<PAGE>
As filed with the Securities and Exchange Commission on February 6, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE PEP BOYS -- MANNY, MOE & JACK
(Exact name of registrant as specified in its charter)
Pennsylvania 23-0962915
(State or other jurisdiction of incorporation)
(I.R.S. Employer 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
The Pep Boys -- Manny, Moe & Jack
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)
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with copies to:
Daniel D. Rubino, Esq.
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
(212) 821-8000
(Counsel for Registrant)
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Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
<PAGE>
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=============================================================================================================
Proposed
Maximum
Proposed Maximum Aggregate Amount of
Title of Each Class of Securities Amount to be Offering Price per Offering Registration
to be Registered Registered(1) Security(2) Price(1) Fee
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<S> <C> <C> <C> <C>
Debt Securities ..................... $200,000,000 100% $200,000,000 $59,000
=============================================================================================================
</TABLE>
(1) Or, if any Debt Securities are issued at an original issue discount, such
greater amount as shall result in an aggregate public offering price of
$200,000,000.
(2) Estimated solely for the purpose of calculating the registration fee.
---------------------
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.
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<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 on any such State.
SUBJECT TO COMPLETION, DATED FEBRUARY 6, 1998
PROSPECTUS
[GRAPHIC OMITTED]
Debt Securities
----------
The Pep Boys -- Manny, Moe & Jack (the "Company") may from time to time
offer its debt securities (the "Debt Securities") on terms to be determined at
the time of sale. The Debt Securities may consist of one or more series of
unsecured debt securities, which may be either senior debentures, notes, bonds
and/or other evidences of indebtedness ("Senior Securities") or subordinated
debentures, notes, bonds and/or other evidences of indebtedness ("Subordinated
Securities"). The Debt Securities may be offered, separately or together, in
separate series, in amounts, at prices and on terms to be set forth in a
supplement to this Prospectus (a "Prospectus Supplement"). The aggregate public
offering price of the securities to be offered by this Prospectus shall not
exceed $200,000,000 (or its equivalent in one or more foreign currencies,
currency units or composite currencies).
The Prospectus Supplement accompanying this Prospectus will set forth,
with respect to the particular series or issue of Debt Securities for which
this Prospectus and the Prospectus Supplement are being delivered: the terms of
any Debt Securities offered, the specific designation, aggregate principal
amount, authorized denominations, maturity, rate (or manner of calculation
thereof) and time of payment of interest, if any, any redemption or repayment
terms, the currency or currencies, currency unit or units or composite currency
or currencies in which the Debt Securities shall be denominated or payable, any
index, formula or other method pursuant to which principal, premium or interest
may be determined and the form of the Debt Securities (which may be in
registered, bearer or global form), and any initial public offering price, the
net proceeds to the Company and the other specific terms of such offering of
Debt Securities.
The Senior Securities offered pursuant to this Prospectus will rank
equally with all other unsecured and unsubordinated obligations of the Company.
The Subordinated Securities offered by this Prospectus will be subordinated to
all existing and future Senior Indebtedness (as defined) of the Company. See
"Description of Debt Securities."
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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 AD-EQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
----------
The Debt Securities may be offered directly, through agents designated
from time to time, to or through dealers or to or through underwriters. Such
agents or underwriters may act alone or with other agents or underwriters. Any
such agents, dealers or underwriters will be set forth in a Prospectus
Supplement. If an agent of the Company, or a dealer or underwriter, is involved
in the offering of the Debt Securities, the agent's commission, dealer's
purchase price, underwriter's discount and net proceeds to the Company, as the
case may be, will be set forth in, or may be calculated from, the Prospectus
Supplement. Any underwriters, dealers or agents participating in the offering
may be deemed "underwriters" within the meaning of the Securities Act of 1933,
as amended.
This Prospectus may not be used to consummate sales of Debt Securities
unless accompanied by a Prospectus Supplement. Any statement contained in this
Prospectus will be deemed to be modified or superseded by any inconsistent
statement contained in any accompanying Prospectus Supplement.
----------
Prospectus dated , 1998.
<PAGE>
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. In addition, the
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission, such as the Company. The address of the Commission's Web
site is http:/www.sec.gov. 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 contains forward-looking statements that involve risks and
uncertainties, including risks associated with the automotive aftermarket
retail and service industries and other risks detailed from time to time in the
Company's filings with the Commission.
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 Debt Securities 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 February 1,
1997 and the Company's Quarterly Reports on Form 10-Q for the quarters ended
May 3, 1997, August 2, 1997 and November 1, 1997, and any amendments or reports
filed for the purpose of updating such description, 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, Executive Vice
President and Chief Financial Officer, The Pep Boys -- Manny, Moe & Jack, 3111
West Allegheny Avenue, Philadelphia, Pennsylvania 19132, telephone (215)
229-9000.
2
<PAGE>
THE COMPANY
Pep Boys 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.
As of November 1, 1997, Pep Boys operated 675 stores (566 Supercenters and 109
Pep Boys Express stores) located in 33 states, the District of Columbia and
Puerto Rico, of which 365 stores are owned and 310 stores are leased. Pep Boys
believes it is best positioned to gain market share and to increase
profitability by serving the "do-it-yourself," "do-it-for-me" and
"buy-for-resale" customer segments with the highest quality merchandise and
service at the best value.
The Company operates approximately 12,826,000 gross square feet of retail
space, including an aggregate of 5,908 service bays. The Company's Supercenter
is a free standing, "one-stop" shopping automotive warehouse that features
state-of-the-art service bays. Each Supercenter carries an average of
approximately 28,000 stock-keeping units and serves the automotive aftermarket
needs of the "do-it-yourself", the "do-it-for-me" and the "buy-for-resale"
customer segments. Late in 1996, a new Supercenter prototype was introduced,
reducing overall size to approximately 18,200 square feet while offering the
same number of stock-keeping units and increasing the number of service bays to
12. The Company intends to continue to utilize this new prototype in 1998. Pep
Boys believes that the operation of service bays in its Supercenters
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.
Pep Boys Express stores (formerly called PARTS USA) generally operate in
certain urban locations that the Company believes will be better served by
stores with an extensive selection of parts and accessories (an average of
approximately 27,000 stock-keeping units per store) but without tires or
service bays. Pep Boys Express stores primarily serve the automotive
aftermarket needs of the "do-it-yourself" and the "buy-for-resale" customer
segments. Pep Boys Express stores average approximately 9,500 square feet. As
compared to Supercenters, Pep Boys Express stores have a higher percentage of
hard parts, the highest margin merchandise category in the sales mix. By
selectively supplementing its Supercenter presence with Pep Boys Express
stores, the Company seeks to increase its market penetration and market share
over time.
The Company has established a commercial delivery business to increase its
market share with the professional installer. This will strengthen the
Company's position in the "buy-for-resale" customer segment by taking greater
advantage of the breadth and quality of its parts inventory as well as its
experience supplying its own service bays and mechanics. As of November 1,
1997, 150 of the Company's stores provide parts delivery, and by the end of
1998, the Company expects to provide parts delivery from all of its suitable
stores, representing approximately 80% of its chain.
The Company believes it is well positioned to serve the entire service and
repair market and is actively developing fleet maintenance programs with
national and local fleet management agencies, corporate fleets, rental car
agencies and extended warranty companies. Pep Boys is also reconditioning used
rental cars in preparation for resale. The flexibility to use less busy periods
of the day for fleet maintenance and rental car reconditioning programs creates
an opportunity for Pep Boys to increase the capacity utilization of its service
bays, thereby creating high margin, incremental sales for the Company.
During fiscal years 1993, 1994, 1995 and 1996, the Company added a net of
29, 49, 71 and 98 stores, respectively. For the thirty-nine weeks ended
November 1, 1997, the Company has added a net of 71 stores. The Company plans
to open approximately 39 new stores during the fourth quarter of fiscal 1997.
In fiscal 1998, the Company plans to open up to 70 new stores. The Company
expects that by slowing the rate of new store openings, it will be able to
increase its focus, execution and returns from existing stores. In addition,
the Company believes that it will be able to fund this expansion plan with
internal cash flow.
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
3
<PAGE>
believes that it carries among the largest selection of parts, accessories and
chemicals in the automotive aftermarket retail industry, with approximately
28,000 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.
4
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's ratio of earnings to fixed
charges on a historical basis for each of the five years in the period ended
February 1, 1997.
<TABLE>
<CAPTION>
Year Ended
------------------------------------------------------------------------------------
Jan. 30, 1993 Jan. 29, 1994 Jan. 28, 1995 Feb. 3, 1996 Feb. 1, 1997
--------------- --------------- --------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges ................. 4.3x 4.9x 4.7x 4.1x 4.7x
</TABLE>
For purposes of computing historical ratios of earnings to fixed charges,
earnings are divided by fixed charges. "Earnings" represent the aggregate of
(a) earnings before income taxes and changes in accounting principle and (b)
fixed charges (exclusive of capitalized interest costs). "Fixed charges"
represent interest costs including capitalized interest costs, plus one-third
of rental expense (which amount is considered representative of the interest
factor in rental expense).
USE OF PROCEEDS
Unless otherwise set forth in the applicable Prospectus Supplement
accompanying this Prospectus, proceeds from the sale of the Debt Securities
will be used by the Company for working capital, for the repayment of debt or
for other general corporate purposes, and initially may be temporarily invested
in short-term securities.
5
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The following description of the Debt Securities sets forth certain
general terms and provisions of the Indentures under which the Debt Securities
are to be issued. The particular terms of each issue of Debt Securities, as
well as any modifications or additions to such general terms that may apply in
the case of such Debt Securities, will be described in the Prospectus
Supplement relating to such Debt Securities. Accordingly, for a description of
the terms of a particular issue of Debt Securities, reference must be made to
both the Prospectus Supplement relating thereto and to the following
description.
The Indentures
Senior Securities, if issued in the future, will be issued under an
Indenture between the Company and PNC Bank, National Association, as Trustee
(the "Senior Indenture"). Subordinated Securities, if issued in the future,
will be issued under an Indenture between the Company and PNC Bank, National
Association, as Trustee (the "Subordinated Indenture"). The Senior Indenture
and the Subordinated Indenture are sometimes referred to herein collectively as
the "Indentures" and individually as an "Indenture."
The Indentures have been filed as exhibits to the Registration Statement
of which this Prospectus is a part. Each Indenture is available for inspection
at the corporate trust office of the Trustee at 1600 Market Street, 30th Floor,
Philadelphia, Pennsylvania 19103. The following description of the Indentures
and summaries of certain provisions thereof do not purport to be complete and
are subject to, and are qualified in their entirety by reference to, all
provisions of the respective Indentures. All section references appearing
herein are to sections of the applicable Indenture or Indentures, and
capitalized terms defined in the Indentures are used herein as therein defined
(unless otherwise defined herein).
There is no requirement that future issues of debt securities of the
Company be issued under either of the Indentures, and the Company is free to
employ other indentures or documentation, containing provisions different from
those included in the Indentures or applicable to one or more issues of Debt
Securities, in connection with future issues of such other debt securities.
General Terms of Debt Securities
Each Indenture provides that the Debt Securities issued thereunder may be
issued without limit as to aggregate principal amount, in one or more series,
in each case as established from time to time in or pursuant to authority
granted by a resolution of the Board of Directors of the Company or as
established in one or more indentures supplemental to such Indenture (Section
301 of the Indentures). Each Indenture also provides that there may be more
than one Trustee under such Indenture, each with respect to one or more series
of Debt Securities. Any Trustee under either Indenture may resign or be removed
with respect to one or more series of Debt Securities issued under such
Indenture, and a successor Trustee may be appointed to act with respect to such
series (Section 608 of the Indentures).
In the event that two or more persons are acting as Trustee with respect
to different series of Debt Securities issued under the same Indenture, each
such Trustee shall be a Trustee of a trust under such Indenture separate and
apart from the trust administered by any other such Trustee (Section 609 of the
Indentures), and, except as otherwise indicated herein, any action described
herein to be taken by the Trustee may be taken by each such Trustee with
respect to, and only with respect to, the one or more series of Debt Securities
for which it is Trustee under such Indenture.
Reference is made to the Prospectus Supplement relating to the series of
Debt Securities to be offered for the following terms thereof: (1) the title of
such Debt Securities; (2) any limit on the aggregate principal amount of such
Debt Securities; (3) the purchase price of such Debt Securities (expressed as a
percentage of the principal amount); (4) the date or dates, or the method for
determining such date or dates, on which the principal (and premium, if any) of
such Debt Securities will be payable; (5) the rate or rates (which may be fixed
or variable), or the method by which such rate or rates shall be determined, at
which such Debt Securities will bear interest, if any; (6) the date or dates
from which any such interest will accrue, the Interest Payment Dates on which
any such interest will be payable, the Regular Record Dates for such Interest
Payment Dates and the basis upon which interest shall be calculated if other
than that of a 360 day year of twelve 30-day months; (7) the place or
6
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places where the principal of (and premium, if any) and interest, if any, on
such Debt Securities will be payable and such Debt Securities may be
surrendered for registration of transfer or exchange; (8) the period or periods
within which, the price or prices at which and the terms and conditions upon
which such Debt Securities may be redeemed, as a whole or in part, at the
option of the Company, if the Company is to have such an option; (9) the
obligation, if any, of the Company to redeem or purchase such Debt Securities
pursuant to any sinking fund or analogous provision or at the option of a
Holder thereof, and the period or periods within which, the price or prices at
which and the terms and conditions upon which such Debt Securities will be
redeemed or purchased, as a whole or in part, pursuant to such obligation; (10)
if other than U.S. dollars, the currency or currencies in which such Debt
Securities are denominated and payable, which may be a foreign currency or
units of two or more foreign currencies or a composite currency or currencies,
and the terms and conditions relating thereto; (11) whether the amount of
payments of principal of (and premium, if any) or interest, if any, on such
Debt Securities may be determined with reference to an index, formula or other
method (which index, formula or method may, but need not be, based on a
currency, currencies, currency unit or units or composite currency or
currencies) and the manner in which such amounts shall be determined; (12) any
additions, modifications or deletions in the terms of such Debt Securities with
respect to the Events of Default set forth in the respective Indentures; (13)
the terms, if any, upon which such Debt Securities may be convertible into
Common Stock or Preferred Stock of the Company and the terms and conditions
upon which such conversion will be effected, including the initial conversion
price or rate, the conversion period and any other provision in addition to or
in lieu of those described herein; (14) whether such Debt Securities will be
issued in certificated or book-entry form; (15) whether such Debt Securities
will be in registered or bearer form and, if in registered form, the
denominations thereof if other than $1,000 and any integral multiple thereof;
(16) the applicability, if any, of the defeasance and covenant defeasance
provisions of Article Fourteen of the applicable Indenture; and (17) any other
terms of such Debt Securities not inconsistent with the provisions of the
respective Indentures (Section 301 of the Indentures).
