<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 22, 1996
REGISTRATION NO. 333-00985
=============================================================================
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.
<PAGE>
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. [ ]
------
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>
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 FEBRUARY 22, 1996
LOGO
PEP BOYS
$100,000,000
The Pep Boys -- Manny, Moe & Jack
% Notes Due 2006
Interest payable and Due , 2006
------
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.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public (1) Commissions Company (1)(2)
-------------- ----------------- ---------------
<S> <C> <C> <C>
Per Note ............ % % %
Total ............... $ $ $
</TABLE>
(1) Plus accrued interest, if any, from , 1996.
(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 , 1996,
against payment in immediately available funds.
CS First Boston
The date of this Prospectus is , 1996.
<PAGE>
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 Citicorp
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 Reports on Form 10-Q for the quarters ended
April 29, 1995, July 29, 1995 and October 28, 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>
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
506 Pep Boys stores (as of February 3, 1996) located in 33 states, the
District of Columbia and Puerto Rico, of which 318 stores are owned and 188
stores are leased. Pep Boys' operations are supplied by distribution
facilities in five locations.
The Company operates approximately 10,255,000 gross square feet of retail
space for an average of approximately 20,300 gross square feet per store,
including an aggregate of 4,727 service bays. A typical Pep Boys store is a
free-standing warehouse format Supercenter of approximately 22,000 square
feet. The new prototype for Supercenter stores is approximately 19,500 square
feet in size. Each new Supercenter will continue to have approximately 12
service bays along with a product offering of approximately 25,000 stock-keeping
units ("SKUs") and will generally be 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 fiscal 1994, the Company introduced a supplemental store format under
the name "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 consist of
certain urban areas and areas located between Supercenters. PARTS USA stores
average approximately 11,900 square feet and stock approximately 23,000 SKUs.
The new prototype for PARTS USA stores is approximately 7,800 square feet in
size. As compared to the Supercenters, PARTS USA stores 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 added a net of 71 stores which includes 46
new warehouse format Supercenters and 29 PARTS USA stores, and closed four
older stores. Included in the Company's expansion were seven stores in Puerto
Rico -- its initial units outside of the continental United States. As of
February 3, 1996, the Company had 475 Supercenters and 31 PARTS USA stores.
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>
USE OF PROCEEDS
The net proceeds from the sale of the Notes due 2006 (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 5.5% to
5.7%, 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 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
October 28, 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 ........... 108,203 108,203
Long-term debt less current maturities:
Indebtedness to banks under revolving credit
loan agreement ............................ $ 90,000 $ --
Other lines of credit with banks ............. 28,000 18,875
Mortgage notes ............................... 2,491 2,491
8 7/8% Notes due April 15, 1996 ............. 107,040 107,040
7% Notes due June 1, 2005 .................... 100,000 100,000
6 5/8% Notes due May 15, 2003 ............... 75,000 75,000
4% Convertible subordinated notes due
September 1, 1999 ......................... 86,250 86,250
Notes offered hereby ......................... -- 100,000
---------- ----------
$ 488,781 $ 489,656
Less current maturities .................. 108,203 108,203
---------- ----------
Total long-term debt ........................ $ 380,578 $ 381,453
---------- ----------
Stockholders' equity:
Common Stock, par value $1.00 per share:
Authorized 500,000,000 shares; 62,046,289
shares issued and outstanding ............. 62,046 62,046
Paid-in capital .............................. 134,678 134,678
Retained earnings ............................ 508,665 508,665
---------- ----------
705,389 705,389
Less:
Shares held in benefits trust, 2,232,500
shares at cost .......................... 60,269 60,269
---------- ----------
Total stockholders' equity ............... 645,120 645,120
---------- ----------
Total long-term debt and stockholders' equity .. $1,025,698 $1,026,573
========== ==========
</TABLE>
4
<PAGE>
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 39-week
periods ended October 28, 1995 and October 29, 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 39-week period ended October
28, 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 October 28, 1995 and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
39 Weeks Ended
------------------------------------
Oct. 28, 1995 Oct. 29, 1994
--------------- ---------------
<S> <C> <C>
Earnings Statement Data
Merchandise sales ....... $1,007,589 $ 924,795
Service revenue ......... 176,245 146,529
----------- -----------
Total revenues .......... 1,183,834 1,071,324
Gross profit from
merchandise sales .... 301,677 267,934
Gross profit from service
revenue .............. 34,427 25,673
----------- -----------
Total gross profit ...... 336,104 293,607
Selling, general and
administrative
expenses ............. 214,070 180,247
Operating profit ........ 122,034 113,360
Nonoperating income ..... 1,605 3,024
Interest expense ........ 23,441 18,033
Earnings before income
taxes and change in
accounting principle . 100,198 98,351
Income taxes ............ 37,324 36,636
Earnings before change in
accounting principle . 62,874 61,715
Cumulative effect of
change in accounting
principle ............ -- (4,300)
Net earnings ............ 62,874 57,415
Balance Sheet Data
Working capital ......... $ 85,113 $ 135,390
Total assets ............ 1,393,313 1,250,600
Long-term debt .......... 380,578 368,007
Stockholders' equity .... 645,120 570,101
Other Statistics
Ratio of earnings to
fixed charges(1) ..... 4.3x 5.1x
Depreciation and
amortization ......... $ 38,953 $ 32,380
Capital expenditures .... $ 132,933 $ 122,601
Number of retail outlets 472 408
Total square footage .... 9,688,000 8,293,000
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<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>
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
-----------------------------------------------------------------------------------
39 Weeks Ended Fiscal Year Ended
------------------------------ ---------------------------------------------------
Oct. 28, 1995 Oct. 29, 1994 Jan. 28, 1995 Jan. 29, 1994 Jan. 30, 1993
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Merchandise sales ..... 85.1% 86.3% 86.1% 86.7% 87.2%
Service revenue(1) .... 14.9 13.7 13.9 13.3 12.8
------ ------ ------ ------ ------
Total revenues ........ 100.0 100.0 100.0 100.0 100.0
Costs of merchandise
sales(2) ............. 70.1(3) 71.0(3) 69.9(3) 71.4(3) 73.0(3)
Costs of service
revenue(2) ........... 80.5(3) 82.5(3) 83.4(3) 83.3(3) 83.4(3)
------ ------ ------ ------ ------
Total costs of revenues 71.6 72.6 71.8 73.0 74.3
Gross profit from
merchandise sales .... 29.9(3) 29.0(3) 30.1(3) 28.6(3) 27.0(3)
Gross profit from
service revenue ...... 19.5(3) 17.5(3) 16.6(3) 16.7(3) 16.6(3)
------ ------ ------ ------ ------
Total gross profit .... 28.4 27.4 28.2 27.0 25.7
Selling, general and
administrative
expenses ............. 18.0 16.8 17.6 17.3 16.8
----- ----- ------ ------ ------
Operating profit ...... 10.4 10.6 10.6 9.7 8.9
Nonoperating income ... .1 .3 .2 .3 .3
Interest expense ...... 2.0 1.7 1.8 1.6 1.8
----- ----- ------ ------ ------
Earnings before income
taxes and cumulative
effect of change in
accounting principle . 8.5 9.2 9.0 8.4 7.4
Income taxes .......... 37.3(4) 37.3(4) 36.7(4) 37.3(4) 36.3(4)
----- ----- ------ ------ ------
Earnings before
cumulative effect of
change in accounting
principle ............ 5.3 5.8 5.7 5.3 4.7
Cumulative effect of
change in accounting
principle ............ -- (.4) (.3) -- --
----- ----- ------ ------ ------
Net earnings .......... 5.3 5.4 5.4 5.3 4.7
===== ===== ====== ====== ======
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
Percentage Change
-----------------------------------------------------
39 Weeks Ended
-----------------
Oct. 28, 1995 vs.
39 Weeks Ended Fiscal 1994 vs. Fiscal 1993 vs.
Oct. 29, 1994 Fiscal 1993 Fiscal 1992
----------------- --------------- ---------------
<S> <C> <C> <C>
Merchandise sales ..... 9.0% 12.5% 6.8%
Service revenue(1) .... 20.3 18.7 11.7
----- ---- ----
Total revenues ........ 10.5 13.4 7.4
Costs of merchandise
sales(2) ............. 7.5 10.2 4.5
Costs of service
revenue(2) ........... 17.3 18.9 11.6
----- ---- ----
Total costs of revenues 9.0 11.5 5.5
Gross profit from
merchandise sales .... 12.6 18.4 13.0
Gross profit from
service revenue ...... 34.1 18.1 11.9
----- ---- ----
Total gross profit .... 14.5 18.3 12.9
Selling, general and
administrative
expenses ............. 18.8 15.4 10.6
----- ---- ----
Operating profit ...... 7.7 23.5 17.3
Nonoperating income ... (46.9) (3.1) 19.4
Interest expense ...... 30.0 31.6 (2.4)
------- ---- -----
Earnings before income
taxes and cumulative
effect of change in
accounting principle . 1.9 21.0 22.1
Income taxes .......... 1.9 19.2 25.6
----- ---- -----
Earnings before
cumulative effect of
change in accounting
principle ............ 1.9 22.1 20.0
Cumulative effect of
change in accounting
principle ............ -- -- --
----- ---- -----
Net earnings .......... 9.5 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.
THIRTY-NINE WEEKS ENDED OCTOBER 28, 1995 VS. THIRTY-NINE WEEKS ENDED OCTOBER
29, 1994
Total revenues increased 11% due to a higher store count (472 at October
28, 1995 compared with 408 at October 29, 1994) while comparable store
revenues (revenues generated by stores in operation during the same months of
each period) decreased 1%. Comparable store merchandise sales decreased 2%
while comparable service revenue increased 7%.
