<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 20, 1996
REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
AUTOZONE, INC.
(Exact name of registrant as specified in its charter)
NEVADA 123 SOUTH FRONT STREET 62-1482048
(State or other MEMPHIS, TENNESSEE 38103 (I.R.S. Employer
jurisdiction of (901) 495-6500 Identification No.)
incorporation or (Address, including zip code, and
organization) telephone number, including area code,
of Registrant's principal executive
offices)
HARRY L. GOLDSMITH
SECRETARY/VICE PRESIDENT/GENERAL COUNSEL
AUTOZONE, INC.
123 SOUTH FRONT STREET
MEMPHIS, TENNESSEE 38103
(901) 495-6500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-------------------
COPIES TO:
GARY OLSON GLENN M. REITER
LATHAM & WATKINS SIMPSON THACHER & BARTLETT
633 WEST FIFTH STREET, SUITE 4000 425 LEXINGTON AVENUE
LOS ANGELES, CALIFORNIA 90071 NEW YORK, NEW YORK 10017
(213) 485-1234 (212) 455-2000
-------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
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, as amended (the "Securities Act"), check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement from 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
from the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. / /
-------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per
share............................. 25,300,000 $35.875 $907,637,500 $312,981
</TABLE>
(1) Includes 3,300,000 shares of Common Stock issuable upon exercise of
over-allotment options to be granted to the Underwriters.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 of the Securities Act.
-------------------
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 WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains two separate prospectuses. The first
prospectus relates to a public offering in the United States of an aggregate of
up to 20,240,000 shares of Common Stock (the "U.S. Offering"). The second
prospectus relates to a concurrent offering outside the United States of an
aggregate of up to 5,060,000 shares of Common Stock (the "International
Offering"). The prospectuses for the U.S. Offering and International Offering
will be identical with the exception of the following alternate pages for the
International Offering: a front cover page, two pages from the "Underwriting"
section and a back cover page. Such alternate pages appear in this Registration
Statement immediately following the complete prospectus for the U.S. Offering.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 20, 1996
22,000,000 SHARES
[LOGO]
AUTOZONE, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
-------------------
Of the 22,000,000 shares of Common Stock offered, 17,600,000 shares are
being offered hereby in the United States and 4,400,000 shares are being offered
in a concurrent international offering outside the United States. The initial
public offering price and the aggregate underwriting discount per share will be
identical for both offerings. See "Underwriting".
All of the shares of Common Stock offered are being sold by Selling
Stockholders of the Company. The Selling Stockholders consist of certain KKR
Partnerships that are limited partnerships affiliated with Kohlberg Kravis
Roberts & Co., L.P. and J.R. Hyde, III, the Chairman of the Board and Chief
Executive Officer of the Company. After the offerings, the KKR Partnerships and
Mr. Hyde will own 10.6% and 8.3%, respectively, of the outstanding shares of
Common Stock (assuming exercise in full of the over-allotment options). See "The
Company" and "Principal and Selling Stockholders". The Company will not receive
any of the proceeds from the sale of the shares offered hereby.
The last reported sales price of the Common Stock, which is listed under the
symbol "AZO", on the New York Stock Exchange on May 17, 1996 was $37 1/8 per
share. See "Price Range of Common Stock".
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO SELLING
OFFERING PRICE DISCOUNT(1) STOCKHOLDERS(2)
--------------------- ------------------------ -------------------
<S> <C> <C> <C>
Per Share................................. $ $ $
Total(3).................................. $ $ $
</TABLE>
------------
(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933. See "Underwriting".
(2) Before deducting estimated expenses of $600,000 payable by the Selling
Stockholders.
(3) The KKR Partnerships have granted the U.S. Underwriters an option for 30
days to purchase up to an additional 2,640,000 shares of Common Stock at the
initial public offering price per share, less the underwriting discount,
solely to cover over-allotments. Additionally, the KKR Partnerships have
granted the International Underwriters an option for 30 days to purchase up
to an additional 660,000 shares of Common Stock at the initial public
offering price per share, less the underwriting discount, solely to cover
over-allotments. If such options are exercised in full, the total initial
public offering price, underwriting discount and proceeds to Selling
Stockholders will be $ , $ and $ , respectively. See
"Underwriting".
-------------------
The shares offered hereby are offered severally by the U.S. Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that certificates
for the shares will be ready for delivery in New York, New York, on or about
, 1996 against payment therefor in immediately available funds.
GOLDMAN, SACHS & CO. LEHMAN BROTHERS
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
FURMAN SELZ
MERRILL LYNCH & CO.
SMITH BARNEY INC.
--------------
THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE>
[LOGO]
The following map identifies the locations of the Company's 1,298 stores in 27
states at May 4, 1996:
[For EDGAR filing:Map is shown illustrating the locations of the Company's 1,298
stores in 27 states at May 4, 1996, as follows:
<TABLE>
<S> <C>
Alabama.......... 69
Arizona.......... 51
Arkansas......... 35
Colorado......... 21
Florida.......... 49
Georgia.......... 83
Illinois......... 37
Indiana.......... 60
Kansas........... 6
Kentucky......... 35
Louisiana........ 65
Michigan......... 9
Mississippi...... 54
Missouri......... 50
New Mexico....... 22
North Carolina... 69
Ohio............. 120
Oklahoma......... 51
Pennsylvania..... 1
South Carolina... 40
Tennessee........ 96
Texas............ 228
Utah............. 15
Virginia......... 19
West Virginia.... 11
Wisconsin........ 1
Wyoming.......... 1
---------
Total........ 1,298
---------
---------
</TABLE>
In addition, the map identifies the locations of the Company's 6 distribution
centers in Georgia, Tennessee, Illinois, Louisiana, Texas, Arizona and Ohio.]
oDistribution Centers
-----------------
IN CONNECTION WITH THE OFFERINGS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
2
<PAGE>
AVAILABLE INFORMATION
AutoZone has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (of which this Prospectus is a part)
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the shares of Common Stock offered hereby. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
portions of which have been omitted as permitted by the rules and regulations of
the Commission. Statements contained in this Prospectus as to the contents of
any contract or other document are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference and the exhibits and schedules thereto. For
further information regarding AutoZone and the shares of Common Stock offered
hereby, reference is hereby made to the Registration Statement and the exhibits
and schedules thereto which may be obtained from the Public Reference Section of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates.
AutoZone is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. The Registration Statement, the exhibits and schedules forming a
part thereof and the reports, proxy statement and other information filed by
AutoZone with the Commission in accordance with the Exchange Act can be
inspected and copied at the Public Reference Section of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following regional
offices of the Commission: Seven World Trade Center, 13th Floor, New York, New
York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
In addition, AutoZone's Common Stock is listed on the New York Stock Exchange
and similar information concerning AutoZone can be inspected and copied at the
New York Stock Exchange, 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company with the
Commission and are incorporated by reference herein:
a. Annual Report on Form 10-K for the fiscal year ended August 26, 1995
(the "1995 10-K").
b. Proxy Statement dated November 15, 1995 (the "1995 Proxy
Statement").
c. Quarterly Reports on Form 10-Q for the quarters ended November 18,
1995, February 10, 1996 and May 4, 1996.
d. Current Reports on Form 8-K dated September 21, 1995 and March 5,
1996.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Common Stock shall be deemed to be
incorporated by reference herein and to be part hereof from the date of filing
such documents.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference 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
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
Copies of all documents which are incorporated by reference (not including
the exhibits to such documents, unless such exhibits are specifically
incorporated by reference in such documents) will be provided without charge to
each person, including any beneficial owner, to whom this Prospectus is
delivered, upon written or oral request. Copies of this Prospectus, as amended
or supplemented from time to time, and any other documents (or parts of
documents) that constitute part of this Prospectus under Section 10(a) of the
Securities Act will also be provided without charge to each such person upon
written or oral request. Requests should be directed to AutoZone, Inc.,
Attention: Shareholder Relations, 123 South Front Street, Memphis, Tennessee
38103, telephone (901) 495-7185.
3
<PAGE>
THE COMPANY
AutoZone, Inc. is a leading specialty retailer of automotive parts and
accessories, focusing primarily on "Do-It-Yourself" ("D-I-Y") customers. The
Company began operations in 1979 and, at May 4, 1996, operated 1,298 stores in
27 states, primarily located in the Sunbelt and Midwest regions of the United
States. Each AutoZone store carries an extensive product line, including new and
remanufactured automotive hard parts, such as alternators, starters, water
pumps, brake shoes and pads, carburetors, clutches and engines; maintenance
items, such as oil, antifreeze, transmission, brake and power steering fluids,
engine additives, protectants and waxes; and accessories, such as car stereos
and floor mats. The Company carries parts for domestic and foreign cars, vans
and light trucks. The Company is implementing a commercial sales program which
provides prompt delivery of parts and other products to local repair garages,
dealers and service stations. This program was offered in 519 of the Company's
stores at May 4, 1996. AutoZone does not perform automotive repairs or
installations.
AutoZone has experienced significant growth due to the opening of new stores
and increases in comparable store sales. Net sales have increased from $818.0
million in the Company's 1991 fiscal year to $1,808.1 million in the 1995 fiscal
year, and net income has increased from $44.2 million to $138.8 million during
such period. In addition, the number of stores has increased from 538 at the
beginning of the 1991 fiscal year to 1,298 at May 4, 1996, representing an
increase in total store square footage from 3.0 million to 8.6 million square
feet during such period. A major element of the Company's business strategy is
continued store expansion, including the opening of stores in new market areas.
AutoZone opened 210 net new stores during its 1995 fiscal year and intends to
open 257 net new stores in its 1996 fiscal year (including 155 net new stores
opened through May 4, 1996) and a substantial number of additional stores in
succeeding fiscal years. See "Business--Store Development and Expansion
Strategy."
AutoZone is dedicated to a marketing and merchandising strategy to provide
customers with superior service, value and parts selection at conveniently
located, well-designed stores. The Company has implemented this strategy
primarily through knowledgeable and motivated store personnel trained to
emphasize prompt and courteous customer service, through an everyday low price
policy and by maintaining an extensive product line with an emphasis on
automotive hard parts. AutoZone's stores are generally situated in
high-visibility locations and provide a distinctive merchandise presentation in
an attractive store environment.
Approximately 26.1% of the Company's shares of Common Stock outstanding
prior to the offerings is held by three limited partnerships (the "KKR
Partnerships"), the general partner of each of which is KKR Associates, a New
York limited partnership and an affiliate of Kohlberg Kravis Roberts & Co., L.P.
("KKR"), and approximately 9.6% is held by Mr. Hyde, the Chairman of the Board
and Chief Executive Officer of the Company (together with the KKR Partnerships,
the "Selling Stockholders"). After giving effect to the sale of shares of the
Company's Common Stock by the Selling Stockholders in the offerings and assuming
exercise in full of the over-allotment options, approximately 10.6% of the
Common Stock will be held by the KKR Partnerships and approximately 8.3% by Mr.
Hyde. The limited partnership agreements pursuant to which the KKR Partnerships
were organized are, by their terms, to dissolve on December 31, 1996 unless
amended by all of the limited partners to extend the term beyond such date.
There can be no assurance that KKR Associates will seek such amendments, or, if
sought, that they will be approved by the limited partners. In the event of the
winding up and dissolution of the KKR Partnerships, KKR Associates will have
sole discretion regarding the disposition of such Common Stock, including public
or private sales of such Common Stock, the distribution of such Common Stock to
the limited partners of the KKR Partnerships, or a combination of the foregoing.
In addition to the shares held by the Selling Stockholders, KKR Associates owns
2.7% of the Common Stock. See "Principal and Selling Stockholders."
The Company's executive offices are located at 123 South Front Street,
Memphis, Tennessee 38103, and its telephone number is (901) 495-6500.
References in this Prospectus to "AutoZone" or the "Company" include the
Company's direct and indirect wholly-owned subsidiaries, unless the context
otherwise requires. See "Business-- Introduction."
4
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth selected financial and other operating
information of AutoZone. The selected financial data for the five fiscal years
during the period ended August 26, 1995 have been derived from the audited
financial statements of AutoZone, which in the case of the three most recent
fiscal years are incorporated by reference in the 1995 Form 10-K, which is
incorporated by reference herein. The selected financial data for the thirty-six
weeks ended May 6, 1995 and May 4, 1996 have been derived from its unaudited
financial statements and includes, in the opinion of the Company's management,
all adjustments necessary to present fairly the data for such periods. The
results for the thirty-six weeks ended May 4, 1996 are not necessarily
indicative of the results to be expected for the 53 weeks ending August 31, 1996
or for any future period. The data provided below should be read in conjunction
with the separate financial statements and notes thereto, incorporated by
reference herein.
<TABLE>
<CAPTION>
THIRTY-SIX WEEKS ENDED
FISCAL YEAR ENDED AUGUST(1)
--------------------------------------------------------------- --------------------------
1991 1992 1993 1994 1995 MAY 6, MAY 4,
(53 WEEKS) (52 WEEKS) (52 WEEKS) (52 WEEKS) (52 WEEKS) 1995 1996
---------- ----------- ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA AND SELECTED OPERATING DATA)
INCOME STATEMENT DATA:
Net sales........................ $817,962 $1,002,327 $1,216,793 $1,508,029 $1,808,131 $ 1,179,307 $ 1,413,042
Cost of sales, including
warehouse and delivery
expenses....................... 491,261 602,956 731,971 886,068 1,057,033 694,318 828,322
Operating, selling, general and
administrative expenses........ 247,355 295,701 344,060 431,219 523,440 347,266 425,467
---------- ----------- ----------- ----------- ----------- ------------ ------------
Operating profit................. 79,346 103,670 140,762 190,742 227,658 137,723 159,253
Interest income (expense)--net... (7,295) 818 2,473 2,244 623 623 (727)
---------- ----------- ----------- ----------- ----------- ------------ ------------
Income before income taxes....... 72,051 104,488 143,235 192,986 228,281 138,346 158,526
Income taxes..................... 27,900 41,200 56,300 76,600 89,500 54,462 58,800
---------- ----------- ----------- ----------- ----------- ------------ ------------
Net income....................... $ 44,151 $ 63,288 $ 86,935 $ 116,386 $ 138,781 $ 83,884 $ 99,726
---------- ----------- ----------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ----------- ----------- ------------ ------------
Net income per share............. $ 0.33 $ 0.43 $ 0.59 $ 0.78 $ 0.93 $ 0.56 $ 0.66
---------- ----------- ----------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ----------- ----------- ------------ ------------
Average shares outstanding,
including common stock
equivalents.................... 134,656 145,940 147,608 148,726 149,302 149,057 150,508
---------- ----------- ----------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ----------- ----------- ------------ ------------
SELECTED OPERATING DATA:
Number of stores (at period
end)........................... 598 678 783 933 1,143 1,059 1,298
Total store square footage (at
period end) (000s)(2).......... 3,458 4,043 4,839 5,949 7,480 6,832 8,583
Percentage increase in square
footage(2)..................... 14% 17% 20% 23% 26% 15% 15%
Average net sales per store
(000s)(2)...................... $ 1,408 $ 1,570 $ 1,666 $ 1,758 $ 1,742 $ 1,184 $ 1,158
Average net sales per store
square foot(2)................. $ 246 $ 267 $ 274 $ 280 $ 269 $ 185 $ 176
Percentage increase in comparable
store net sales(3)............. 12% 15% 9% 9% 6% 6% 5%
BALANCE SHEET DATA (AT PERIOD
END):
Current assets................... $233,439 $ 279,350 $ 378,467 $ 424,402 $ 447,822 $ 426,096 $ 592,692
Current liabilities.............. 177,632 207,080 286,136 339,029 417,549 373,000 589,762
Working capital.................. 55,807 72,270 92,331 85,373 30,273 53,096 2,930
Total assets..................... 397,776 501,048 696,547 882,102 1,111,778 1,022,536 1,404,008
Total debt....................... 7,246 7,057 4,458 4,252 13,503 16,832 97,775
Shareholders' equity............. 204,628 278,120 396,613 528,377 684,710 622,480 794,875
</TABLE>
---------------
(1) The Company's fiscal year consists of 52 or 53 weeks ending on the last
Saturday in August.
