. Preferential Collection of Claims Against Company.
--------------------------------------------------
The Trustee shall comply with Section 311(a) of the Trust Indenture
Act, excluding any creditor relationship listed in Section 310(b) of the
Trust Indenture Act. A trustee who has resigned or been removed shall be
subject to Section 311(a) of the Trust Indenture Act to the extent indicated
therein.
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SECTION 614. Appointment of Authenticating Agent.
------------------------------------
At any time when any of the Securities remains Outstanding the Trustee
may appoint an Authenticating Agent or Agents which shall be authorized to
act on behalf of the Trustee to authenticate Securities issued upon exchange
or registration of transfer or pursuant to Section 306, and Securities so
authenticated shall be entitled to the benefits of this Indenture and shall
be valid and entitled to the benefits of this Indenture and shall be valid
and obligatory for all purposes as if authenticated by the Trustee hereunder.
Wherever reference is made in this Indenture to the authentication and
delivery of Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a
certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, any State thereof or the
District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $100,000,000
and subject to supervision or examination by Federal or State authority. If
such Authenticating Agent publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section, such Authenticating Agent
shall resign immediately in the manner and with the effect specified in this
Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating
Agent shall be a party, or any corporation succeeding to the corporate agency
or corporate trust business of an Authenticating Agent, shall continue to be
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<PAGE> 107
an Authenticating Agent, provided such corporation shall be otherwise
eligible under this Section, without the execution or filing of any paper or
any further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time
such Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall
become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating
Agent. No successor Authenticating Agent shall be appointed unless eligible
under the provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 607.
If an appointment is made pursuant to this Section, the Securities may
have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternate certificate of authentication in the following
form:
This is one of the Securities described in the within-mentioned
Indenture.
FIRST FIDELITY BANK,
NATIONAL ASSOCIATION
By___________________________
As Authenticating Agent
By___________________________
Authorized Officer
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<PAGE> 108
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of
Holders.
-------------------------------------------------
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 15 days after the Regular Record Date
for the payment of interest, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders as of a
date not more than 15 days prior to time such information is furnished,
and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
provided no such list need be furnished if the Trustee shall be the Security
Registrar.
SECTION 702. Preservation of Information; Communications to
Holders.
-----------------------------------------------
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701, the names and
addresses of such Holders received by the Trustee in its capacity as Security
Registrar and the names and addresses of such Holders filed with it within
the two preceding years pursuant to Section 703(c)(2). The Trustee may
destroy any list furnished to it as provided in Section 701 upon receipt of a
new list so furnished.
(b) Holders may communicate pursuant to Section 312(b) of the Trust
Indenture Act with other Holder with respect to their rights under this
Indenture or the Securities. The Company, the Trustee, the Registrar and any
other person shall have the protection of Section 312(c) of the Trust
Indenture Act.
SECTION 703. Reports by Trustee.
-------------------
(a) If such report is required by Section 313 of the Trust Indenture
Act, within 60 days after each __________, beginning with the _______________
following the date of this Indenture, the Trustee shall mail to
each Holder a brief report dated as of such ________ ______ that complies
with Section 313(a) of the Trust Indenture Act. The Trustee also shall comply
with Section 313(b) (2), (c) and (d) of the Trust Indenture Act.
(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which the
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when the Securities are listed on any stock exchange.
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SECTION 704. Reports by Company.