Debt Securities may be issued under the Indentures as Original Issue
Discount Securities to be offered and sold at a substantial discount from the
principal amount thereof. Special U.S. federal income tax, accounting and other
considerations applicable thereto will be described in the applicable
Prospectus Supplement.
Unless otherwise provided with respect to a series of Debt Securities, the
Debt Securities will be issued only in registered form without coupons in
denominations of $1,000 and integral multiples thereof (Section 302 of the
Indentures).
Debt Securities may be issued, from time to time, with the principal
amount payable on any principal payment date, or the amount of interest payable
on an interest payment date, to be determined by reference to one or more
currency exchange rates, commodity prices, equity indices or other factors.
Holders of such Debt Securities may receive a principal amount on any
principal date, or a payment of interest on any interest payment date, that is
greater than or less than the amount of principal or interest otherwise payable
on such dates, depending upon the value on such dates of the applicable
currencies, commodities, equity indices or other factors. Information as to the
methods for determining the amount of principal or interest payable on any
date, the currencies, commodities, equity indices or other factors to which the
amount payable on such date is linked and certain additional Federal income tax
considerations will be set forth in the Prospectus Supplement relating thereto.
Certificated Securities
Except as may be set forth in the applicable Prospectus Supplement, Debt
Securities will not be issued in certificated form. If, however, Debt
Securities are to be issued in certificated form, no service charge will be
made for any transfer or exchange of any Debt Securities, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith (Section 305 of the Indentures).
Book-Entry Debt Securities
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities (each, a "Global Security") that will be
deposited with, or on behalf of, a depository identified in the Prospectus
Supplement. Global Securities may be issued in either registered or bearer form
and in either temporary
7
<PAGE>
or permanent form. Unless otherwise provided in the Prospectus Supplement, Debt
Securities that are represented by a Global Security will be issued in
denominations of $1,000 and any integral multiple thereof, and will be issued
in registered form only, without coupons. Payments of principal of, premium, if
any, and interest on Debt Securities represented by a Global Security will be
made by the Company to the Trustee under the applicable Indenture, and then
forwarded to the depository.
The Company anticipates that any Global Securities will be deposited with,
or on behalf of, The Depository Trust Company, New York, New York ("DTC"), that
such Global Securities will be registered in the name of DTC's nominee, and
that the following provisions will apply to the depository arrangements with
respect to any such Global Securities. Additional or differing terms of the
depository arrangements will be described in the Prospectus Supplement relating
to a particular series of Debt Securities issued in the form of Global
Securities.
So long as DTC or its nominee is the registered owner of a Global
Security, DTC or its nominee, as the case may be, will be considered the sole
Holder of the Debt Securities represented by such Global Security for all
purposes under the applicable Indenture. Except as provided below, owners of
beneficial interests in a Global Security will not be entitled to have Debt
Securities represented by such Global Security registered in their names, will
not receive or be entitled to receive physical delivery of Debt Securities in
certificated form and will not be considered the owners or Holders thereof
under the applicable Indenture. The laws of some states require that certain
purchasers of securities take physical delivery of such securities in
certificated form; accordingly, such laws may limit the transferability of
beneficial interests in a Global Security.
If DTC is at any time unwilling or unable to continue as depository or if
at any time DTC ceases to be a clearing agency registered under the Exchange
Act if so required by applicable law or regulation, and, in either case, a
successor depository is not appointed by the Company within 90 days, the
Company will issue individual Debt Securities in certificated form in exchange
for the Global Securities. In addition, the Company may at any time, and in its
sole discretion, determine not to have any Debt Securities represented by one
or more Global Securities, and, in such event, will issue individual Debt
Securities in certificated form in exchange for the relevant Global Securities.
In any such instance, an owner of a beneficial interest in a Global Security
will be entitled to physical delivery of individual Debt Securities in
certificated form of like tenor and rank, equal in principal amount to such
beneficial interest and to have such Debt Securities in certificated form
registered in its name. Unless otherwise provided in the Prospectus Supplement,
Debt Securities so issued in certificated form will be issued in denominations
of $1,000 or any integral multiple thereof, and will be issued in registered
form only, without coupons.
The following is based on information furnished by DTC:
DTC will act as securities depository for the Debt Securities. The Debt
Securities will be issued as fully registered securities registered in the name
of Cede & Co. (DTC's partnership nominee).
DTC is 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 company" 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. DTC holds
securities that its participants ("Participants") deposit with DTC. DTC also
facilitates the settlement among Participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc. Access to the DTC system is also available to
others such as securities brokers and dealers, banks and trust companies that
clear through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The rules applicable
to DTC and its Participants are on file with the Commission.
Purchases of Debt Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Debt
Securities on DTC's records. The ownership interest of each actual purchaser of
each Debt Security ("Beneficial Owner") is in turn recorded on the Direct and
Indirect Participants' records.
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A Beneficial Owner does not receive written confirmation from DTC of its
purchase, but such Beneficial Owner is expected to receive a written
confirmation providing details of the transaction, as well as periodic
statements of its holdings, from the Direct or Indirect Participant through
which such Beneficial Owner entered into the transaction. Transfers of
ownership interests in Debt Securities are accomplished by entries made on the
books of Participants acting on behalf of Beneficial Owners. Beneficial Owners
do not receive certificates representing their ownership interests in Debt
Securities, except in the event that use of the book-entry system for the Debt
Securities is discontinued.
To facilitate subsequent transfers, the Debt Securities are registered in
the name of DTC's partnership nominee, Cede & Co. The deposit of the Debt
Securities with DTC and their registration in the name of Cede & Co. will
effect no change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Debt Securities; DTC records reflect only the identity
of the Direct Participants to whose accounts Debt Securities are credited,
which may or may not be the Beneficial Owners. The Participants remain
responsible for keeping account of their holdings on behalf of their customers.
Delivery of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners are governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Debt Securities within an issue are being redeemed, DTC's practice is to
determine by lot the amount of interest of each Direct Participant in such
issue to be redeemed.
Neither DTC nor Cede & Co. consents or votes with respect to the Debt
Securities. Under its usual procedures, DTC mails a proxy (an "Omnibus Proxy")
to the issuer as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct Participants
to whose accounts the Debt Securities are credited on the record date
(identified on a list attached to the Omnibus Proxy).
Principal, premium, if any, and interest payments on the Debt Securities
are made to DTC. DTC's practice is to credit Direct Participants' accounts on
the payable date in accordance with their respective holdings as shown on DTC's
records unless DTC has reason to believe that it will not receive payment of
the payable date. Payments by Participants to Beneficial Owners are governed by
standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street
name," and are the responsibility of such Participant and not of DTC, the
applicable Trustee or the Company, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal,
premium, if any, and interest to DTC is the responsibility of the Company or
the applicable Trustee, disbursement of such payments to Direct Participants is
the responsibility of DTC, and disbursement of such payments to the Beneficial
Owners is the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with
respect to the Debt Securities at any time by giving reasonable notice to the
Company or the applicable Trustee. Under such circumstances, in the event that
a successor securities depository is not appointed, Debt Security certificates
are required to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
Debt Security certificates will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources (including DTC) that the Company believes to be
reliable, but the Company takes no responsibility for the accuracy thereof.
Unless stated otherwise in the Prospectus Supplement, the underwriters or
agents with respect to a series of Debt Securities issued as Global Securities
will be Direct Participants in DTC.
None of the Company, any underwriter or agent, the applicable Trustee or
any applicable paying agent will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
interests in a Global Security, or for maintaining, supervising or reviewing
any records relating to such beneficial interest.
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Merger
The Company may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into any other
corporation, provided that (a) either the Company shall be the continuing
corporation, or the successor corporation (if other than the Company) formed by
or resulting from any such consolidation or merger or which shall have received
the transfer of such assets shall be a corporation organized and existing under
the laws of the United States or a State thereof and shall expressly assume
payment of the principal of (and premium, if any) and interest on all the Debt
Securities and the performance and observance of all the convenants and
conditions of the applicable Indenture; and (b) the Company or such successor
corporation shall not immediately thereafter be in default under the applicable
Indenture (Section 801 of the Indentures).
Limitations on Liens; Restrictions on Sale and Leaseback Transactions
Limitations 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 Debt Securities (together with,
if the Company shall so determine, any other Indebtedness ranking equally with
the Debt Securities) 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 1004(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 1004(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
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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 between the
Company and a Restricted Subsidiary or between Restricted Subsidiaries.
(Section 1005(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 1005(b))
Waiver of Certain Covenants. The Company may omit in respect of any series
of Debt Securities issued under the Senior Indenture, in any particular
instance, to comply with any covenant or condition set forth under "Limitations
on Liens" and "Restrictions on Sale and Leaseback Transactions" above, if
before or after the time for such compliance the Holders of at least a majority
in principal amount of the Debt Securities at the time outstanding of such
series either waive such compliance in such instance or generally waive
compliance with such covenant or condition, but no such waiver shall extend to
or affect such 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 Senior Trustee in respect of any such covenant or
condition shall remain in full force and effect (Section 1005 of the Senior
Indenture).
Subordinated Indenture. The Subordinated Indenture does not contain the
limitations on liens and restrictions on sale and leaseback transactions
contained in the Senior Indenture.
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 1004(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 1005(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
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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.
"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. 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.
Events of Default, Notice and Waiver
Senior Indenture. The Senior Indenture provides that the following events
are Events of Default with respect to any series of Debt Securities issued
thereunder; (a) default for 30 days in the payment of any installment of
interest on any Debt Security of such series; (b) default in the payment of the
principal of (or premium, if any, on) any Debt Security of such series at its
Maturity; (c) default in making a sinking fund payment required for any Debt
Security of such series; (d) default in the performance of any other covenant
of the Company in the Senior Indenture (other than a covenant included in the
Senior Indenture solely for the benefit of a series of Debt Securities issued
thereunder other than such series), continued for 60 days after written notice
as provided in the Senior Indenture; (e) certain events of default resulting in
the acceleration of the maturity of the related indebtedness aggregating in
excess of $10,000,000 under any mortgages, indentures (including the
Indentures) or instruments under which the Company may have issued, or by which
there may have been secured or evidenced, any other indebtedness (including
Debt Securities of any other series) of the Company, but only if such
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indebtedness is not discharged or such acceleration is not rescinded or
annulled; (f) certain events of bankruptcy, insolvency or reorganization, or
court appointment of a receiver, liquidator or trustee of the Company or its
property; and (g) any other Event of Default provided with respect to a
particular series of Debt Securities (Section 501 of the Senior Indenture).
The Senior Trustee may withhold notice to the Holders of any series of
Debt Securities of any default with respect to such series (except a default in
the payment of the principal of (or premium, if any) or interest on any Debt
Security of such series or in the payment of any sinking fund installment in
respect of any Debt Security of such series) if the Responsible Officers of the
Senior Trustee consider such withholding to be in the interest of such Holders
(Section 601 of the Senior Indenture).
If an Event of Default under the Senior Indenture with respect to Debt
Securities of any series issued thereunder at the time Outstanding occurs and
is continuing, then in every such case the Senior Trustee or the Holders of not
less than 25% in principal amount of the Outstanding Debt Securities of that
series may declare the principal amount (or, if the Debt Securities of that
series are Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms thereof) of all of the Debt Securities
of that series to be due and payable immediately by written notice thereof to
the Company (and to the Senior Trustee if given by the Holders). However, at
any time after such a declaration of acceleration with respect to Debt
Securities of such series (or of all Debt Securities then Outstanding under the
Senior Indenture, as the case may be) has been made, but before a judgment or
decree for payment of the money due has been obtained by the Senior Trustee
prior to the Stated Maturity thereof, the Holders of a majority in principal
amount of Outstanding Debt Securities of such series (or of all Debt Securities
then Outstanding under the Senior Indenture, as the case may be) may, subject
to certain conditions, rescind and annul such acceleration if all Events of
Default, other than the non-payment of accelerated principal (or specified
portion thereof), with respect to Debt Securities of such series (or of all
Debt Securities then Outstanding under the Senior Indenture, as the case may
be) have been cured or waived as provided in the Senior Indenture (Section 502
of the Senior Indenture). The Senior Indenture also provides that the Holders
of not less than a majority in principal amount of the Outstanding Debt
Securities of any series issued thereunder (or of all Debt Securities then
Outstanding under the Senior Indenture, as the case may be) may, subject to
certain limitations, waive any past default with respect to such series and its
consequences (Section 513 of the Senior Indenture). Reference is made to the
Prospectus Supplement relating to any series of Debt Securities issued under
the Senior Indenture which are Original Issue Discount Securities for the
particular provisions relating to acceleration of a portion of the principal
amount of such Original Issue Discount Securities upon the occurrence of an
Event of Default and the continuation thereof. Within 120 days after the close
of each fiscal year, the Company must file with the Senior Trustee a statement,
signed by specified officers, stating whether or not such officers have
knowledge of any default under the Senior Indenture and, if so, specifying each
such default and the nature and status thereof (Section 1006 of the Senior
Indenture).