(2) Total store square footage is based on the Company's standard store formats
including normal selling, office, stockroom and receiving space, but
excluding excess space not utilized in a store's operations. Average net
sales per store and average net sales per store square foot are based on the
average of beginning and ending number of stores and store square footage
and are not weighted to take into consideration the actual dates of store
openings or expansions. For fiscal 1991, average net sales per store and
average net sales per store square foot have been adjusted to exclude net
sales for the fifty-third week.
(3) Comparable store net sales data is calculated based on the change in net
sales of all stores opened as of the beginning of the preceding full fiscal
year. Increases for fiscal 1991 and fiscal 1992 have been adjusted to
exclude the effect of the fifty-third week in fiscal 1991.
5
<PAGE>
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is listed on the New York Stock Exchange under
the symbol AZO. The following table sets forth the high and low closing sale
prices for the Company's Common Stock for the calendar quarters indicated as
reported by the New York Stock Exchange Composite Tape. These sales prices have
been adjusted to reflect a two-for-one stock split during the second calendar
quarter of 1994.
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
1994
----------------------------------------------------------------
First Quarter................................................... $30 3/4 $26 15/16
Second Quarter.................................................. 30 1/4 23 3/4
Third Quarter................................................... 25 5/8 22 1/4
Fourth Quarter.................................................. 27 21 3/4
1995
----------------------------------------------------------------
First Quarter................................................... 26 7/8 23 3/8
Second Quarter.................................................. 26 22
Third Quarter................................................... 27 5/8 25
Fourth Quarter.................................................. 30 1/8 24 3/4
1996
----------------------------------------------------------------
First Quarter................................................... 34 24 1/8
Second Quarter (through May 17)................................. 37 1/2 32 3/8
</TABLE>
The last reported sale price of the Common Stock on the New York Stock
Exchange Composite Tape as of a recent date is set forth on the cover page of
this Prospectus.
DIVIDEND POLICY
AutoZone has not declared or paid any cash dividends on its Common Stock
since its incorporation in May 1986 and does not currently intend to declare or
pay any dividends. Any determination to pay dividends in the future will be at
the discretion of the Company's Board of Directors and will be dependent upon
AutoZone's results of operations, financial condition, capital expenditures,
working capital requirements, any contractual restrictions and other factors
deemed relevant by the Board of Directors.
6
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of AutoZone at May 4,
1996:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Short-term borrowings(1)............................................................ $ 97,775
-----------
-----------
Long-term debt...................................................................... $ --
Shareholders' equity:
Common Stock, par value $.01 per share; 200,000,000 shares authorized; 149,891,533
shares outstanding(2)........................................................... 1,499
Additional paid-in capital........................................................ 231,981
Retained earnings................................................................. 561,395
-----------
Total shareholders' equity.................................................... 794,875
-----------
Total capitalization........................................................ $ 794,875
-----------
-----------
</TABLE>
------------
(1) Consists of borrowings under the revolving credit agreements.
(2) Excludes 9,584,727 shares of Common Stock underlying stock options
outstanding at May 4, 1996 at an average exercise price of $17.03 per share.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth income statement data of AutoZone expressed
as a percentage of net sales for the periods indicated:
<TABLE>
<CAPTION>
THIRTY-SIX WEEKS ENDED
FISCAL YEAR ENDED
------------------------------------------- ------------------------
AUGUST 28, AUGUST 27, AUGUST 26, MAY 6, MAY 4,
1993 1994 1995 1995 1996
------------- ------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net sales............................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales, including warehouse and delivery
expenses.............................................. 60.2 58.8 58.5 58.9 58.6
----- ----- ----- ----- -----
Gross profit............................................ 39.8 41.2 41.5 41.1 41.4
Operating, selling, general and administrative
expenses.............................................. 28.3 28.6 28.9 29.4 30.1
----- ----- ----- ----- -----
Operating profit........................................ 11.5 12.6 12.6 11.7 11.3
Interest income--net.................................... 0.2 0.1 -- -- --
Income taxes............................................ 4.6 5.0 4.9 4.6 4.2
----- ----- ----- ----- -----
Net income.............................................. 7.1% 7.7% 7.7% 7.1% 7.1%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>
THIRTY-SIX WEEKS ENDED MAY 4, 1996 COMPARED TO THIRTY-SIX WEEKS ENDED MAY 6,
1995
Net sales for the thirty-six weeks ended May 4, 1996 increased by $233.7
million, or 19.8%, over net sales for the comparable period for fiscal 1995.
This increase was due to a comparable store net sales increase of 5% (which was
primarily due to sales growth in the Company's newer stores) and increases in
net sales for stores opened since the beginning of fiscal 1995. For the twelve
weeks ended May 4, 1996, comparable store net sales increased by 8%, which was
primarily due to sales growth in the Company's newer stores and the added sales
of the Company's commercial sales program.
Gross profit for the thirty-six weeks ended May 4, 1996 was $584.7 million,
or 41.4% of net sales, compared with $485.0 million, or 41.1% of net sales,
during the comparable period for fiscal 1995. The increase in the gross profit
percentage was due primarily to efficiencies in distribution costs and favorable
results of second quarter physical inventories.
Operating, selling, general and administrative expenses for the thirty-six
weeks ended May 4, 1996 increased by $78.2 million over such expenses for the
comparable period for fiscal 1995, and increased as a percentage of net sales
from 29.4% to 30.1%. The increase in the expense ratio was due primarily to
operating costs of the Company's second call center in Houston and start-up
costs of the Company's commercial sales program (which program is still being
implemented and has been unprofitable to date). During the thirty-six week
period ending May 4, 1996, the Company increased the number of stores
participating in the commercial sales program from three to 519.
The Company's effective income tax rate decreased from 39.4% of pre-tax
income for the thirty-six weeks ended May 6, 1995 to 37.1% for the thirty-six
weeks ended May 4, 1996. The decrease in the effective income tax rate is due to
a reduction in state income taxes.
FISCAL 1995 COMPARED TO FISCAL 1994
Net sales for fiscal 1995 increased by $300.1 million, or 19.9%, over net
sales for fiscal 1994. This increase was due to a comparable store net sales
increase of 6%, which was primarily due to sales growth in the Company's newer
stores, and an increase in net sales of $214.1 million for stores opened since
the beginning of fiscal 1994. At August 26, 1995, the Company had 1,143 stores
in operation, a net increase of 210 stores, or approximately 26% in new store
square footage for the year.
Gross profit for fiscal 1995 was $751.1 million, or 41.5% of net sales,
compared with $622.0 million, or 41.2% of net sales, for fiscal 1994. The
increase in gross profit was due primarily to improved leveraging of warehouse
and delivery expenses.
Operating, selling, general and administrative expenses for fiscal 1995
increased by $92.2 million over such expenses for fiscal 1994, and increased as
a percentage of net sales from 28.6% to 28.9%. The
8
<PAGE>
increase in the expense ratio was primarily due to expenses incurred in
connection with the introduction of the call center and flexogram programs (see
"Business--Marketing and Merchandising Strategy") and increased net advertising
expenses.
Net interest income for fiscal 1995 was $0.6 million compared with $2.2
million for fiscal 1994. The decrease in interest income was primarily due to
lower levels of invested cash. At August 26, 1995, the Company had short-term
borrowings, net of short-term investments, of $10.8 million compared with
short-term investments, net of short-term borrowings, of $53.9 million at August
27, 1994.
AutoZone's effective income tax rate was 39.2% of pre-tax income for fiscal
1995 and 39.7% for fiscal 1994. The decrease in the tax rate was primarily due
to a change in the effective state tax rate due to expansion in lower tax rate
states.
FISCAL 1994 COMPARED TO FISCAL 1993
Net sales for fiscal 1994 increased by $291.2 million or 23.9% over net
sales for fiscal 1993. This increase was due to a comparable store net sales
increase of 9%, which was principally attributable to higher unit sales of the
Company's products, and an increase in net sales of $193.3 million for stores
opened since the beginning of fiscal 1993. At August 27, 1994, the Company had
933 stores in operation, a net increase of 150 stores, or approximately 23% in
new store square footage for the year.
Gross profit for fiscal 1994 was $622.0 million, or 41.2% of net sales,
compared with $484.8 million, or 39.8% of net sales for fiscal 1993. The
increase in gross profit was due primarily to a relative increase in sales of
higher margin automotive parts and a $10.3 million change in the LIFO provision.
Operating, selling, general and administrative expenses for fiscal 1994
increased by $87.2 million over such expenses for fiscal 1993, and increased as
a percentage of net sales from 28.3% to 28.6%. The increase in the expense ratio
was primarily due to higher store payroll, the introduction of a satellite
system and a store call center, and lower advertising rebates from vendors.
Net interest income for fiscal 1994 was $2.2 million compared with $2.5
million for fiscal 1993. The decrease in net investment income was primarily due
to lower levels of invested cash. Short-term investments totaled $54.1 million
at August 27, 1994 compared with $82.8 million at August 28, 1993.
AutoZone's effective income tax rate was 39.7% of pre-tax income for fiscal
1994 and 39.3% for fiscal 1993. The increase in the tax rate was primarily due
to the federal Omnibus Budget Reconciliation Act of 1993 being in effect for the
entire year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital requirements have been the funding of its
continued new store expansion program and the resultant increase in distribution
centers and inventory requirements. The Company has opened 760 stores and
constructed six new distribution centers from the beginning of fiscal 1991 to
May 4, 1996. The Company has financed this growth through a combination of
internally generated funds and, to a lesser degree, borrowings. Net cash
provided by operating activities was $117.0 million in fiscal 1993, $128.3
million in fiscal 1994, $180.1 million in fiscal 1995, $90.2 million during the
thirty-six weeks ended May 6, 1995 and $78.6 million during the thirty-six weeks
ended May 4, 1996. The comparative decrease in cash provided by operations
during the thirty-six weeks ended May 4, 1996 is due primarily to increased
inventory due to forward buying, opening of the new Zanesville, Ohio
distribution center and opening of new stores, which was offset by higher net
income, depreciation and leverage of accounts payable.
Capital expenditures were $120.6 million in fiscal 1993, $173.0 million in
fiscal 1994, $258.1 million in fiscal 1995, $166.8 million during the thirty-six
weeks ended May 6, 1995 and $183.2 million during the thirty-six weeks ended May
4, 1996. During the thirty-six weeks ended May 4, 1996 the Company opened 155
net new stores and completed construction of a new 550,000 square foot
distribution center in Zanesville, Ohio, which commenced operations in February
1996. The Company completed the construction of and relocation to its new
Memphis headquarters in October 1995. Construction commitments, which primarily
related to new stores, totaled approximately $63 million at May 4, 1996.
9
<PAGE>
The Company's new store development program requires significant working
capital, principally for inventories. Historically, the Company has negotiated
extended payment terms from suppliers, minimizing the working capital required
by its expansion. The Company believes that it will be able to continue
financing much of its inventory growth by favorable payment terms from
suppliers, but there can be no assurance that the Company will be successful in
doing so. The Company also may negotiate shorter payment terms in exchange for
other concessions.
The Company anticipates that it will rely primarily on internally generated
funds to support its capital expenditures and working capital requirements. The
balance of such requirements will be funded through short-term borrowings. The
Company has revolving credit agreements with several banks providing for lines
of credit in an aggregate maximum amount of $125 million, including an increase
of $50 million in January 1996. These credit agreements contain a covenant
limiting the amount of debt the Company may incur relative to its net worth. At
May 4, 1996, the Company had borrowings outstanding under these credit
agreements of $97.8 million.
At August 26, 1995, the Company had outstanding stock options covering
9,503,981 shares of Common Stock. Assuming all such options become vested and
are exercised, such options would result in proceeds of $140.4 million to the
Company. Such proceeds constitute an additional source for liquidity and capital
resources for the Company. For fiscal 1995 and for the thirty-six weeks ended
May 4, 1996, proceeds from sales of stock under stock option and employee stock
purchase plans were $17.6 million and $14.4 million, respectively, including
related tax benefits.
INFLATION
The Company does not believe its operations have been materially affected by
inflation. The Company has been successful, in many cases, in mitigating the
effects of merchandise cost increases principally due to economies of scale
resulting from increased volumes of purchases, selective forward buying and the
use of alternative suppliers.
SEASONALITY AND QUARTERLY PERIODS
The Company's business is somewhat seasonal in nature, with the highest
sales occurring in the summer months of June through August, in which average
weekly per store sales historically have run about 20% to 30% higher than in the
slowest months of December through February. The Company's business is also
affected by weather conditions. Extremely hot or extremely cold weather tends to
enhance sales by causing parts to fail and spurring sales of seasonal products.
Mild or rainy weather tends to soften sales as parts' failure rates are lower in
mild weather and elective maintenance is deferred during periods of rainy
weather.
Each of the first three quarters of AutoZone's fiscal year consists of
twelve weeks and the fourth quarter generally consists of sixteen weeks (except
for the fourth quarter of fiscal 1991 which had, and the fourth quarter of
fiscal 1996 which will have, seventeen weeks). Because the fourth quarter
contains the seasonally high sales volume months of June, July and August and
consists of sixteen weeks compared to twelve weeks for each of the first three
quarters, the Company's fourth quarter represents a disproportionate share of
the annual net sales and net income. For fiscal 1994 and 1995, the fourth
quarter represented 34.7% and 34.8%, respectively, of annual net sales and 38.9%
and 39.6%, respectively, of net income.
10
<PAGE>
The following table sets forth quarterly unaudited financial information for
fiscal 1994 and 1995 and for the first, second and third quarters of fiscal 1996
(in thousands, except per share data):
<TABLE>
<CAPTION>
SIXTEEN WEEKS
TWELVE WEEKS ENDED ENDED
------------------------------------------- ---------------
NOVEMBER 20, FEBRUARY 12, MAY 7, AUGUST 27,
1993 1994 1994 1994
-------------- -------------- ----------- ---------------
<S> <C> <C> <C> <C>
Net sales.......................................... $ 322,846 $ 303,203 $ 358,159 $ 523,821
Gross profit....................................... 131,110 124,115 146,521 220,215
Operating profit................................... 35,794 34,239 46,512 74,197
Income before income taxes......................... 36,620 34,735 46,808 74,823
Net income......................................... 22,020 20,935 28,208 45,223
Net income per share............................... 0.15 0.14 0.19 0.30
<CAPTION>
NOVEMBER 19, FEBRUARY 11, MAY 6, AUGUST 26,
1994 1995 1995 1995
-------------- -------------- ----------- ---------------
<S> <C> <C> <C> <C>
Net sales.......................................... $ 389,763 $ 364,061 $ 425,483 $ 628,824
Gross profit....................................... 158,818 149,080 177,091 266,109
Operating profit................................... 45,408 39,201 53,114 89,935
Income before income taxes......................... 45,834 39,398 53,114 89,935
Net income......................................... 27,634 23,836 32,414 54,897
Net income per share............................... 0.19 0.16 0.22 0.37
<CAPTION>
NOVEMBER 18, FEBRUARY 10, MAY 4,
1995 1996 1996
-------------- -------------- -----------
<S> <C> <C> <C> <C>
Net sales.......................................... $ 463,029 $ 425,838 $ 524,175
Gross profit....................................... 193,220 176,033 215,531
Operating profit................................... 55,397 43,424 60,432
Income before income taxes......................... 55,397 43,424 59,705
Net income......................................... 34,797 27,324 37,605
Net income per share............................... 0.23 0.18 0.25
</TABLE>
MERGER WITH ALLDATA CORPORATION
On March 29, 1996, Alldata Corporation ("Alldata") became a wholly owned
subsidiary of AutoZone in a stock-for-stock merger accounted for as a pooling of
interests. Under the terms of the merger agreement, AutoZone issued
approximately 1.7 million shares of Common Stock and stock options covering
approximately 200,000 shares of Common Stock. Financial information of Alldata
has been included in the results of operations from the date of acquisition, and
is included in the balance sheet as of May 4, 1996. Financial statements for
periods prior to the date of combination have not been restated as the effect is
not material to AutoZone's financial condition and results of operations. The
assets and liabilities of Alldata were approximately $18 million and $21
million, respectively, at the date of combination.