-------------------
The Company shall:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from time
to time by rules and regulations prescribe) which the Company may be
required to file with the Commission pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934; or, if the Company is not
required to file information, documents or reports pursuant to either of
said Sections, then it shall file with the Trustee and submit to the
Commission, in accordance with rules and regulations prescribed from
time to time by the Commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant to
Section 13 of the Securities Exchange Act of 1934 in respect of a
security listed and registered on a national securities exchange as may
be prescribed from time to time in such rules and regulations;
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<PAGE> 110
(2) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance
by the Company with the conditions and covenants of this Indenture as
may be required from time to time by such rules and regulations; and
(3) transmit by mail to all Holders, as provided in Section 703(c),
within 30 days after the filing thereof with the Trustee, such summaries
of any information, documents and reports required to be filed by the
Company pursuant to paragraphs (1) and (2) of this Section as may be
required by rules and regulations prescribed from time to time by the
Commission.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
-----------------------------------------------------
The Company shall not consolidate with or merge into any other
corporation or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, and the Company shall not permit
any Person to consolidate with or merge into the Company or convey, transfer
or lease its properties and assets substantially as an entirety to the
Company, unless:
(1) in case the Company shall consolidate with or merge into another
corporation or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the corporation formed by
such consolidation or into which the Company is merged or the Person
which acquires by conveyance or transfer, or which leases, the
properties and assets of the Company substantially as an entirety shall
be a corporation organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia and
55
<PAGE> 111
shall expressly assume, by an indenture supplemental hereto, executed
and delivered to the Trustee, in form satisfactory to the Trustee, the
due and punctual payment of the principal of and interest on all the
Securities and the performance of every covenant of this Indenture on
the part of the Company to be performed or observed;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both,
would become an Event of Default, shall have happened and be continuing;
(3) if, as a result of any such consolidation or merger or such
conveyance, transfer or lease, properties or assets of the Company would
become subject to a mortgage, pledge, lien, security interest or other
encumbrance which would not be permitted by this Indenture, the Company
or such successor corporation or Person, as the case may be, shall take
such steps as shall be necessary effectively to secure the Securities
equally and ratably with (or prior to) all indebtedness secured thereby;
and
(4) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is
required in connection with such transaction, such supplemental
indenture complies with this Article and that all conditions precedent
herein provided for relating to such transaction have been complied
with.
SECTION 802. Successor Corporation Substituted.
----------------------------------
Upon any consolidation or merger by the Company with or into any other
corporation or any conveyance, transfer of lease of the properties and assets
of the Company substantially as an entirety in accordance with Section 801,
the successor corporation formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor corporation had been named as the Company herein, and thereafter,
except in the case of a lease, the predecessor corporation shall be relieved
of all obligations and covenants under this Indenture and the Securities.
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<PAGE> 112
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders
--------------------------------------------------
Without the consent of any Holders, the Company, when authorized by or
pursuant to a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to the Company
and the assumption by any such successor of the covenants of the Company
herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company; or
(3) to add any additional Events of Default; or
(4) to secure the Securities pursuant to the requirements of Section
1007 or otherwise; or
(5) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be inconsistent
with the provisions of this Indenture and which shall not adversely
affect the interests of the Holders in any material respect.
SECTION 902. Supplemental Indentures with Consent of Holders.
------------------------------------------------
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Act of said Holders
delivered to the Company and the Trustee, the Company, when authorized by a
Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby:
(1) change the Stated Maturity of the principal of, or any installment
of principal of or interest on, any Security, or reduce the principal
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<PAGE> 113
amount thereof or the rate of interest thereon, or change the place of
payment where, or the coin or currency in which, any Security or the
interest thereon is payable, or impair the right to institute suit for
the enforcement of any such payment on or after the Stated Maturity
thereof, or
(2) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for
any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or
(3) modify any of the provisions of this Section, Section 513 or
Section 1011, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby; provided, however, that this clause shall not be deemed to
require the consent of any Holder with respect to changes in the
references to "the Trustee" and concomitant changes in this Section and
Sections 801 and 1011.
It shall not be necessary for any act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
-------------------------------------
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 601) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties, immunities or liabilities under
this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
----------------------------------
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such
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supplemental indenture shall form a part of this Indenture for all purposes;
and every Holder of Securities theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
------------------------------------
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
---------------------------------------------------
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so
determine, new Securities so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared
and executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities.
ARTICLE X
COVENANTS
SECTION 1001. Payment of Principal and Interest.
----------------------------------
The Company covenants and agrees that it will duly and punctually pay
the principal of, and interest on, the Securities in accordance with the
terms of the Securities and this Indenture.
SECTION 1002. Maintenance of Office or Agency.