Subject to provisions in the Senior Indenture relating to its duties in
case of default, the Senior Trustee is under no obligation to exercise any of
its rights or powers under the Senior Indenture at the request or direction or
any Holders of any series of Debt Securities then Outstanding under the Senior
Indenture, unless such Holders shall have offered to the Senior Trustee
reasonable security or indemnity (Section 602 of the Senior Indenture). Subject
to such provisions for indemnification and certain limitations contained in the
Senior Indenture, the Holders of not less than a majority in principal amount
of the Outstanding Debt Securities of any series issued thereunder (or of all
Debt Securities then Outstanding under the Senior Indenture, as the case may
be) shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Senior Trustee, or of exercising any
trust or power conferred upon the Senior Trustee (Section 512 of the Senior
Indenture).
Subordinated Indenture. The Subordinated Indenture provides that the
following events are the only Events of Default with respect to any series of
Debt Securities issued thereunder; (a) default for 30 days in the payment of
any installment of interest on any Debt Security of such series; (b) default in
the payment of the principal of (or premium, if any, on) any Debt Security of
such series at its Maturity; (c) default in making a sinking fund payment
required for any Debt Security of such series; (d) default in the performance
of any other covenant of the Company in the Subordinated Indenture (other than
a covenant included in the Subordinated Indenture solely for the benefit of a
series of Debt Securities issued thereunder other than such series), continued
for 60 days after written notice as provided in the Subordinated Indenture; (e)
certain events of default
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resulting in the acceleration of the maturity of the related indebtedness
aggregating in excess of $10,000,000 under any mortgages, indentures (including
the Indentures) or instruments under which the Company may have issued, or by
which there may have been secured or evidenced, any other indebtedness
(including Debt Securities of any other series) of the Company, but only if
such indebtedness is not discharged or such acceleration is not rescinded or
annulled; (f) certain events relating to the bankruptcy, insolvency or
reorganization, or court appointment of a receiver, liquidator or trustee of
the Company or its property; and (g) any other Event of Default provided with
respect to a particular series of Debt Securities (Section 501 of the
Subordinated Indenture).
As with the Senior Indenture, the Subordinated Trustee may withhold notice
to the Holders of any series of Debt Securities issued under the Subordinated
Indenture of any default with respect to such series (except a default in the
payment of the principal of (or premium, if any) or interest on any Debt
Security of such series or in the payment of any sinking fund installment in
respect of any Debt Security of such series) if the Responsible Officers of the
Subordinated Trustee consider such withholding to be in the interest of such
Holders (Section 601 of the Subordinated Indenture).
If an Event of Default under the Subordinated Indenture with respect to
Debt Securities of any series issued thereunder at the time Outstanding occurs
and is continuing, then in every such case the Subordinated Trustee or the
Holders of not less than 25% in principal amount of the Outstanding Debt
Securities of that series may declare the principal amount (or, if the Debt
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms thereof) of all of the
Debt Securities of that series to be due and payable immediately by written
notice thereof to the Company (and to the Subordinated Trustee if given by the
Holders). However, at any time after such a declaration of acceleration with
respect to Debt Securities of such series (or of all Debt Securities then
Outstanding under the Subordinated Indenture, as the case may be) has been
made, but before a judgment or decree for payment of the money due has been
obtained by the Subordinated Trustee prior to the Stated Maturity thereof, the
Holders of a majority in principal amount of Outstanding Debt Securities of
such series (or of all Debt Securities then Outstanding under the Subordinated
Indenture, as the case may be) may, subject to certain conditions, rescind and
annul such acceleration if all Events of Default with respect to Debt
Securities of such series (or of all Debt Securities then Outstanding under the
Subordinated Indenture, as the case may be) have been cured or waived as
provided in such Indenture (Section 502 of the Subordinated Indenture). The
Subordinated Indenture also provides that the Holders of not less than a
majority in principal amount of the Outstanding Debt Securities of such series
issued thereunder (or of all Debt Securities then Outstanding under the
Subordinated Indenture, as the case may be) may, subject to certain
limitations, waive any past default with respect to such series and its
consequences (Section 513 of the Subordinated Indenture). Reference is made to
the Prospectus Supplement relating to any series of Debt Securities issued
under the Subordinated Indenture which are Original Issue Discount Securities
for the particular provisions relating to acceleration of a portion of the
principal amount of such Original Issue Discount Securities upon the occurrence
of an Event of Default and the continuation thereof. Within 120 days after the
close of each fiscal year, the Company must file with the Subordinated Trustee
a statement signed by specified officers, stating whether or not such officers
have knowledge of any default under the Subordinated Indenture, and, if so,
specifying each such default and the nature and status thereof (Section 1006 of
the Subordinated Indenture).
Subject to provisions in the Subordinated Indenture relating to its duties
in case of default, the Subordinated Trustee is under no obligation to exercise
any of its rights or powers under the Subordinated Indenture at the request or
direction of any Holders of any series of Debt Securities then Outstanding
under the Subordinated Indenture, unless such Holders shall have offered to the
Subordinated Trustee reasonable security or indemnity (Section 602 of the
Subordinated Indenture). Subject to such provisions for indemnification and
certain limitations contained in the Subordinated Indenture, the Holders of not
less than a majority in principal amount of the Outstanding Debt Securities of
any series issued thereunder (or of all Debt Securities then Outstanding under
the Subordinated Indenture, as the case may be) shall have the right to direct
the time, method and place of conducting any proceeding for any remedy
available to the Subordinated Trustee, or of exercising any trust or power
conferred upon the Subordinated Trustee (Section 512 of the Subordinated
Indenture).
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Modification of the Indentures
Senior Indenture. Modifications and amendments of the Senior Indenture may
be made only with the consent of the Holders of not less than a majority in
aggregate principal amount of each series of Outstanding Debt Securities under
the Senior Indenture which are affected by the modification or amendment;
provided that no such modification or amendment may, without the consent of the
Holder of each such Debt Security affected thereby, (a) change the Stated
Maturity of the principal of, or any installment of interest (or premium, if
any) on, any such Debt Security; (b) reduce the principal amount of, or the
rate or amount of interest on, or any premium payable on redemption of, any
such Debt Security, or reduce the amount of principal of an Original Issue
Discount Security that would be due and payable upon declaration of
acceleration of the Maturity thereof or would be provable in bankruptcy, or
adversely affect any right of repayment of the Holder of any such Debt
Security; (c) change the Place of Payment, or the coin or currency, for payment
of principal of, premium, if any, or interest on any such Debt Security; (d)
impair the right to institute suit for the enforcement of any payment on or
with respect to any such Debt Security; or (e) reduce the above-stated
percentage of Outstanding Debt Securities of any series necessary to modify or
amend the Senior Indenture or to waive compliance with certain provisions
thereof or certain defaults and consequences thereunder (Section 902 of the
Senior Indenture).
Subordinated Indenture. Modifications and amendments of the Subordinated
Indenture may be made only with the consent of the Holders of not less than a
majority in aggregate principal amount of each series of Outstanding Debt
Securities under the Subordinated Indenture which are affected by the
modification or amendment; provided that no such modification or amendment may,
without the consent of the Holder of each such Debt Security affected thereby,
(a) change the Stated Maturity of the principal of, or any installment of
interest (or premium, if any) on, any such Debt Security; (b) reduce the
principal amount of, or the rate or amount of interest on, or any premium
payable on redemption of, any such Debt Security, or reduce the amount of
principal of an Original Issue Discount Security that would be due and payable
upon declaration of acceleration of the Maturity thereof or would be provable
in bankruptcy, or adversely affect any right of the repayment of the Holder of
any such Debt Security; (c) change the Place of Payment, or the coin or
currency, for payment of principal of, premium, if any, or interest on any such
Debt Security; (d) impair the right to institute suit for the enforcement of
any payment on or with respect to any such Debt Security; (e) reduce the
above-stated percentage of Outstanding Debt Securities of any series necessary
to modify or amend the Subordinated Indenture or to waive compliance with
certain provisions thereof or certain defaults and consequences thereunder; or
(f) subordinate the indebtedness evidenced by any such Debt Security to any
indebtedness of the Company other than Senior Indebtedness (as defined in the
Subordinated Indenture) (Section 902 of the Subordinated Indenture).
Defeasance and Covenant Defeasance
The Indentures provide that, if the provisions of Article Fourteen are
made applicable to the Debt Securities of or within any series and any related
coupons pursuant to Section 301 of either Indenture, the Company may elect
either (a) to defease and be discharged from any and all obligations with
respect to such Debt Securities and any related coupons (except for the
obligation to pay Additional Amounts, if any, upon the occurrence of certain
events of tax, assessment or governmental charge with respect to payments on
such Debt Securities and the obligations to register the transfer or exchange
of such Debt Securities and any related coupons, to replace temporary or
mutilated, destroyed, lost or stolen Debt Securities and any related coupons,
to maintain an office or agency in respect of such Debt Securities and any
related coupons and to hold moneys for payment in trust) ("defeasance")
(Section 1402 of the Indentures) or (b) to be released from its obligations
with respect to such Debt Securities and any related coupons under Sections
1004 and 1005 of the Senior Indenture (being the restrictions described under
"Limitation on Liens" and "Restrictions on Certain Dispositions," respectively)
or, if provided pursuant to Section 301 of either Indenture, its obligations
with respect to any other covenant, and any omission to comply with such
obligations shall not constitute a default or an Event of Default with respect
to such Debt Securities and any related coupons ("covenant defeasance")
(Section 1403 of the Indentures), in either case upon the irrevocable deposit
by the Company with the relevant Trustee (or other qualifying trustee), in
trust, of an amount, in such currency or currencies, currency unit or units or
composite currency or currencies in which such Debt Securities and any related
coupons are then specified as payable at Stated Maturity, or Government
Obligations (as defined below), or both, applicable to such Debt Securities and
any related coupons (with such applicability being determined on the basis of
the currency, currency unit or composite currency in
15
<PAGE>
which such Debt Securities are then specified as payable at Stated Maturity)
which through the payment of principal and interest in accordance with their
terms will provide money in an amount sufficient to pay the principal of (and
premium, if any) and interest, if any, on such Debt Securities and any related
coupons, and any mandatory sinking fund or analogous payments thereon, on the
scheduled due dates therefor.
Such a trust may only be established if, among other things, the Company
has delivered to the relevant Trustee an Opinion of Counsel (as specified in
the Indentures) to the effect that the Holders of such Debt Securities and any
related coupons will not recognize income, gain or loss for U.S. federal income
tax purposes as a result of such defeasance or covenant defeasance and will be
subject to U.S. federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance or covenant
defeasance had not occurred, and such Opinion of Counsel, in the case of
defeasance under clause (a) above, must refer to and be based upon a ruling of
the Internal Revenue Service or a change in applicable United States federal
income tax law occurring after the date of the Indenture (Section 1404 of the
Indentures).
"Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government which issued the foreign
currency in which the Debt Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (ii) obligations
of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America or such government which issued
the foreign currency in which the Debt Securities of such series are payable,
the payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America or such other government, which, in
either case, are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank or trust
company as custodian with respect to any such Government Obligation or a
specific payment of interest on or principal of any such Government Obligation
held by such custodian for the account of the holder of a depository receipt;
provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the Government
Obligation or the specific payment of interest on or principal of the
Government Obligation evidenced by such depository receipt (Section 101 of the
Indentures).
Unless otherwise provided in the applicable Prospectus Supplement, if
after the Company has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any
series, (a) the Holder of a Debt Security of such series is entitled to, and
does, elect pursuant to the terms of such Debt Security to receive payment in a
currency, currency unit or composite currency other than that in which such
deposit has been made in respect of such Debt Security, or (b) the currency,
currency unit or composite currency in which such deposit has been made in
respect of any Debt Security of such series ceases to be used by its government
of issuance, the indebtedness represented by such Debt Security shall be deemed
to have been, and will be, fully discharged and satisfied through the payment
of the principal of (and premium, if any) and interest, if any, on such Debt
Security as they become due out of the proceeds yielded by converting the
amount so deposited in respect of such Debt Security into the currency,
currency unit or composite currency in which such Debt Security becomes payable
as a result of such election or such cessation of usage based on the applicable
Market Exchange Rate (Section 1405 of the Indentures). Unless otherwise
provided in the applicable Prospectus Supplement, all payments of principal of
(and premium, if any) and interest, if any, and Additional Amounts, if any, on
any Debt Security that is payable in a foreign currency, currency unit or
composite currency that ceases to be used by its government of issuance shall
be made in U.S. dollars (Section 412 of the Indentures).