11
<PAGE>
BUSINESS
INTRODUCTION
AutoZone is a leading specialty retailer of automotive parts and
accessories, focusing primarily on D-I-Y customers. The Company began operations
in 1979 and, at May 4, 1996, operated 1,298 stores in 27 states, primarily
located in the Sunbelt and Midwest regions of the United States. Each AutoZone
store carries an extensive product line, including new and remanufactured
automotive hard parts, such as alternators, starters, water pumps, brake shoes
and pads, carburetors, clutches and engines; maintenance items, such as oil,
antifreeze, transmission, brake and power steering fluids, engine additives,
protectants and waxes; and accessories, such as car stereos and floor mats. The
Company carries parts for domestic and foreign cars, vans and light trucks. The
Company is implementing a commercial sales program which provides prompt
delivery of parts and other products to local repair garages, dealers and
service stations. This program was offered in 519 of the Company's stores at May
4, 1996. AutoZone does not perform automotive repairs or installations.
AutoZone is dedicated to a marketing and merchandising strategy to provide
customers with superior service, value and parts selection at conveniently
located, well-designed stores. The Company has implemented this strategy
primarily with knowledgeable and motivated store personnel trained to emphasize
prompt and courteous customer service, through an everyday low price policy and
by maintaining an extensive product line with an emphasis on automotive hard
parts. AutoZone's stores are generally situated in high-visibility locations and
provide a distinctive merchandise presentation in an attractive store
environment.
At May 4, 1996, AutoZone had 1,298 stores located in the following 27
states:
<TABLE>
<S> <C>
Alabama.......... 69
Arizona.......... 51
Arkansas......... 35
Colorado......... 21
Florida.......... 49
Georgia.......... 83
Illinois......... 37
Indiana.......... 60
Kansas........... 6
Kentucky......... 35
Louisiana........ 65
Michigan......... 9
Mississippi...... 54
Missouri......... 50
New Mexico....... 22
North Carolina... 69
Ohio............. 120
Oklahoma......... 51
Pennsylvania..... 1
South Carolina... 40
Tennessee........ 96
Texas............ 228
Utah............. 15
Virginia......... 19
West Virginia.... 11
Wisconsin........ 1
Wyoming.......... 1
</TABLE>
MARKETING AND MERCHANDISING STRATEGY
AutoZone's marketing and merchandising strategy is to provide customers with
superior service, value and parts selection at conveniently located,
well-designed stores. Key elements of this strategy are as follows:
CUSTOMER SERVICE
The Company believes that D-I-Y consumers place a significant value on
customer service. As a result, the Company emphasizes customer service as the
most important element in its marketing and merchandising strategy. The Company
attempts to promote a corporate culture which "always puts customers first" and
emphasizes knowledgeable and courteous service. To do so, the Company employs
parts personnel with technical expertise to advise customers regarding the
correct part type and application, utilizes a wide range of training methods to
educate and motivate its store personnel, and provides store personnel with
significant opportunities for promotion and incentive compensation. Customer
service is enhanced by electronic parts catalogs which assist in the selection
of parts; free testing of starters, alternators, batteries and sensors and
actuators; and liberal return and warranty policies. AutoZone stores are
generally open from 8 a.m. to 9 or 10 p.m. (with some open to midnight) on
Monday through Saturday and are typically open from 9 a.m. to 6 p.m. on Sunday.
The Company recently implemented a number of programs to enhance customer
service. AutoZone installed a satellite system for all of its stores which,
among other things, enables the
12
<PAGE>
Company to speed credit card and check approval processes and locate parts at
neighboring AutoZone stores. The Company has opened call centers in Memphis and
Houston to support the sales staff at high volume stores. Call center personnel
handle inquiries and orders, enabling store personnel to concentrate on serving
in-store customers without having to field telephone calls. In addition, the
Company initiated a "flexogram" inventory management program which matches the
hard parts inventory of each store to the automobile population in each sales
area.
In March 1996, Alldata became a wholly owned subsidiary of AutoZone in a
stock-for-stock merger. Alldata has developed a database system that provides
comprehensive and up-to-date automotive diagnostic, service and repair
information which it will continue to market to professional repair shops. In
addition, the Company plans to integrate certain limited information from the
Alldata database, such as technical service bulletins, recall information and
specifications, into its electronic catalog.
PRODUCT SELECTION
The Company offers a wide selection of automotive parts and other products
designed to cover a broad range of specific vehicle applications. AutoZone's
stores generally carry between 16,000 and 19,000 SKUs. Each AutoZone store
carries the same basic product line with some regional and local differences
based on climate, demographics and age and type of vehicle registration. The
Company's "flexogram" program enables the Company to tailor its hard parts
inventory to the makes and models of the automobiles in each store's trade area.
In addition to brand name products, the Company sells a number of products,
including batteries and engines, under the "AutoZone" name and a selection of
automotive hard parts, including starters, alternators, water pumps, brakes and
filters under its private label names. In addition to products stocked in
stores, the Company offers a range of products, consisting principally of
automotive hard parts, through its Express Parts program. The Express Parts
program provides air-freight delivery of lower turnover products to AutoZone's
stores.
PRICING
The Company employs an everyday low price strategy and attempts to be the
price leader in hard parts categories. Management believes that its prices
overall compare favorably to those of its competitors. The Company's pricing
strategy is supported through newspaper, radio and television advertising as
well as through in-store promotional signage and displays.
COMMERCIAL SALES PROGRAM
AutoZone is implementing a commercial sales program which provides prompt
delivery of parts and other products to local repair garages, dealers and
service stations. This program was offered in 519 of the Company's stores at May
4, 1996. AutoZone expects that the program will be available in nearly all of
its stores by the end of calendar 1996. Commercial customers generally pay the
same every day low prices for parts and other products as paid by AutoZone's
D-I-Y customers. The Company anticipates that the commercial sales program will
result in an expansion of its customer base at a relatively modest incremental
capital investment. The Company believes that the program, when fully
implemented, should enhance its future financial performance. There can be no
assurance, however, that the Company will complete implementation of the
commercial sales program by year-end 1996 or that such implementation will
enhance the Company's results of operations and financial condition in future
fiscal years.
STORE DESIGN AND VISUAL MERCHANDISING
AutoZone seeks to design and build stores with a high visual impact.
AutoZone stores are designed to have an industrial "high tech" appearance by
utilizing colorful exterior signage, exposed beams and ductwork, and brightly
lighted interiors. Merchandise in stores is attractively displayed, typically
utilizing diagonally placed gondolas for maintenance and accessory products as
well as specialized shelving for batteries and, in many stores, oil products.
The Company employs a uniform ("planogrammed") store layout system to promote
consistent merchandise presentation in all of its stores. In-store signage and
special displays are used extensively to aid customers in locating merchandise
and promoting products.
13
<PAGE>
STORE DEVELOPMENT AND EXPANSION STRATEGY
The following table sets forth the Company's store development activities
during the past five fiscal years and the thirty-six weeks ended May 4, 1996:
<TABLE>
<CAPTION>
FISCAL YEAR THIRTY-SIX
------------------------------------------------------------- WEEKS ENDED
1991 1992 1993 1994 1995 MAY 4, 1996
----------- ----------- ----------- ----------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Beginning Stores................................. 538 598 678 783 933 1,143
New Stores....................................... 60 82 107 151 210 155
Replaced Stores(1)............................... 4 14 20 20 29 22
Closed Stores(1)................................. (4) (16) (22) (21) (29) (22)
--- --- --- --- --------- -----
Ending Stores.................................... 598 678 783 933 1,143 1,298
--- --- --- --- --------- -----
--- --- --- --- --------- -----
</TABLE>
----------------
(1) Replaced stores are either relocations or conversions of existing
smaller stores to larger formats. Closed stores include replaced stores.
The Company opened 210 net new stores in fiscal 1995, representing an
increase in total square footage from fiscal 1994 of approximately 26%. For the
thirty-six week period ended May 4, 1996, the Company opened 155 net new stores
and plans to open an additional 102 net new stores by the end of fiscal 1996.
The Company believes that expansion opportunities exist both in markets
which it does not currently serve and in markets in which it can achieve a
larger presence. The Company attempts to obtain high visibility in sites in high
traffic locations and undertakes substantial research prior to entering new
markets. Key factors in selecting new site and market locations include
population, demographics, vehicle profile and number and strength of
competitors' stores. The Company generally seeks to open new stores within or
contiguous to existing market areas and attempts to cluster development in new
urban markets in a relatively short period of time in order to achieve economies
of scale in advertising and distribution costs. The Company may also expand its
operations through acquisitions of existing stores from third parties. The
Company regularly evaluates potential acquisition candidates in new as well as
existing market areas.
AutoZone's net sales have grown significantly in the past several years,
increasing from $818.0 million in fiscal 1991 to $1,808.1 million in fiscal
1995. The continued growth and financial performance of the Company will be
dependent, in large part, upon management's ability to open new stores on a
profitable basis in existing and new markets and also upon its ability to
continue to increase sales in existing stores. There can be no assurance that
the Company will continue to be able to open and operate new stores on a timely
and profitable basis or will continue to attain increases in comparable store
sales.
14
<PAGE>
STORE OPERATIONS
STORE FORMATS
Substantially all of AutoZone's stores are based on standard store formats
resulting in generally consistent appearance, merchandising and product mix.
Although the smaller store formats were generally used by the Company for its
earlier stores, the Company has increasingly used larger format stores, starting
with its 8,100 square foot store introduced in 1987, its 6,600 square foot store
introduced in 1991 and its 7,700 square foot store introduced in 1993. In fiscal
1996, the 6,600 square foot and larger store formats are expected to account for
more than 85% of new and replacement stores. Total store space as of May 4, 1996
was as follows:
<TABLE>
<CAPTION>
TOTAL STORE
STORE FORMAT NUMBER OF STORES SQUARE FOOTAGE(1)
---------------------------------------------------------------- ------------------- ------------------
<S> <C> <C>
8,100 sq. ft.................................................... 182 1,474,200
7,700 sq. ft.................................................... 288 2,217,600
6,600 sq. ft.................................................... 372 2,455,200
5,400 sq. ft.................................................... 437 2,359,800
4,000 sq. ft.................................................... 19 76,000
----- ----------
Total....................................................... 1,298 8,582,800
----- ----------
----- ----------
</TABLE>
----------------
(1) Total store square footage is based on the Company's standard store
formats, including normal selling, office, stockroom and receiving space,
but excluding excess space not utilized in a store's operations.
Approximately 85% to 90% of each store is selling space, of which
approximately 30% to 40% is dedicated to automotive parts inventory. The parts
inventory area is fronted by a counter staffed by knowledgeable parts personnel
and equipped with proprietary electronic parts catalogs. The remaining selling
space contains gondolas for accessories, maintenance items, including oil and
air filters, additives and waxes, and other parts together with specifically
designed shelving for batteries and, in many stores, oil products.
Approximately 80% of the Company's stores are freestanding, with the balance
principally located within strip shopping centers. Freestanding large format
stores typically have parking for approximately 45 to 50 cars on a lot of
approximately 3/4 to one acre. The Company's 5,400 and 4,000 square foot stores
typically have parking for approximately 25 to 40 cars and are usually located
on a lot of approximately 1/2 to 3/4 acre.
STORE PERSONNEL AND TRAINING
While subject to fluctuation based on seasonal volumes and actual store
sales, the 4,000, 5,400 and 6,600 square foot stores typically employ 12 to 18
persons, including a manager and an assistant manager, and the larger stores
typically employ 14 to 23 persons. The Company generally hires personnel with
prior automotive experience. Although the Company relies primarily on on-the-job
training, it also provides formal training programs, which include regular store
meetings on specific sales and product issues, standardized training manuals and
a specialist program under which store personnel can obtain Company
certification in one of several areas of technical expertise. The Company is
testing a multimedia training program that will permit store personnel to train
at their own pace. The Company supplements training with frequent store visits
by management.
The Company provides financial incentives to store managers through an
incentive compensation program and through participation in the Company's stock
option plan. In addition, AutoZone's growth has provided opportunities for the
promotion of qualified employees. Management believes these opportunities are an
important factor in AutoZone's ability to attract, motivate and retain quality
personnel.
15
<PAGE>
The Company supervises store operations primarily through approximately 198
area advisors who report to one of 27 district managers, who, in turn, report to
one of six regional managers. Purchasing, merchandising, advertising,
accounting, cash management and other store support functions are centralized in
the Company's corporate and administrative headquarters in Memphis, Tennessee.
The Company believes that such centralization enhances consistent execution of
the Company's merchandising and marketing strategy at the store level.
STORE AUTOMATION
In order to assist store personnel in providing a high level of customer
service, all stores have proprietary electronic parts catalogs that provide
parts information based on the make, model and year of an automobile. The
catalog display screens are placed on the hard parts inventory counter so that
both employees and customers can view the screen. In addition, the Company's
satellite system enables the Company to speed up credit card and check approval
processes and locate parts at neighboring AutoZone stores.
All stores utilize the Company's computerized Store Management System, which
includes scanning and point-of-sale data collection terminals. The Store
Management System provides productivity benefits, including lower administrative
requirements and improved personnel scheduling at the store level, as well as
enhanced merchandising information and improved inventory control. The Company
believes the Store Management System also enhances customer service through
faster processing of transactions and simplified warranty and product return
procedures.
PURCHASING AND DISTRIBUTION
Merchandise is selected and purchased for all stores at the Company's
headquarters in Memphis. No one class of product accounts for as much as 10% of
the Company's total sales. In fiscal 1995, the Company purchased products from
approximately 200 suppliers and no single supplier accounted for more than 6% of
the Company's total purchases. During fiscal 1995, the Company's ten largest
suppliers accounted for approximately 29% of the Company's purchases. The
Company generally has no long-term contracts for the purchase of merchandise.
Management believes that AutoZone's relationships with suppliers are excellent.
Management also believes that alternative sources of supply exist, at similar
cost, for substantially all types of product sold.
Substantially all of the Company's merchandise is shipped by vendors to the
Company's distribution centers. Orders are typically placed by stores on a
weekly basis with orders shipped from the warehouse in leased trucks operated by
the Company on the following day.
COMPETITION
The Company competes principally in the D-I-Y and, more recently, the
commercial automotive aftermarket. Although the number of competitors and the
level of competition experienced by AutoZone's stores vary by market area, the
automotive aftermarket is highly fragmented and generally very competitive. The
Company believes that the largest share of the automotive aftermarket is held by
independently owned jobber stores which, while principally selling to commercial
accounts, have significant D-I-Y sales. The Company also competes with other
automotive specialty retailing chains and, in certain product categories, such
as oil and filters, with discount and general merchandise stores. The principal
competitive factors which affect the Company's business are store location,
customer service, product selection and quality, and price. While AutoZone
believes that it competes effectively in its various geographic areas, certain
of its competitors have substantial resources or have been operating longer in
particular geographic areas.
TRADEMARKS
The Company has registered several service marks and trademarks in the
United States Patent and Trademark office, including its service mark "AutoZone"
and its trademarks "AutoZone", "Duralast", "Valucraft", "Ultra Spark", "Albany"
and "Alldata". The Company believes that the "AutoZone" service mark and
trademarks have become an important component in its merchandising and marketing
strategy.
16
<PAGE>
EMPLOYEES
At May 4, 1996, the Company employed approximately 26,000 persons,
approximately 17,300 of whom were employed full-time. Approximately 84% of the
Company's employees were employed in stores or in direct field supervision,
approximately 7% in distribution centers and approximately 9% in corporate and
support functions.
The Company's employees currently are not members of any unions. The Company
has never experienced any material labor disruption. Management believes that
its labor relations are generally good.
PROPERTIES
The following table sets forth certain information concerning AutoZone's
principal properties:
<TABLE>
<CAPTION>
SQUARE NATURE OF
LOCATION PRIMARY USE FOOTAGE OCCUPANCY
------------------- ----------------------------------------- --------- -----------
<S> <C> <C> <C>
Memphis, TN Corporate and Administrative Offices 360,000 Owned
Lavonia, GA Distribution Center 421,700 Owned
Lexington, TN Distribution Center 341,000 Owned
Danville, IL Distribution Center 304,500 Owned
Memphis, TN Express Parts Warehouse 233,100 Leased
Lafayette, LA Distribution Center 464,000 Owned
San Antonio, TX Distribution Center 217,000 Owned
Phoenix, AZ Distribution Center 212,000 Owned
Zanesville, OH Distribution Center 550,000 Owned
</TABLE>
The Company relocated its headquarters in Memphis, Tennessee, in October
1995 and completed the sale of its former headquarters in December 1995.