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>
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 and slightly higher
general office expenses.
The 30% increase in interest expense was due primarily to higher debt
levels coupled with higher interest rates.
The 2% increase in earnings before the cumulative effect of a change in
accounting principle in 1995 as compared with 1994, was due primarily to
increases in gross profit from merchandise sales and gross profit from
service revenue, as a percentage of related sales and revenues, offset, in
part, by increases in selling, general and administrative expenses and
interest expense.
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>
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 flexible employee benefits
trust (established on April 29, 1994 to fund a portion of the Company's
obligations arising from various employee compensation and benefit plans), 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 into
stockholders' equity, the Company reduced its debt by $72,639,000.
The following table indicates the Company's principal cash requirements
beginning in fiscal 1992.
<TABLE>
<CAPTION>
39 Weeks Ended
Oct. 28, 1995 Fiscal 1994 Fiscal 1993 Fiscal 1992
-------------- ------------- ------------- -------------
(dollar amounts in thousands)
<S> <C> <C> <C> <C>
Capital expenditures .................... $132,933 $185,072 $135,165 $ 78,025
Net inventory (decrease) increase (1) ... (14,903) 87,248 26,487 24,001
-------- -------- --------- ---------
Total cash requirements ................. $118,030 $272,320 $161,652 $102,026
======== ======== ======== ========
Net cash provided by operating activities
(excluding net inventory) .............. $137,232 $124,474 $111,595 $100,415
======== ======== ======== ========
</TABLE>
- ------
(1) Net inventory includes the change in inventory less the net change in
checks outstanding and accounts payable.
Beginning in fiscal 1992, inventories have increased as the Company added a
net of 135 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.
The Company opened 75 new stores in fiscal 1995 and currently plans to
open approximately 100 new stores in fiscal 1996. Management estimates that
the cost to open all 100 stores, coupled with capital expenditures relating
to existing stores, warehouses and offices during fiscal 1996, will be
approximately $200,000,000. In addition to the funds required to finance the
Company's store expansion, the Company has $107,040,000 in long-term debt
that matures on April 15, 1996. Funds required to finance the store
expansion, including related inventory requirements, and to repay the
8
<PAGE>
long-term debt maturing on April 15, 1996 are expected to come from operating
activities with the remainder provided by unused lines of credit, which totalled
$249,500,000 at February 3, 1996, or from accessing traditional lending sources
which may include the public capital markets.
On August 25, 1994, the Company sold $86,250,000 of 4% convertible
subordinated notes due September 1, 1999. Proceeds were used to repay portions
of the Company's short-term variable rate debt.
On April 21, 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. At the
Company's option, the interest rate on any loan may be based on (i) the higher
of the Federal funds rate plus 1/4% or the prime rate, (ii) LIBOR plus up to
.63% or (iii) a negotiated rate based upon market conditions.
On June 12, 1995, the Company sold $100,000,000 of 7% Notes due June 1,
2005. Proceeds were used to repay portions of the Company's long-term
variable-rate bank debt, and for general corporate purposes.
The Company's working capital was $85,113,000 at October 28, 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 October 28, 1995, 39% at January 28, 1995 and 32% at January 29, 1994.
9
<PAGE>
DESCRIPTION OF NOTES
The Notes will be issued under an Indenture, dated as of February _____,
1996 (the "Indenture") between the Company and First Union National Bank, as
Trustee (the "Trustee"), a form of which has been 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
________ __, 2006 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 _____________ __, 1996, 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.
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
10
<PAGE>
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>
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>
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>
"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>
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
on 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 of or 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>
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 and the Company's 7%
Notes due 2005. In the ordinary course of business, the Company maintains
deposits with the Trustee and the Trustee provides other banking and lending
services to the Company.
16
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated February , 1996 (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, 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
17
<PAGE>
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
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>
- -----------------------------------------------------------------------------
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 .............................. 17
Notice to Canadian Residents .............. 17
Legal Matters ............................. 18
Experts ................................... 18
- -----------------------------------------------------------------------------
<PAGE>
- -----------------------------------------------------------------------------
LOGO
PEP BOYS
$100,000,000
% Notes Due 2006
PROSPECTUS
LOGO
CS FIRST BOSTON
- -----------------------------------------------------------------------------
<PAGE>
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:
SEC Registration Fee ....................... $ 34,483
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 ..................... 17,017
----------
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>
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 maintains liability insurance on behalf of its directors
and officers.
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>
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Number Description
- -------- -------------
<S> <C>
1 Form of Underwriting Agreement
4 Form of Indenture between the Company and First Union National Bank, 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 39 weeks ended October 28, 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>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it 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
February 22, 1996.
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 February 22, 1996
---------------------------- Chief Executive Officer and Director
Mitchell G. Leibovitz (Principal Executive Officer)
/s/ MICHAEL J. HOLDEN Senior Vice President and Chief Financial February 22, 1996
---------------------------- Officer (Principal Financial and
Michael J. Holden Accounting Officer)
* Director February 22, 1996
----------------------------
Lennox K. Black
* Director February 22, 1996
----------------------------
Pemberton Hutchinson
* Director February 22, 1996
----------------------------
Bernard J. Korman
* Director February 22, 1996
----------------------------
J. Richard Leaman, Jr.
* Director February 22, 1996
----------------------------
Malcolmn D. Pryor
* Director February 22, 1996
----------------------------
Lester Rosenfeld
* Director February 22, 1996
----------------------------
Benjamin Strauss
* Director February 22, 1996
----------------------------
Myles H. Tanenbaum
/s/ DAVID V. WACHS Director February 22, 1996
----------------------------
David V. Wachs
</TABLE>
*By: /s/ MICHAEL J. HOLDEN
---------------------------
Michael J. Holden
Attorney-in-Fact
II-4
<PAGE>
REGISTRATION NO. 333-00985
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------
EXHIBITS
TO
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------
THE PEP BOYS -- MANNY, MOE & JACK
================================================================================
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ----- --------------
<S> <C>
1 Form of Underwriting Agreement
4 Form of Indenture between the Company and First Union National Bank,
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 39 weeks ended
October 28, 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>
$100,000,000
THE PEP BOYS -- MANNY, MOE & JACK
___% Notes Due 2006
UNDERWRITING AGREEMENT
________ __, 1996
CS FIRST BOSTON CORPORATION,
As Representative of the Several Underwriters,
Park Avenue Plaza
New York, NY 10055
Dear Sirs:
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 2006 (the "Securities") to
be issued under an indenture, dated as of ________ __, 1996 ("Indenture"),
between the Company and First Union National Bank, 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. 333-_____)
relating to the Securities, including a form of prospectus, has been
filed with the Securities and Exchange Commission ("Commission") and
either (i) has been declared effective under the Securities Act of
1933, as amended ("Act"), and is not proposed to be amended or (ii) is
proposed to be amended by amendment or post-effective amendment. If
such registration statement ("initial registration statement") has been
declared effective, either (i) an additional registration statement
("additional registration statement") relating to the Securities may
have been filed with the Commission pursuant to Rule 462(b) ("Rule
462(b)") under the Act and, if so filed, has become effective upon
filing pursuant to such Rule and the Securities all have been duly
registered under the Act pursuant to the initial registration statement
and, if applicable, the additional registration statement or (ii) such
an additional registration statement is proposed to be filed with the
Commission pursuant to Rule 462(b) and will become effective upon
filing pursuant to such Rule and upon such filing the Securities will
all have been duly registered under the Act pursuant to the initial
registration statement and such additional registration statement. If
the Company does not propose to amend the initial registration
statement or, if an additional registration statement has been filed
and the Company does not propose to amend it, 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 amendment (if any) to each such registration statement has
been declared effective by the Commission or has become effective upon
filing pursuant to Rule 462(c) ("Rule 462(c)") under the Act or, in the
case of the additional registration statement, Rule 462(b). For
<PAGE>
purposes of this Agreement, "Effective Time" with respect to the
initial registration statement or, if filed prior to the execution and
delivery of this Agreement, the additional registration statement means
(i) 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 has become effective upon filing pursuant to Rule 462(c),
or (ii) 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. If an additional
registration statement has not been filed prior to the execution and
delivery of this Agreement but the Company has advised CS First Boston
that it proposes to file one, "Effective Time" with respect to such
additional registration statement means the date and time as of which
such registration statement is filed and becomes effective pursuant to
Rule 462(b). "Effective Date" with respect to the initial registration
statement or the additional registration statement (if any) means the
date of the Effective Time thereof. The initial registration statement,
as amended at its Effective Time, including all material incorporated
by reference therein and including all information contained in the
additional registration statement (if any) and deemed to be a part of
the initial registration statement as of the Effective Time of the
additional registration statement pursuant to the General Instructions
of the Form on which it is filed and including all information (if any)
deemed to be a part of the initial registration statement as of its
Effective Time pursuant to Rule 430A(b) ("Rule 430A(b)") under the Act,
is hereinafter referred to as the "Initial Registration Statement." The
additional registration statement, as amended at its Effective Time,
including the contents of the initial registration statement
incorporated by reference therein and including all information (if
any) deemed to be a part of the additional registration statement as of
its Effective Time pursuant to Rule 430A(b), is hereinafter referred to
as the "Additional Registration Statement." The Initial Registration
Statement and the Additional Registration Statement are herein referred
to collectively as the "Registration Statements" and individually as a
"Registration Statement." 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 a Registration Statement,
including all material incorporated by reference in such prospectus, is
hereinafter referred to as the "Prospectus." No document has been or
will be prepared or distributed in reliance on Rule 434 under the Act.