In the event the Company effects covenant defeasance with respect to any
Debt Securities and any related coupons and such Debt Securities and any
related coupons are declared due and payable because of the occurence of any
Event of Default other than the Event of Default described in clause (d) under
"Events of Default, Notice and Waiver" with respect to Sections 1004 and 1005
of the Senior Indenture (which Sections would no longer be applicable to such
Debt Securities or any related coupons) or described in clause (d) or (g) under
"Events of Default, Notice and Waiver" with respect to any other covenant with
respect to which there has been defeasance, the amount in such currency,
currency unit or composite currency in which such Debt Securities and any
related coupons are payable, and Government Obligations on deposit with the
relevant Trustee, will be sufficient to pay amounts due on such Debt Securities
and any related coupons at the time of
16
<PAGE>
their Stated Maturity but may not be sufficient to pay amounts due on such Debt
Securities and any related coupons at the time of the accleration resulting
from such Event of Default. However, the Company would remain liable to make
payment of such amounts due at the time of acceleration.
The applicable Prospectus Supplement may further describe the provisions,
if any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series and any related coupons.
Senior Securities
Senior Securities are to be issued under the Senior Indenture. Each series
of Senior Securities will constitute Senior Indebtedness and will rank equally
with each other series of Senior Securities and other Senior Indebtedness. All
subordinated debt (including, but not limited to, all Subordinated Securities
issued under the Subordinated Indenture) will be subordinated to the Senior
Securities and other Senior Indebtedness.
Subordination of Subordinated Securities
Subordinated Indenture. The payment of the principal of (and premium, if
any) and interest on the Subordinated Securities will be subordinated as set
forth in the Subordinated Indenture to the Senior Indebtedness of the Company,
whether outstanding on the date of the Subordinated Indenture or thereafter
incurred (Section 1701 of the Subordinated Indenture). At November 1, 1997, the
aggregate Senior Indebtedness of the Company was approximately $503 million.
The Indenture does not prohibit or limit the incurring of additional Senior
Indebtedness by the Company.
Ranking. No class of Subordinated Securities is subordinated to any other
class of subordinated debt securities. See "Subordination Provisions" below.
Subordination Provisions. In the event (a) of any distribution of assets
of the Company upon any dissolution, winding up, liquidation or reorganization
of the Company, whether in bankruptcy, insolvency, reorganization or
receivership proceedings or upon an assignment for the benefit of creditors or
any other marshalling of the assets and liabilities of the Company or
otherwise, except a distribution in connection with a merger or consolidation
or a conveyance or transfer of all or substantially all of the properties of
the Company which complies with the requirements of Article Eight of the
Subordinated Indenture, or (b) that a default shall have occurred and be
continuing with respect to the payment of principal of (or premium, if any) or
interest on any Senior Indebtedness, or (c) that the principal of the
Subordinated Securities of any series issued under the Subordinated Indenture
(or in the case of Original Issue Discount Securities, the portion of the
principal amount thereof referred to in Section 502 of the Subordinated
Indenture) shall have been declared due and payable pursuant to Section 502 of
the Subordinated Indenture, and such declaration shall not have been rescinded
and annulled as provided in said Section 502, then:
(1) in a circumstance described in the foregoing clause (a) or (b), the
holders of all Senior Indebtedness and in the circumstance described in the
foregoing clause (c), the holders of all Senior Indebtedness outstanding at
the time the principal of such Subordinated Securities issued under the
Subordinated Indenture (or in the case of Original Issue Discount
Securities, such portion of the principal amount) shall have been so
declared due and payable, shall first be entitled to receive payment of the
full amount due thereon in repsect of principal, premium (if any) and
interest, or provision shall be made for such payment in money or money's
worth, before the Holders of any of the Subordinated Securities are
entitled to receive any payment on account of the principal of (or premium,
if any) or interest on the indebtedness evidenced by the Subordinated
Securities;
(2) if upon any payment or distribution contemplated in clause (1) after
giving effect to the subordination provisions contemplated therein there
shall remain any amounts of cash, property or securities of the Company
available for payment or distribution in respect of Subordinated
Securities, then the amount of such cash, property or securities shall be
shared ratably among the Holders of all Subordinated Securities issued
under the Subordinated Indenture and any subordinated indebtedness ranking
on a parity therewith;
17
<PAGE>
(3) any payment by, or distribution of assets of, the Company of any
kind or character, whether in cash, property or securities (other than
certain subordinated securities of the Company issued in a reorganization
or readjustment), to which the Holders of any of the Subordinated
Securities would be entitled except for the provisions of Article Seventeen
of the Subordinated Indenture shall be paid or delivered by the person
making such payment or distribution directly to the holders of Senior
Indebtedness (as provided in clauses (1) and (2) above), or on their
behalf, ratably according to the aggregate amounts remaining unpaid on
account of such Senior Indebtedness, to the extent necessary to make
payment in full of all Senior Indebtedness (as provided in clauses (1) and
(2) above) remaining unpaid after giving effect to any concurrent payment
or distribution (or provision therefor) to the holders of such Senior
Indebtedness, before any payment or distribution is made to or in respect
of the Holders of the Subordinated Securities;
(4) in the event that, notwithstanding the foregoing, any payment by, or
distribution of assets of, the Company of any kind or character is received
by the Holders of any of the Subordinated Securities issued under the
Subordinated Indenture before all Senior Indebtedness is paid in full, such
payment or distribution shall be paid over to the holders of such Senior
Indebtedness or on their behalf, ratably as aforesaid, for application to
the payment of all such Senior Indebtedness remaining unpaid until all such
Senior Indebtedness shall have been paid in full, after giving effect to
any concurrent payment or distribution (or provision therefor) to the
holders of such Senior Indebtedness.
By reason of such subordination in favor of the holders of Senior
Indebtedness in the event of insolvency, certain general creditors of the
Company, including holders of Senior Indebtedness, may recover more, ratably,
than the Holders of the Subordinated Securities.
Definition of Senior Indebtedness
Senior Indebtedness is defined in the Subordinated Indenture to mean (i)
the principal of and premium, if any, and unpaid interest on indebtedness for
money borrowed, (ii) purchase money and similar obligations, (iii) obligations
under capital leases, (iv) guarantees, assumptions or purchase commitments
relating to, or other transactions as a result of which the Company is
responsible for the payment of, such indebtedness of others, (v) renewals,
extensions and refunding of any such indebtedness, (vi) interest or obligations
in respect of any such indebtedness accruing after the commencement of any
insolvency or bankruptcy proceedings; and (vii) obligations associated with
derivative products such as interest rate and currency exchange contracts,
foreign exchange contracts, commodity contracts, and similar arrangements,
unless, in each case, the instrument by which the Company incurred, assumed or
guaranteed the indebtedness or obligations described in clauses (i) through
(vii) hereof expressly provides that such indebtedness or obligation is
subordinate or junior in right of payment to any other indebtedness or
obligations of the Company.
18
<PAGE>
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities in any of the following ways (or
in any combination thereof): (i) through underwriters or dealers; (ii) directly
to a limited number of purchasers or to a single purchaser; or (iii) through
agents. The Prospectus Supplement with respect to any Debt Securities will set
forth the terms of the offering of such Debt Securities, including the name or
names of any underwriters, dealers or agents and the respective amounts of such
Debt Securities underwritten or purchased by each of them, the public offering
price of such Debt Securities and the proceeds to the Company from such sale,
any discounts, commissions or other items constituting compensation from the
Company and any discounts, commissions or concessions allowed or reallowed or
paid to dealers and any securities exchanges on which such Debt Securities may
be listed.
If underwriters are used in the sale of any Debt Securities, such Debt
Securities will be acquired by the underwriters for their own account and may
be resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Such Debt Securities may be either offered to the public
through underwriting syndicates represented by managing underwriters, or
directly by underwriters.
Debt Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Unless otherwise indicated in the
Prospectus Supplement, any such agent will be acting on a reasonable efforts
basis for the period of its appointment. Any underwriters, dealers or agents
participating in the offering may be deemed "underwriters" within the meaning
of the Securities Act of 1933, as amended.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters, dealers or agents to solicit offers by certain purchasers to
purchase Debt Securities from the Company at the public offering price set
forth in the Prospectus Supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future. Such
contracts will be subject only to those conditions set forth in the Prospectus
Supplement.
Agents, dealers and underwriters may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which the agents or underwriters may be required to
make in respect thereof.
The Debt Securities may or may not be listed on a national securities
exchange. No assurances can be given that there will be a market for the Debt
Securities.
LEGAL MATTERS
The validity of the authorization and issuance of the Debt Securities
offered hereby is being passed upon for the Company by Willkie Farr &
Gallagher, 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 February 1, 1997 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.
19
<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 .................... $ 59,000
Printing and Engraving Expenses ......... 25,000
Legal Fees and Expenses ................. 150,000
Accounting Fees and Expenses ............ 15,000
Blue Sky Fees and Expenses .............. 10,000
Trustee Fees ............................ 10,000
Rating Agency Fees ...................... 25,000
Miscellaneous Expenses .................. 6,000
--------
Total ............................... $300,000
========
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 6 of the Underwriting Agreement Basic Provisions, filed as
Exhibit 1 hereto, pursuant to which the underwriter agrees 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 Distribution Agreement
*4.1 Form of Senior Indenture
*4.2 Form of Subordinated Indenture
*4.3 Form of Senior Security
*4.4 Form of Subordinated Security
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 February 1, 1997)
12.2 Calculation of Ratio of Earnings to Fixed Charges for the 39 weeks ended November 1, 1997
23.1 Consent of Willkie Farr & Gallagher (included in Exhibit 5)
23.2 Consent of Deloitte & Touche LLP
24 Power of Attorney (included on the signature page hereof)
*25 Form T-1, Statement of Eligibility under the Trust Indenture Act of 1939 of the Trustee
</TABLE>
- ------------
* To be filed by amendment or incorporated by reference to the extent
applicable in connection with an offering.
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act").
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement:
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with
or furnished to the Securities and Exchange Commission ("SEC") by such
registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment 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.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(b) 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 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.
(c) 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 provisions described in Item 15 or otherwise,
II-3
<PAGE>
the Registrant has been advised that in the opinion of the SEC, 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
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that:
(1) For the purposes of determining any liability under the Securities Act
of 1933, 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 Registrants 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 purposes of determining any liability under the Securities Act of
1933, 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.
(e) The undersigned Registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the SEC under Section 305(b)(2) of the
Trust Indenture Act.
II-4
<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 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Philadelphia, Commonwealth of Pennsylvania, on
February 6, 1998.
THE PEP BOYS - MANNY, MOE & JACK
By: /s/ Mitchell G. Leibovitz
------------------------------------
Mitchell G. Leibovitz
Chairman of the Board, President
and Chief Executive Officer
POWER OR ATTORNEY
Each of the undersigned officers and directors of The Pep Boys -- Manny,
Moe & Jack hereby severally constitutes and appoints Mitchell G. Leibovitz and
Michael J. Holden as the attorney-in-fact for the undersigned, in any and all
capacities, with full power of substitution, to sign any and all pre- or
post-effective amendments to this Registration Statement, any subsequent
Registration Statement for the same offering which may be filed pursuant to
Rule 462(b) under the Securities Act of 1933 and any and all pre- or
post-effective amendments thereto, and to file the same with exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that each said
attorney-in-fact may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, 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 6, 1998
- ----------------------------- Chief Executive Officer and Director
Mitchell G. Leibovitz (Principal Executive Officer)
/s/ MICHAEL J. HOLDEN Executive Vice President and Chief February 6, 1998
- ----------------------------- Financial Officer (Principal Financial
Michael J. Holden and Accounting Officer)
Director February , 1998
- -----------------------------
Lennox K. Black
/s/ BERNARD J. KORMAN Director February 6, 1998
- -----------------------------
Bernard J. Korman
/s/ J. RICHARD LEAMAN, JR. Director February 6, 1998
- -----------------------------
J. Richard Leaman, Jr.
/s/ MALCOLMN D. PRYOR Director February 6, 1998
- -----------------------------
Malcolmn D. Pryor
/s/ LESTER ROSENFELD Director February 6, 1998
- -----------------------------
Lester Rosenfeld
/s/ BENJAMIN STRAUSS Director February 6, 1998
- -----------------------------
Benjamin Strauss
Director February , 1998
- -----------------------------
Myles H. Tanenbaum
/s/ DAVID V. WACHS Director February 6, 1998
- -----------------------------
David V. Wachs
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- -------- --------------------------------------------------------------------------------------------------
<S> <C>
1 Form of Distribution Agreement
*4.1 Form of Senior Indenture
*4.2 Form of Subordinated Indenture
*4.3 Form of Senior Security
*4.4 Form of Subordinated Security
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 February 1, 1997)
12.2 Calculation of Ratio of Earnings to Fixed Charges for the 39 weeks ended November 1, 1997
23.1 Consent of Willkie Farr & Gallagher (included in Exhibit 5)
23.2 Consent of Deloitte & Touche LLP
24 Power of Attorney (included on the signature page hereof)
*25 Form T-1, Statement of Eligibility under the Trust Indenture Act of 1939 of the Trustee
</TABLE>
- ------------
* To be filed by amendment or incorporated by reference to the extent
applicable in connection with an offering.
<PAGE>
DRAFT 2/5/98
$200,000,000
THE PEP BOYS - MANNY, MOE & JACK
Medium-Term Notes
DISTRIBUTION AGREEMENT
, 1998
Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, New York 10010-3629.