AutoZone opened a new distribution center in Zanesville, Ohio, in February 1996.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources." The lease on the Express Parts
warehouse in Memphis expires in February 1997. AutoZone also rents additional
warehouse space, various district offices and training and other office
facilities, which are not material in the aggregate.
At May 4, 1996, AutoZone leased 508 and owned 790 of its 1,298 stores.
Original lease terms generally range from five to 20 years with renewal options.
Leases on 295 stores that are currently operating expire prior to the end of
fiscal 2001; however, leases on 275 of such stores contain renewal options.
LEGAL PROCEEDINGS
AutoZone is a party to various claims and lawsuits arising in the ordinary
course of business. The Company does not believe that such claims and lawsuits,
singly or in the aggregate, will have a material adverse effect on its business,
properties, results of operations, financial condition or prospects.
17
<PAGE>
MANAGEMENT
The following table lists AutoZone's executive officers as of May 4, 1996.
The title of each executive officer includes the words "Customer Satisfaction"
which reflects AutoZone's commitment to customer service as part of its
marketing and merchandising strategy. Officers are elected by and serve at the
discretion of the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
------------------------------------------ --- --------------------------------------------------------------
<S> <C> <C>
J.R. Hyde, III............................ 53 Chairman and Chief Executive Officer
Customer Satisfaction
Johnston C. Adams, Jr. ................... 48 Vice Chairman and Chief Operating Officer
Customer Satisfaction
Thomas S. Hanemann........................ 59 President
Customer Satisfaction
Timothy D. Vargo.......................... 45 Vice Chairman
Customer Satisfaction
Lawrence E. Evans......................... 52 Executive Vice President-Development
Customer Satisfaction
Robert J. Hunt............................ 47 Executive Vice President-Finance and
Chief Financial Officer
Customer Satisfaction
Shawn P. McGhee........................... 33 Executive Vice President-Merchandising
Customer Satisfaction
Anthony Dean Rose, Jr. ................... 35 Senior Vice President-Advertising
Customer Satisfaction
Stephen W. Valentine...................... 33 Senior Vice President-Systems Technology and Support
Customer Satisfaction
Michael E. Butterick...................... 44 Vice President-Controller
Customer Satisfaction
Harry L. Goldsmith........................ 44 Vice President, Secretary and General Counsel
Customer Satisfaction
</TABLE>
The Company's Board of Directors consists of Mr. Hyde, Mr. Adams, Mr.
Hanemann, Mr. Vargo, Andrew M. Clarkson, John E. Moll, James F. Keegan, Ronald
Terry, Henry R. Kravis, Robert I. MacDonnell, Michael W. Michelson and George R.
Roberts. Messrs. Kravis, MacDonnell, Michelson and Roberts are general partners
of KKR. See "Principal and Selling Stockholders."
18
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of AutoZone's outstanding Common Stock as of May 4, 1996 , and as
adjusted to reflect the sale of 25,300,000 shares by the Selling Stockholders in
the offerings (assuming exercise in full of the over-allotment options), by (i)
any person or group known by the Company to be the beneficial owner of more than
five percent of the Company's Common Stock (including the Selling Stockholders)
and (ii) all directors and executive officers of AutoZone as a group (including
Mr. Hyde). Except as indicated by the notes to the following table, the holders
listed below have sole voting power and investment power over the shares
beneficially held by them and the beneficial ownership is direct. The address of
KKR Associates is 9 West 57th Street, New York, New York 10019; the address of
Mr. Hyde is 123 South Front Street, Memphis, Tennessee 38103; the address of
Provident Investment Counsel, Inc. is 300 North Lake Avenue, Pasadena,
California 91101; and the address of The Prudential Insurance Company of America
is Prudential Plaza, Newark, New Jersey 07102.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
AS OF BENEFICIAL OWNERSHIP
MAY 4, 1996 (1) SHARES AFTER OFFERING (1)
------------------------- BEING -------------------------
NAME OF BENEFICIAL OWNER SHARES PERCENT OFFERED SHARES PERCENT
---------------------------------------------------- ------------ ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
KKR Associates(2)................................... 43,208,488 28.8% 23,300,000 19,908,488 13.3%
J.R. Hyde, III(3)................................... 14,404,946 9.6% 2,000,000 12,404,946 8.3%
The Prudential Insurance Company of America(4)...... 9,236,278 6.2% -- 9,236,278 6.2%
Provident Investment Counsel, Inc.(5)............... 8,426,972 5.6% -- 8,426,972 5.6%
Henry R. Kravis(2)(6)............................... -- -- -- -- --
Robert I. MacDonnell(2)(7).......................... -- -- -- -- --
Michael W. Michelson(2)............................. -- -- -- -- --
George R. Roberts(2)(8)............................. -- -- -- -- --
All directors and executive officers as a group,
including Mr. Hyde (other than as set forth in
relation to KKR Associates) (19 persons).......... 17,180,722 11.5% 2,000,000 15,180,722 10.1%
</TABLE>
-------------
(1) For purposes of this table, "beneficial ownership" includes any shares which
such person has the right to acquire within 60 days of May 4, 1996. For
purposes of computing the percentage of outstanding shares held by each
person or group of persons named above on a given date, any security which
such person or persons has the right to acquire within 60 days after such
date is deemed to be outstanding, but is not deemed to be outstanding in
computing the percentage ownership of any other person.
(2) Includes (i) 39,158,272 shares (26.1%) owned of record by three limited
partnerships of which KKR Associates is the sole general partner and as to
which it possesses sole voting and investment power, and (ii) 4,050,216
shares (2.7%) owned by KKR Associates. Messrs. Kravis, Roberts, MacDonnell,
Michelson, Saul A. Fox, Edward A. Gilhuly, Perry Golkin, James H. Greene,
Jr., Paul E. Raether, Clifton S. Robbins, Scott M. Stuart and Michael T.
Tokarz, as general partners of KKR Associates, a limited partnership, may be
deemed to share beneficial ownership of the shares. Messrs. Kravis, Roberts,
MacDonnell and Michelson are members of AutoZone's Board of Directors. The
foregoing persons disclaim beneficial ownership of the shares owned by the
three limited partnerships. Not included in the number of shares listed are
140,000 shares held in trust for the family of Mr. Raether and for which Mr.
Raether's spouse acts as co-trustee, 20,000 shares held in trust for the
family of Mr. Gilhuly and for which Mr. Gilhuly acts as co-trustee, 2,000
shares owned by Mr. Golkin, 40,000 shares owned jointly by Mr. Greene and
his wife and 40,000 shares owned by Mr. Tokarz.
(3) Includes 570,000 shares which are held in trusts for which Mr. Hyde is a
trustee, and 370,000 shares held by a charitable foundation for which Mr.
Hyde is an officer and a director. Does not include 2,000 shares owned by
Mr. Hyde's spouse.
(4) All information regarding The Prudential Insurance Company of America
("Prudential") is based upon the Schedule 13G filed by Prudential dated
February 14, 1996. Prudential may have direct or indirect voting and/or
investment discretion over 9,236,278 shares which are held for the benefit
of its clients by its separate accounts, externally managed accounts,
registered investment companies, subsidiaries and/or other affiliates.
Prudential has sole voting and investment power over 856,300 shares, shares
the power to vote 7,294,078
19
<PAGE>
shares, and shares the investment power over 8,379,978 shares. Prudential's
filing of the Schedule 13G should not be construed as an admission that
Prudential is for the purposes of Section 13 or 16 of the Securities
Exchange Act, the beneficial owner of these shares.
(5) All information regarding Provident Investment Counsel, Inc. ("Provident")
is based upon the Schedule 13G filed by Provident dated February 7, 1996.
Provident is a registered investment adviser and has direct beneficial
ownership of the shares listed as a result of Provident's discretionary
authority to buy, sell, and vote shares of such common stock for its
investment advisory clients. Provident has the sole power to vote 6,486,847
shares and no power to vote 1,940,125 shares. Provident has sole dispositive
power for all of the shares.
(6) Does not include 120,000 shares held by Mr. Kravis as a trustee of an
irrevocable trust created by Mr. Roberts for the benefit of Mr. Roberts'
children (the "Roberts Trust"). As co-trustee, Mr. Kravis shares the
authority to vote and dispose of the shares, but has no economic interest in
such shares. Does not include 120,000 shares held in an irrevocable trust
created by Mr. Kravis for the benefit of his children with respect to which
Mr. Kravis disclaims any beneficial ownership.
(7) Does not include 120,000 shares held in an irrevocable trust created by Mr.
MacDonnell for the benefit of Mr. MacDonnell's children (the "MacDonnell
Trust") with respect to which Mr. MacDonnell disclaims any beneficial
ownership.
(8) Does not include 120,000 shares held by Mr. Roberts as a trustee of the
MacDonnell Trust. As co-trustee, Mr. Roberts shares the authority to vote
and dispose of the shares, but has no economic interest in such shares. Does
not include 120,000 shares held in the Roberts Trust with respect to which
Mr. Roberts disclaims any beneficial ownership.
After the offerings and assuming exercise in full of the over-allotment
options, approximately 10.6% of the outstanding Common Stock will be held by the
KKR Partnerships and approximately 8.3% by Mr. Hyde. The KKR Partnerships
consist of three limited partnerships of which KKR Associates is the general
partner. KKR Associates has sole voting and investment power with respect to the
shares held by the KKR Partnerships. In addition to the shares held by the KKR
Partnerships, KKR Associates owns 2.7% of the Common Stock. Consequently, KKR
Associates and its general partners, four of whom are also directors of
AutoZone, will be able to control or significantly influence AutoZone and any
action requiring stockholder approval.
The Company, the Selling Stockholders and certain stockholders, directors
and executive officers of the Company have agreed not to sell or otherwise
dispose of, directly or indirectly, any shares of capital stock of the Company,
except for the shares to be sold in the offerings, for a period of at least 60
days from the date of this Prospectus without the prior written consent of the
U.S. Underwriters and the International Managers.
No prediction can be made as to the effect, if any, that future sales of
shares, or the availability of shares for future sales, will have on the market
price of the Common Stock prevailing from time to time. Sales of substantial
amounts of Common Stock (including shares issued upon the exercise of stock
options), or the perception that such sales could occur, could adversely affect
prevailing market prices for the Common Stock.
20
<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL
AutoZone is incorporated in the State of Nevada and pursuant to its Articles
of Incorporation, as amended (the "Articles"), the authorized capital stock of
AutoZone consists of 200,000,000 shares of Common Stock, par value $.01 per
share, and 1,000,000 shares of Preferred Stock, par value $.01 per share. At the
close of business on May 4, 1996, AutoZone had outstanding 149,891,533 shares of
Common Stock. There are no outstanding shares of Preferred Stock. All
outstanding shares of Common Stock are fully paid and nonassessable.
COMMON STOCK
Each holder of Common Stock is entitled to one vote for each share owned of
record on matters voted upon by stockholders, and a majority vote is required
for all action to be taken by stockholders, except that, subject to certain
limited exceptions, under Nevada law any director may be removed from office by
the vote of stockholders representing not less than two-thirds of the voting
power of the issued and outstanding Common Stock. In the event of a liquidation,
dissolution or winding-up of AutoZone, the holders of Common Stock are entitled
to share equally and ratably in the assets of AutoZone, if any, remaining after
the payment of all debts and liabilities of AutoZone and the liquidation
preference of any outstanding preferred stock. The Common Stock has no
preemptive rights, no cumulative voting rights and no redemption, sinking fund
or conversion provisions.
Holders of Common Stock are entitled to receive dividends if, as, and when
declared by the Board of Directors out of funds legally available therefor,
subject to the dividend and liquidation rights of any preferred stock that may
be issued and subject to any dividend restrictions that may be contained in
future credit facilities. No dividend or other distribution (including
redemptions or repurchases of shares of capital stock) may be made if after
giving effect to such distribution, AutoZone would not be able to pay its debts
as they become due in the usual course of business, or AutoZone's total assets
would be less than the sum of its total liabilities plus the amount that would
be needed, if AutoZone were to be dissolved at the time of distribution to
satisfy the preferential rights upon dissolution of stockholders whose
preferential rights are superior to those receiving the distribution. AutoZone
does not currently intend to pay dividends on shares of Common Stock. See
"Dividend Policy."
The Nevada Revised Statutes Chapter 78 (the "Nevada Code") contains
provisions restricting the ability of a Nevada corporation to engage in business
combinations with an interested stockholder. Under the Nevada Code, except under
certain circumstances, business combinations with interested stockholders are
not permitted for a period of three years following the date such stockholder
becomes an interested stockholder. The Nevada Code defines an interested
stockholder, generally, as a person who is the beneficial owner, directly or
indirectly, of 10% of the outstanding shares of a Nevada corporation. In
addition, the Nevada Code generally disallows the exercise of voting rights with
respect to "control shares" of an "issuing corporation" held by an "acquiring
person," unless such voting rights are conferred by a majority vote of the
disinterested stockholders. "Control shares" are those outstanding voting shares
of an issuing corporation which an acquiring person and those persons acting in
association with an acquiring person (i) acquire or offer to acquire in an
acquisition of a controlling interest and (ii) acquire within ninety days
immediately preceding the date when the acquiring person became an acquiring
person. An "issuing corporation" is a corporation organized in Nevada which has
two hundred or more stockholders, at least one hundred of whom are stockholders
of record and residents of Nevada, and which does business in Nevada directly or
through an affiliated corporation. The Nevada Code also permits directors to
resist a change or potential change in control of the corporation if the
directors determine that the change or potential change is opposed to or not in
the best interest of the corporation. As a result, AutoZone's Board of Directors
may have considerable discretion in considering and responding to unsolicited
offers to purchase a controlling interest in AutoZone.
The Common Stock is listed on the New York Stock Exchange.
The transfer agent and registrar for the Common Stock is First Chicago Trust
Company of New York.
21
<PAGE>
PREFERRED STOCK
The Board of Directors of AutoZone is authorized, without further
stockholder action, to divide any or all shares of the authorized Preferred
Stock into series and to fix and determine the designations, preferences, and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions thereon, of any series so established, including
voting powers, dividend rights, liquidation preferences, redemption rights and
conversion privileges. As of the date of this Prospectus, the Board of Directors
has not authorized any series of Preferred Stock and there are no plans,
agreements, or understandings for the issuance of any shares of Preferred Stock.
22
<PAGE>
CERTAIN UNITED STATES TAX CONSEQUENCES
TO NON-UNITED STATES HOLDERS
GENERAL
The following is a general discussion of the material United States federal
income and estate tax consequences of the ownership and disposition of Common
Stock by a holder who is not a United States person (a "Non-U.S. Holder"). For
this purpose, the term "Non-U.S. Holder" is defined as any person who is, as to
the United States, a foreign corporation, a non-resident alien individual, a
non-resident fiduciary of a foreign estate or trust, or a foreign partnership
one or more of the members of which is, for United States federal income tax
purposes, a foreign corporation, a non-resident alien individual or a
non-resident fiduciary of a foreign estate or trust. This discussion does not
address all aspects of United States federal income and estate taxes and does
not deal with foreign, state and local consequences that may be relevant to such
Non-U.S. Holders in light of their personal circumstances. Furthermore, this
discussion is based on current provisions of the Internal Revenue Code of 1986,
as amended (the "Code"), existing and proposed regulations promulgated
thereunder and administrative and judicial interpretations thereof, all of which
are subject to change. EACH PROSPECTIVE PURCHASER OF COMMON STOCK IS ADVISED TO
CONSULT A TAX ADVISOR WITH RESPECT TO CURRENT AND POSSIBLE FUTURE TAX
CONSEQUENCES OF ACQUIRING, HOLDING AND DISPOSING OF COMMON STOCK AS WELL AS ANY
TAX CONSEQUENCES THAT MAY ARISE UNDER THE LAWS OF ANY UNITED STATES STATE, LOCAL
OR OTHER TAXING JURISDICTION.