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 of the Initial Registration
Statement is prior to the execution and delivery of this Agreement: (i)
on the Effective Date of the Initial Registration Statement, the
Initial 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,
(ii) on the Effective Date of the Additional Registration Statement (if
any), each Registration Statement conformed, or will conform, in all
material respects to the requirements of the Act, the Trust Indenture
Act and the Rules and Regulations and did not include, or will not
include, any untrue statement of a material fact and did not omit, or
will not omit, to state any material fact required to be stated therein
or necessary to make the statements therein not misleading and (iii) on
the date of this Agreement, the Initial Registration Statement and, if
the Effective Time of the Additional Registration Statement is prior to
the execution and delivery of this Agreement, the Additional
Registration Statement each conforms, and at the time of filing of the
<PAGE>
Prospectus pursuant to Rule 424(b) or (if no such filing is required)
at the Effective Date of the Additional Registration Statement in which
the Prospectus is included, and on the Closing Date (as hereinafter
defined), each Registration Statement and the Prospectus, each as
amended or supplemented, 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 of the Initial
Registration Statement is subsequent to the execution and delivery of
this Agreement: (A) on the Effective Date of the Initial Registration
Statement, the Initial Registration Statement and the Prospectus, each
as amended or supplemented, 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 no Additional
Registration Statement has been or will be filed and (B) on the Closing
Date, the Initial 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, and no Additional
Registration Statement has been or will be filed. The two preceding
sentences do not apply to statements in or omissions from a
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 a
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 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.
<PAGE>
(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
Statements 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 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.
<PAGE>
(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
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.
<PAGE>
(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
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 Statements 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.
<PAGE>
(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 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 each 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 Statements 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.
<PAGE>
(xxv) On the date each 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.
(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
Statements, 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 ________ __, 1996 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 in Federal (same day) funds by official check or
checks, or wire transfer to an account previously designated to CS First Boston
by the Company at a bank acceptable to CS First Boston, 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 ________ __, 1996, or at such
other time not later than seven full business days thereafter as 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 of the Initial Registration
Statement 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 fifteenth business day after the
Effective Date of the Initial Registration Statement. The Company will
<PAGE>
advise CS First Boston promptly of any such filing pursuant to Rule
424(b). If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement and an additional
registration statement is necessary to register a portion of the
Securities under the Act but the Effective Time thereof has not
occurred as of such execution and delivery, the Company will file the
additional registration statement or, if filed, will file a
post-effective amendment thereto with the Commission pursuant to and in
accordance with Rule 462(b) on or prior to 10:00 P.M., New York time,
on the date of this Agreement or, if earlier, on or prior to the time
the Prospectus is printed and distributed to any Underwriter, or will
make such filing at such later date as shall have been consented to by
CS First Boston.
(b) The Company will advise CS First Boston promptly of any
proposal to amend or supplement the initial or any additional
registration statement as filed or the related prospectus or the
Initial Registration Statement, Additional Registration Statement (if
any) 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 each Registration
Statement (if its Effective Time is subsequent to the execution and
delivery of this Agreement) and of any amendment or supplementation of
a Registration Statement or the Prospectus and of the institution by
the Commission of any stop order proceedings in respect of a
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 a 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 a 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 of the
Initial Registration Statement (or, if later, the Effective Date of the
Additional Registration Statement) which will satisfy the provisions of
Section 11(a) of the Act. 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 each
Registration Statement (at least two of which will be signed and will
include all exhibits and a signed accountant's report of Deloitte &
Touche LLP), each related preliminary prospectus, the Prospectus and
all amendments and supplements to such documents, in each case in such
quantities as CS First Boston reasonably requests. The Prospectus shall
be so furnished on or prior to 3:00 P.M., New York time, on the
business day following the later of the execution and delivery of this
Agreement or the Effective Time of the Initial Registration Statement.
All other documents shall be so furnished as soon as available.
<PAGE>
(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 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 Statements, 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 of the Initial
Registration Statement 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 of the Initial Registration Statement 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 LLP 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 Statements 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 Statements in accordance with standards
established by the American Institute of Certified Public
Accountants, as indicated in their report attached to such
letter;
<PAGE>
(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 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 Statements 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 Statements;
(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 Statements;
(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
Statements (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 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.
<PAGE>
For purposes of this subsection, (i) if the Effective
Time of the Initial Registration Statement is subsequent to the
execution and delivery of this Agreement, "Registration Statements"
shall mean the initial registration statement as proposed to be amended
by the amendment or post-effective amendment to be filed shortly prior
to the Effective Time, (ii) if the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement but the Effective Time of the Additional Registration
Statement is subsequent to such execution and delivery, "Registration
Statements" shall mean the Initial Registration Statement and the
additional registration statement as proposed to be filed or as
proposed to be amended by the post-effective amendment to be filed
shortly prior to its Effective Time, and (iii) "Prospectus" shall mean
the prospectus included in the Registration Statements. All financial
statements and schedules included in material incorporated by reference
into the Prospectus shall be deemed included in the Registration
Statements for purposes of this subsection.
(b) If the Effective Time of the Initial Registration
Statement is not prior to the execution and delivery of this Agreement,
such 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 of the
Additional Registration Statement (if any) is not prior to the
execution and delivery of this Agreement, such Effective Time shall
have occurred not later than 10:00 P.M., New York time, on the date of
this Agreement or, if earlier, the time the Prospectus is printed and
distributed to any Underwriter, or shall have occurred at such later
date as shall have been consented to by CS First Boston. If the
Effective Time of the Initial Registration Statement 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 a
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.
<PAGE>
(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, 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 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.
<PAGE>
(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 Statements 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 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 Statements or in
any other securities being registered pursuant to any
other registration statement filed by the Company under
the Act.
<PAGE>
(x) The descriptions in the Registration Statements 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 Statements
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 Statements or the
Prospectus or to be filed as exhibits to the
Registration Statements 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
Statements or the Prospectus.
(xi) The Initial Registration Statement was declared
effective under the Act as of the date and time
specified in such opinion, the Additional Registration
Statement (if any) was filed and became effective under
the Act as of the date and time (if determinable)
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 Initial
Registration Statement or the Additional Registration
Statement (as the case may be) and, to the knowledge of
such counsel after reasonable inquiry, no stop order
suspending the effectiveness of a 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) Each 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 any Registration Statement, as of
its effective date, 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 being understood that such counsel need
express no view as to the financial statements or other
financial data contained in the Registration Statements
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 Statements, 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.
<PAGE>
(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 any Registration Statement has been issued and no
proceedings for that purpose have been instituted or are contemplated
by the Commission, (D) the Additional Registration Statement (if any)
satisfying the requirements of subparagraphs (1) and (3) of Rule 462(b)
was filed pursuant to Rule 462(b), including payment of the applicable
filing fee in accordance with Rule 111(a) or (b) under the Act, prior
to the time the Prospectus was printed and distributed to any
Underwriter, (E) they have carefully examined the Registration
Statements and the Prospectus and neither any Registration Statement
nor the Prospectus or any amendment or supplement thereto, (i) as of
their respective effective times, 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 (F) subsequent to the
dates as of which information is given in the Registration Statements
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 LLP 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. CS First Boston may in its sole discretion waive on behalf
of the Underwriters compliance with any conditions to the obligations of the
Underwriters hereunder.
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
any 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 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
<PAGE>
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 any 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 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.
<PAGE>
(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 a 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 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.
<PAGE>
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.
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.
<PAGE>
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.
<PAGE>
SCHEDULE A
Principal Amount
Underwriter of Securities
- ----------- -----------------
CS First Boston Corporation........................... $
-----------
Total........................................ $100,000,000
============
<PAGE>
SCHEDULE B
Significant Subsidiaries of the Company
PBY Corporation
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
<PAGE>
===============================================================================
THE PEP BOYS-MANNY, MOE & JACK,
Issuer
------
TO
FIRST UNION NATIONAL BANK,
Trustee
-------
------------------------
INDENTURE
Dated as of ______________, 1996
$100,000,000
__% Notes Due 2006
===============================================================================
<PAGE>
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 ......................................... 16
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 ....... 21
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
i
<PAGE>
Page
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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
ARTICLE V
REMEDIES................................................................ 34
SECTION 501. Events of Default...................................... 34
SECTION 502. Acceleration of Maturity; Rescission 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.................................... 45
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
ii
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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.................... 50
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY....................... 52
SECTION 701. Company to Furnish Trustee Names and
Addresses of Holders................................... 52
SECTION 702. Preservation of Information;
Communications to Holders.............................. 52
SECTION 703. Reports by Trustee..................................... 53
SECTION 704. Reports by Company..................................... 53
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE.................... 54
SECTION 801. Company May Consolidate, Etc., Only on
Certain Terms.......................................... 54
SECTION 802. Successor Corporation Substituted...................... 55
ARTICLE IX
SUPPLEMENTAL INDENTURES................................................. 55
SECTION 901. Supplemental Indentures Without Consent
of Holders............................................. 55
SECTION 902. Supplemental Indentures with Consent of
Holders................................................ 56
SECTION 903. Execution of Supplemental Indentures................... 57
SECTION 904. Effect of Supplemental Indentures...................... 57
SECTION 905. Conformity with Trust Indenture Act.................... 58
SECTION 906. Reference in Securities to Supplemental
Indentures............................................. 58
ARTICLE X
COVENANTS............................................................... 58
SECTION 1001. Payment of Principal and Interest..................... 58
SECTION 1002. Maintenance of Office or Agency....................... 58
SECTION 1003. Money for Securities Payments to Be
Held in Trust......................................... 59
SECTION 1004. Corporate Existence................................... 60
SECTION 1005. [Intentionally Omitted]............................... 61
SECTION 1006. [Intentionally Omitted]............................... 61
SECTION 1007. Limitation Upon Liens................................. 61
SECTION 1008. Limitation Upon Sale and Leaseback
Transactions.......................................... 63
iii
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SECTION 1009. Limitations Upon Permitting Restricted
Subsidiaries to become Non-Restricted
Subsidiaries and Non-Restricted
Subsidiaries to become Restricted
Subsidiaries.......................................... 64
SECTION 1010. Defeasance of Certain Obligations..................... 64
SECTION 1011. Waiver of Certain Covenants........................... 65
ARTICLE XI
REDEMPTION OF SECURITIES................................................ 66
Section 1101. No Right of Redemption............................ 66
iv
<PAGE>
THE PEP BOYS-MANNY, MOE & JACK
Reconciliation and tie between Trust Indenture Act of 1939 and
Indenture, dated as of _______________, 1996
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
(b) ......................................... 613
Section 312(a) ......................................... 701, 702(a)
(b) ......................................... 702(b)
(c) ......................................... 702
Section 313(a) ......................................... 703(a)
(b) ......................................... 703(b)
(c) ......................................... 703(a), 703(b)
(d) ......................................... 703(a)
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.