Ladies and Gentlemen:
1. Introduction. The Pep Boys - Manny, Moe & Jack, a
Pennsylvania corporation (the "Issuer"), confirms its agreement with you (the
"Distributor") with respect to the issue and sale from time to time by the
Issuer of its medium-term notes registered under the registration statement
referred to in Section 2(a) (any such medium-term notes being hereinafter
referred to as the "Securities," which expression shall, if the context so
admits, include any permanent global Security). Securities may be offered and
sold pursuant to Section 3 of this Agreement in an aggregate amount not to
exceed the amount of Registered Securities (as defined in Section 2(a) hereof)
registered pursuant to such registration statement reduced by the aggregate
amount of any other Registered Securities sold otherwise than pursuant to
Section 3 of this Agreement. The Securities will be issued under a Senior
Indenture (the "Senior Indenture"), between the Issuer and PNC Bank, National
Association, as trustee (the "Trustee") or a Subordinated Indenture
("Subordinated Indenture," and together with the Senior Indenture, the
"Indentures"), between the Issuer and PNC Bank, National Association, as
Trustee.
The Securities shall have the terms described in the
Prospectus referred to in Section 2(a) as it may be amended or supplemented from
time to time, including any supplement to the Prospectus that sets forth only
the terms of a particular issue of the Securities (a "Pricing Supplement").
Securities will be issued, and the terms thereof established, from time to time
by the Issuer in accordance with the Indentures and the Procedures (as defined
in Section 3(d) hereof).
2. Representations and Warranties of the Issuer. The Issuer
represents and warrants to, and agrees with, the Distributor as follows:
<PAGE>
(a) A registration statement (No. 333- ), including a
prospectus, relating to $200,000,000 aggregate principal amount of debt
securities of the Issuer, including the Securities (together, the
"Registered Securities") (including a prospectus which, as supplemented
from time to time, shall be used in connection with sales of the
Securities) has been filed with the Securities and Exchange Commission
(the "Commission") and has been declared effective under the Securities
Act of 1933, as amended (the "Act"). Such registration statement, as
amended as of the Closing Date (as defined in Section 3(e) hereof), is
hereinafter referred to as the "Registration Statement", and the
prospectus included in such Registration Statement, as supplemented so
as generally to describe the Securities and the terms of the offering
of the Securities, including all material incorporated by reference
therein, is hereinafter referred to as the "Prospectus". Any reference
in this Agreement to amending or supplementing the Prospectus shall be
deemed to include the filing of materials incorporated by reference in
the Prospectus after the Closing Date and any reference in this
Agreement to any amendment or supplement to the Prospectus shall be
deemed to include any such materials incorporated by reference in the
Prospectus after the Closing Date. No document has been or will be
prepared or distributed in reliance on Rule 434 under the Act.
(b) On the effective date of the Registration Statement, such
Registration Statement conformed in all material respects to the
requirements of the Act, the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), and the rules and regulations of the
Commission ("Rules and Regulations") and did not include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and on the Closing Date, and at each of the
times of acceptance and of delivery referred to in Section 6(a) hereof
and at each of the times of amendment or supplementing referred to in
Section 6(b) hereof (the Closing Date and each such time being herein
sometimes referred to as a "Representation Date"), the Registration
Statement and the Prospectus as then 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 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 not misleading, except that
the foregoing does not apply to statements in or omissions from any of
such documents based upon written information furnished to the Issuer
by the Distributor specifically for use therein, it being understood
that the only such information furnished by the Distributor consists of
the information described as such herein. No stop order suspending the
effectiveness of the Registration Statement or any part thereof has
been issued and no proceeding for that purpose has been instituted or,
to the Issuer's knowledge, threatened by the Commission.
(c) The Issuer 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 Issuer 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
2
<PAGE>
would not have a material adverse effect on the Issuer and its
subsidiaries, taken as a whole.
(d) 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 A hereto. Each Significant
Subsidiary of the Issuer 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 Issuer 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 Issuer, 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 Issuer, any unperfected security interest.
(e) The Indentures have been duly authorized, executed and
delivered by the Issuer and duly qualified under the Trust Indenture
Act and constitute valid and binding obligations of the Issuer,
enforceable 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; the Securities
have been duly authorized by the Issuer, and when the Securities have
been delivered and paid for pursuant to this Agreement, the Securities
will have been duly executed, authenticated, issued and delivered and
will conform in all material respects to the description thereof
contained in the Prospectus and will constitute valid and binding
obligations of the Issuer entitled to the benefits of the Indenture and
enforceable against the Issuer 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.
(f) 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.
(g) The execution, delivery and performance of the Indentures
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 Issuer and its subsidiaries and
will not (A) contravene any provision of the charter or by-laws of the
Issuer or any of its subsidiaries, or (B) conflict with or result in a
breach or
3
<PAGE>
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 Issuer 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 Issuer 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 Issuer or
any such subsidiary is bound or to which any of the properties of the
Issuer 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 Issuer and its
subsidiaries, taken as a whole, or on the transactions contemplated by
this Agreement and the Indentures; and the Issuer has full power and
authority to authorize, issue and sell the Securities as contemplated
by this Agreement.
(h) This Agreement (including any agreement with respect to
the offering and sale of particular Securities as contemplated by
Section 3) has been duly authorized, executed and delivered by the
Issuer.
(i) The Issuer and its Significant Subsidiaries have good and
marketable title to all properties (real and personal) owned by the
Issuer 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 Issuer and
its subsidiaries, taken as a whole; all properties held under lease or
sublease by the Issuer 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 Issuer and its
Significant Subsidiaries; neither the Issuer 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 Issuer 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 Issuer or any Significant Subsidiary under any
such lease or sublease 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.
(j) The Issuer 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
Issuer and its subsidiaries, taken as a whole.
(k) No labor disturbance by the employees of the Issuer exists
or, to the knowledge of the Issuer, 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 Issuer and its subsidiaries, taken as a whole.
4
<PAGE>
(l) The Issuer 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 Issuer and its subsidiaries, taken
as a whole; and to the knowledge of the Issuer and its subsidiaries, no
conflict with the rights of others exists with respect to any such
Intellectual Property.
(m) The properties, assets and operations of the Issuer 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 Issuer or any of its subsidiaries,
reasonably anticipated future events, conditions, circumstances,
activities, practices, incidents, actions or plans of the Issuer 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 Issuer nor any of its subsidiaries is the subject
of any federal, state, local or foreign investigation, and neither the
Issuer 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
Issuer or any of its subsidiaries, threatened actions, suits or
proceedings against or affecting the Issuer, 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.
(n) (A) Neither the Issuer nor any of its Significant
Subsidiaries is in violation of its charter or by-laws, (B) neither the
Issuer 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 Issuer 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 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 Issuer or any of
its subsidiaries is a party or to which any of the properties or assets
of the Issuer 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,
5
<PAGE>
have a material adverse effect on the condition (financial or other),
business, prospects, results of operations or general affairs of the
Issuer and its subsidiaries, taken as a whole.
(o) There are no pending actions, suits or proceedings against
or affecting the Issuer, any of its subsidiaries or any of their
properties that are required under the Act to be described in the
Registration Statement and the Prospectus (other than as described
therein) or that could, singly or in the aggregate, have a material
adverse effect on the condition (financial or other), business,
prospects, results of operations or general affairs of the Issuer and
its subsidiaries, taken as a whole, or could have a material adverse
effect on the ability of the Issuer to perform its obligations under
this Agreement, the Indentures or the Securities, or that are otherwise
material in the context of the sale of the Securities; and, to the
Issuer's knowledge, no such actions, suits or proceedings are
threatened or contemplated.
(p) The financial statements and related schedules and notes
included or incorporated by reference in the Registration Statement and
the Prospectus comply, in all material respects, with the requirements
of the Act and the Rules and Regulations, were prepared in accordance
with generally accepted accounting principles consistently applied
throughout the periods involved and fairly present the financial
condition and results of operations of the Issuer and its subsidiaries,
on a consolidated basis, at the dates and for the periods presented. If
financial information or statistical data are included in the
Prospectus under the captions "Selected Financial Data" and
"Capitalization" or similar captions, such data are fairly stated in
all material respects in relation to the consolidated financial
statements of the Issuer from which they have been derived. If pro
forma financial statements are included in the Prospectus: the
assumptions used in preparing the pro forma financial statements
included in the Prospectus provide a reasonable basis for presenting
the significant effects directly attributable to the transactions or
events described therein, the related pro form adjustments give
appropriate effect to those assumptions, and the pro forma columns
therein reflect the proper application of those adjustments to the
corresponding historical financial amounts.
(q) Since the dates as of which information is given in the
Prospectus, (A) neither the Issuer 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
Issuer; (B) neither the Issuer 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 Issuer and, except as contemplated by the Prospectus, no change
in the capital stock of the Issuer and no dividend or distribution of
any kind declared, paid or made by the Issuer 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 Issuer and its
subsidiaries, taken as a whole.
6
<PAGE>
(r) The Issuer 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 Issuer 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.
(s) The Issuer 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 Issuer 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 Issuer
and its subsidiaries, no tax deficiency might be asserted against the
Issuer 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
Issuer and its subsidiaries, taken as a whole.
(t) The Issuer is not and, after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof
as described in the Prospectus, will not be an "investment company," as
defined in the Investment Issuer Act of 1940.
(u) Immediately after any sale of Securities by the Issuer
hereunder or under any Terms Agreement (as hereinafter defined), the
aggregate amount of Securities which shall have been issued and sold by
the Issuer hereunder or under any Terms Agreement and of any debt
securities of the Issuer (other than such Securities) that shall have
been issued and sold pursuant to the Registration Statement will not
exceed the amount of debt securities registered under the Registration
Statement.
3. Appointment as Distributor; Agreement of Distributor;
Solicitations.
(a) (i) Subject to the terms and conditions stated herein, the
Issuer hereby appoints the Distributor as the agent of the Issuer for the
purpose of soliciting or receiving offers to purchase the Securities to be
issued by the Issuer during any Marketing Time. For purposes of this Agreement
"Marketing Time" shall mean any time when no suspension of solicitation of
offers to purchase Securities pursuant to Section 3(c) or Section 4(c) shall be
in effect or any time when either the Distributor shall own any Securities with
the intention of reselling them or the Issuer has accepted an offer to purchase
Securities but the related settlement has not occurred.
(ii) So long as this Agreement shall remain in effect, the
Issuer shall not, without the consent of the Distributor, solicit or accept
offers to purchase Securities otherwise than to or through the Distributor;
provided, however, that, subject to all of the terms and conditions of this
Agreement, the foregoing shall not be construed to prevent the Issuer from
selling at any time any Registered Securities in a firm commitment underwriting
pursuant to an underwriting agreement that does not provide for a continuous
offering of such Registered
7
<PAGE>
Securities; and provided, further, that the Issuer reserves the right from time
to time (i) to sell Securities directly to an investor, and (ii) to accept a
specific offer to purchase Securities solicited by a dealer other than the
Distributor (each an "Other Dealer"), without obtaining the prior consent of the
Distributor, provided that (x) the Issuer shall give the Distributor notice of
its decision to accept such an offer to purchase Securities concurrently with
such acceptance, (y) any Other Dealer shall agree to be bound by and subject to
the terms and conditions of this Agreement binding on the Distributor (including
the commission schedule set forth on Exhibit B), and (z) so long as this
Agreement remains in effect, the Issuer shall not appoint any other agent or
dealer for the purpose of soliciting or receiving offers to purchase Securities
on a continuous basis.
(b) (i) On the basis of the representations and warranties
contained herein, but subject to the terms and conditions herein set forth, the
Distributor agrees, as the agent of the Issuer, to use reasonable efforts when
requested by the Issuer to solicit offers to purchase the Securities upon the
terms and conditions set forth in the Prospectus, as from time to time amended
or supplemented.
(ii) The Distributor shall not have any obligation to purchase
Securities from the Issuer; however, the Distributor may agree from time to time
to purchase Securities as principal for resale to investors and other purchasers
selected by the Distributor. Unless otherwise expressly agreed by the Issuer and
the Distributor as contemplated by clause (v) below, each offer to sell
Securities transmitted by the Distributor and accepted by the Issuer shall
constitute acceptance of an offer to sell such Securities to the Distributor for
resale. In addition, if so specified in a Terms Agreement (as defined in clause
(iii) below) executed by the Issuer and the Distributor, the Distributor shall
act as representative of the several underwriters named in such Terms Agreement
for resale of the Securities specified in such Terms Agreement upon the terms
and subject to the conditions specified in such Terms Agreement, this Agreement
and in the Prospectus, as supplemented by the applicable pricing supplement. It
is understood that the Distributor and any underwriters for which it may act as
representative propose that they will offer any Securities which they agree to
purchase as principal for sale as set forth in the Prospectus, as supplemented
by the applicable Pricing Supplement.
(iii) Upon acceptance by the Issuer of an offer by the
Distributor to purchase Securities as principal, unless the Issuer and the
Distributor execute a Terms Agreement substantially in the form of Exhibit A
hereto (a "Terms Agreement") or any written confirmation or communication
transmitted by the Distributor to the Issuer with respect to the terms of the
Securities and of their offer and sale evidenced by the offer communicated by
the Distributor and accepted by the Issuer, in each case together with the
provisions of this Agreement, shall constitute an agreement between the
Distributor and the Issuer for the sale and purchase of such Securities (whether
or not any Terms Agreement or other written confirmation or communication shall
have been executed by the Issuer or the Distributor). Each purchase of
Securities by the Distributor shall, unless otherwise agreed, be at a discount
from the principal amount of each such Security equivalent to the applicable
commission set forth in Exhibit B hereto.
(iv) The Distributor is authorized to engage the services of
any other brokers or dealers in connection with the offer or sale of Securities
purchased by the
8
<PAGE>
Distributor as principal for resale to others and may reallow any portion of the
discount received from the Issuer to such brokers or dealers.