An individual may, subject to certain exceptions, be deemed to be a resident
alien (as opposed to a non-resident alien) by virtue of being present in the
United States on at least 31 days in the calendar year and for an aggregate of
at least 183 days during a three-year period ending in the current calendar year
(counting for such purposes all of the days present in the current year,
one-third of the days present in the immediately preceding year, and one-sixth
of the days present in the second proceeding year). Resident aliens are subject
to United States federal tax as if they were United States citizens and
residents.
DIVIDENDS
The Company does not currently intend to pay dividends on shares of Common
Stock. See "Dividend Policy." In the event that dividends are paid on shares of
Common Stock, except as described below, such dividends paid to a Non-U.S.
Holder of Common Stock will be subject to withholding of United States federal
income tax at a 30% rate or such lower rate as may be specified by an applicable
income tax treaty, unless the dividends are effectively connected with the
conduct of a trade or business of the Non-U.S. Holder within the United States.
If the dividend is effectively connected with the conduct of a trade or business
of the Non-U.S. Holder within the United States, the dividend would be subject
to United States federal income tax on a net income basis at applicable
graduated individual or corporate rates and would be exempt from the 30%
withholding tax described above. Any such effectively connected dividends
received by a foreign corporation may, under certain circumstances, be subject
to an additional "branch profits tax" at a 30% rate or such lower rate as may be
specified by an applicable income tax treaty.
Under current United States Treasury regulations, dividends paid to an
address outside the United States are presumed to be paid to a resident of such
country (unless the payor has knowledge to the contrary) for purposes of the
withholding discussed above, and, under the current interpretation of United
States Treasury regulations, for purposes of determining the applicability of a
tax treaty rate. Under proposed United States Treasury regulations, not
currently in effect, however, a Non-U.S. Holder of Common Stock who wishes to
claim the benefit of an applicable treaty rate would be required to satisfy
applicable certification and other requirements. Certain certification and
disclosure requirements must be complied with in order to be exempt from
withholding under the effectively connected income exemption discussed above.
A Non-U.S. Holder of Common Stock that is eligible for a reduced rate of
United States withholding tax pursuant to a tax treaty may obtain a refund of
any excess amounts currently withheld by filing an appropriate claim for refund
with the United States Internal Revenue Service (the "Service").
23
<PAGE>
GAIN ON DISPOSITION OF COMMON STOCK
A Non-U.S. Holder generally will not be subject to United States federal
income tax on any gain recognized on a disposition of a share of Common Stock
unless (i) subject to the exception discussed below, the Company is or has been
a "United States real property holding corporation" (a "USRPHC") within the
meaning of Section 897(c)(2) of the Code at any time within the shorter of the
five-year period preceding such disposition or such Non-U.S. Holder's holding
period (the "Required Holding Period"), (ii) the gain is effectively connected
with the conduct of a trade or business within the United States of the Non-U.S.
Holder and, if a tax treaty applies, attributable to a permanent establishment
maintained by the Non-U.S. Holder, (iii) the Non-U.S. Holder is an individual
who holds the share of Common Stock as a capital asset and is present in the
United States for 183 days or more in the taxable year of the disposition and
either (a) such individual has a "tax home" (as defined for United States
federal income tax purposes) in the United States or (b) the gain is
attributable to an office or other fixed place of business maintained in the
United States by such individual, or (iv) the Non-U.S. Holder is subject to tax
pursuant to the Code provisions applicable to certain United States expatriates.
If an individual Non-U.S. Holder falls under clauses (ii) or (iv) above, he or
she will be taxed on his or her net gain derived from the sale under regular
United States federal income tax rates. If the individual Non-U.S. Holder falls
under clauses (iii) above, he or she will be subject to a flat 30% tax on the
gain derived from the sale which may be offset by United States capital losses
(notwithstanding the fact that he or she is not considered a resident of the
United States). If a Non-U.S. Holder that is a foreign corporation falls under
clause (ii) above, it will be taxed on its gain under regular graduated United
States federal income tax rates and, in addition, will under certain
circumstances be subject to the branch profits tax equal to 30% of its
"effectively connected earnings and profits" within the meaning of the Code for
the taxable year, as adjusted for certain items, unless it qualifies for a lower
rate under an applicable income tax treaty.
A corporation is generally a USRPHC if the fair market value of its United
States real property interests equals or exceeds 50% of the sum of the fair
market value of its worldwide real property interests plus its other assets used
or held for use in a trade or business. While not free from doubt, the Company
believes that it is currently a USRPHC; however, a Non-U.S. Holder would
generally not be subject to tax or withholding in respect of such tax, on gain
from a sale or other disposition of Common Stock by reason of the Company's
USRPHC status if the Common Stock is regularly traded on an established
securities market ("regularly traded") during the calendar year in which such
sale or disposition occurs provided that such holder does not own, actually or
constructively, Common Stock with a fair market value in excess of 5% of the
fair market value of all Common Stock outstanding at any time during the
Required Holding Period. The Company believes that the Common Stock will be
treated as regularly traded.
If the Company is or has been a USRPHC within the Required Holding Period,
and if a Non-U.S. Holder owns in excess of 5% of the fair market value of Common
Stock (as described in the preceding paragraph), such Non-U.S. Holder of Common
Stock will be subject to United States federal income tax at regular graduated
rates under certain rules ("FIRPTA tax") on gain recognized on a sale or other
disposition of such Common Stock. In addition, if the Common Stock were not
treated as regularly traded and the Company does not provide certification that
it is not (and has not been during a specified period) a USRPHC for United
States federal income tax purposes, a Non-U.S. Holder (without regard to its
ownership percentage) is subject to withholding in respect of FIRPTA tax at a
rate of 10% of the amount realized on a sale or other disposition of Common
Stock and will be further subject to FIRPTA tax in excess of the amounts
withheld. Any amount withheld pursuant to such withholding tax will be either
(i) refunded to a Non-U.S. Holder if the Company is not a USRPHC for United
States federal income tax purposes and such Non-U.S. Holder files an appropriate
claim for refund with the Service, or (ii) creditable against such Non-U.S.
Holder's United States federal income tax liability. Non-U.S. Holders are urged
to consult their tax advisors concerning the potential applicability of these
provisions.
24
<PAGE>
FEDERAL ESTATE TAXES
Common Stock owned, or treated as owned, by a non-resident alien individual
(as specifically determined for United States federal estate tax purposes) at
the time of death will be included in such holder's gross estate for United
States federal estate tax purposes, unless an applicable estate tax treaty
provides otherwise.
UNITED STATES INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
The Company must report annually to the Service and to each Non-U.S. Holder
the amount of dividends paid to such holder and the tax withheld with respect to
such dividends. These information reporting requirements apply regardless of
whether withholding is required. Copies of the information returns reporting
such dividends and withholding may also be made available to the tax authorities
in the country in which the Non-U.S. Holder resides under the provisions of an
applicable income tax treaty.
United States backup withholding tax (which generally is a withholding tax
imposed at the rate of 31% on certain payments to persons that fail to furnish
certain information under the United States information reporting requirements)
generally will not apply to (a) the payment of dividends paid on Common Stock to
a Non-U.S. Holder at an address outside the United States (unless the payor has
knowledge that the payee is a U.S. person) or (b) the payment of the proceeds of
the sale of Common Stock to or through the foreign office of a foreign broker.
In the case of the payment of proceeds from such a sale of Common Stock through
a foreign office of a broker that is a United States person or a "U.S. related
person," however, information reporting (but not backup withholding) is required
with respect to the payment unless the broker has documentary evidence in its
files that the owner in a Non-U.S. Holder and certain other requirements are met
or the holder otherwise establishes an exemption. For this purpose, a "U.S.
related person" is (i) a "controlled foreign corporation for United States
federal income tax purposes, or (ii) a foreign person 50% or more of whose gross
income from all sources for the three-year period ending with the close of its
taxable year preceding the payment (or for such part of the period that the
broker has been in existence) is derived from activities that are effectively
connected with the conduct of a United States trade or business. The payment of
the proceeds of a sale of shares of Common Stock to or through a United States
office of a broker is subject to information reporting and possible backup
withholding unless the owner certifies its non-United States status under
penalties of perjury or otherwise establishes an exemption. Any amounts withheld
under the backup withholding rules from a payment to a Non-U.S. Holder will be
allowed as a refund or a credit against such Non-U.S. Holder's United States
federal income tax liability, provided that the required information is
furnished to the Service.
The United States Treasury has recently issued proposed regulations
regarding the withholding and information reporting rules discussed above. In
general, the proposed regulations do not alter the substantive withholding and
information reporting requirements but unify current certification procedures
and forms and clarify and modify reliance standards. If finalized in their
current form, the proposed regulations would generally be effective for payments
made after December 31, 1997, subject to certain transition rules.
25
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the U.S. Underwriting Agreement, the
Selling Stockholders have severally agreed to sell to each of the U.S.
Underwriters named below, and each of such U.S. Underwriters has severally
agreed to purchase from the Selling Stockholders, the respective number of
shares of Common Stock set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON
U.S. UNDERWRITER STOCK
----------------------------------------------------------------------------------------- -------------
<S> <C>
Goldman, Sachs & Co. ....................................................................
Lehman Brothers Inc. ....................................................................
Donaldson, Lufkin & Jenrette Securities Corporation......................................
Furman Selz LLC .........................................................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated ..................................................................
Smith Barney Inc. .......................................................................
-------------
Total.......................................................................... 17,600,000
-------------
-------------
</TABLE>
Under the terms and conditions of the U.S. Underwriting Agreement, the U.S.
Underwriters are committed to take and pay for all of the shares offered hereby,
if any are taken.
The U.S. Underwriters propose to offer the shares of Common Stock in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus, and in part to certain securities dealers at such
price less a concession of $ per share. The U.S. Underwriters may allow, and
such dealers may reallow, a concession not in excess of $ per share to certain
brokers and dealers. After the shares of Common Stock are released for sale to
the public, the offering price and the other selling terms may from time to time
be varied by the representatives.
AutoZone and the Selling Stockholders have entered into an underwriting
agreement (the "International Underwriting Agreement") with the underwriters of
the international offering (the "International Underwriters") providing for the
concurrent offer and sale of 4,400,000 shares of Common Stock in an
international offering outside the United States. The initial public offering
price and aggregate underwriting discounts per share for the offerings will be
identical. The closing of the offering made hereby is a condition to the closing
of the international offering, and vice versa. The representatives of the
International Underwriters are Goldman Sachs International and Lehman Brothers.
Pursuant to an agreement between the U.S. and international underwriting
syndicates (the "Agreement Between") relating to the offerings, each of the U.S.
Underwriters named herein has agreed, as a part of the distribution of the
shares offered hereby and subject to certain exceptions, it will (a) offer, sell
or deliver shares of Common Stock, directly or indirectly, only in the United
States of America (including the States and the District of Columbia), its
territories, its possessions and other areas subject to its jurisdiction (the
"United States") and to U.S. persons, which term shall mean, for purposes of
this paragraph: (i) any individual who is a resident of the United States or
(ii) any corporation, partnership or other entity organized in or under the laws
of the United States or any political subdivision thereof and whose office most
directly involved with the purchase is located in the United States, and (b)
cause any dealer to whom it may sell such shares at any concession to agree to
observe a similar restriction. Each of the International Underwriters has agreed
pursuant to the Agreement Between that, as a part of the distribution of the
shares offered as part of the international offering, and subject to certain
exceptions, it will (i) not, directly or indirectly, offer, sell or deliver
shares of Common Stock (a) in the United States or to any U.S. persons or (b) to
any person who it believes intends to reoffer, resell or deliver the shares in
the United States or to any U.S. persons and (ii) cause any dealer to whom it
may sell such shares at any concession to agree to observe a similar
restriction.
26
<PAGE>
Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of shares of
Common Stock as may be mutually agreed. The price of any shares so sold shall be
the initial public offering price, less an amount not greater than the selling
concession.
The KKR Partnerships have severally granted the U.S. Underwriters an option
exercisable for 30 days after the date of this Prospectus to purchase up to an
aggregate of 2,640,000 additional shares of Common Stock, solely to cover
over-allotments, if any. If the U.S. Underwriters exercise such over-allotment
option, the Underwriters have severally agreed, subject to certain conditions,
to purchase approximately the same percentage thereof that the number of shares
to be purchased by each of them, as shown in the foregoing table, bears to the
17,600,000 shares of Common Stock offered hereby. The KKR Partnerships have
granted the International Underwriters a similar option exercisable for up to an
aggregate of 660,000 additional shares of Common Stock.
Each U.S. Underwriter and International Underwriter has represented and
agreed that (i) it has not offered or sold and, prior to the date six months
after the date of issue of the shares of Common Stock, will not offer or sell
any shares of Common Stock to persons in the United Kingdom except to persons
whose ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995; (ii) it has complied and will
comply with all applicable provisions of the Financial Services Act 1986 with
respect to anything done by it in relation to the Common Stock in, from or
otherwise involving the United Kingdom, and (iii) it has only issued or passed
on, and will only issue or pass on to any person in the United Kingdom, any
investment advertisement (within the meaning of the Financial Services Act 1986)
relating to the shares of Common Stock if that person falls within Article 11(3)
of the Financial Services Act 1986 (Investment Advertisements) (Exemptions)
Order 1995.
Purchasers of the shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practices of the country of
purchase in addition to the offering price set forth on the cover page hereof.
Certain of the U.S. Underwriters and International Underwriters have
provided from time to time, and expect to provide in the future, investment
banking services to the Company and its affiliates (including certain of the
Selling Stockholders) for which such U.S. Underwriters and International
Underwriters have received and will receive customary fees and commissions.
The Company, the Selling Stockholders and certain stockholders, directors
and executive officers of the Company have agreed, with certain exceptions, not
to sell or otherwise dispose of, directly or indirectly, any shares of capital
stock of the Company, except for the shares to be sold in the offerings, for a
period of at least 60 days from the date of this Prospectus without the prior
written consent of the U.S. Underwriters and the International Underwriters.
The Company and the Selling Stockholders have agreed to indemnify the U.S.
Underwriters and the International Underwriters against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments
that the U.S. Underwriters and the International Underwriters may be required to
make in respect thereof.
27
<PAGE>
LEGAL MATTERS
Certain legal matters in connection with the sale of the shares of Common
Stock offered hereby will be passed upon for AutoZone and for the Selling
Stockholders by Latham & Watkins, Los Angeles, California, and Schreck, Jones,
Bernhard, Woloson & Godfrey, Las Vegas, Nevada. Certain partners of Latham &
Watkins, members of their families, related persons and others own, and through
the Selling Stockholders, have an indirect interest in, less than 1% of the
Common Stock. Such persons do not have the power to vote or dispose of shares
which are indirectly held, some of which shares will be sold in the offerings.
Certain legal matters in connection with the offerings will be passed upon for
the U.S. Underwriters and the International Underwriters by Simpson Thacher &
Bartlett (a partnership which includes professional corporations), New York, New
York. Simpson Thacher & Bartlett renders legal services to KKR on a regular
basis.
EXPERTS
The financial statements and related schedules of AutoZone as of August 26,
1995 and August 27, 1994 and for each year in the three year period ended August
26, 1995, included or incorporated by reference in the Annual Report on Form
10-K have been audited by Ernst & Young LLP, independent auditors, as set forth
in their reports thereon included or incorporated by reference therein and
incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
28
<PAGE>
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
-------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information............................. 3
Incorporation of Certain Documents by Reference... 3
The Company....................................... 4
Selected Financial Data........................... 5
Price Range of Common Stock....................... 6
Dividend Policy................................... 6
Capitalization.................................... 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations.............. 8
Business.......................................... 12
Management........................................ 18
Principal and Selling Stockholders................ 19
Description of Capital Stock...................... 21
Certain United States Tax Consequences to
Non-United States Holders........................ 23
Underwriting...................................... 26
Legal Matters..................................... 28
Experts........................................... 28
</TABLE>
22,000,000 SHARES
AUTOZONE, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
-------------------
[LOGO]
--------------
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
FURMAN SELZ
MERRILL LYNCH & CO.
SMITH BARNEY INC.
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
<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 JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL
PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
JURISDICTION.
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 20, 1996
22,000,000 SHARES
[LOGO]
AUTOZONE, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
-------------------
Of the 22,000,000 shares of Common Stock offered, 4,400,000 shares are being
offered hereby in an international offering outside the United States and
17,600,000 shares are being offered in a concurrent offering in the United
States. The initial public offering price and the aggregate underwriting
discount per share will be identical for both offerings. See "Underwriting".