v
<PAGE>
INDENTURE, dated as of _______________, 1996, 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 Union National Bank, 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
<PAGE>
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
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>
"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>
"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 therefor,
4
<PAGE>
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>
"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
6
<PAGE>
such Securities in respect of which there shall have been presented to
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 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.
7
<PAGE>
"Restricted Subsidiary" means any Subsidiary other than a
Non-Restricted Subsidiary; 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 2006 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
8
<PAGE>
event of any proceedings for voluntary liquidation, dissolution or
other winding up of the Company, 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
9
<PAGE>
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 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
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.
10
<PAGE>
"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.
<PAGE>
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:
(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.
<PAGE>
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 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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
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.
<PAGE>
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):
THE PEP BOYS - MANNY, MOE & JACK
__% Notes Due 2006
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 ____________, 2006, and to
pay interest thereon from ______________, 1996 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 ____________, 1996 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
<PAGE>
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 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:
- --------------------------------
18
<PAGE>
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 2006 (herein called the "Securities")
limited in aggregate principal amount to $100,000,000, issued and to be issued
under an Indenture, dated as of ________________, 1996 (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 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.
<PAGE>
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.
20
<PAGE>
SECTION 204. Form of Trustee's Certificate of Authentication.
This is one of the Securities referred to in the within-mentioned
Indenture.
FIRST FIDELITY BANK,
NATIONAL ASSOCIATION
By:
Authorized Officer
Dated:_______________________
<PAGE>
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, 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 2006.
Their Stated Maturity shall be _______________, 2006. The Securities shall bear
interest at the rate of __% per annum from ____________, 1996, or from the most
recent interest payment date to which interest has been paid, as the case may
be, payable on ____________, 1996, 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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
25
<PAGE>
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 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.
<PAGE>
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:
<PAGE>
(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 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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
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
<PAGE>
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.
<PAGE>
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 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
<PAGE>
(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 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.
<PAGE>
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
(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
<PAGE>
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 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
<PAGE>
(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:
FIRST: To the payment of all amounts due the Trustee under Section 607;
and
<PAGE>
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.
<PAGE>
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. may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
<PAGE>
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.
<PAGE>
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
<PAGE>
(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.
<PAGE>
(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 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;
<PAGE>
(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.
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.
<PAGE>
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.
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.
<PAGE>
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.
(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.
<PAGE>
(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 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.
<PAGE>
(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.
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.
<PAGE>
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.
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 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.
<PAGE>
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 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:
<PAGE>
This is one of the Securities described in the within-mentioned
Indenture.
FIRST FIDELITY BANK,
NATIONAL ASSOCIATION
By
-------------------------------------
As Authenticating Agent
By
------------------------------------
Authorized Officer
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 and the names and
addresses of such Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
<PAGE>
(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 May 15, beginning with the May 15 following the
date of this Indenture, the Trustee shall mail to each Holder a brief report
dated as of such May 15 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.
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;
<PAGE>
(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;
(3) transmit by mail to all Holders 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; and
(4) file with the Trustee annually, pursuant to section
314(a)(4) of the Trust Indenture Act, within 120 days of the end of the
fiscal year of the Company, a certificate as to the compliance with all
conditions and covenants of this Indenture.
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
shall expressly assume, by an indenture supplemental hereto, executed
<PAGE>
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.
<PAGE>
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 amount thereof or the rate of interest thereon, or change the
place of payment where, or the coin or currency in which, any
<PAGE>
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 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.
<PAGE>
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 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.
<PAGE>
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;
(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
<PAGE>
(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 shall determine
<PAGE>
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 and which secures Indebtedness 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,
<PAGE>
(4) Mortgages upon any property or assets owned
by any Restricted Subsidiary when it becomes a
Restricted Subsidiary,
(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
Indebtedness ranking equally with such Securities) shall be secured
equally and ratably with such Indebtedness.
<PAGE>
(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
<PAGE>
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 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 NonRestricted 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 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;
<PAGE>
(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;
(4) 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
(5) 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.
<PAGE>
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 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.
<PAGE>
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 UNION NATIONAL BANK
By:
-------------------------------------
Attest:
[SEAL]
<PAGE>
STATE OF ____________ )
: ss.:
COUNTY OF ____________ )
On the _____ day of ____________, 1996, 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 ____________, 1996, before me personally came
_________________________, to me known, who, being by me duly sworn, did depose
and say that he is _________________________ of First Union National Bank,
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>
[WILLKIE FARR & GALLAGHER LETTERHEAD]
February 22, 1996
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.
333-00985) (the "Registration Statement") relating to the Notes due 2006 of
the Company (the "Notes"). The Notes will be issued under an Indenture (the
"Indenture") to be entered into by the Company and First Union National
Bank, 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 pursuant
to Rule 462(b) under the Securities Act of 1993 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>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-00985 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
February 22, 1996
<PAGE>
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 UNION NATIONAL BANK
(Name of Trustee)
22-1147033
(I.R.S. Employer Identification No.)
101 NORTHSIDE PLAZA, ELKTON, MARYLAND
(Address of Principal Executive Offices)
21921
(Zip Code)
THE PEP BOYS-MANNY, MOE & JACK
(Exact name of registrant as specified in their charters)
PENNSYLVANIA
(State of Incorporation)
23-0962915
(I.R.S. Employer Identification No.)
3111 WEST ALLEGHENY AVENUE
PHILADELPHIA, PA 19132
(Address of Principal Executive Offices)
% NOTES DUE 2006
<PAGE>
(Title of Indenture Securities)
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.
2
<PAGE>
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.
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.
3
<PAGE>
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.
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.
4
<PAGE>
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.
X 1. Copy of Articles of Association of the trustee as now in effect.
- ---
2. Copy of the Certificate of the Comptroller of the Currency dated
- --- January 11, 1994, evidencing the authority of the trustee to
transact business.*
3. Copy of the authorization of the trustee to exercise fiduciary
- --- powers.*
X 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 December 31, 1995, published pursuant to the
requirements of its supervising authority.
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.
5
<PAGE>
9. Consent to service of process required of foreign trustees
- --- pursuant to Rule 10a-4 under the Act, not applicable.
- ---------------------
*Previously filed with the Securities and Exchange Commission
on February 11, 1994 as an exhibit to Form T-1 in connection with Registration
Statement No. 22-73340 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 Union National Bank, a national banking association organized and
existing under the laws of the United States of America, has duly caused this
Statement of Eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Elkton and State of Maryland, on
the 20th day of February, 1996.
FIRST UNION NATIONAL BANK
By: /s/ Alan G. Finn
--------------------------------
Alan G. Finn
Assistant Vice President
<PAGE>
EXHIBIT 1
FIRST UNION NATIONAL BANK (EFF. 1/1/96)
(formerly First Fidelity Bank, National Association)
BYLAWS
ADOPTED: JANUARY 10, 1994; AMENDED APRIL 19, 1994
------------------------------
ARTICLE I
Meetings of Shareholders
Section 1.1. Annual Meeting. The regular annual meeting of the shareholders
for the election of directors and transaction of whatever other business may
properly come before the meeting, shall be held at the Main Office of the
Association, or such other place as the Board of Directors may designate, at
10:00 A.M., on the second Thursday of April of each year or such other time
within 90 days as may be set by the Board of Directors. If, from any cause, an
election of directors is not made on the said day, the Board of Directors shall
order the election to be held on some subsequent day, as soon thereafter as
practicable, according to the provisions of the law; and notice thereof shall be
given in the manner herein provided for the annual meeting.
Section 1.2. Special Meetings. Except as otherwise specifically provided by
statute, special meetings of the shareholders may be called for any purpose at
any time by the Board of Directors or by any one or more shareholders owning, in
the aggregate, not less than twenty-five percent of the stock of the
Association.
Section 1.3. Notice of Meetings. Notice of Annual and Special meetings
shall be mailed, postage prepaid, at least ten days prior to the date thereof,
addressed to each shareholder at his address appearing on the books of the
Association; but any failure to mail such notice, or any irregularity therein,
shall not affect the validity of such meeting, or of any of the proceedings
thereat. A shareholder may waive any such notice.