(v) If expressly agreed by the Distributor and the Issuer, the
Distributor will solicit offers to purchase Securities from the Issuer through
the Distributor, acting as agent, in accordance with the provisions of this
Agreement. In such event, the Distributor shall communicate to the Issuer,
orally or in writing, each reasonable offer to purchase Securities received by
it as agent; and the Issuer shall have the sole right to accept offers to
purchase the Securities and may reject any such offer, in whole or in part. The
Distributor shall have the right, in its discretion reasonably exercised,
without notice to the Issuer, to reject any offer to purchase Securities
received by it as such agent, in whole or in part, and any such rejection shall
not be deemed a breach of its agreement contained herein. At the time of
delivery of, and payment for, any Securities sold by the Issuer as a result of a
solicitation made by, or offer to purchase received by, the Distributor, acting
on an agency basis, the Issuer agrees to pay the Distributor a commission in
accordance with the schedule set forth in Exhibit B hereto.
(vi) The Distributor shall not have any responsibility for
maintaining records with respect to the aggregate principal amount of Securities
sold, or otherwise monitoring the availability of Securities for sale under the
Registration Statement.
(vii) No Security which the Issuer has agreed to sell pursuant
to this Agreement shall be deemed to have been purchased and paid for, or sold
by the Issuer, until such Security shall have been delivered to the purchaser
thereof against payment by such purchaser.
(c) Upon receipt of notice from the Issuer as contemplated by
Section 4(c) hereof, the Distributor shall suspend its solicitation of offers to
purchase Securities until such time as the Issuer shall have furnished it with
an amendment or supplement to the Registration Statement or the Prospectus, as
the case may be, contemplated by Section 4(c) and shall have advised the
Distributor that such solicitation may be resumed.
The Issuer reserves the right, in its sole discretion, to
suspend solicitation of offers to purchase the Securities commencing at any time
for any period of time or permanently. Upon receipt of at least one Business
Day's prior notice from the Issuer, the Distributor will forthwith suspend
solicitation of offers to purchase Securities from the Issuer until such time as
the Issuer has advised the Distributor that such solicitation may be resumed.
For the purpose of the foregoing sentence, "Business Day" shall mean any day
that is not a Saturday or Sunday, and that in The City of New York is not a day
on which banking institutions generally are authorized or obligated by law or
executive order to close.
(d) Administrative procedures respecting the sale of
Securities (the "Procedures") shall be agreed upon from time to time by the
Distributor and the Issuer. The initial Procedures, which are set forth in
Exhibit C hereto, shall remain in effect until changed by agreement among the
Issuer and the Distributor. The Distributor and the Issuer agree to perform the
respective duties and obligations specifically provided to be performed by each
of them herein and in the Procedures. The Issuer will furnish to the Trustee a
copy of the Procedures as from time to time in effect.
9
<PAGE>
(e) The documents required to be delivered by Section 5 hereof
shall be delivered at the office of Dewey Ballantine LLP, 1301 Avenue of the
Americas, New York, New York, not later than 10:00 A.M., New York City time, on
the date of this Agreement or at such later time as may be mutually agreed by
the Issuer and the Distributor, which in no event shall be later than the time
at which the Distributor commences solicitation of purchases of Securities
hereunder, such time and date being herein called the "Closing Date". For
purposes of Rule 15c6-1 under the Securities Exchange Act of 1934, the
settlement date (if later than the otherwise applicable settlement date) shall
be the date for payment of funds and delivery of securities for all the
Securities sold pursuant to an offering of Securities having identical terms
(including the issue date) and terms of sale (whether or not set forth in a
single Terms Agreement).
4. Certain Agreements of the Issuer. The Issuer agrees with
the Distributor that it will furnish to Dewey Ballantine LLP, counsel for the
Distributor, one signed copy of the Registration Statement, including all
exhibits, in the form it became effective and of all amendments thereto and
that, in connection with each offering of Securities,
(a) The Issuer will prepare a Pricing Supplement with respect
to any Securities to be offered and sold to or through the Distributor
pursuant to this Agreement and, after approval of such Pricing
Supplement by the Distributor, will file such Pricing Supplement with
the Commission pursuant to and in accordance with Rule 424(b) under the
Act.
(b) The Issuer will advise the Distributor promptly of any
proposal to amend or supplement the Registration Statement or the
Prospectus and will afford the Distributor a reasonable opportunity to
comment on any such proposed amendment or supplement (other than any
Pricing Supplement that relates to Securities not purchased through or
by such Distributor), and if the Issuer affects any amendment or
supplementation of the Registration Statement or the Prospectus to
which the Distributor objects, the Distributor shall be relieved of its
obligations under Section 3(b) to solicit offers to purchase Securities
until such time as the Issuer shall have filed such further amendments
or supplements such that the Distributor is reasonably satisfied with
the Registration Statement and the Prospectus, as then amended or
supplemented; and the Issuer will also advise the Distributor promptly
of the filing and effectiveness of any such amendment or supplement and
of the institution by the Commission of any stop order proceedings in
respect of the Registration Statement or of any part thereof 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 the Prospectus, as then
amended or supplemented, would 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 when such Prospectus is delivered, not misleading, or if it
is necessary at any such time to amend the Prospectus to comply with
the Act, the Issuer will promptly notify the Distributor by telephone
(with confirmation in writing) to suspend solicitation of offers to
purchase the Securities and to cease making offers or sales of
Securities which a Distributor may then own as principal; and if the
Issuer shall decide to amend or
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supplement the Registration Statement or the Prospectus, it will
promptly advise the Distributor by telephone (with confirmation in
writing) and, subject to the provisions of subsection (a) of this
Section, will promptly prepare and file with the Commission an
amendment or supplement which will correct such statement or omission
or an amendment which will effect such compliance. Notwithstanding the
foregoing, if, at the time any such event occurs or it becomes
necessary to amend the Prospectus to comply with the Act, the
Distributor shall own any of the Securities with the intention of
reselling them, or the Issuer has accepted an offer to purchase
Securities but the related settlement has not occurred, the Issuer,
subject to the provisions of subsection (a) of this Section, will
promptly prepare and file with the Commission an amendment or
supplement which will correct such statement or omission or an
amendment which will effect such compliance. Neither the Distributor's
consent to, nor its delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 5.
(d) The Issuer will file promptly all documents required to be
filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act. In addition, on the date on which the Issuer makes
any announcement to the general public concerning earnings or
concerning any other event which is required to be described, or which
the Issuer proposes to describe, in a document filed pursuant to the
Exchange Act, the Issuer will furnish the information contained or to
be contained in such announcement to the Distributor, confirmed in
writing and, subject to the provisions of subsections (a) and (b) of
this Section, will cause the Prospectus to be amended or supplemented
to reflect the information contained in such announcement. The Issuer
also will furnish the Distributor with copies of all material press
releases or announcements to the general public.
(e) The Issuer will immediately notify the Distributor of any
downgrading in the rating of any debt securities of the Issuer or any
proposal to downgrade the rating of any debt securities of the Issuer
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 Issuer (other than an
announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading of such rating), as soon as the
Issuer learns of such downgrading, proposal to downgrade or public
announcement.
(f) As soon as practicable, but not later than 16 months,
after the date of each acceptance by the Issuer of an offer to purchase
Securities hereunder, the Issuer will make generally available to its
securityholders an earnings statement covering a period of at least 12
months beginning after the later of (i) the effective date of the
registration statement relating to the Registered Securities, (ii) the
effective date of the most recent post-effective amendment to the
Registration Statement to become effective prior to the date of such
acceptance and (iii) the date of the Issuer's most recent Annual Report
on Form 10-K filed with the Commission prior to the date of such
acceptance, which will satisfy the provisions of Section 11(a) of the
Act.
(g) The Issuer will furnish to the Distributor copies of the
Registration Statement, including all exhibits, any related preliminary
prospectus, any related
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preliminary prospectus supplement, the Prospectus and all amendments
and supplements to such documents (including any Pricing Supplement),
in each case as soon as available and in such quantities as are
reasonably requested.
(h) The Issuer 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 the Distributor
designates and will continue such qualifications in effect so long as
required for the distribution thereof.
(i) So long as any Securities are outstanding, the Issuer will
furnish to the Distributor, (i) as soon as practicable after the end of
each fiscal year, a copy of its annual report to stockholders for such
year, (ii) as soon as available, a copy of each report or definitive
proxy statement of the Issuer filed with the Commission under the
Exchange Act or mailed to stockholders, and (iii) from time to time,
such other information concerning the Issuer as the Distributor may
reasonably request.
(j) The Issuer will pay, or reimburse the Distributor for, all
reasonable expenses incident to the performance of its obligations
under this Agreement and will reimburse the Distributor for any
reasonable expenses (including reasonable fees and disbursements of
counsel) incurred by it in connection with qualification of the
Securities for sale and determination of their eligibility for
investment under the laws of such jurisdictions as the Distributor may
designate and the printing of memoranda relating thereto, for any fees
charged by investment rating agencies for the rating of the Securities,
for any filing fee incident to, and the reasonable fees and
disbursements of counsel to the Distributor in connection with, review
by the National Association of Securities Dealers, Inc. relating to the
Securities, for expenses incurred by the Distributor in distributing
the Prospectus and all supplements thereto (including any Pricing
Supplement), any preliminary prospectuses and any preliminary
prospectus supplements to the Distributor, for costs incurred by the
Distributor in advertising any offering of Securities and for the
Distributor's reasonable expenses (including the reasonable fees and
disbursements of counsel to the Distributor) incurred in connection
with the establishment or maintenance of the program contemplated by
this Agreement or otherwise in connection with the activities of the
Distributor under this Agreement.
(k) Between the date on which the Distributor agrees to
purchase Securities from the Issuer as principal for resale and the
date of delivery of such Securities, the Issuer will not offer or sell,
or enter into any agreement to sell, pledge, or otherwise dispose of,
directly or indirectly, or file with the Commission a registration
statement under the Act relating to any of its debt securities (other
than such Securities) in the United States, other than borrowings under
the Issuer's revolving credit agreements and lines of credit, the
private placement of securities and issuances of its commercial paper,
or publicly disclose the intention to make any such offer, sale, pledge
or disposition or filing.
5. Conditions of Obligations. The obligations of the
Distributor, as agent of the Issuer, under this Agreement at any time to solicit
offers to purchase the Securities and to purchase Securities from the Issuer as
principal is subject to the accuracy, on the date hereof, on each Representation
Date and on the date of each such solicitation, of the representations and
warranties of the Issuer herein, to the accuracy, on each such date, of the
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statements of the Issuer's officers made pursuant to the provisions hereof, to
the performance, on or prior to each such date, by the Issuer of its obligation
hereunder, and to each of the following additional conditions precedent:
(a) The Prospectus, as amended or supplemented as of any
Representation Date or date of such solicitation, as the case may be,
shall have been filed with the Commission in accordance with the Rules
and Regulations and no stop order suspending the effectiveness of the
Registration Statement or of any part thereof shall have been issued
and no proceedings for that purpose shall have been instituted or, to
the knowledge of the Issuer or the Distributor, shall be contemplated
by the Commission.
(b) Neither the Registration Statement nor the Prospectus, as
amended or supplemented as of any Representation Date or date of such
solicitation, as the case may be, shall contain any untrue statement of
fact which, in the opinion of the Distributor, is material or omits to
state a fact which, in the opinion of the Distributor, is material and
is required to be stated therein or is necessary to make the statements
therein in light of the circumstances under which they were made not
misleading.
(c) There shall not have occurred (i) any change, or any
development or event involving a prospective change, in or affecting
particularly the business or properties of the Issuer or any of its
subsidiaries that, in the judgment of the Distributor, materially
impairs the investment quality of the Securities; (ii) any downgrading
in the rating of any debt securities of the Issuer 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 Issuer (other than an announcement with positive
implications of a possible upgrading, and no implication 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 Issuer on any exchange
or in the over-the-counter market; (iv) any banking moratorium declared
by U.S. 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 the
Distributor, the effect of any such outbreak, escalation, declaration,
calamity or emergency makes it impractical or inadvisable to proceed
with solicitations of offers to purchase, or sales of and payment for
the Securities.
(d) With respect to any Security denominated in a currency
other than the U.S. dollar, more than one currency or a composite
currency or any Security the principal or interest of which is indexed
to such currency, currencies or composite currency, there shall not
have occurred a suspension or material limitation in foreign exchange
trading in such currency, currencies or composite currency by a major
international bank, a general moratorium on commercial banking
activities in the country or countries issuing such currency,
currencies or composite currency, the outbreak or escalation of
hostilities involving, the occurrence of any material adverse change in
the existing financial, political or economic conditions of, or the
declaration
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of war or a national emergency by, the country or countries issuing
such currency, currencies or composite currency or the imposition or
proposal of exchange controls by any governmental authority in the
country or countries issuing such currency, currencies or composite
currency.
(e) At the Closing Date and, if specified in a Terms
Agreement, if any, at the time of delivery of the Securities described
in such Terms Agreement, the Distributor shall have received an
opinion, dated the Closing Date, or such date of delivery, as the case
may be, of Willkie Farr & Gallagher, counsel for the Issuer, to the
effect that:
(i) Each of the Issuer 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
Issuer 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 Issuer and its subsidiaries, taken as a
whole; and all of the outstanding shares of capital stock of
the Issuer's Significant Subsidiaries have been duly
authorized and validly issued, are fully paid and
non-assessable and are owned by the Issuer, 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 Indentures have been duly authorized,
executed and delivered by the Issuer and have been duly
qualified under the Trust Indenture Act and, assuming due
authorization, execution and delivery by the Trustee,
constitute valid and legally binding obligations of the
Issuer, enforceable against the Issuer 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
or by general principles of equity.