All of the shares of Common Stock offered hereby are being sold by Selling
Stockholders of the Company. The Selling Stockholders consist of certain KKR
Partnerships that are limited partnerships affiliated with Kohlberg Kravis
Roberts & Co., L.P. and J.R. Hyde, III, the Chairman of the Board and Chief
Executive Officer of the Company. After the offerings, the KKR Partnerships and
Mr. Hyde will own 10.6% and 8.3%, respectively, of the outstanding shares of
Common Stock (assuming exercise in full of the over-allotment options). See "The
Company" and "Principal and Selling Stockholders". The Company will not receive
any of the proceeds from the sale of the shares offered hereby.
The last reported sales price of the Common Stock, which is listed under the
symbol "AZO", on the New York Stock Exchange on May 17, 1996 was $37 1/8 per
share. See "Price Range of Common Stock".
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO SELLING
OFFERING PRICE DISCOUNT(1) STOCKHOLDERS(2)
--------------------- --------------------------- -------------------
<S> <C> <C> <C>
Per Share........... $ $ $
Total(3)............ $ $ $
</TABLE>
-------------
(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933. See "Underwriting".
(2) Before deducting estimated expenses of $600,000 payable by the Selling
Stockholders.
(3) The KKR Partnerships have granted the U.S. Underwriters an option for 30
days to purchase up to an additional 660,000 shares of Common Stock at the
initial public offering price per share, less the underwriting discount,
solely to cover over-allotments. Additionally, the KKR Partnerships have
granted the U.S. Underwriters an option for 30 days to purchase up to an
additional 2,640,000 shares of Common Stock at the initial public offering
price per share, less the underwriting discount, solely to cover
over-allotments. If such options are exercised in full, the total initial
public offering price, underwriting discount and proceeds to Selling
Stockholders will be $ , $ and $ , respectively. See
"Underwriting".
---------------------
The shares offered hereby are offered severally by the International
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that certificates for the shares will be ready for delivery in New York, New
York, on or about , 1996 against payment therefor in immediately
available funds.
GOLDMAN SACHS INTERNATIONAL LEHMAN BROTHERS
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
FURMAN SELZ
MERRILL LYNCH INTERNATIONAL
SMITH BARNEY INC.
--------------
THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the International Underwriting
Agreement, the Selling Stockholders have severally agreed to sell to each of the
International Underwriters named below, and each of such International
Underwriters has severally agreed to purchase from the Selling Stockholders the
respective number of shares of Common Stock set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON
INTERNATIONAL UNDERWRITER STOCK
------------------------------------------------------------ -----------
<S> <C>
Goldman Sachs International.................................
Lehman Brothers International (Europe)......................
Donaldson, Lufkin & Jenrette Securities Corporation.........
Furman Selz LLC.............................................
Merrill Lynch International.................................
Smith Barney Inc............................................
-----------
Total............................................. 4,400,000
-----------
-----------
</TABLE>
Under the terms and conditions of the International Underwriting Agreement,
the International Underwriters are committed to take and pay for all of the
shares offered hereby, if any are taken.
The International Underwriters propose to offer the shares of Common Stock
in part directly to the public at the initial public offering price set forth on
the cover page of this Prospectus, and in part to certain securities dealers at
such price less a concession of $ per share. The International Underwriters
may allow, and such dealers may reallow, a concession not in excess of $ per
share to certain brokers and dealers. After the shares of Common Stock are
released for sale to the public, the offering price and the other selling terms
may from time to time be varied by the representatives.
AutoZone and the Selling Stockholders have entered into an underwriting
agreement ("U.S. Underwriting Agreement") with the underwriters of the U.S.
offering (the "U.S. Underwriters") providing for the concurrent offer and sale
of 17,600,000 shares of Common Stock in an offering. The initial public offering
price and aggregate underwriting discount per share for the offerings will be
identical. The closing of the offering made hereby is a condition to the closing
of the U.S. offering, and vice versa. The representatives of the U.S.
Underwriters are Goldman, Sachs & Co. and Lehman Brothers.
Pursuant to an agreement between the U.S. and international underwriting
syndicates (the "Agreement Between") relating to the offerings, each of the
International Underwriters named herein has agreed that, as a part of the
distribution of the shares offered hereby and subject to certain exceptions, it
will (a) not offer, sell or deliver shares of Common Stock, directly or
indirectly, in the United States of America (including the States and the
District of Columbia), its territories, its possessions and other areas subject
to its jurisdiction (the "United States") or to U.S. persons, which term shall
mean, for purposes of this paragraph: (i) any individual who is a resident of
the United States or (ii) any corporation, partnership or other entity organized
in or under the laws of the United States or any political subdivision thereof
and whose office most directly involved with the purchase is located in the
United States, and (b) cause any dealer to whom it may sell such shares at any
concession to agree to observe a similar restriction. Each of the U.S.
Underwriters has agreed pursuant to the Agreement Between that, as a part of the
distribution of the shares offered as a part of the U.S. offering, and subject
to certain exceptions, it will offer, sell or deliver the shares of Common Stock
offered, directly or indirectly, only in the United States and to U.S. persons.
Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of shares of
Common Stock as may be mutually agreed. The price of any shares so sold shall be
the initial public offering price, less an amount not greater than the selling
concession.
26
<PAGE>
The KKR Partnerships have severally granted the International Underwriters
an option exercisable for 30 days after the date of this Prospectus to purchase
up to an aggregate of 660,000 additional shares of Common Stock, solely to cover
over-allotments, if any. If the International Underwriters exercise such
over-allotment option, the International Underwriters have severally agreed,
subject to certain conditions, to purchase approximately the same percentage
thereof that the number of shares to be purchased by each of them, as shown in
the foregoing table, bears to the 4,400,000 shares of Common Stock offered
hereby. The KKR Partnerships have granted the U.S. Underwriters a similar option
exercisable for up to an aggregate of 2,640,000 additional shares of Common
Stock.
Each U.S. Underwriter and International Underwriter has represented and
agreed that (i) it has not offered or sold and, prior to the date six months
after the date of issue of the shares of Common Stock, will not offer or sell
any shares of Common Stock to persons in the United Kingdom except to persons
whose ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995; (ii) it has complied and will
comply with all applicable provisions of the Financial Services Act 1986 with
respect to anything done by it in relation to the Common Stock in, from or
otherwise involving the United Kingdom, and (iii) it has only issued or passed
on, and will only issue or pass on to any person in the United Kingdom, any
investment advertisement (within the meaning of the Financial Services Act 1986)
relating to the shares of Common Stock if that person falls within Article 11(3)
of the Financial Services Act 1986 (Investment Advertisements) (Exemptions)
Order 1995.
Purchasers of the shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practices of the country of
purchase in addition to the offering price set forth on the cover page hereof.
Certain of the U.S. Underwriters and International Underwriters have
provided from time to time, and expect to provide in the future, investment
banking services to the Company and its affiliates (including certain of the
Selling Stockholders) for which such U.S. Underwriters and International
Underwriters have received and will receive customary fees and commissions.
The Company, the Selling Stockholders and certain stockholders, directors
and executive officers of the Company have agreed, with certain exceptions, not
to sell or otherwise dispose of, directly or indirectly, any shares of capital
stock of the Company, except for the shares to be sold in the offerings, for a
period of at least 60 days from the date of this Prospectus without the prior
written consent of the U.S. Underwriters and the International Underwriters.
The Company and the Selling Stockholders have agreed to indemnify the U.S.
Underwriters and the International Underwriters against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments
that the U.S. Underwriters and the International Underwriters may be required to
make in respect thereof.
27
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
-------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 3
Incorporation of Certain Documents by Reference........................... 3
The Company............................................................... 4
Selected Financial Data................................................... 5
Price Range of Common Stock............................................... 6
Dividend Policy........................................................... 6
Capitalization............................................................ 7
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 8
Business.................................................................. 12
Management................................................................ 18
Principal and Selling Stockholders........................................ 19
Description of Capital Stock.............................................. 21
Certain United States Tax Consequences to Non-United States Holders....... 23
Underwriting.............................................................. 26
Legal Matters............................................................. 28
Experts................................................................... 28
</TABLE>
22,000,000 SHARES
AUTOZONE, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
-------------------
[LOGO]
-------------------
GOLDMAN SACHS INTERNATIONAL
LEHMAN BROTHERS
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
FURMAN SELZ
MERRILL LYNCH INTERNATIONAL
SMITH BARNEY INC.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following are the estimated expenses in connection with the issuance and
distribution of the Securities being registered, all of which are payable by the
Selling Stockholders:
<TABLE>
<S> <C>
SEC registration fee.................................................. $ 312,981
NASD filing fee....................................................... 30,500
Printing and engraving expenses....................................... 85,000
Legal fees............................................................ 100,000
Accounting fees and expenses.......................................... 50,000
Blue Sky fees and expenses............................................ 10,000
Transfer agent and registrar's fees................................... 2,500
Miscellaneous......................................................... 9,019
---------
Total............................................................. $ 600,000
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
AutoZone's Articles of Incorporation provides that a director or officer of
AutoZone shall not be personally liable to AutoZone or its stockholders for
damages for any breach of fiduciary duty as a director or officer, except for
liability for (i) acts or omissions which involve intentional misconduct, fraud
or a knowing violation of law, or (ii) the payment of distributions in violation
of Nevada Revised Statutes 78.300. In addition, Nevada Revised Statutes 78.751
and Article III, Section 13 of AutoZone's By-Laws, under certain circumstances,
provide for the indemnification of AutoZone's officers, directors, employees,
and agents against liabilities which they may incur in such capacities. A
summary of the circumstances in which such indemnification is provided for is
contained herein, but that description is qualified in its entirety by reference
to Article III, Section 13 of AutoZone's By-Laws.
In general, any officer, director, employee or agent shall be indemnified
against expenses including attorneys' fees, fines, settlements or judgments
which were actually and reasonably incurred in connection with a legal
proceeding, other than one brought by or on the behalf of AutoZone, to which he
was a party as a result of such relationship, if he acted in good faith, and in
the manner he believed to be in or not opposed to AutoZone's best interest and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. If the action or suit is brought by or on
behalf of AutoZone, the person to be indemnified must have acted in good faith
and in a manner he reasonably believed to be in or not opposed to AutoZone's
best interest. No indemnification will be made in respect of any claim, issue or
matter as to which such person shall have been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to
AutoZone or for amounts paid in settlement to AutoZone, unless and only to the
extent that the court in which the action or suit was brought or other court of
competent jurisdiction, determines upon application that in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such expenses which such court shall deem proper.
Any indemnification under the previous paragraphs, unless ordered by a court
or advanced as provided in the succeeding paragraph, must be made by AutoZone
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. The determination must be made (i) by the stockholders, (ii) by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to the act, suit or proceeding, (iii) if a majority vote of
a quorum of directors who were not parties to the act, suit or proceeding so
orders, by independent legal counsel in a written opinion or (iv) if a quorum
consisting of directors who were not parties to the act, suit or proceeding
cannot be obtained, by independent legal counsel in a written opinion. To the
extent that a director, officer, employee or agent of AutoZone has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in the previous
II-1
<PAGE>
paragraph, or in defense of any claim, issue or matter therein, he must be
indemnified by AutoZone against expenses, including attorneys' fees, actually
and reasonably incurred by him in connection with the defense.
Expenses incurred by an officer or director in defending a civil or criminal
action, suit or proceeding must be paid by AutoZone as they are incurred and in
advance of the final disposition of the action, suit or proceeding, upon receipt
of an undertaking by or on behalf of the director or officer to repay the amount
if it is ultimately determined by a court of competent jurisdiction that he is
not entitled to be indemnified by AutoZone as authorized by the By-Laws. Such
expenses incurred by other employees and agents may be so paid upon such terms
and conditions, if any, as the Board of Directors deems appropriate.
The indemnification and advancement of expenses authorized in or ordered by
a court as provided in the foregoing paragraphs does not exclude any other
rights to which a person seeking indemnification or advancement of expenses may
be entitled under the Articles of Incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, for either an action in
his official capacity or an action in another capacity while holding his office,
except that indemnification, unless ordered by a court as described in the third
preceding paragraph or for advancement of expenses made as described in the next
preceding paragraph, may not be made to or on behalf of any director or officer
if a final adjudication establishes that his acts or omissions involved
intentional misconduct, fraud or a knowing violation of the law and was material
to the cause of action. If a claim for indemnification or payment of expenses
under Section 13 of the By-Laws is not paid in full within ninety (90) days
after a written claim therefor has been received by AutoZone, the claimant may
file suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such claim.
In any such action, AutoZone shall have the burden of proving that the claimant
was not entitled to the requested indemnification or payment of expenses under
applicable law.
The Board of Directors may authorize, by a vote of a majority of a quorum of
the Board of Directors, AutoZone to purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of AutoZone, or
is or was serving at the request of AutoZone as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not AutoZone
would have the power to indemnify him against such liability under the
provisions of Section 13 of the By-Laws. The Board of Directors may authorize
AutoZone to enter into a contract with any person who is or was a director,
officer, employee or agent of AutoZone or is or was serving at the request of
AutoZone as a director, officer, employee or agent of another partnership, joint
venture, trust or other enterprise providing for indemnification rights
equivalent to or, if the Board of Directors so determines, greater than those
provided for in Section 13 of the By-Laws.
AutoZone has also purchased insurance for its directors and officers for
certain losses arising from claims or charges made against them in their
capacities as directors and officers of AutoZone.
ITEM 16. EXHIBITS.
See Exhibit Index.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
AutoZone pursuant to the Registrant's Articles of Incorporation, the Nevada
Revised Statutes, or otherwise, AutoZone has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by AutoZone of expenses incurred or paid by a director, officer or
controlling person of AutoZone 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, AutoZone will,
II-2
<PAGE>
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.
The undersigned Registrant hereby undertakes:
(1) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered herein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(2) That, for 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 Registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(3) That, for the purpose 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.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 Memphis, State of Tennessee, on the 17th day of May
1996.
AUTOZONE, INC.
By: /s/ J.R. HYDE, III
...........................................
J.R. Hyde, III
CHAIRMAN, CHIEF EXECUTIVE OFFICER
AND DIRECTOR
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints J.R. Hyde, III, Robert J. Hunt, Harry L.
Goldsmith and Donald R. Rawlins, and each of them, with full power to act
without the other, such person's true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign this Registration Statement,
any and all amendments thereto (including post-effective amendments), any
subsequent Registration Statements pursuant to Rule 462 of the Securities Act of
1933, as amended, and any amendments thereto and to file the same, with exhibits
and schedules thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing necessary or desirable 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 said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, 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
-------------------------------------------------- ------------------------- ------------
<C> <S> <C>
Chairman, Chief Executive
/s/ J.R. HYDE, III Officer and Director
................................................. (Principal Executive May 17, 1996
(J.R. Hyde, III) Officer)
Executive Vice President
/s/ ROBERT J. HUNT and Chief Financial
................................................. Officer (Principal May 17, 1996
(Robert J. Hunt) Financial Officer)
/s/ MICHAEL E. BUTTERICK Vice President and
................................................. Controller (Principal May 17, 1996
(Michael E. Butterick) Accounting Officer)
/s/ JOHNSTON C. ADAMS, JR. Vice-Chairman, Chief
................................................. Operating Officer and May 17, 1996
(Johnston C. Adams, Jr.) Director
/s/ THOMAS S. HANEMANN
................................................. President and Director May 17, 1996
(Thomas S. Hanemann)
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
-------------------------------------------------- ------------------------- ------------
<C> <S> <C>
/s/ TIMOTHY D. VARGO Vice-Chairman and
................................................. Director May 17, 1996
(Timothy D. Vargo)
/s/ ANDREW M. CLARKSON
................................................. Director May 15, 1996
(Andrew M. Clarkson)
/s/ JAMES F. KEEGAN
................................................. Director May 17, 1996
(James F. Keegan)
................................................. Director May , 1996
(John E. Moll)
/s/ RONALD TERRY
................................................. Director May 17, 1996
(Ronald Terry)
/s/ HENRY R. KRAVIS
................................................. Director May 17, 1996
(Henry R. Kravis)
/s/ GEORGE R. ROBERTS
................................................. Director May 17, 1996
(George R. Roberts)
/s/ ROBERT I. MACDONNELL
................................................. Director May 17, 1996
(Robert I. MacDonnell)
/s/ MICHAEL W. MICHELSON
................................................. Director May 17, 1996
(Michael W. Michelson)
</TABLE>
II-5
<PAGE>
AUTOZONE, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS DESCRIPTION OF EXHIBIT
----------- -------------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of U.S. Underwriting Agreement.