--------------------------------
The Company will maintain in the Borough of Manhattan, The City of New
York, an office or agency where Securities may be presented or surrendered
for payment, where Securities may be surrendered for registration of transfer
or exchange and where notices and demands to or upon the Company in respect
of the Securities and this Indenture may be served. The Company hereby
initially appoints the Corporate Trust Office of the Trustee as office or
agency for each of said purposes. The Company will give prompt written notice
to the Trustee of the location, and any change in the location, of such
office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the
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<PAGE> 115
address thereof, such presentations, surrenders, notices and demands may be
made or served at the Corporate Trust Office of the Trustee, and the Company
hereby appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside of The City of New York where the
Securities may be presented or surrendered for any or all such purposes and
may from time to time rescind such designations; provided, however, that no
such designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of Manhattan, The
City of New York for such purposes. The Company will give prompt written
notice to the Trustee of any such designation or rescission and of any change
in the location of any such other office or agency.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
--------------------------------------------------
If the Company shall at any time act as its own Paying Agent it will,
on or before each due date of the principal of or interest on any of the
Securities, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal or interest so
becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will,
prior to each due date of the principal of or interest on any Securities,
deposit with a Paying Agent a sum sufficient to pay the principal or interest
so becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal or interest, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its action or
failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(i) hold all sums held by it for the payment of the principal of or
interest on Securities in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
60
<PAGE> 116
(ii) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of
principal or interest on the Securities; and
(iii) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay,
or by Company Order direct any Paying Agent to pay, to the Trustee all sums
held in trust by the Company or such Paying Agent, such sums to be held by
the Trustee upon the same trusts as those upon which such sums were held by
the Company or such Paying Agent, and, upon such payment by any Paying Agent
to the Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or received
by the Trustee in respect of obligations deposited with the Trustee pursuant
to Section 403 or 1010, or then held by the Company, in trust for the payment
of the principal of or interest on any Security and remaining unclaimed for
two years after such principal or interest has become due and payable shall
be paid to the Company on Company Request, or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in any Authorized
Newspaper in each place of payment, notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30
days from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
SECTION 1004. Corporate Existence.
--------------------
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate existence of its Restricted Subsidiaries and its
and their rights (charter and statutory) and franchises; provided, however,
that (1) the Company or any Restricted Subsidiary shall not be required to
preserve any such right or franchise if the Board of Directors of the Company
61
<PAGE> 117
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company or of such Restricted Subsidiary and
that the loss thereof is not disadvantageous in any material respect to the
Holders, and (2) the Company shall not be required to preserve the corporate
existence of any Restricted Subsidiary if the Board of Directors of the
Company shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and that the loss thereof is
not disadvantageous in any material respect to the Holders.
SECTION 1005. [Intentionally Omitted].
SECTION 1006. [Intentionally Omitted].
SECTION 1007. Limitation Upon Liens.
----------------------
(a) The Company will not, and will not permit any Restricted
Subsidiary to, issue, assume or guarantee any Indebtedness secured by any
mortgage, security interest, pledge, lien of other encumbrance upon, or any
interest or title of any lessor, lender or other secured party to or under
any Capital Lease with respect to, any Operating Property or Operating Asset
of the Company or any Restricted Subsidiary, whether such Operating Property
or Operating Asset is now owned or hereafter acquired (such mortgages,
security interests, pledges, liens and other encumbrances being hereinafter
called a "Mortgage" or "Mortgages"), except
(1) Mortgages incurred or created in the ordinary course of business
not arising in connection with Indebtedness that do not in the aggregate
materially impair the use or value of the properties or assets of the
Company and its Restricted Subsidiaries, taken as a whole,
(2) Mortgages existing on the date hereof,
(3) Mortgages (other than Capital Leases) to secure the payment of
all or any part of the purchase price or construction costs in respect
of property or properties acquired by the Company or a Restricted
Subsidiary after the date hereof securing indebtedness incurred prior
to, at the time of, or within 360 days after, the acquisition of any
such property or the completion of any such construction in the
aggregate not in excess of the aggregate amount expended in the
acquisition of such property or properties plus the aggregate amount
expended for the improvements thereon,
(4) Mortgages upon any property or assets owned by any Restricted
Subsidiary when it becomes a Restricted Subsidiary,
62
<PAGE> 118
(5) Mortgages upon any property or assets of any corporation
existing at the time such corporation is merged into or consolidated
with the Company or any Restricted Subsidiary, or at the time of a sale,
lease or other disposition of an entity as an entirety or substantially
as an entirety to the Company or any Restricted Subsidiary,
(6) Mortgages upon any property when the property is acquired by the
Company or a Restricted Subsidiary,
(7) Mortgages to secure the payment of all or any part of the cost
of improvements to any property owned by the Company or a Restricted
Subsidiary,
(8) the extension, renewal or replacement of any Mortgage permitted
by Subparagraph (2), (3), (4), (5), (6) or (7), but only if the
principal amount of Indebtedness secured by the Mortgage immediately
prior thereto is not increased and the Mortgage is not extended to other
property,
(9) Mortgages for taxes or other governmental charges either not yet
delinquent or nonpayment of which is being contested in good faith by
appropriate proceedings, provided enforcement of any lien has been
stayed,
(10) Mortgages arising out of any final judgment for the payment of
money aggregating not in excess of $10,000,000,
(11) Mortgages created by or relating to any legal proceeding or
final judgment which at the time is being contested in good faith by
appropriate proceedings, provided enforcement of any lien has been
stayed,
(12) easements or similar encumbrances, the existence of which do not
impair the use of the property subject thereto for the purposes for
which it is held or was acquired,
(13) Mortgages securing Indebtedness of a Restricted Subsidiary to
the Company or to another Restricted Subsidiary,
without in any such case effectively providing concurrently with the
issuance, assumption or guarantee of any such Indebtedness that the
Securities (together with, if the Company shall so determine, any other
63
<PAGE> 119
Indebtedness ranking equally with such Securities) shall be secured equally
and ratably with such Indebtedness.