Section 1.4. Organization of Meetings. The Chairman shall preside
at all meetings of shareholders. In his absence, the President, or a
director designated by the Chairman shall preside at such meeting.
7
<PAGE>
Section 1.5. Proxies. Shareholders may vote at any meeting of the
shareholders by proxies duly authorized in writing. Proxies shall be
valid only for one meeting to be specified therein, and any adjournments
of such meeting. Proxies shall be dated and shall be filed with the
records of the meeting.
Section 1.6. Quorum. A majority of the outstanding capital stock,
represented in person or by proxy, shall constitute a quorum at any meeting of
shareholders, unless otherwise provided by law. A majority of the votes cast
shall decide every question or matter submitted to the shareholders at any
meeting, unless otherwise provided by law or by the Articles of Association.
ARTICLE II
Directors
Section 2.1. Board of Directors. The Board of Directors (hereinafter
referred to as the "Board"), shall have power to manage and administer the
business and affairs of the Association. Except as expressly limited by law, all
corporate powers of the Association shall be vested in and may be exercised by
said Board.
Section 2.2. Number. The Board shall consist of not less than five nor more
than twenty-five persons, the exact number within such minimum and maximum
limits to be fixed and determined from time to time by resolution of a majority
of the full Board or by resolution of the shareholders at any meeting thereof;
provided, however, that a majority of the full Board may not increase the number
of directors to a number which: (a) exceeds by more than two the number of
directors last elected by shareholders where such number was fifteen or less;
and (b) to a number which exceeds by more than four the number of directors last
elected by shareholders where such number was sixteen or more, but in no event
shall the number of directors exceed twenty-five.
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Section 2.3. Organization Meeting. A meeting shall be held for the purpose
of organizing the new Board and electing and appointing officers of the
Association for the succeeding year on the day of the Annual Meeting of
Shareholders or as soon thereafter as practicable, and, in any event, within
thirty days thereof. If, at the time fixed for such meeting, there shall not be
a quorum present, the directors present may adjourn the meeting, from time to
time, until a quorum is obtained.
Section 2.4. Regular Meetings. The regular meetings of the Board shall be
held on such days and time as the directors may, by resolution, designate; and
written notice of any change thereof shall be sent to each member. When any
regular meeting of the Board falls upon a legal holiday, the meeting shall be
held on such other day as the Board may designate.
Section 2.5. Special Meetings. Special meetings of the Board may be called
by the Chairman of the Board, or President, or at the request of three or more
directors. Each director shall be given notice of each special meeting, except
the organization meeting, at least one day before it is to be held by facsimile,
telephone, telegram, letter or in person. Any director may waive any such
notice.
Section 2.6. Quorum. A majority of the directors shall constitute a quorum
at any meeting, except when otherwise provided by law; but a less number may
adjourn any meeting, from time to time, and the meeting may be held, as
adjourned without further notice.
Section 2.7. Term of Office and Vacancy. Directors shall hold office for
one year and until their successors are elected and have qualified. No person
shall stand for election as a director of this Association if at the date of his
election he will have passed his seventieth birthday; provided, however, this
prohibition shall not apply to persons who are active officers of this
Association, an affiliate bank, or its parent corporation, or a former chief
executive officer of the Association. No person, who is not an officer or former
officer of this Association, an affiliate bank, or its parent corporation and
who has discontinued the principal position or activity the person held when
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initially elected, shall be recommended to the shareholders for reelection;
provided, however, that exceptions may be made because of a change in principal
position or activity which would be compatible with continued service to this
Association. No person elected as a director may exercise any of the powers of
his office until he has taken the oath of office as prescribed by law. When any
vacancy occurs among the directors, the remaining members of the Board, in
accordance with the laws of the United States, may appoint a director to fill
such vacancy at any regular meeting of the Board, or at a special meeting called
for that purpose.
Section 2.8. Nominations. Nominations for election to the Board may
be made by the Executive Committee or by any stockholder of any
outstanding class of capital stock of the Association entitled to vote for
the election of directors.
Section 2.9. Communications Equipment. Any or all directors may participate
in a meeting of the Board by means of conference telephone or any means of
communication by which all persons participating in the meeting are able to hear
each other.
Section 2.10. Action Without Meeting. Any action required or permitted to
be taken by the Board or committee thereof by law, the Association's Articles of
Association, or these Bylaws may be taken without a meeting, if, prior or
subsequent to the action, all members of the Board or committee shall
individually or collectively consent in writing to the action. Each written
consent or consents shall be filed with the minutes of the proceedings of the
Board or committee. Action by written consent shall have the same force and
effect as a unanimous vote of the directors, for all purposes. Any certificate
or other documents which relates to action so taken shall state that the action
was taken by unanimous written consent of the Board or committee without a
meeting.
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ARTICLE III
Committees of the Board
Section 3.1. Executive Committee. The Board may by resolution adopted by a
majority of the entire Board designate an Executive Committee consisting of the
Chairman of the Board, the President, and not less than two other directors.
Subject to the national banking laws and the Association's Articles of
Association, the Executive Committee may exercise all the powers of the Board of
Directors with respect to the affairs of the Association, except that the
Executive Committee may not:
1. (a) exercise such powers while a quorum of the Board of Directors
is actually convened for the conduct of business,
(b) exercise any power specifically required to be exercised by
at least a majority of all the directors,
(c) act on matters committed by the Bylaws or resolution of the
Board of Directors to another committee of the board, or
(d) amend or repeal any resolution theretofore adopted by the
Board of Directors which by its terms is amendable or repealable only by
the Board;
2. amend the Articles of Association or make, alter or repeal any
Bylaw of the Association;
3. elect or appoint any director, create or fill any vacancies in
the Board of Directors or remove any director, or authorize or approve any
change in the compensation of any officer of the Association who is also
a director of the Association;
4. authorize or approve issuance or sale or contract for sale of
shares of stock of the Association, or determine the designation and
relative rights, preferences and limitations of a class or series of
shares;
5. adopt an agreement of merger or consolidation, or submit to
shareholders any action that requires shareholder approval, including any
recommendation to the shareholders concerning the sale, lease or exchange of all
or substantially all the Association's property and assets, a dissolution of the
Association or a revocation of a previously approved dissolution; or
6. authorize an expenditure by the Association in excess of $10
million for any one item or group of related items.
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The committee shall hold regular meetings at such times as the members shall
agree and whenever called by the chairman of the committee. A majority of the
committee shall constitute a quorum for the transaction of business. The
committee shall keep a record of its proceedings and shall report these
proceedings to the Board at the regular meetings thereof. The committee shall
serve as the nominating committee for nominations to the Board. The committee
shall provide oversight on all Community Reinvestment Act ("CRA") matters
pertaining to the Association. The committee shall also be responsible for
monitoring the CRA activities of the Association on an on-going basis and making
periodic reports on such CRA activity to the Board.
Section 3.2. Chairman of the Executive Committee. The Board may designate
one of its members to be Chairman of the Executive Committee who shall preside
at the meetings thereof and shall perform such duties as the Board shall assign
to him from time to time.
Section 3.3. Audit Committee. The Board shall appoint a committee of three
or more persons exclusive of the officers of this Association which committee
shall be known as the Audit Committee. It shall be the duty of this committee at
least once in every twelve months to examine the affairs of the Association, and
determine whether it is in a sound and solvent condition and to recommend to the
Board such changes in the manner of doing business, etc., as may seem to be
desirable. The committee may cause such examination to be made in its behalf and
under its supervision by outside accountants and may also use the services of
any other persons either inside or outside the Association to assist in its
work. The results of each examination shall be reported in writing to the Board.
Section 3.4. Audit of Trust Department. The Audit Committee shall, at least
once during each calendar year and within fifteen months of the last such audit
make suitable audits of the Trust Department or cause suitable audits to be made
by auditors responsible only to the Board, and at such time shall ascertain
whether the department has been administered in accordance with law, Part 9 of
the Regulations of the Comptroller of the Currency, and sound fiduciary
principles. In lieu of such periodic audit the Audit Committee, at the election
of the Board, may conduct or cause to be conducted by auditors responsible only
to the Board an adequate continuous audit system adopted by the Board. A written
report of such periodic or continuous audit shall be made to the Board.
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Section 3.5. Other Committees. The Board may appoint from time to time
other committees composed of one or more persons each, for such purposes and
with such powers as the Board may determine. The Chairman of the Board shall
have the power to designate another person to serve on any committee during the
absence or inability of any member thereof so to serve.
Section 3.6. Directors' Emeritus. The Board may designate one or more
persons to serve as Director Emeritus. Such Director Emeritus shall have the
right to attend any and all meetings of the Board, but shall have no vote at
such meetings. A person designated as Director Emeritus may serve in that
capacity for a period of three years.
Section 3.7. Alternate Committee Members. The Board may, from time to time,
appoint one or more, but no more than three persons to serve as alternate
members of a committee, each of whom shall be empowered to serve on that
committee in place of a regular committee member in the event of the absence or
disability of that committee member. An alternate committee member shall, when
serving on a committee, have all of the powers of a regular committee member.
Alternate committee members shall be notified of, and requested to serve at, a
particular meeting or meetings, or for particular periods of time, by or at the
direction of the chairman of the committee or the Chairman of the Board.
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ARTICLE IV
Officers
Section 4.1a. Appointment. The senior officers of this Association shall be
chosen by the Board and shall be the Chairman of the Board, one or more Vice
Chairmen, the President, the Chief Financial Officer and such other officers as
in the judgment of the Board may be from time to time required. The Chairman of
the Board and the President shall be chosen from the Directors. The Board may
designate a person to serve as secretary of all meetings of the Board and of the
shareholders and the persons so designated shall keep accurate minutes of such
meetings.