(iii) Any series of Securities established on or
prior to the date of such opinion has been duly authorized and
established in conformity with the Indentures, and, when the
terms of a particular Security and of its issuance and sale
have been duly authorized and established by all necessary
corporate action in conformity with the Indentures, and such
Security has been duly completed, executed, authenticated and
issued in accordance with the Indentures and delivered against
payment as contemplated by this Agreement, such Security will
constitute a valid and legally binding obligation of the
Issuer enforceable against the Issuer in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and
to general equity principles, it being understood that such
counsel may (a)
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assume that at the time of the issuance, sale and delivery of
each Security the authorization of such series will not have
been modified or rescinded and there will not have occurred
any change in law affecting the validity, legally binding
character or enforceability of such Security, (b) assume that
neither the issuance, sale and delivery of any Security, nor
any of the terms of such Security, nor compliance by the
Issuer with such terms, will violate any applicable law, any
agreement or instrument then binding upon the Issuer or any
restriction imposed by any court or governmental body having
jurisdiction over the Issuer, and (c) state that as of the
date of such opinion a judgment for money in an action based
on Securities denominated in foreign currencies or currency
units in a Federal or State court in the United States
ordinarily would be enforced in the United States only in
United States dollars, and that the date used to determine the
rate of conversion of the foreign currency or currency unit in
which a particular Security is denominated into United States
dollars will depend upon various factors, including which
court renders the judgment.
(iv) The Registration Statement has become effective
under the Act, the Prospectus was filed with the Commission
pursuant to the subparagraph of Rule 424(b) under the Act
specified in such opinion on the date specified therein, and,
to the knowledge of such counsel after reasonable inquiry, no
stop order suspending the effectiveness of the Registration
Statement or of any part thereof has been issued and no
proceedings for that purpose have been instituted or are
pending or contemplated under the Act.
(v) The registration statement relating to the
Registered Securities, as of its effective date, the
Registration Statement and the Prospectus, as of the Closing
Date, and any amendment or supplement thereto, as of its date,
complied as to form in all material respects with the
requirements of the Act, the Trust Indenture Act and the Rules
and Regulations.
(vi) The descriptions in the Registration Statement
and the Prospectus (including those incorporated by reference)
of statutes, legal and governmental proceedings and contracts
and other documents are accurate and fairly present the
information required to be shown; and such counsel do not know
of any legal or governmental proceedings required to be
described in the Prospectus which are not described (including
those incorporated by reference) as required or of any
contracts or documents of a character required to be described
in the Registration Statement or the Prospectus or to be filed
as exhibits to the Registration Statement which are not
described (including those incorporated by reference) and
filed as required; it being understood that such counsel need
express no opinion as to the financial statements or other
financial data contained in the Registration Statement or the
Prospectus.
(vii) 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
consummation of the transactions contemplated by this
Agreement in connection with the issuance and sale of the
Securities by the Issuer, except such as have been obtained
and made under the Act, the Trust Indenture Act or the Rules
and Regulations and
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such as may be required under state securities laws (it being
understood that such counsel may assume with respect to each
particular Security that the inclusion of any alternative or
additional terms in such Security that are not currently
specified in the form of Securities examined by such counsel
would not require the Issuer to obtain any regulatory consent,
authorization or approval or make any regulatory filing in
order for the Issuer to issue, sell and deliver such
Security).
(viii) The execution, delivery and performance of the
Indentures 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 Issuer and its Significant Subsidiaries and will not (A)
contravene any provision of the charter or by-laws of the
Issuer or any of its Significant 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 Issuer 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
Issuer 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 Issuer or any
such Significant Subsidiary is bound or to which any of the
properties of the Issuer or any such Significant 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 Issuer and its
subsidiaries, taken as a whole, or on the transactions
contemplated by this Agreement and the Indentures; and the
Issuer has full power and authority to authorize, issue and
sell the Securities as contemplated by this Agreement (it
being understood that such counsel may assume with respect to
each particular Security that the inclusion of any alternative
or additional terms in such Security that are not currently
specified in he form of Securities examined by such counsel
will not cause the issuance, sale or delivery of such
Security, the terms of such Security, or the compliance by the
Issuer with such terms, to violate any of the court orders or
laws specified in this paragraph or to result in a default
under or a breach of any of the agreements specified in this
paragraph).
(ix) Neither the Issuer 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 Issuer 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 Issuer or any of
its Significant Subsidiaries is a party or to which any of the
properties or assets of the Issuer or any such Significant
Subsidiary is subject.
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(x) To the knowledge of such counsel after reasonable
inquiry, there are no pending or threatened actions, suits or
proceedings against or affecting the Issuer, any of the
Significant Subsidiaries or any of their properties that are
required under the Act to be described in the Registration
Statement and the Prospectus (other than as described therein)
or that could have a material effect on the ability of the
Issuer to perform its obligations under this Agreement, the
Indentures or the Securities, or that are otherwise material
in the context of the sale of the Securities.
(xi) To the knowledge of such counsel after
reasonable inquiry, there are no contracts, agreements or
understandings between the Issuer and any third party granting
such third party the right to require the Issuer to file a
registration statement under the Act with respect to any
securities of the Issuer owned or to be owned by such third
party or to require the Issuer to include such securities in
the securities registered pursuant to the Registration
Statement or in any other securities being registered pursuant
to any other registration statement filed by the Issuer under
the Act.
(xii) This Agreement has been duly authorized,
executed and delivered by the Issuer.
provided, however, that, in the case of each such opinion delivered pursuant to
a Terms Agreement, (w) the statements contained in such opinion relating to the
Registration Statement or the Prospectus shall relate to the Registration
Statement or the Prospectus, as the case may be, as amended or supplemented as
of the date of the Issuer's acceptance of the offer to purchase such Securities
and as of the time of delivery of such Securities; (x) such opinion shall relate
to the Securities being delivered on the date of such opinion and not to other
Securities as well; (y) in lieu of the opinion described in clause (iii), such
opinion shall state that the Securities being delivered on the date of such
opinion, when delivered against payment therefor as contemplated by this
Agreement, will have been duly authorized, executed, authenticated, issued and
delivered and will constitute valid and legally binding obligations of the
Issuer enforceable in accordance with their terms, subject only to the
exceptions set forth in clause (iii) as to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and general equity principles, and
will conform to the description thereof contained in the Prospectus as amended
or supplemented at such date of delivery; and (z) the opinions described in
clauses (vii) and (viii) shall be rendered without making the assumptions
described in the parantheticals set forth at the end of each such clause.
Such counsel shall also state that such counsel have
no reason to believe that the registration statement relating to the
Registered Securities, 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 as of the date thereof
or as of the Closing Date, or any amendment or supplement thereto, as
of its date or as of the Closing Date, 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
therein, in light of the circumstances under which they were made, not
misleading; it
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being understood that such counsel need express no view as to the
financial statements or other financial data contained in the
Registration Statement or the Prospectus.
(f) At the Closing Date and, if specified in a Terms
Agreement, if any, at the time of delivery of the Securities described
in such Terms Agreement, the Distributor shall have received a
certificate, dated the Closing Date or such date of delivery, as the
case may be, of the President and the principal financial officer of
the Issuer in which such officers, to the best of their knowledge after
reasonable investigation, shall state that (A) the representations and
warranties of the Issuer in this Agreement are true and correct in all
material respects, (B) the Issuer has complied in all material respects
with all agreements and satisfied in all material respects all
conditions on its part to be performed or satisfied hereunder at or
prior to the Closing Date or such date of delivery, as the case may be,
(C) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are contemplated by the Commission, and (D) subsequent to
the date as of which information is given in the Registration Statement
and the Prospectus, there has been no material adverse change, nor any
development reasonably likely, singly or in the aggregate, to result in
a material adverse change, in the condition (financial or other),
business, prospects, results of operations or general affairs of the
Issuer and its subsidiaries, taken as a whole. In the case of each such
certificate delivered pursuant to a Terms Agreement, the statements
contained in such certificate relating to the Registration Statement or
the Prospectus shall relate to the Registration Statement or the
Prospectus, as the case may be, as amended or supplemented as of the
date of the Issuer's acceptance of the offer to purchase such
Securities and as of the time of delivery of such Securities.
(g) At the Closing Date and, if specified in a Terms
Agreement, if any, at the time of delivery of the Securities described
in such Terms Agreement, the Distributor shall have received a letter,
dated the Closing Date or such date of delivery, as the case may be, 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 to the effect that:
(i) in their opinion the financial statements and
schedules examined by them and included or incorporated by
reference in the Prospectus 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 Prospectus in accordance with standards established by the
American Institute of Certified Public Accountants, as
indicated in their report attached to such letter;
(iii) on the basis of the review referred to in
clause (ii) above, a reading of the latest available interim
financial statements of the Issuer, a reading of the minutes
of all meetings of the stockholders and directors (including
each committee thereof) of the Issuer and its subsidiaries,
inquiries of officials of the Issuer who have responsibility
for financial and accounting
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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
Prospectus 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 Prospectus;
(B) if any unaudited "capsule" information
is contained in the Prospectus, the unaudited
consolidated net sales, net operating income, net
income and net income per share amounts or other
amounts constituting such "capsule" information and
described in such letter do not agree with the
corresponding amounts set forth in the unaudited
consolidated financial statements for those same
periods or were not determined on a basis
substantially consistent with that of the
corresponding amounts in the audited statements of
income;
(C) at the date of the latest available
balance sheet read by such accountants, and at a
subsequent specified date not more than three
business 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 Issuer 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 Distributor;
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; and
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other
financial information contained in
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the Prospectus (in each case to the extent that such dollar
amounts, percentages and other financial information are
derived from the general accounting records of the Issuer and
its subsidiaries subject to the internal controls of the
Issuer'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 and other financial
information to be in agreement with such results.
All financial statements and schedules included in
material incorporated by reference into the Prospectus shall
be deemed included in the Prospectus for purposes of this
subsection.
In the case of each such letter delivered pursuant to
a Terms Agreement, the statements contained in such letter
relating to the Registration Statement or the Prospectus shall
relate to the Registration Statement or the Prospectus, as the
case may be, as amended or supplemented as of the date of the
Issuer's acceptance of the offer to purchase such Securities
and as of the time of delivery of such Securities.
(h) At the Closing Date and, if specified in a Terms
Agreement, if any, at the time of delivery of the Securities described
in such Terms Agreement, the Distributor shall have received from Dewey
Ballantine LLP, counsel for the Distributor, such opinion or opinions,
dated the Closing Date or such date of delivery, as the case may be,
with respect to the validity of the Securities, the Registration
Statement, the Prospectus and other related matters as the Distributor
may require, and the Issuer shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon
such matters.
(i) The Issuer shall have furnished to the Distributor or its
counsel such further certificates and documents as the Distributor or
such counsel reasonably request.
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 the Distributor and its counsel. The
Issuer will furnish the Distributor with such conformed copies of such opinions,
certificates, letters and documents as they reasonably request.
6. Additional Covenants of the Issuer. The Issuer
agrees that:
(a) Each acceptance by the Issuer of an offer for the purchase
of Securities shall be deemed to be an affirmation that its
representations and warranties contained in this Agreement are true and
correct at the time of such acceptance and a covenant that such
representations and warranties will be true and correct at the time of
delivery to the purchaser of the Securities as though made at and as of
each such time, it being understood that such representations and
warranties shall relate to the Registration Statement and the
Prospectus as amended or supplemented at each such time. Each such
acceptance by the Issuer of an offer to purchase Securities shall be
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deemed to constitute an additional representation, warranty and
agreement by the Issuer that, as of the date of delivery of such
Securities to the purchaser thereof, after giving effect to the
issuance of such Securities, of any other Securities to be issued on or
prior to such delivery date and of any other Registered Securities to
be issued and sold by the Issuer on or prior to such delivery date, the
aggregate amount of Registered Securities (including any Securities)
which have been issued and sold by the Issuer will not exceed the
amount of Registered Securities registered pursuant to the Registration
Statement.
(b) Each time that the Registration Statement or the
Prospectus shall be amended or supplemented (other than by a Pricing
Supplement), the Issuer shall, (A) concurrently with such amendment or
supplement, if such amendment or supplement shall occur at a Marketing
Time, or (B) immediately at the next Marketing Time if such amendment
or supplement shall not occur at a Marketing Time, furnish the
Distributor with a certificate, dated the date of delivery thereof, of
the President or any Vice President and a principal financial or
accounting officer of the Issuer, in form satisfactory to the
Distributor, to the effect that the statements contained in the
certificate covering the matters set forth in Section 5(f) hereof which
was last furnished to the Distributor pursuant to this Section 6(b) are
true and correct at the time of such amendment or supplement, as though
made at and as of such time or, in lieu of such certificate, a
certificate of the same tenor as the certificate referred to in Section
5(f); provided, however, that any certificate furnished under this
Section 6(b) shall relate to the Registration Statement and the
Prospectus as amended or supplemented at the time of delivery of such
certificate and, in the case of the matters set forth in Section 5(f),
to the time of delivery of such certificate.