(b) Notwithstanding the provisions of Subsection (a) of this Section
1007, the Company or any Restricted Subsidiary may create or assume Mortgages
(including Capital Leases) in addition to those permitted by Subsection (a)
of this Section 1007, and renew, extend or replace such Mortgages; provided
that, at the time of such creation, assumption, renewal, extension or
replacement, and after giving effect thereto, Exempted Debt does not exceed
15% of the Consolidated Net Tangible Assets.
SECTION 1008. Limitation Upon Sale and Leaseback Transactions
-----------------------------------------------
(a) The Company will not, nor will it permit any Restricted Subsidiary
to, enter into any arrangements with any Person (other than the Company or a
Restricted Subsidiary) providing for the leasing by the Company or any
Restricted Subsidiary of any Operating Property or Operating Asset now owned
or hereafter acquired which has been or is to be sold or transferred by the
Company or such Restricted Subsidiary to such Person with the intention of
taking back a lease of such property (a "Sale and Leaseback Transaction")
unless (i) such transaction involves a lease or right to possession or use
for a temporary period not to exceed three years following such sale, by the
end of which it is intended that the use of such property by the lessee will
be discontinued, (ii) the Company or a Restricted Subsidiary would, on the
effective date of such transaction, be entitled, pursuant to the provisions
of Section 1007(a) hereof, to issue, assume or guarantee Indebtedness secured
by a Mortgage on such property at least equal in amount to the Attributable
Debt in respect of such Sale and Leaseback Transaction without equally and
ratably securing the Securities, or (iii) if the proceeds of such sale (a)
are equal to or greater than the fair market value of such property, and (b)
are applied within 360 days to either the purchase or acquisition of fixed
assets or equipment used in the operation of its business or the construction
of improvements on real property or to the repayment of Senior Funded Debt of
the Company or any Restricted Subsidiary.
(b) Notwithstanding the provisions of Subsection (a) of this Section
1008, the Company or any Restricted Subsidiary may enter into Sale and
Leaseback Transactions in addition to those permitted by paragraph (a) of
this Section 1008, and without any obligation to retire any Senior Funded
Debt of the Company or a Restricted Subsidiary; provided that, at the time of
64
<PAGE> 120
entering into such Sale and Leaseback Transactions, and after giving effect
thereto, Exempted Debt does not exceed 15% of Consolidated Net Tangible
Assets.
SECTION 1009. Limitations Upon Permitting Restricted Subsidiaries
to become Non-Restricted Subsidiaries and
Non-Restricted Subsidiaries to become Restricted
Subsidiaries.
---------------------------------------------------
(a) The Company will not permit any Restricted Subsidiary to be
designated as or otherwise to become a Non-Restricted Subsidiary unless (i)
the principal purpose of such Subsidiary is to engage in financing the
operations of the Company or its Subsidiaries or both, and (ii) immediately
after such Restricted Subsidiary becomes a Non-Restricted Subsidiary, it will
not own, directly or indirectly, any capital stock of any other Restricted
Subsidiary or any Mortgage on property of any other Restricted Subsidiary.
The Company will promptly redesignate any Non-Restricted Subsidiary which
ceases to meet the conditions specified above as a Restricted Subsidiary.