1.2 Form of International Underwriting Agreement.
4.1 Form of Common Stock Certificate. Incorporated by reference to Exhibit 4.1 to Pre-Effective Amendment
No. 2 to the Form S-1 Registration Statement filed by the Company under the Securities Act (No.
33-45649).
4.2 Registration Rights Agreement, dated as of February 18, 1987, by and among Auto Shack, Inc. and certain
stockholders. Incorporated by reference to Exhibit 4.9 to the Form S-1 Registration Statement filed by
the Company under the Securities Act (No. 33-39197).
4.3 Amendment No. 1 to the Registration Rights Agreement dated as of August 1, 1993 by and among AutoZone
and certain stockholders. Incorporated by reference to Exhibit 4.3 to Pre-Effective Amendment No. 1 to
the Form S-3 Registration Statement filed by the Company under Securities Act (No. 33-67550).
5.1 Opinion of Schreck, Jones, Bernhard, Woloson & Godfrey regarding legality of Common Stock.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Schreck, Jones, Bernhard, Woloson & Godfrey (included in its opinion filed as Exhibit 5.1).
24.1 Power of Attorney of AutoZone's Directors and Officers (incorporated in the Signature Page on page II-4
in this Registration Statement).
</TABLE>
<PAGE>
AUTOZONE, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
UNDERWRITING AGREEMENT
(U.S. VERSION)
----------------------
____, 1996
Goldman, Sachs & Co.,
Lehman Brothers Inc.,
Donaldson, Lufkin & Jenrette
Securities Corporation,
Furman Selz Incorporated,
Merrill Lynch, Pierce,
Fenner & Smith Incorporated
Smith Barney Inc.
As Representatives for each of
the several Underwriters
named in Schedule 1 hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
The stockholders of AutoZone, Inc., a Nevada corporation (the
"Company"), named in Schedule 2 hereto (the "Selling Stockholders") propose to
sell to the U.S. Underwriters named in Schedule 1 hereto (the "U.S.
Underwriters") an aggregate of 17,600,000 shares (the "Firm Shares") of the
Company's Common Stock, par value $0.01 per share (the "Common Stock"). In
addition, the Selling Stockholders propose to grant to the U.S. Underwriters an
option to purchase up to an additional 2,640,000 shares of Common Stock on the
terms and for the purposes set forth in Section 3 hereof (the "Option Shares").
The Firm Shares and the Option Shares, if purchased, are hereinafter
collectively called the "Shares". This is to confirm the agreement concerning
the purchase of the Shares from the Selling Stockholders by the U.S.
Underwriters.
It is understood and agreed to by all parties that the Company and the
Selling Stockholders are concurrently entering into an agreement (the
"International Underwriting Agreement") providing for the sale by the Selling
Stockholders of up to a total of 5,060,000 shares of Common Stock (the
"International Shares"), including the overallotment option thereunder, through
arrangements with certain underwriters outside the United States (the
"International Underwriters"), for whom Goldman Sachs International, Lehman
Brothers International (Europe), Donaldson, Lufkin & Jenrette Securities
Corporation, Furman Selz Incorporated, Merrill Lynch International Limited and
Smith Barney Inc. are acting as representatives. The U.S. Underwriters and the
International Underwriters are simultaneously entering into an Agreement between
U.S. and International Underwriting Syndicates
<PAGE>
(the "Agreement between Syndicates") which provides, among other things, for the
transfer of shares of Common Stock between the two syndicates. Two forms of
prospectus are to be used in connection with the offering and sale of shares of
Common Stock contemplated by the foregoing, one relating to the Shares hereunder
and the other relating to the International Shares. The latter form of
prospectus will be identical to the former except for certain substitute pages
as included in the registration statement and amendments thereto as mentioned
below. Except as used in Sections 3, 4, 5, 11 and 13 herein, and except as the
context may otherwise require, references hereinafter to the Shares shall
include all the shares of Common Stock which may be sold pursuant to either this
Agreement or the International Underwriting Agreement, and references herein to
any prospectus whether in preliminary or final form, and whether as amended or
supplemented, shall include both the U.S. and the international versions
thereof.
1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The
Company represents and warrants (at and as of the date hereof and at and as of
each Delivery Date (as defined in Section 5 hereof)) to, and agrees with, each
of the U.S. Underwriters that:
(a) A registration statement on Form S-3 (File No. _________),
including a pre-effective amendment thereto, in respect of the Firm Shares
and Option Shares has been filed with the Securities and Exchange Commission
(the "Commission"); such registration statement in the form heretofore
delivered to you, as representatives for each of the several U.S.
Underwriters (the "Representatives"), has been declared effective by the
Commission in such form; no other document with respect to such registration
statement (or document incorporated by reference therein) has heretofore
been filed with the Commission; and no stop order suspending the
effectiveness of such registration statement has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission (any preliminary prospectus included in such registration
statement or filed with the Commission pursuant to Rule 424(a) of the rules
and regulations of the Commission under the Securities Act of 1933, as
amended (the "Act"), being hereinafter called a "Preliminary Prospectus");
the various parts of such registration statement, including all exhibits
thereto and including (i) the information contained in the form of final
prospectus filed with the Commission pursuant to Rule 424(b) under the Act
in accordance with Section 6(a) hereof and deemed by virtue of Rule 430A
under the Act to be part of the registration statement at the time it was
declared effective and (ii) the documents incorporated by reference in the
prospectus contained in the registration statement at the time such part of
the registration statement became effective, each as amended at the time
such part of the registration statement became effective, being hereinafter
called the "Registration Statement"; such final prospectus, in the form
filed pursuant to Rule 424(b) under the Act, being hereinafter called the
"Prospectus"; any reference herein to any Preliminary Prospectus or
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
Act, as of the date of such Preliminary Prospectus or Prospectus, as the
case may be; any reference to any amendment or supplement to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include any
document filed after the date of such Preliminary Prospectus or Prospectus,
as the case may be, under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and incorporated by reference in such Preliminary
Prospectus or Prospectus, as the case may be; and any reference to any
amendment to the Registration Statement shall be deemed to refer to and
include any annual report of the Company filed pursuant to Section 13(a) or
15(d) of the Exchange Act after the effective date of the Registration
Statement that is incorporated by reference in the Registration Statement);
-2-
<PAGE>
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations of the
Commission thereunder, and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; PROVIDED, HOWEVER, that this
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Company by a U.S. Underwriter through the Representatives or
by a Selling Stockholder expressly for use therein;
(c) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the
Act and the rules and regulations of the Commission thereunder and do not
and will not, as of the applicable effective date as to the Registration
Statement and any amendment thereto and as of the applicable filing date as
to the Prospectus and any amendment or supplement thereto, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
PROVIDED, HOWEVER, that this representation and warranty shall not apply to
any statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by a U.S. Underwriter
through the Representatives or by a Selling Stockholder expressly for use
therein;
(d) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and any
further documents so filed and incorporated by reference in the Prospectus
or any further amendment or supplement thereto, when such documents become
effective or are filed with the Commission, as the case may be, will conform
in all material respects to the requirements of the Act or the Exchange Act,
as applicable, and the rules and regulations of the Commission thereunder
and will not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading;
(e) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus; and, since such date, there has not been
any change in the capital stock (except for any increase due to the exercise
of stock options which were outstanding as of May 4, 1996 or as a result of
issuances of shares of Common Stock pursuant to the Company's Stock Purchase
Plan) or any increase in excess of $3 million in the consolidated long-term
debt of the Company and its subsidiaries or any material adverse change, or
any development involving a prospective material adverse change, in or
affecting the general affairs, business, management, financial position,
-3-
<PAGE>
stockholders' equity or results of operations of the Company and its
subsidiaries taken as a whole, otherwise than as set forth or contemplated
in the Prospectus;
(f) The Company and its subsidiaries have good and marketable title in
fee simple to all real property and good and marketable title to all
personal property owned by them, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus or
such as would not and do not have, either individually or in the aggregate,
any material adverse effect on the general affairs, business, management,
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries taken as a whole; and any real property and
buildings held under lease by the Company and its subsidiaries are held by
them under valid, subsisting and enforceable leases with such exceptions as
would not and do not have, either individually or in the aggregate, any
material adverse effect on the general affairs, business, management,
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries taken as a whole;
(g) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Nevada, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectus, and has been duly qualified as
a foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction; each of
the Company's subsidiaries that is a corporation has been duly incorporated
and is validly existing as a corporation in good standing under the laws of
the jurisdiction of incorporation, with power and authority (corporate and
other) to own its properties and conduct its business as described in the
Prospectus, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, or is subject to no material
liability or disability by reason of the failure to be so qualified in any
such jurisdiction; the Company's subsidiary that is a limited partnership
has been duly organized and is validly existing as a limited partnership in
good standing under the laws of the State of Delaware with power and
authority (partnership and other) to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as a
foreign limited partnership for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction; and all
of the outstanding shares of capital stock of, or equity interests in, each
subsidiary of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and are owned by the Company, directly or
indirectly, free and clear of all liens, encumbrances, equities or claims;
(h) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
(including the Shares to be sold by the Selling Stockholders to the U.S.
Underwriters hereunder and to the International Underwriters under the
International Underwriting Agreement) have been duly and validly authorized
and issued, are fully paid and non-assessable and conform to the description
of the Common Stock contained in the Prospectus;
-4-
<PAGE>
(i) The execution, delivery and performance by the Company of this
Agreement and the International Underwriting Agreement and the consummation
of the transactions herein and therein contemplated will not conflict with
or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement, stock option or other employee benefit plan, or other agreement
or instrument to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries is bound or to which any of
the property or assets of the Company or any of its subsidiaries is subject,
nor will such action result in any violation of the provisions of the
Articles of Incorporation or By-laws of the Company or any of its
subsidiaries or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their respective properties; no consent,
approval, authorization, order, registration or qualification of or with any
such court or governmental agency or body is required for the execution,
delivery and performance by the Company of this Agreement and the
International Underwriting Agreement and the consummation of the
transactions contemplated hereby and thereby, except the registration under
the Act of the Shares and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of the Shares
by the U.S. Underwriters and the International Underwriters; and this
Agreement and the International Underwriting Agreement have been duly
authorized, executed and delivered by the Company;
(j) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is subject which, if determined adversely to the Company or
any of its subsidiaries, would, either individually or in the aggregate,
have a material adverse effect on the general affairs, business, management,
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries taken as a whole; and, to the best of the
Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(k) There are no contracts or other documents of a character required
to be described in the Prospectus or filed as exhibits to the Registration
Statement by the Act or by the rules and regulations of the Commission
thereunder which have not been described in the Prospectus or filed as
exhibits to the Registration Statement; and
(l) Ernst & Young, who have certified certain financial statements of
the Company, are independent public accountants as required by the Act and
the rules and regulations of the Commission thereunder.
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE SELLING
STOCKHOLDERS. Each Selling Stockholder severally represents and warrants (at
and as of the date hereof and at and as of each Delivery Date) to, and agrees
with, each of the U.S. Underwriters that:
(a) Such Selling Stockholder holds the Shares owned on the date hereof
and being sold by such Selling Stockholder hereunder and under the
International Underwriting Agreement, free and clear of all liens,
encumbrances, equities or claims; immediately prior to each Delivery Date
such Selling Stockholder will hold the Shares being sold by such Selling
Stockholder hereunder and under the International Underwriting Agreement on
such date, free and clear of all liens,
-5-
<PAGE>
encumbrances, equities or claims; and upon delivery of such Shares and
payment therefor pursuant hereto and the International Underwriting
Agreement, the U.S. Underwriters and International Underwriters will hold
such Shares, free and clear of all liens, encumbrances, equities or claims,
assuming that such U.S. Underwriters and International Underwriters purchase
such Shares in good faith and without notice of any such lien, encumbrance,
equity or claim or other adverse claim within the meaning of the Uniform
Commercial Code as in effect in the State of New York;
(b) Such Selling Stockholder has full right, power and authority to
enter into each of this Agreement and the International Underwriting
Agreement; the execution, delivery and performance of each of this Agreement
and the International Underwriting Agreement and the consummation by such
Selling Stockholder of the transactions contemplated hereby and thereby will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement, stock option or other employee benefit plan, or
other agreement or instrument to which such Selling Stockholder is a party
or by which such Selling Stockholder is bound or to which any of the
property or assets of such Selling Stockholder is subject, nor will such
action result in any violation of the provisions of the charter, bylaws,
deed of trust, partnership agreement or other constituent documents, if any,
relating to such Selling Stockholder or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction
over such Selling Stockholder or any properties of such Selling Stockholder;
and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the execution, delivery and performance by such Selling
Stockholder of each of this Agreement or the International Underwriting
Agreement and the consummation of the transactions contemplated hereby and
thereby, except the registration under the Act of the Shares and such
consents, approvals, authorizations, registrations or qualifications as may
be required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the U.S. Underwriters and the
International Underwriters; and this Agreement and the International
Underwriting Agreement have been duly authorized, executed and delivered by
the Selling Stockholders;
(c) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto are made in reliance upon and in conformity
with information furnished in writing to the Company by such Selling
Stockholder expressly for use therein, the Registration Statement and such
Preliminary Prospectus do not, and the Prospectus and any amendments or
supplements thereto will not, as of the applicable effective date or as of
the applicable filing date, as the case may be, contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and
(d) Such Selling Stockholder has not taken and will not take, directly
or indirectly, any action which is designed to or which has constituted or
which might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares.
3. PURCHASE OF SHARES. On the basis of the representations and
warranties contained in, and subject to the terms and conditions of, this
Agreement, each Selling Stockholder hereby, severally and not jointly, agrees to
sell the number of Firm Shares set forth opposite such Selling
-6-
<PAGE>
Stockholder's name in Schedule 2 hereto to the several U.S. Underwriters and
each of the U.S. Underwriters, severally and not jointly, agrees to purchase the
number of Firm Shares set forth opposite that U.S. Underwriter's name in
Schedule 1 hereto. Each U.S. Underwriter shall be obligated to purchase from
each Selling Stockholder that number of Firm Shares which represents the same
proportion of the number of Firm Shares to be sold by each Selling Stockholder
as the number of Firm Shares set forth opposite the name of such U.S.
Underwriter in Schedule 1 represents of the total number of Firm Shares to be
purchased by all of the U.S. Underwriters pursuant to this Agreement. The
respective purchase obligations of the U.S. Underwriters with respect to the
Firm Shares shall be rounded among the U.S. Underwriters to avoid fractional
shares, as the Representatives may determine.
In addition, the Selling Stockholders grant to the U.S. Underwriters an
option to purchase an aggregate of up to 2,640,000 shares of Option Shares as
set forth in Schedule 2 hereto. Such option is granted solely for the purpose
of covering over-allotments in the sale of Firm Shares and is exercisable as
provided in Section 5 hereof. Option Shares shall be purchased severally for
the account of the U.S. Underwriters in proportion to the number of Firm Shares
set forth opposite the name of such U.S. Underwriters in Schedule 1 hereto. The
respective purchase obligations of each U.S. Underwriter with respect to the
Option Shares shall be adjusted by the Representatives so that no U.S.
Underwriter shall be obligated to purchase Option Shares other than in 100 share
amounts.
The price of both the Firm Shares and any Option Shares shall be
$______ per share.
The Selling Stockholders shall not be obligated to deliver any of the
Shares to be delivered on the First Delivery Date or the Second Delivery Date
(as hereinafter defined), as the case may be, except upon payment for all the
Shares to be purchased on such Delivery Date as hereinafter provided.
4. OFFERING OF SHARES BY THE U.S. UNDERWRITERS. Upon the
authorization by the Representatives of the release of the Firm Shares, the
several U.S. Underwriters propose to offer the Firm Shares for sale upon the
terms and conditions set forth in the Prospectus.