(c) At each Representation Date referred to in Section 6(b),
the Issuer shall, (A) concurrently if such Representation Date shall
occur at a Marketing Time, or (B) immediately at the next Marketing
Time if such Representation Date shall not occur at a Marketing Time,
furnish the Distributor with a written opinion or opinions, dated the
date of such Representation Date, of counsel for the Issuer, in form
satisfactory to the Distributor, to the effect set forth in Section
5(e) hereof; provided; however, that to the extent appropriate such
opinion or opinions may reconfirm matters set forth in a prior opinion
delivered at the Closing Date or under this Section 6(c); provided
further, however, that any opinion or opinions furnished under this
Section 6(c) shall relate to the Registration Statement and the
Prospectus as amended or supplemented at such Representation Date and
shall state that the Securities sold in the relevant Applicable Period
(as defined below) have been duly authorized, executed, authenticated,
issued and delivered and constitute valid and legally binding
obligations of the Issuer enforceable in accordance with their terms,
subject only to the exceptions set forth in clause (iii) of Section
5(e) hereof as to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and general equity
principles, and conform in all material respects to the description
thereof contained in the Prospectus as amended or supplemented at the
relevant date or dates for the delivery of such Securities to the
purchaser or purchasers thereof. For the purpose of this Section 6(c),
"Applicable Period" shall mean with respect to any opinion delivered on
a Representation Date the period commencing on the date as of which the
most
21
<PAGE>
recent prior opinion delivered at the Closing Date or under this
Section 6(c) speaks and ending on such Representation Date.
(d) At each Representation Date referred to in Section 6(b) on
which the Registration Statement or the Prospectus shall be amended or
supplemented to include additional financial information, the Issuer
shall cause Deloitte & Touche, (A) concurrently if such Representation
Date shall occur at a Marketing Time, or (B) immediately at the next
Marketing Time if such Representation Date shall not occur at a
Marketing Time, to furnish the Distributor with a letter, addressed
jointly to the Issuer and the Distributor and dated the date of such
Representation Date, in form and substance satisfactory to the
Distributor, to the effect set forth in Section 5(g) hereof; provided,
however, that to the extent appropriate such letter may reconfirm
matters set forth in a prior letter delivered at the Closing Date or
pursuant to this Section 6(d); provided further, however, that any
letter furnished under this Section 6(d) shall relate to the
Registration Statement and the Prospectus as amended or supplemented at
such Representation Date, with such changes as may be necessary to
reflect changes in the financial statements and other information
derived from the accounting records of the Issuer.
(e) The Issuer agrees that any obligation of a person who has
agreed to purchase Securities to make payment for and take delivery of
such Securities shall be subject to (i) the accuracy, on the related
settlement date fixed pursuant to the Procedures, of the Issuer's
representation and warranty deemed to be made to the Distributor
pursuant to the last sentence of subsection (a) of this Section 6, and
(ii) the satisfaction, on such settlement date, of each of the
conditions set forth in Sections 5(a), (b) and (c), it being understood
that under no circumstance shall the Distributor have any duty or
obligation to exercise the judgment permitted under Section 5(b) or (c)
on behalf of any such person.
7. Indemnification and Contribution.
(a) The Issuer will indemnify and hold harmless the
Distributor against any losses, claims, damages or liabilities, joint or
several, to which the Distributor may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
the Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus or preliminary prospectus supplement, 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 the Distributor for any legal or other expenses
reasonably incurred by the Distributor in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Issuer 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 or omission or
alleged omission made in any of such documents in reliance upon and in
conformity with written information furnished to the Issuer by the Distributor
specifically for use therein, unless such loss, claim, damage or liability
arises out of the offer or sale of Securities occurring after the Distributor
has notified the Issuer in writing that such information should no longer be
used therein, it being understood and agreed that the only
22
<PAGE>
such information furnished by the Distributor consists of the information
described as such in subsection (b) below; and provided, further, that with
respect to any untrue statement or omission or alleged untrue statement or
omission made in any preliminary prospectus or preliminary prospectus
supplement, the indemnity agreement contained in this subsection (a) shall not
inure to the benefit of the Distributor to the extent that any such loss, claim,
damage or liability of the Distributor 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 herein) if the Issuer had previously
furnished copies thereof in requisite quantities to the Distributor.
(b) The Distributor will indemnify and hold harmless the
Issuer against any losses, claims, damages or liabilities to which the Issuer
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus or any amendment or
supplement thereto, or any related preliminary prospectus or preliminary
prospectus supplement, 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 Issuer by the Distributor
specifically for use therein, and will reimburse any legal or other expenses
reasonably incurred by the Issuer in connection with investigating or defending
any such loss, claim, damage, liability or action as such expenses are incurred,
unless such loss, claim, damage or liability arises out of the offer or sale of
Securities occurring after the Distributor has notified the Issuer in writing
that such information should no longer be used therein, it being understood and
agreed that the only such information furnished by the Distributor consists of
the following information in a supplement to the Prospectus furnished on behalf
of the Distributor: the legend concerning stabilization and over-allotment on
the inside front cover page and the seventh paragraph under the caption
"Supplemental Plan of Distribution of the Notes."
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the 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 the 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 7 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
23
<PAGE>
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release of
such indemnified party from all liability on any claims that are the subject
matter of such action.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each 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 Issuer on the one hand and the Distributor on the other from the offering
pursuant to this Agreement of the Securities which are the subject of the action
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 Issuer on the one hand and the Distributor 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 Issuer on the one hand and the Distributor on the other
shall be deemed to be in the same proportions as the total net proceeds from the
offering pursuant to this Agreement of the Securities which are the subject of
the action (before deducting expenses) received by the Issuer bear to the total
discounts and commissions received by the Distributor from the offering of such
Securities pursuant to this Agreement. 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 Issuer or the Distributor 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), the Distributor shall not be required to contribute any amount
in excess of the amount by which the total price at which the Securities which
are the subject of the action and which were distributed to the public through
it pursuant to this Agreement or upon resale of Securities purchased by it from
the Issuer exceeds the amount of any damages which the Distributor 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.
(e) The obligations of the Issuer under this Section 7 shall
be in addition to any liability which the Issuer may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
the Distributor within the meaning of the Act; and the obligations of the
Distributor under this Section 7 shall be in addition to any liability which the
Distributor may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Issuer, to each officer of the Issuer who
has signed the Registration Statement and to each person, if any, who controls
the Issuer within the meaning of the Act.
24
<PAGE>
8. Status of The Distributor. In soliciting offers to purchase
the Securities from the Issuer pursuant to this Agreement and in assuming its
other obligations hereunder (other than any obligation to purchase Securities
pursuant to Section 3 hereof), the Distributor is acting solely as agent for the
Issuer and not as principal. In connection with the placement of any Securities
by a Distributor, acting as agent, (a) the Distributor will make reasonable
efforts to assist the Issuer in obtaining performance by each purchaser whose
offer to purchase Securities from the Issuer has been solicited by the
Distributor and accepted by the Issuer, but the Distributor shall have no
liability to the Issuer in the event any such purchase is not consummated for
any reason; and (b) if the Issuer shall default on its obligations to deliver
Securities to a purchaser whose offer it has accepted, the Issuer (i) shall hold
the Distributor harmless against any loss, claim or damage arising from or as a
result of such default by the Issuer, and (ii) in particular, shall pay to the
Distributor any commission to which they would be entitled in connection with
such sale.
9. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Issuer or its officers and of the Distributor 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 the Distributor, the Issuer 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 10 or for any other reason or if for any reason
the sale of Securities described in a confirmation or Terms Agreement referred
to in Section 3 by the Issuer to the Distributor is not consummated, the Issuer
shall remain responsible for the expenses to be paid or reimbursed by it
pursuant to Section 4(j) and the respective obligations of the Issuer and the
Distributor pursuant to Section 7 shall remain in effect and, to the extent
Securities remain outstanding, the obligations of the Issuer under Sections 4(f)
and 4(i) shall also remain outstanding. In addition, if any such termination of
this Agreement shall occur either (i) at a time when the Distributor shall own
any of the Securities with the intention of reselling them or (ii) after the
Issuer has accepted an offer to purchase Securities and prior to the related
settlement, the obligations of the Issuer under the second sentence of Section
4(c), under Sections 4(a), 4(b), 4(d), 4(e), 4(g), 4(h) and 4(k) and, in the
case of a termination occurring as described in (ii) above, under Sections 3(c),
6(a) and 6(e) and under the last sentence of Section 8, shall also remain in
effect.
10. Termination. This Agreement may be terminated for any
reason at any time by the Issuer or by the Distributor upon the giving of one
day's written notice of such termination to the other parties hereto; provided,
however, that this Agreement may not be terminated by the giving of such notice
following receipt by the Issuer of a confirmation or Terms Agreement referred to
in Section 3 relating to the purchase of Securities by the Distributor and prior
to delivery of the Securities described in such confirmation or Terms Agreement,
unless the sale and purchase of Securities contemplated thereby is rejected by
the Issuer in accordance with Section 3. Any settlement with respect to
Securities placed by the Distributor on an agency basis occurring after
termination of this Agreement shall be made in accordance with the Procedures
and the Distributor agrees, if requested by the Issuer, to take the steps
therein provided to be taken by such Distributor in connection with such
settlement.
11. Sales of Securities Denominated in a Currency other than
U.S. Dollars or of Indexed Securities. If at any time the Issuer and the
Distributor shall determine to issue and sell Securities denominated in a
currency other than U.S. dollars, which other currency
25
<PAGE>
may include a currency unit, or with respect to which an index is used to
determine the amounts of payments of principal and any premium and interest, the
Issuer and any the Distributor may execute and deliver a supplement to this
Agreement for the purpose of making any appropriate additions to and
modifications of the terms of this Agreement (and the Procedures) applicable to
such Securities and the offer and sale thereof. The Issuer will not issue
Securities denominated in Yen otherwise than in compliance with applicable
Japanese laws, regulations and policies. In particular, the Issuer or its
designated agent shall submit such reports or information as may be required
from time to time by applicable law, regulations and guidelines promulgated by
Japanese governmental and regulatory authorities in the case of the issue and
purchase of the Securities and the Issuer shall ensure that each such Security
shall have a minimum denomination of (Y)1,000,000 and a minimum maturity of one
year or such other minimum denomination and maturity as may be allowed from time
to time by Japanese governmental and regulatory authorities.
12. Notices. Except as otherwise provided herein, all notices
and other communications hereunder shall be in writing and shall be deemed to
have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to Credit Suisse First Boston Corporation shall be
directed to it at Eleven Madison Avenue, New York, New York 10010-3629,
Attention: Short and Medium Term Finance Department (Facsimile No. (212)
325-8183); and notices to the Issuer shall be directed to it at The Pep Boys -
Manny, Moe & Jack, 3111 West Allegheny Avenue, Philadelphia, Pennsylvania,
19132, Attention: Chief Financial Officer (Facsimile No. (215) 227-9533); or in
the case of any party hereto, to such other address or person as such party
shall specify to each other party by a notice given in accordance with the
provisions of this Section 12. Any such notice shall take effect at the time of
receipt.
13. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto, their respective successors, the
officers and directors and controlling persons referred to in Section 7 and, to
the extent provided in Section 6(f), any person who has agreed to purchase
Securities from the Issuer, and no other person will have any right or
obligation hereunder.
14. Counterparts. This Agreement and any Terms 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.
15. Applicable Law. This Agreement and any Terms 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 Issuer 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 any
Terms Agreement or the transactions contemplated hereby or thereby.
26
<PAGE>
If the foregoing correctly sets forth our agreement, please
indicate your acceptance hereof in the space provided for that purpose below.
Very truly yours,
THE PEP BOYS - MANNY, MOE & JACK
By:
--------------------------------
Name: Mitchell G. Leibovitz
Title: Chairman & CEO
CONFIRMED AND ACCEPTED, as of the date first above written:
CREDIT SUISSE FIRST BOSTON CORPORATION
By:
--------------------------
Name:
Title:
<PAGE>
SCHEDULE A
Significant Subsidiaries of the Issuer
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.
<PAGE>
Exhibit 5
[WILLKIE FARR & GALLAGHER LETTERHEAD]
February 6, 1998
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 (the
"Registration Statement") relating to up to $200,000,000 aggregate principal
amount of Debt Securities of the Company (the "Securities"). The Securities
will be issued under a Senior Indenture and a Subordinated Indenture (together,
the "Indentures") to be entered into by the Company and PNC Bank, National
Association, as Trustee (the "Trustee").
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 Securities 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
Securities have been duly authorized and, when duly executed, authenticated and
delivered by or on behalf of the Company, duly authenticated by the Trustee in
accordance with the applicable Indenture and duly paid for, will be binding
obligations of the Company and entitled to the benefits of the applicable
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 Securities
pursuant to Rule 462(b) under the Securities Act of 1933 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 12.2
Statement Regarding Computation of Ratios
Ratios of Earnings to Fixed Charges
(in thousands, except ratios)
<TABLE>
<CAPTION>
Thirty-nine weeks ended
--------------------------------------
November 1, 1997 November 2, 1996
------------------ -----------------
<S> <C> <C>
Interest ........................................... $ 28,147 $ 22,895
Interest factor in rental expense .................. 11,064 7,863
Capitalized interest ............................... 1,402 940
-------- --------
(a) Fixed charges, as defined ........................ 40,613 31,698
Earnings before income taxes ....................... 121,522 124,013
Fixed charges ...................................... 40,613 31,698
Capitalized interest ............................... (1,402) (940)
-------- --------
(b) Earnings, as defined ............................. 160,733 154,771
(c) Ratio of earnings to fixed charges (b/a) ......... 4.0x 4.9x
</TABLE>
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of The Pep Boys -- Manny, Moe & Jack on Form S-3 of our report dated
March 18, 1997, appearing in the Annual Report on Form 10-K of The Pep Boys --
Manny, Moe & Jack for the year ended February 1, 1997 and to the reference to
us under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
February 6, 1998