(b) Promptly after the adoption of any Board Resolution designating a
Restricted Subsidiary as a Non-Restricted Subsidiary or a Non-Restricted
Subsidiary as a Restricted Subsidiary, or the making of any election by duly
authorized officers of the Company to effect any such designation, a copy of
such Board Resolutions or a written statement as to such designation signed
by such officers shall be filed with the Trustee, together with an Officers'
Certificate stating that the provisions of this Section 1009 have been
complied with in connection with such designation, and, in case of the
designation of a Restricted Subsidiary as a Non-Restricted Subsidiary,
setting forth the name of each other Subsidiary (if any) which has become a
Non-Restricted Subsidiary as a result of such designation.
SECTION 1010. Defeasance of Certain Obligations.
----------------------------------
The Company may omit to comply with any term, provision or condition
set forth in Section 1007 through 1009, inclusive, provided that the
following conditions shall have been satisfied:
(1) With reference to this Section 1010, the Company has deposited or
caused to be irrevocably deposited (except as provided in Section 403)
with the Trustee as trust funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders cash
in U.S. dollars (or such other money or currencies as shall then be
65
<PAGE> 121
legal tender in the United States) and/or U.S. Government Obligations,
which through the payment of interest and principal in respect thereof,
in accordance with their terms, will provide (and without reinvestment
and assuming no tax liability will be imposed on such Trustee), not
later than one day before the due date of any payment of money, an
amount in cash, sufficient, in the opinion of a nationally recognized
firm of independent certified public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge
each installment of principal of and any interest on all the Securities
on the dates such installments of interest or principal are due;
(2) Such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or
instrument to which the Company is a party or by which it is bound which
breach, violation or default, in the case of any other such agreement or
instrument, individually or in the aggregate, would have a material
adverse effect upon the business of the Company and its Restricted
Subsidiaries taken as a whole or upon the Company's ability to perform
its obligations under this Section;
(3) No Event of Default or event which with notice or lapse of time
would become an Event of Default (including by reason of such deposit)
shall have occurred and be continuing on the date of such deposit;
(5) The Company has delivered to the Trustee an Opinion of Counsel to
the effect that Holders will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit and defeasance
of certain obligations and will be subject to Federal Income tax on the
same amounts and in the same manner and at the same times as would have
been the case if such deposit and defeasance had not occurred; and
(6) The Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the defeasance contemplated by this
Section have been complied with.
SECTION 1011. Waiver of Certain Covenants.
----------------------------
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in Sections 1007 to 1009, inclusive,
if before the time for such compliance the Holders of at least a majority in
principal amount of the Outstanding Securities shall, by Act of such Holders,
either waive such compliance in such instance or generally waive compliance
with such term, provision, covenant or condition, but no such waiver shall
extend to or affect such term, provision, covenant or condition except to the
extent so expressly waived and, until such waiver shall become effective, the
66
<PAGE> 122
obligations of the Company and the duties of the Trustee in respect of any
such term, provision, covenant or condition shall remain in full force and
effect.
ARTICLE XI
REDEMPTION OF SECURITIES
Section 1101. No Right of Redemption.
-----------------------
The Securities may not be redeemed prior to their Stated Maturity.
* * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
67
<PAGE> 123
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seal to be hereunto affixed
and attested, all as of the day and year first above written.
THE PEP BOYS-MANNY, MOE & JACK
By:___________________________________
Attest:
[SEAL]
FIRST FIDELITY BANK,
NATIONAL ASSOCIATION
By:___________________________________
Attest:
[SEAL]
68
<PAGE> 124
STATE OF _____________ )
: ss.:
COUNTY OF ____________ )
On the _____ day of ____________, 19___, before me personally came
____________, to me known, who, being by me duly sworn, did depose and say
that he is ____________ of The Pep Boys-Manny, Moe & Jack, one of the
corporations described in and which executed the foregoing instrument; that
he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by authority of the
Board of Directors of said corporation; and that he signed his name thereto
by like authority.
------------------------------
STATE OF _____________ )
: ss.:
COUNTY OF ____________ )
On the _____ day of ____________, 19___, before me personally came
____________, to me known, who, being by me duly sworn, did depose and say
that he is ____________ of First Fidelity Bank, National Association, one of
the corporations described in and which executed the foregoing instrument;
that he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by authority of the
Board of Directors of said corporation; and that he signed his name thereto
by like authority.