Section 4.1b. Other Officers. The Chairman, the President, the Chief
Executive Officer, any Vice Chairman or any Senior Executive Vice President may
appoint such other officers with such titles and duties as he may designate.
Section 4.2. Term of Office. The officers who are required by the articles
of association or the bylaws to be members of the Board shall hold their
respective offices until the Organization meeting of the Board following the
annual meeting of shareholders or until their respective successors shall have
been elected, unless they shall resign, become disqualified or be removed from
office. Each other officer shall hold office at the pleasure of the Board. Any
officer may be removed at any time by the Board.
Section 4.3. Chairman of the Board. The chairman of the board shall be
designated as Chairman of the Board. He shall preside at all meetings of the
stockholders and directors and he shall be a member of all committees of the
Board except the Audit Committee. He shall have such other powers and perform
such other duties as may be prescribed from time to time by the Board. He shall
be subject only to the direction and control of the Board.
Section 4.4. President. The president shall be the chief executive officer
of the Association and he shall be designated as President and Chief Executive
Officer. In the absence of the Chairman the President shall preside at all
meetings of the Board. The President shall be a member of each committee of the
Board except the Audit Committee. He shall have the powers and perform the
duties conferred or imposed upon the President by the national banking laws, and
he shall have such other powers and perform such other duties as may from time
to time be imposed upon or assigned to him by the Board.
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Section 4.5. Chief Financial Officer. The Chief Financial Officer shall have
such title as may be designated by the Board and he shall be responsible for all
monies, funds and valuables of this Association, provide for the keeping of
proper records of all transactions of the Association, report to the Board at
each regular meeting the condition of the Association, submit to the Board, when
requested, a detailed statement of the income and expenses, be responsible for
the conduct and efficiency of all persons employed under him, and perform such
other duties as may be from time to time assigned to him by the Board.
Section 4.6. Other Officers. All other officers shall respectively exercise
such powers and perform such duties as generally pertain to their several
offices, or as may be conferred upon or assigned to them by the Board, the
Chairman of the Board or the President.
Section 4.7. Bond. Each officer and employee, if so required by the Board,
shall give bond with surety to be approved by the Board, conditioning for the
honest discharge of his duties as such officer or employee. In the discretion of
the Board, such bonds may be individual, schedule or blanket form, and the
premiums may be paid by the Association.
ARTICLE V
Trust Department
Section 5.1. Trust Department. There shall be a department of the
Association known as the Trust Department which shall perform the
fiduciary responsibilities of the Association.
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Section 5.2. Trust Officer. There shall be a Trust Officer of this
Association whose duties shall be to manage, supervise and direct all the
activities of the Trust Department. Such persons shall do or cause to be done
all things necessary or proper in carrying on the business of the Trust
Department in accordance with the provisions of law and applicable regulations;
and shall act pursuant to opinion of counsel where such opinion is deemed
necessary. Opinions of counsel shall be retained on file in connection with all
important matters pertaining to fiduciary activities. The Trust Officer shall be
responsible for all assets and documents held by the Association in connection
with fiduciary matters. The Trust Officer shall perform such other duties and
possess such other powers as from time to time shall be delegated to him by the
Chief Executive Officer, the Board, the Executive Committee or these bylaws. The
President may appoint such other officers of the Trust Department as it may deem
necessary or advisable with such duties as may be assigned and with such titles
as may be designated.
Section 5.3. Trust Investment. Funds held in a fiduciary capacity shall be
invested in accordance with the instrument establishing the fiduciary
relationship and local law. Where such instrument does not specify the character
and class of the investments to be made and does not vest in the Association a
discretion in the matter, funds held pursuant to such instrument shall be
invested in investments in which corporate fiduciaries may invest under local
law.
ARTICLE VI
Stock Certificates and Transfers
Section 6.1. Stock Certificates. Ownership of capital stock of the
Association shall be evidenced by certificates of stock signed by the Chairman
or President, and the Secretary, or an Assistant Secretary. Each certificate
shall state upon its face that the stock is transferable only upon the books of
the Association by the holder thereof, or by duly authorized attorney, upon the
surrender of such certificate, and shall meet the requirements of Section 5139,
United States Revised Statutes, as amended.
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Section 6.2. Transfers. The stock of this Association shall be assignable
and transferable only on the books of this Association, subject to the
restrictions and provisions of the national banking laws; and a transfer book
shall be provided in which all assignments and transfers of stock shall be made.
When stock is transferred, the certificates thereof shall be returned to the
Association, canceled, preserved and new certificates issued.
Section 6.3. Dividends. Dividends shall be paid to the shareholders in
whose names the stock shall stand at the close of business on the day next
preceding the date when the dividends are payable, provided, however, that the
directors may fix another date as a record date for the determination of the
shareholders entitled to receive payment thereof.
ARTICLE VII
Increase of Stock
Section 7.1. Capital Stock. Shares of the capital stock of the Association,
which have been authorized but not issued, may be issued from time to time for
such consideration, not less than the par value thereof, as may be determined by
the Board.
ARTICLE VIII
Corporate Seal
Section 8.1. Seal. The seal, an impression of which appears below,
is the seal of the Association as adopted by the Board of Directors:
[Seal]
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The Chairman of the Board, the Vice Chairman, the President, Senior
Executive Vice President, Executive Vice President, Senior Vice President, Vice
President, each Assistant Vice President, the Chief Financial Officer, the
Secretary, each Assistant Secretary, each Trust Officer, each Assistant Trust
Officer or each Assistant Cashier, shall have the authority to affix the
corporate seal of this Association and to attest to the same.
ARTICLE IX
Miscellaneous Provisions
Section 9.1. Fiscal Year. The fiscal year of the Association shall
be the calendar year.
Section 9.2. Execution of Instruments. All agreements, contracts,
indentures, mortgages, deeds, conveyances, transfers, certificates,
declarations, receipts, discharges, releases, satisfactions, settlements,
petitions, schedules, accounts, affidavits, bonds, undertakings, proxies and
other instruments or documents may be signed, executed, acknowledged, verified,
delivered or accepted in behalf of the Association by the Chairman of the Board,
or any Vice Chairman, or the President, or Senior Executive Vice President, or
Executive Vice President, or Senior Vice President, or Vice President, or
Assistant Vice President, or Chief Financial Officer, or the Secretary, or
Assistant Secretary, or, if in connection with the exercise of fiduciary powers
of the Association, by any of said officers or by any Trust Officer or Assistant
Trust Officer, to the extent authorized by the corporate policy of the
Association, as adopted and modified from time to time. Any such instruments may
also be executed, acknowledged, verified, delivered, or accepted in behalf of
the Association in such other manner and by such other officers as the Board may
from time to time direct.
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Section 9.3. Records. The organization papers of this Association,
the articles of association, the bylaws and any amendments thereto, the
proceedings of all regular and special meetings of the shareholders and of the
directors, the returns of the judges of elections, and the reports of the
committees of directors shall be recorded in an appropriate minute book, and the
minutes of each meeting shall be signed by the Secretary or any other officer
appointed to act as secretary of the meeting.
Section 9.4. Banking Hours. This Association and its branch offices
shall be open on such days and during such hours as shall be fixed from
time to time by the Board.
Section 9.5. Voting Shares of Other Corporations. The Chairman, any Vice
Chairman, the President, or any Vice President is authorized to vote, represent
and exercise on behalf of this Association all rights incident to any and all
shares of stock of any other corporation standing in the name of the
Association. The authority granted herein may be exercised by such officers in
person or by proxy or by power of attorney duly executed by said officer.
ARTICLE X
Bylaws
Section 10.1. Inspection. A copy of the Bylaws, with all amendments
thereto, shall at all times be kept in a convenient place at the Head Office of
the Association, and shall be open for inspection to all shareholders, during
banking hours.
Section 10.2. Amendments. These Bylaws may be changed or amended at
any regular or special meeting of the Board by the vote of a majority of
the Directors.
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FIRST UNION NATIONAL BANK EXHIBIT 4
ARTICLES OF ASSOCIATION
(effective January 1,1996)
For purposes of organizing an Association to carry on the business of
banking under the laws of the United States, the undersigned do enter into the
following Articles of Association:
FIRST. The title of this Association shall be First Union National
Bank.
SECOND. The Main Office of the Association shall be in Elkton,
County of Cecil, State of Maryland. The general business of the
Association shall be conducted at its main office and its branches.
THIRD. The Board of Directors of this Association shall consist of not less
than five nor more than twenty-five persons, the exact number to be fixed and
determined from time to time by resolution of a majority of the full Board of
Directors or by resolution of the shareholders at any annual or special meeting
thereof. Each Director, during the full term of his directorship, shall own a
minimum of (a) $1,000 par value of stock of this Association or (b) preferred or
common stock of First Fidelity Bancorporation having (i) aggregate par value
equal to or greater than $1,000, (ii) aggregate shareholders' equity equal to or
greater than $1,000 or (iii) aggregate fair market value equal to or greater
than $1,000. Any vacancy in the Board of Directors may be filled by action of
the Board of Directors.
FOURTH. There shall be an annual meeting of the shareholders the purpose of
which shall be the election of Directors and the transaction of whatever other
business may be brought before said meeting. It shall be held at the main office
or other convenient place as the Board of Directors may designate, on the day of
each year specified therefor in the By-laws, but if no election is held on that
day, it may be held on any subsequent day according to such lawful rules as may
be presented by the Board of Directors.
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FIFTH. (A) General. The amount of capital stock of this Association shall
be (i) 25,000,000 shares of common stock of the par value of twenty dollars
($20.00) each (the "Common Stock") and (ii) 160,540 shares of preferred stock of
the par value of one dollar ($1.00) each (the "Non-Cumulative Preferred Stock"),
having the rights, privileges and preferences set forth below, but said capital
stock may be increased or decreased from time to time in accordance with the
provisions of the laws of the United States.
(B) Terms of the Non-Cumulative Preferred Stock.
1. General. Each share of Non-Cumulative Preferred Stock shall be
identical in all respects with the other shares of Non-Cumulative Preferred
Stock. The authorized number of shares of Non-Cumulative Preferred Stock may
from time to time be increased or decreased (but not below the number then
outstanding) by the Board of Directors. Shares of Non-Cumulative Preferred Stock
redeemed by the Association shall be canceled and shall revert to authorized but
unissued shares of NonCumulative Preferred Stock.
2. Dividends.
(a) General. The holders of Non-Cumulative Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors, but
only out of funds legally available therefor, non-cumulative cash dividends at
the annual rate of $83.75 per share, and no more, payable quarterly on the first
days of December, March, June and September, respectively, in each year with
respect to the quarterly dividend period (or portion thereof) ending on the day
preceding such respective dividend payment date, to shareholders of record on
the respective date, not exceeding fifty days preceding such dividend payment
date, fixed for that purpose by the Board of Directors in advance of payment of
each particular dividend. Notwithstanding the foregoing, the cash dividend to be
paid on the first dividend payment date after the initial issuance of
NonCumulative Preferred Stock and on any dividend payment date with respect to a
partial dividend period shall be $83.75 per share multiplied by the fraction
produced by dividing the number of days since such initial issuance or in such
partial dividend period, as the case may be, by 360.
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(b) Non-cumulative Dividends. Dividends on the shares of NonCumulative
Stock shall not be cumulative and no rights shall accrue to the holders of
shares of Non-Cumulative Preferred Stock by reason of the fact that the
Association may fail to declare or pay dividends on the shares of Non-Cumulative
Preferred Stock in any amount in any quarterly dividend period, whether or not
the earnings of the Association in any quarterly dividend period were sufficient
to pay such dividends in whole or in part, and the Association shall have no
obligation at any time to pay any such dividend.
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(c) Payment of Dividends. So long as any share of Non-Cumulative Preferred
Stock remains outstanding, no dividend whatsoever shall be paid or declared and
no distribution made on any junior stock other than a dividend payable in junior
stock, and no shares of junior stock shall be purchased, redeemed or otherwise
acquired for consideration by the Association, directly or indirectly (other
than as a result of a reclassification of junior stock, or the exchange or
conversion of one junior stock for or into another junior stock, or other than
through the use of the proceeds of a substantially contemporaneous sale of other
junior stock), unless all dividends on all shares of Non-Cumulative Preferred
Stock and non-cumulative Preferred Stock ranking on a parity as to dividends
with the shares of Non-Cumulative Preferred Stock for the most recent dividend
period ended prior to the date of such payment or declaration shall have been
paid in full and all dividends on all shares of cumulative Preferred Stock
ranking on a parity as to dividends with the shares of Non-Cumulative Preferred
Stock for the most recent dividend period ended prior to the date of such
payment or declaration shall have been paid in full and all dividends on all
shares of Non-Cumulative Stock (not withstanding that dividends on such stock
are cumulative) for all past dividend periods shall have been paid in full.
Subject, to the foregoing, and not otherwise, such dividends (payable in cash,
stock or otherwise) as may be determined by the Board of Directors may be
declared and paid on any junior stock from time to time out of any funds legally
available therefor, and the Non-Cumulative Stock shall not be entitled to
participate in any such dividends, whether payable in cash, stock or otherwise.
No dividends shall be paid or declared upon any shares of any class or series of
stock of the Association ranking on a parity (whether dividends on such stock
are cumulative or non-cumulative) with the NonCumulative Preferred Stock in the
payment of dividends for any period unless at or prior to the time of such
payment or declaration all dividends payable on the Non-Cumulative Preferred
Stock for the most recent dividend period ended prior to the date of such
payment or declaration shall have been paid in full. When dividends are not paid
in full, as aforesaid, upon the Non-Cumulative Preferred Stock and any other
series of Preferred Stock ranking on a parity as to dividends (whether dividends
on such stock are cumulative or non-cumulative) with the NonCumulative Preferred
Stock, all dividends declared upon the Non-Cumulative Preferred Stock and any
other series of Preferred Stock ranking on a parity as to dividends with the
Non-Cumulative Preferred Stock shall be declared pro rata so that the amount of
dividends declared per share on the Non-Cumulative Preferred Stock and such
other Preferred Stock shall in all cases bear to each other the same ratio that
accrued dividends per share on the Non-Cumulative Preferred Stock (but without
any accumulation in respect of any unpaid dividends for prior dividend periods
on the shares of Non-Cumulative Stock) and such other Preferred Stock bear to
each other. No interest, or sum of money in lieu of interest, shall be payable
in respect of any dividend payment or payments on the NonCumulative Preferred
Stock which may be in arrears.
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3. Voting. The holders of Non-Cumulative Preferred Stock shall not
have any right to vote for the election of directors or for any other
purpose.
4. Redemption.
(a) Optional Redemption. The Association, at the option of the Board of
Directors, may redeem the whole or any part of the shares of NonCumulative
Preferred Stock at the time outstanding, at any time or from time to time after
the fifth anniversary of the date of original issuance of the Non-Cumulative
Preferred Stock, upon notice given as hereinafter specified, at the redemption
price per share equal to $1,000 plus an amount equal to the amount of accrued
and unpaid dividends from the immediately preceding dividend payment date (but
without any accumulation for unpaid dividends for prior dividend periods on the
shares of NonCumulative Preferred Stock) to the redemption date.
(b) Procedures. Notice of every redemption of shares of NonCumulative
Preferred Stock shall be mailed by first class mail, postage prepaid, addressed
to the holders of record of the shares to be redeemed at their respective last
addresses as they shall appear on the books of the Association. Such mailing
shall be at least 10 days and not more than 60 days prior to the date fixed for
redemption. Any notice which is mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the shareholder
receives such notice, and failure duly to give such notice by mail, or any
defect in such notice, to any holder of shares of Non-Cumulative Preferred Stock
designated for redemption shall not affect the validity of the proceedings for
the redemption of any other shares of Non-Cumulative Preferred Stock.
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In case of redemption of a part only of the shares of Non-Cumulative
Preferred Stock at the time outstanding the redemption may be either pro rata or
by lot or by such other means as the Board of Directors of the Association in
its discretion shall determine. The Board of Directors shall have full power and
authority, subject to the provisions herein contained, to prescribe the terms
and conditions upon which shares of the Non-Cumulative Preferred Stock shall be
redeemed from time to time.
If notice of redemption shall have been duly given, and, if on or before
the redemption date specified therein, all funds necessary for such redemption
shall have been set aside by the Association, separate and apart from its other
funds, in trust for the pro rata benefit of the holders of the shares called for
redemption, so as to be and continue to be available therefor, then,
notwithstanding that any certificate for shares so called for redemption shall
not have been surrendered for cancellation, all shares so called for redemption
shall no longer be deemed outstanding on and after such redemption date, and all
rights with respect to such shares shall forthwith on such redemption date cease
and terminate, except only the right of the holders thereof to receive the
amount payable on redemption thereof, without interest.
If such notice of redemption shall have been duly given or if the
Association shall have given to the bank or trust company hereinafter referred
to irrevocable authorization promptly to give such notice, and, if on or before
the redemption date specified therein, the funds necessary for such redemption
shall have been deposited by the Association with such bank or trust company in
trust for the pro rata benefit of the holders of the shares called for
redemption, then, notwithstanding that any certificate for shares so called for
redemption shall not have been surrendered for cancellation, from and after the
time of such deposit, all shares so called for redemption shall no longer be
deemed to be outstanding and all rights with respect to such shares shall
forthwith cease and terminate, except only the right of the holders thereof to
receive from such bank or trust company at any time after the time of such
deposit the funds so deposited, without interest. The aforesaid bank or trust
company shall be organized and in good standing under the laws of the United
States of America or any state thereof, shall have capital, surplus and
undivided profits aggregating at least $50,000,000 according to its last
published statement of condition, and shall be identified in the notice of
redemption. Any interest accrued on such funds shall be paid to the Association
from time to time. In case fewer than all the shares of Non-Cumulative Preferred
Stock represented by a stock certificate are redeemed, a new certificate shall
be issued representing the unredeemed shares without cost to the holder thereof.
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Any funds so set aside or deposited, as the case may be, and unclaimed at
the end of the relevant escheat period under applicable state law from such
redemption date shall, to the extent permitted by law, be released or repaid to
the Association, after which repayment the holders of the shares so called for
redemption shall look only to the Association for payment thereof.
5. Liquidation.
(a) Liquidation Preference. In the event of any voluntary liquidation,
dissolution or winding up of the affairs of the Association, the holders of
Non-Cumulative Preferred Stock shall be entitled, before any distribution or
payment is made to the holders of any junior stock, to be paid in full an amount
per share equal to an amount equal to $1,000 plus an amount equal to the amount
of accrued and unpaid dividends per share from the immediately preceding
dividend payment date (but without any accumulation for unpaid dividends for
prior dividend periods on the shares of Non-Cumulative Preferred Stock) per
share to such distribution or payment date (the "liquidation amount").