------------------------------
<PAGE> 125
[WILLKIE FARR & GALLAGHER LETTERHEAD]
June 5, 1995
The Pep Boys - Manny, Moe & Jack
3111 West Allegheny Avenue
Philadelphia, Pennsylvania 19132
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
The Pep Boys - Manny, Moe & Jack (the "Company") has requested our opinion
in connection with the Registration Statement on Form S-3 (File No.
33-59859) (the "Registration Statement") relating to the Notes due 2005 of
the Company (the "Notes"). The Notes will be issued under an Indenture (the
"Indenture") to be entered into by the Company and First Fidelity Bank,
National Association, as Trustee, (the "Trustee") and sold pursuant to the
terms of an underwriting agreement to be executed by the Company and CS
First Boston Corporation, as representative of the several underwriters (the
"Underwriters").
We have examined copies of the Certificate of Incorporation and Bylaws of
the Company, the Registration Statement, all resolutions adopted by the
Company's Board of Directors and other records and documents that we have
deemed necessary, for the purpose of this opinion. We have also examined
such other documents, papers, statutes and authorities as we have deemed
necessary to form a basis for the opinion hereinafter expressed.
In our examination, we have assumed the genuineness of all signatures and
the conformity to original documents of all copies submitted to us. As to
various questions of fact material to our opinion, we have relied on
statements and certificates of officers and representatives of the Company
and public officials. In rendering this opinion, we have also assumed that
there will be no changes in applicable law or facts between the date hereof
and any date of issuance of Notes and that the provisions of all applicable
federal and state securities laws have been complied with.
Based upon and subject to the foregoing, we are of the opinion that the
Notes have been duly authorized and, when duly executed, authenticated and
delivered by or on behalf of the Company, duly authenticated by the Trustee
and duly paid for by the Underwriters, will be binding obligations of the
Company and entitled to the benefits of the Indenture.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, to the incorporation by reference of this opinion in
any abbreviated registration statement in connection with the Notes and to
the reference to our firm under the caption "Legal Matters" in the
Registration Statement.
Very truly yours,
/s/ Willkie Farr & Gallagher
----------------------------
Willkie Farr & Gallagher
<PAGE> 126
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of The Pep Boys -- Manny, Moe & Jack on Form S-3 of our report
dated March 20, 1995, appearing in the Annual Report on Form 10-K of The Pep
Boys -- Manny, Moe and Jack for the year ended January 28, 1995 and to the
reference to us under the headings "Selected Financial Data" and "Experts" in
the Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
June 1, 1995
<PAGE> 127
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) _
FIRST FIDELITY BANK, NATIONAL ASSOCIATION
(Exact Name of Trustee as Specified in its Charter)
22-1147033
(I.R.S. Employer Identification No.)
202A SOUTH BRIDGE STREET, ELKTON, MARYLAND
(Address of Principal Executive Offices)
21921
(Zip Code)
FIRST FIDELITY BANK, NATIONAL ASSOCIATION
123 SOUTH BROAD STREET
PHILADELPHIA, PA 19109
ATTENTION: CORPORATE TRUST ADMINISTRATION
(215) 985-6000
(Name, address and telephone number of Agent for Service)
The Pep Boys-Manny, Moe & Jack
(Exact Name of Obligor as Specified in its Charter)
Pennsylvania
(State or other jurisdiction of Incorporation or Organization)
23-0962915
(I.R.S. Employer Identification No.)
3111 West Allegheny Avenue,Philadelphia
(Address of Principal Executive Offices)
19132
(Zip Code)
NOTES DUE 2005
(Title of Indenture Securities)
<PAGE> 128
1. General information.
Furnish the following information as to the trustee:
a) Name and address of each examining or supervisory authority to which it
is subject:
Comptroller of the Currency
United States Department of the Treasury
Washington, D.C. 20219
Federal Reserve Bank (3rd District)
Philadelphia, Pennsylvania 19106
Federal Deposit Insurance Corporation
Washington, D.C. 20429
b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
3. Voting securities of the trustee.
Furnish the following information as to each class of voting
securities of the trustee:
Not applicable - see answer to Item 13.
4. Trusteeships under other indentures.
If the trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in any
other securities, of the obligor are outstanding, furnish the following
information:
Not applicable - see answer to Item 13.
5. Interlocking directorates and similar relationships with the obligor
or underwriters.
If the trustee or any of the directors or executive officers of the
trustee is a director, officer, partner, employee, appointee, or
representative of the obligor or of any underwriter for the obligor,
identify each such person having any such connection and state the nature
of each such connection.
Not applicable - see answer to Item 13.
6. Voting securities of the trustee owned by the obligor or its
officials.
<PAGE> 129
Furnish the following information as to the voting securities of the
trustee owned beneficially by the obligor and each director, partner, and
executive officer of the obligor:
Not applicable - see answer to Item 13.
7. Voting securities of the trustee owned by underwriters or their
officials.
Furnish the following information as to the voting securities of the
trustee owned beneficially by each underwriter for the obligor and each
director, partner, and executive officer of each such underwriter:
Not applicable - see answer to Item 13.
8. Securities of the obligor owned or held by the trustee.
Furnish the following information as to securities of the obligor owned
beneficially or held as collateral security for obligations in default by
the trustee:
Not applicable - see answer to Item 13.
9. Securities of underwriters owned or held by the trustee.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of an underwriter for the obligor,
furnish the following information as to each class of securities of such
underwriter any of which are so owned or held by the trustee:
Not applicable - see answer to Item 13.
10. Ownership or holdings by the trustee of voting securities of certain
affiliates or security holders of the obligor.
If the trustee owns beneficially or holds as collateral security for
obligations in default voting securities of a person who, to the knowledge
of the trustee (1) owns 10 percent or more of the voting stock of the
obligor or (2) is an affiliate, other than a subsidiary, of the obligor,
furnish the following information as to the voting securities of such
person:
Not applicable - see answer to Item 13.
11. Ownership or holdings by the trustee of any securities of a person
owning 50 percent or more of the voting securities of the obligor.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of a person who, to the knowledge of
the trustee, owns 50 percent or more of the voting securities of the
obligor, furnish the following information as to each class of securities
of such person any of which are so owned or held by the trustee:
Not applicable - see answer to Item 13.
12. Indebtedness of the obligor to the trustee.
Except as noted in the instructions, if the obligor is indebted to
the trustee, furnish the following information:
Not applicable - see answer to Item 13.
<PAGE> 130
13. Defaults by the obligor.
(a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such default.
None.
(b) If the trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, or is trustee for more than one
outstanding series of securities under the indenture, state whether there
has been a default under any such indenture or series, identify the
indenture or series affected, and explain the nature of any such default.
None.
14. Affiliations with the underwriters.
If any underwriter is an affiliate of the trustee, describe each such
affiliation.
Not applicable - see answer to Item 13.
15. Foreign trustee.
Identify the order or rule pursuant to which the trustee is authorized
to act as sole trustee under indentures qualified or to be qualified under
the Act.
Not applicable - trustee is a national banking association organized
under the laws of the United States.
16. List of Exhibits.
List below all exhibits filed as part of this statement of eligibility.
1. Copy of Articles of Association of the trustee as now in effect.**
---
2. Copy of the Certificate of the Comptroller of the Currency date
--- dated January 11, 1994, evidencing the authority of the trustee to
transact business.*
3. Copy of the Certification of Fiduciary Powers of the trustee by the
--- Office of the Comptroller of the Currency dated July 24, 1992.*
4. Copy of existing by-laws of the trustee.**
---
5. Copy of each indenture referred to in Item 4, if the obligor is in
--- default.
-Not Applicable.
X 6. Consent of the trustee required by Section 321(b) of the Act.
---
X 7. Copy of report of condition of the trustee at the close of business
--- on March 31, 1995, published pursuant to the requirements of its
supervising authority.
<PAGE> 131
8. Copy of any order pursuant to which the foreign trustee is
--- authorized to act as sole trustee under indentures qualified or to
be qualified under the Act.
- Not Applicable
9. Consent to service of process required of foreign trustees pursuant
--- to Rule lOa-4 under the Act.