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In the event of any involuntary liquidation, dissolution or winding up of
the affairs of the Association, then, before any distribution or payment shall
be made to the holders of any junior stock, the holders of Non-Cumulative
Preferred Stock shall be entitled to be paid in full an amount per share equal
to the liquidation amount.
If such payment shall have been made in full to all holders of shares of
Non-Cumulative Preferred Stock, the remaining assets of the Association shall be
distributed among the holders of junior stock, according to their respective
rights and preferences and in each case according to their respective numbers of
shares.
(b) Insufficient Assets. In the event that, upon any such voluntary or
involuntary liquidation, dissolution or winding up, the available assets of the
Association are insufficient to pay such liquidation amount on all outstanding
shares of Non-Cumulative Preferred Stock, then the holders of Non-Cumulative
Preferred Stock shall share ratably in any distribution of assets in proportion
to the full amounts to which they would otherwise be respectively entitled.
(c) Interpretation. For the purposes of this paragraph 5, the consolidation
or merger of the Association with any other corporation or association shall not
be deemed to constitute a liquidation, dissolution or winding up of the
Association.
6. Preemptive Rights. The Non-Cumulative Preferred Stock is not
entitled to any preemptive, subscription, conversion or exchange rights in
respect of any securities of the Association.
7. Definitions. As used herein with respect to the Non-Cumulative
Preferred Stock, the following terms shall have the following meanings:
(a) The term "junior stock" shall mean the Common Stock and any other class
or series of shares of the Association hereafter authorized over which the
Non-Cumulative Preferred Stock has preference or priority in the payment of
dividends or in the distribution of assets on any liquidation, dissolution or
winding up of the Association.
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(b) The term "accrued dividends", with respect to any share of any class or
series, shall mean an amount computed at the annual dividend rate for the class
or series of which the particular share is a part, from, if such share is
cumulative, the date on which dividends on such share became cumulative to and
including the date to which such dividends are to be accrued, less the aggregate
amount of all dividends theretofore paid thereon and, if such share is
non-cumulative, the relevant date designated to and including the date to which
such dividends are accrued, less the aggregate amount of all dividends
theretofore paid with respect to such period.
(c) The term "Preferred Stock" shall mean all outstanding shares of all
series of preferred stock of the Association as defined in this Article Fifth of
the Articles of Association, as amended, of the Association.
8. Restriction on Transfer. No shares of Non-Cumulative Preferred Stock, or
any interest therein, may be sold, pledged, transferred or otherwise disposed of
without the prior written consent of the Association. The foregoing restriction
shall be stated on any certificate for any shares of Non-Cumulative Preferred
Stock.
9. Additional Rights. The shares of Non-Cumulative Preferred Stock
shall not have any relative, participating, optional or other special
rights and powers other than as set forth herein.
SIXTH. The Board of Directors shall appoint one of its members President of
this Association, who shall be Chairperson of the Board, unless the Board
appoints another director to be the Chairperson. The Board of Directors shall
have the power to appoint one or more Vice Chairmen and Vice Presidents and such
other officers and employees as may be required to transact the business of this
Association.
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The Board of Directors shall have the power to define the duties of
the officers and employees of the Association; to fix the salaries to be paid to
them; to dismiss them; to require bonds from them and to fix the penalty
thereof; to regulate the manner in which any increase of the capital of the
Association shall be made; to manage and administer the business and affairs of
the Association; to make all By-laws that it may be lawful for them to make; and
generally to do and perform all acts that it may be legal for a Board of
Directors to do and perform.
SEVENTH. The Board of Directors shall have the power to change the location
of the main office to any other place permitted by law, but subject to the
approval of the Comptroller of the Currency; and shall have the power to
establish or change the location of any branch or branches of the Association to
any other location, without the approval of the shareholders, but subject to the
approval of the Comptroller of the Currency.
EIGHTH. The corporate existence of this Association shall continue
until terminated in accordance with the laws of the United States.
NINTH. The Board of Directors of this Association, or any one or more
shareholders owning, in the aggregate, not less than 25 percent of the stock of
this Association, may call a special meeting of shareholders at any time. Unless
otherwise provided by the laws of the United States, a notice of the time,
place, and purpose of every annual and special meeting of the shareholders shall
be given by first-class mail, postage prepaid, mailed at least ten days prior to
the date of such meeting, to each shareholder of record at his address as shown
upon the books of this Association.
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TENTH. (A) Indemnification of Directors.
The Association shall, to the fullest extent permitted by applicable
banking, corporate and other law and regulation, indemnify any person who is or
was a director of the Association from and against any and all expenses,
liabilities or other losses arising in connection with any action, suit, appeal
or other proceeding, by reason of the fact that such person is or was serving as
a director of the Association and may, to the fullest extent permitted by
applicable banking, corporate and other law and regulation, advance monies to
such persons for expenses incurred in defending any such action, suit, appeal or
other proceeding on such terms as the Association's Board of Directors shall
determine and as are required by applicable banking, corporate and other law or
regulation or interpretation by the applicable banking regulators. The
Association may purchase insurance for the purpose of indemnifying such persons
and/or reimbursing the Association upon payment of indemnification to such
persons to the extent that indemnification is authorized by the preceding
sentences, except that insurance coverage and corporate indemnification shall
not be available in connection with a formal order by a court or judicial or
governmental body assessing civil money penalties against such person or in the
event that such coverage or indemnification would be prohibited by applicable
banking, corporate and other law or regulation.
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(B) Indemnification of Officers, Employees and Agents.
The Association shall indemnify any person who is or was an officer,
employee or agent of the Association or who is or was a director, general
partner, trustee or principal of another entity serving as such at the request
of the Association from and against any and all expenses, liabilities or other
losses arising in connection with any action, suit, appeal or other proceeding,
by reason of the fact that such person is or was serving as an officer, employee
or agent of the Association or as a director of another entity at the request of
the Association, to the extent authorized by the corporate policy of the
Association, as adopted and modified from time to time by the shareholders of
the Association, except to the extent that such indemnification would be
prohibited by applicable banking, corporate and other law or regulation. The
Association may advance monies to such persons for expenses incurred in
defending any such action, suit, appeal or other proceeding in accordance with
the corporate policy of the Association, as adopted and modified from time to
time by the shareholders of the Association, under such terms and procedures as
are required by applicable banking, corporate and other law or regulation or
interpretation by the applicable banking regulators, except to the extent that
such advancement would be prohibited by applicable banking, corporate and other
law or regulation. The Association may purchase insurance for the purpose of
indemnifying such persons and/or reimbursing the Association upon payment of
indemnification to such person to the extent that indemnification is authorized
by the preceding sentence, except that insurance coverage and corporate
indemnification shall not be available in connection with a formal order by a
court or judicial or governmental body assessing civil money penalties against
such person or in the event that such coverage or indemnification would be
prohibited by applicable banking, corporate and other law or regulation.
ELEVENTH. These Articles of Association may be amended at any regular
or special meeting of the shareholders by the affirmative vote of the holders of
a majority of the stock of this Association, unless the vote of the holders of a
greater amount of stock is required by law, and in that case by the vote of the
holders of such greater amount.
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EXHIBIT 6
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, we hereby consent 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 UNION NATIONAL BANK
By: /s/ Alan G. Finn
------------------------------
Alan G. Finn
Assistant Vice President
Elkton, Maryland
February 20, 1996
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EXHIBIT 7
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the First Fidelity Bank,
National Association (now First Union National Bank) of Elkton in the state of
Maryland, at the close of business on December 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................ 1,876,439
Interest-bearing balances......................................... 35,650
Securities.......................................................... /////////
Hold-to-maturity securities....................................... 672,202
Available-for-sale securities..................................... 4,786,380
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............................................... 30,000
Securities purchased under agreements to resell.................. 369,072
Loans and lease financing receivables:
Loan and leases, net of unearned income..................23,027,860
LESS: Allowance for loan and lease losses................ 469,305
LESS: Allocated transfer risk reserve.................... 0
Loans and leases, net of unearned income, allowance, and
reserve........................................................... 22,558,555
Assets held in trading accounts................................... 76,675
Premises and fixed assets (including capitalized leases).......... 374,903
Other real estate owned........................................... 104,196
Investment in unconsolidated subsidiaries and associated //////////
companies......................................................... 19,166
Customer's liability to this bank on acceptances outstanding...... 134,499
Intangible assets................................................. 785,891
Other assets...................................................... 863,227
Total assets...................................................... 32,686,855
LIABILITIES
Deposits:
In domestic offices.......................................... 24,886,995
Noninterest-bearing.............................. 4,687,403
Interest-bearing.................................20,199,592
In foreign offices, Edge and Agreement subsidiaries,
and IBFs..................................................... 1,304,436
Noninterest-bearing.............................. 207
Interest-bearing................................. 960,051
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........................................ 1,304,436
Securities sold under agreements to repurchase................ 882,846
Demand notes issued to the U.S. Treasury........................... 97,451
Trading liabilities................................................ 0
Other borrowed money:.............................................. /////////
With original maturity of one year or less......................... 252,296
With original maturity of more than one year.................. 1,602
Mortgage indebtedness and obligations under capitalized leases..... 17,369
Bank's liability on acceptances executed and outstanding........... 134,499
Subordinated notes and debentures.................................. 175,000
Other liabilities.................................................. 934,256
Total liabilities.................................................. 29,647,008
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............................. 1,127,557
Net unrealized holding gains (losses) on available-for-sale /////////
securities........................................................ ( 486)
Cumulative foreign currency translation adjustments................ 0
Total equity capital............................................... 3,039,847
Total liabilities, limited-life preferred stock and equity......... /////////
capital......................................................... 32,686,855