- Not Applicable
----------
*Previously filed with the Securities Exchange Commission on
February 11, 1994 as an Exhibit to Form T-1 in connection with Registration
Statement Number 22-73340 and **previously filed with the Securities
Exchange Commission on April 14, 1995 with Registration Statement Number
33-58625 and incorporated herein by reference
NOTE
The trustee disclaims responsibility for the accuracy or
completeness of information contained in this Statement of Eligibility and
Qualification not known to the trustee and not obtainable by it through
reasonable investigation and as to which information it has obtained from
the obligor and has had to rely or will obtain from the principal
underwriters and will have to rely.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939,
the trustee, First Fidelity Bank, National Association, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this Statement of Eligibility and Qualification to
be signed on its behalf by the undersigned, thereunto duly authorized, all
in the City of Philadelphia and Commonwealth of Pennsylvania, on the 2nd
day of June, 1995.
FIRST FIDELITY BANK, NATIONAL ASSOCIATION
By: /s/ Alan G. Finn
------------------------
Alan G. Finn
Asst. Vice President
<PAGE> 132
EXHIBIT
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321 (b) of the Trust
Indenture Act of 1939, and in connection with the proposed issue of The Pep
Boys-Manny, Moe & Jack, Notes due 2005, First Fidelity Bank, National
Association, hereby consents that reports of examinations by Federal,
State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request
therefor.
FIRST FIDELITY BANK, NATIONAL ASSOCIATION
By: /s/ Alan G. Finn
------------------------
Alan G. Finn
Asst. Vice President
Philadelphia, Pennsylvania
June 2, 1995
<PAGE> 133
EXHIBIT 7
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the First Fidelity Bank,
National Association of Elkton in the state of Maryland, at the close of
business on March 31, 1995, published in response to call made by Comptroller of
the Currency, under title 12, United States Code, Section 161. Charter Number
33869 Comptroller of the Currency Northeastern District.
Statement of Resources and Liabilities
ASSETS
Thousand of Dollars
-------------------
Cash and balance due from depository institutions:
Noninterest-bearing balances and currency and coin ........ 1,599,546
Interest-bearing balances ................................. 131,786
Securities
Hold-to-maturity securities ............................... 3,154,827
Available-for-sale securities ............................. 3,271,974
Federal funds sold and securities purchased under agreements
to resell in domestic offices of the bank and of it
Edge and Agreement subsidiaries, and in IBFS:
Federal funds sold ........................................ 10,000
Securities purchased under agreements to resell ........... 207,267
Loans and lease financing receivables:
Loan and leases, net of unearned income ........... 22,371,585
LESS: Allowance for loan and lease losses ......... 517,965
LESS: Allocated transfer risk reserve ............. 0
Loans and leases, net of unearned income, allowance, and
reserve ...................................................... 21,853,620
Assets held in trading accounts .............................. 70,275
Premises and fixed assets (including capitalized leases) ..... 390,023
Other real estate owned ...................................... 135,803
Investment in unconsolidated subsidiaries and associated
companies .................................................... 13,434
Customer's liability to this bank on acceptances outstanding . 180,053
Intangible assets ............................................ 721,391
Other assets ................................................. 890,755
Total assets ................................................. 32,630,754
LIABILITIES
Deposits:
In domestic offices .................................... 25,014,990
Noninterest-bearing ...................... 4,531,531
Interest-bearing ......................... 20,483,459
In foreign offices, Edge and Agreement subsidiaries,
and IBFs ............................................... 1,106,660
Noninterest-bearing ...................... 11,811
Interest-bearing ......................... 1,094,849
Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of its
Edge and Agreement subsidiaries, and IBFs
Federal fund purchased ................................. 1,044,014
Securities sold under agreements to repurchase ......... 1,421,199
Demand notes issued to the U.S. Treasury ..................... 0
Trading liabilities .......................................... 0
Other borrowed money:
With original maturity of one year or less ................... 16,956
with original maturity of more than one year ........... 635
Mortgage indebtedness and obligations under capitalized leases 16,899
Bank's liability on acceptances executed and outstanding ..... 180,795
Subordinated notes and debentures ............................ 175,000
Other liabilities ............................................ 620,629
Total liabilities ............................................ 29,597,777
Limited-life preferred stock and related surplus ............. 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus ................ 160,540
Common Stock ................................................. 452,156
Surplus ...................................................... 1,300,080
Undivided profits and capital reserves ....................... 1,167,757
Net unrealized holding gains (losses) on available-for-sale
securities .................................................. (47,556)
Cumulative foreign currency translation adjustments .......... 0
Total equity capital ......................................... 3,032,977
Total liabilities, limited-life preferred stock and equity
capital .................................................... 32,630,754