5. DELIVERY OF AND PAYMENT FOR THE SHARES. Delivery of and payment
for the Firm Shares shall be made in New York, New York, at 10:00 A.M., New York
City time, on the fourth full business day following the date of this Agreement
or at such other date or place as shall be determined by agreement between the
Representatives and the Selling Stockholders. This date and time are sometimes
referred to as the "First Delivery Date". On the First Delivery Date, each
Selling Stockholder shall deliver or cause to be delivered certificates
representing the Firm Shares to the Representatives for the account of each U.S.
Underwriter against payment to or upon the order of such Selling Stockholder of
the purchase price for the Firm Shares by certified or official bank check or
checks payable in New York Clearing House (next-day) funds. Time shall be of
the essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligation of each U.S. Underwriter
hereunder. Upon delivery, the Firm Shares shall be registered in such names and
in such denominations as the Representatives shall request in writing not less
than two full business days prior to the First Delivery Date. For the purpose
of expediting the checking and packaging of the certificates for the Firm
Shares, the Selling Stockholders shall make the certificates representing the
Firm Shares available for inspection by the Representatives in New York, New
York, not later than 2:00 P.M., New York City time, on the business day prior to
the First Delivery Date.
-7-
<PAGE>
At any time on or before the thirtieth day after the date of this
Agreement, the option granted in Section 3 hereof may be exercised by written
notice being given to the Selling Stockholders by the Representatives. Such
notice shall set forth the aggregate number of Option Shares as to which the
option is being exercised, the names in which the Option Shares are to be
registered, the denominations in which the Option Shares are to be issued and
the date and time, as determined by the Representatives, when the Option Shares
are to be delivered; PROVIDED, HOWEVER, that this date and time shall not be
earlier than the First Delivery Date nor earlier than the second business day
after the date on which the option shall have been exercised nor later than the
third business day after the date on which the option shall have been exercised.
The date and time the Option Shares are delivered are sometimes referred to as
the "Second Delivery Date", and the First Delivery Date and the Second Delivery
Date are sometimes each referred to as a "Delivery Date".
Delivery of and payment for the Option Shares shall be made in New
York, New York (or at such other place as shall be determined by agreement
between the Representatives and the Selling Stockholders) at 10:00 A.M., New
York City time, on the Second Delivery Date. On the Second Delivery Date, each
Selling Stockholder shall deliver or cause to be delivered the certificates
representing the Option Shares to the Representatives for the account of each
U.S. Underwriter against payment to or upon the order of such Selling
Stockholder of the purchase price for the Option Shares by certified or official
bank check or checks payable in New York Clearing House (next-day) funds. Time
shall be of the essence, and delivery at the time and place specified pursuant
to this Agreement is a further condition of the obligation of each U.S.
Underwriter hereunder. Upon delivery, the Option Shares shall be registered in
such names and in such denominations as the Representatives shall request in the
aforesaid written notice. For the purpose of expediting the checking and
packaging of the certificates for the Option Shares, the Selling Stockholders
shall make the certificates representing the Option Shares available for
inspection by the Representatives in New York, New York, not later than 2:00
P.M., New York City time, on the business day prior to the Second Delivery Date.
6. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under
the Act not later than the Commission's close of business on the second
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under
the Act; to file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Representatives, be required
by the Act or requested by the Commission; to make no further amendment or
any supplement to the Registration Statement or Prospectus prior to the last
Delivery Date which shall be disapproved by the Representatives promptly
after reasonable notice thereof; to advise the Representatives promptly
after it receives notice thereof, of the time when the Registration
Statement, or any amendment thereto, has been filed or becomes effective or
any supplement to the Prospectus or any amended Prospectus has been filed
and to furnish the Representatives with copies thereof; to file promptly all
reports and any definitive proxy or information statements required to be
filed by the Company with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and
for so long as the delivery of a prospectus is required in connection with
the offering or sale of the Shares; to advise the Representatives promptly
after it receives notice thereof, of the issuance by the Commission of any
stop order or of any order preventing or
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suspending the use of any Preliminary Prospectus or prospectus, of the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any
such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for
additional information; and, in the event of the issuance of any stop order
or of any order preventing or suspending the use of any Preliminary
Prospectus or Prospectus or suspending any such qualification, to use
promptly its best efforts to obtain its withdrawal;
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Shares for offering
and sale under the securities laws of such jurisdictions as the
Representatives may request and to continue such qualifications in effect in
such jurisdictions for as long as may be necessary to complete the
distribution of the Shares; PROVIDED that in connection therewith the
Company shall not be required to qualify as a foreign corporation or to file
a general consent to service of process in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the business day next
succeeding the date of this Agreement and from time to time to furnish
promptly to each of the Representatives and to counsel for the U.S.
Underwriters a signed copy of the Registration Statement as originally filed
with the Commission, and each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith; prior to 10:00 a.m.,
New York City time, on the business day next succeeding the date of this
Agreement and from time to time to deliver promptly to the Representatives
in New York City such number of the following documents as the
Representatives shall reasonably request: (i) conformed copies of the
Registration Statement as originally filed with the Commission and each
amendment thereto (in each case excluding exhibits other than this Agreement
and the computation of per share earnings), (ii) each Preliminary
Prospectus, the Prospectus and any amended or supplemented Prospectus and
(iii) any document incorporated by reference in the Prospectus (excluding
exhibits thereto); and, if the delivery of a prospectus is required at any
time prior to the expiration of nine months after the time of issue of the
Prospectus in connection with the offering or sale of the Shares and if at
such time any event shall have occurred 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 in order 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 for any
other reason it shall be necessary during such period to amend or supplement
the Prospectus or to file under the Exchange Act any document incorporated
by reference in the Prospectus in order to comply with the Act or the
Exchange Act, to notify the Representatives and upon the Representatives'
request to file such document and to prepare and furnish without charge to
each U.S. Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance, and in case any U.S.
Underwriter is required to deliver a prospectus in connection with sales of
any of the Shares at any time nine months or more after the time of issue of
the Prospectus, upon the Representatives' request but at the expense of such
U.S. Underwriter, to prepare and deliver to such U.S. Underwriter as many
copies as the Representatives may request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its security holders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as
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defined in Rule 158(c) under the Act), an earning statement of the Company
(which need not be audited) complying with Section 11(a) of the Act and the
rules and regulations of the Commission thereunder (including, at the option
of the Company, Rule 158 under the Act);
(e) During the period beginning from the date hereof and continuing to
and including the date 60 days after the date of the Prospectus not,
directly or indirectly, to offer, sell, contract to sell or otherwise
transfer or dispose of any capital stock of the Company or securities
convertible or exchangeable or exercisable for capital stock of the Company
(other than (A) Shares to be sold to the U.S. Underwriters and the
International Underwriters and (B) Common Stock issuable pursuant to
employee stock option plans or the employee stock purchase plan, in each
case as in effect on the date hereof);
(f) For so long as any reports or proxy or information statements are
required to be filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), to furnish to its stockholders (i) as soon as
practicable after the end of each fiscal year an annual report (including a
balance sheet and statements of income, stockholders' equity and cash flow
of the Company certified by independent public accountants) and (ii) as soon
as practicable after the end of each of the first three quarters of each
fiscal year, summary financial information of the Company for such quarter,
in each case, complying with the requirements of the Act and the Exchange
Act;
(g) During a period of three years from the effective date of the
Registration Statement, to furnish to the Representatives copies of all
reports or other communications (financial or other) furnished to
stockholders, and deliver to the Representatives as soon as they are
available, copies of any reports and financial statements furnished to or
filed with the Commission or any national securities exchange on which any
class of securities of the Company is listed; and
(h) To use its best efforts to comply with the rules and regulations
of the New York Stock Exchange with respect to the offering of the Shares.
7. FURTHER AGREEMENTS OF THE SELLING STOCKHOLDERS. Each Selling
Stockholder agrees:
(a) During the period beginning from the date hereof and continuing to
and including the date 60 days after the date of the Prospectus not,
directly or indirectly, to offer, sell, contract to sell or otherwise
transfer or dispose of any capital stock of the Company or securities
convertible or exchangeable or exercisable for capital stock of the Company
(other than Shares to be sold to the U.S. Underwriters and the International
Underwriters), without the prior written consent of the Representatives;
(b) That the obligations of such Selling Stockholder hereunder shall
not be terminated by any act of such Selling Stockholder, by operation of
law or, in the case of an individual, by the death or incapacity of such
individual Selling Stockholder or, in the case of a partnership, by the
termination of such partnership, or, in the case of a corporation, the
dissolution or liquidation of such corporation, or, in the case of a trust,
by the death or incapacity of any executor or trustee or the termination of
such trust or the occurrence of any other event;
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<PAGE>
(c) To deliver to the Representatives prior to the First Delivery Date
a properly completed and executed United States Treasury Department Form W-9
(or other applicable form or statement specified by Treasury Department
regulations in lieu thereof); and
(d) To advise the Representatives promptly of any material adverse
change, or any development involving a prospective material adverse change,
in or affecting the accuracy of any of its or his representations or
warranties or its or his inability to perform the agreements and indemnities
herein at any time prior to payment being made to such Selling Stockholder
on either Delivery Date and take such steps as may be reasonably requested
by the Representatives to remedy any such material adverse change or
inability.
8. EXPENSES. The Selling Stockholders, jointly and severally,
covenant and agree with the several U.S. Underwriters and the International
Underwriters that the Selling Stockholders will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of the Company's counsel
and accountants in connection with the registration of the Shares under the Act
and all other expenses in connection with the preparation, printing and filing
of the Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the U.S. Underwriters and dealers; (ii) the cost of delivering,
printing or producing any Agreement among Underwriters (U.S. Version), Agreement
among Underwriters (International Version), this Agreement, the International
Underwriting Agreement, the Agreement between U.S. and International
Underwriting Syndicates, any Selling Agreement, the Blue Sky Memorandum and any
other documents in connection with the offering, purchase, sale and delivery of
the Shares; (iii) all expenses in connection with the qualification of the
Shares for offering and sale under state securities laws as provided in Section
6(b) hereof, including the fees and disbursements of counsel for the U.S.
Underwriters in connection with such qualification and in connection with the
Blue Sky Memorandum; (iv) the filing fees incident to securing any required
review by the National Association of Securities Dealers, Inc. of the terms of
the sale of the Shares; (v) the cost of preparing stock certificates; (vi) the
cost and charges of any transfer agent or registrar; (vii) any stock transfer
taxes payable in connection with sales of Shares to the U.S. Underwriter and
International Underwriters and (viii) all other costs and expenses incident to
the performance of the Company's and the Selling Stockholders' obligations
hereunder which are not otherwise specifically provided for in this Section 8.
It is understood, however, that, except as provided in this Section 8, Section
10 and Section 13 hereof, the U.S. Underwriters will pay all of their own costs
and expenses, including the fees of their counsel, stock transfer taxes on
resale of any of the Shares by them, and any advertising expenses in connection
with any offers they may make.
9. CONDITIONS OF U.S. UNDERWRITERS OBLIGATIONS. The respective
obligations of the U.S. Underwriters hereunder, as to the Shares to be delivered
on each Delivery Date, shall be subject, in their discretion, to the accuracy,
when made and on and as of such Delivery Date, of all representations and
warranties of the Company and each of the Selling Stockholders contained herein,
to the performance by the Company and each of the Selling Stockholders of all of
their respective obligations hereunder, and to the following additional
conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing
by the rules and regulations of the Commission under the Act and in
accordance with Section 6(a) hereof; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the
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<PAGE>
Commission; and all requests for additional information on the part of the
Commission shall have been complied with to the Representatives' reasonable
satisfaction;
(b) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the International
Underwriting Agreement, the Registration Statement and the Prospectus, and
all other legal matters relating to this Agreement and the International
Underwriting Agreement and the transactions contemplated hereby and thereby,
shall be reasonably satisfactory in all material respects to Simpson Thacher
& Bartlett, counsel for the U.S. Underwriters and the International
Underwriters, and the Company and the Selling Stockholders shall have
furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters;
(c) Schreck, Jones, Bernhard, Woloson & Godfrey, Nevada counsel for
the Company, shall have furnished to the Representatives their written
opinion, addressed to the U.S. Underwriters and the International
Underwriters dated such Delivery Date, in form and substance satisfactory to
the Representatives, to the effect that:
(i) The Company has been duly incorporated and is validly existing
as a corporation under the laws of the State of Nevada, with corporate
power and authority to own its properties and conduct its business as
described in the Prospectus;
(ii) The Company has authorized capital stock as set forth in the
Prospectus, and all of the issued shares of capital stock of the
Company (including the Shares being delivered on such Delivery Date)
have been duly and validly authorized and issued and are fully paid and
nonassessable; and the Shares conform to the description of the Common
Stock contained in the Prospectus;
(iii) This Agreement and the International Underwriting Agreement
have been duly authorized, executed and delivered by the Company;
(iv) The execution, delivery and performance by the Company of this
Agreement and the International Underwriting Agreement and the
consummation of the transactions herein and therein contemplated will
not result in any violation of the provisions of the Articles of
Incorporation or By-laws of the Company or any statute or of any order,
rule or regulation known to such counsel, which in its experience is
normally applicable to transactions of the type contemplated by this
Agreement and the International Underwriting Agreement, of any court or
governmental agency or body having jurisdiction over the Company, any
of its subsidiaries or any of their respective properties; and
(v) No consent, approval, authorization, order, registration or
qualification of or with any state court or governmental agency or body
is required for the consummation by the Company of the transactions
contemplated by this Agreement and the International Underwriting
Agreement, except for such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the U.S. Underwriters.
In rendering such opinion, such counsel may state that such opinion is
limited to matters governed by Nevada law.
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<PAGE>
(d) Latham & Watkins, counsel for the Company, shall have furnished to
the Representatives their written opinion, addressed to the U.S.
Underwriters and the International Underwriters dated such Delivery Date, in
form and substance satisfactory to the Representatives, to the effect that:
(i) The Company has been duly incorporated and is validly existing
as a corporation under the laws of the State of Nevada, with corporate
power and authority to own its properties and conduct its business as
described in the Prospectus;
(ii) All of the issued shares of capital stock of the Company
(including the Shares being delivered on such Delivery Date) have been
duly and validly authorized and issued and are fully paid and non-
assessable;
(iii) This Agreement and the International Underwriting Agreement
have been duly authorized, executed and delivered by the Company and,
assuming due authorization, execution and delivery by the U.S.
Underwriters and the International Underwriters, constitute valid and
legally binding agreements of the Company enforceable against the
Company in accordance with their respective terms, except as may be
limited (A) by the effect of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting the rights and remedies of
creditors; (B) by the effect of general principles of equity, whether
enforcement is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor may be
brought; (C) by an implied covenant of good faith and fair dealing; and
(D) by considerations of public policy;
(iv) The execution, delivery and performance by the Company of this
Agreement and the International Underwriting Agreement and the
consummation of the transactions herein and therein contemplated will
not conflict with or result in a material breach or violation of any of
the terms or provisions of, or constitute a default under, any
agreement or instrument, or stock option or other employee benefit plan
listed or referred to in Items 4 or 10 of the exhibits to the Company's
Annual Report on Form 10-K for the fiscal year ended August 26, 1995,
nor will such action result in any violation of any statute or of any
order, rule or regulation known to such counsel, which in its
experience is normally applicable to transactions of the type
contemplated by this Agreement and the International Underwriting
Agreement, of any United States federal or state court or governmental
agency or body having jurisdiction over the Company, any of its
subsidiaries or any of their respective properties;
(v) No consent, approval, authorization, order, registration or
qualification of or with any United States federal or state court or
governmental agency or body is required for the consummation by the
Company of the transactions contemplated by this Agreement and the
International Underwriting Agreement, except the registration under the
Act of the Shares, and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the U.S. Underwriters;
(vi) The documents incorporated by reference in the Prospectus or
any further amendment or supplement thereto made by the Company prior
to such Delivery Date
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<PAGE>
(other than the financial statements and related schedules therein, as
to which such counsel need express no opinion), when they became
effective or were filed with the Commission, as the case may be,
complied as to form in all material respect with the requirements of
the Act or the Exchange Act, as applicable and the rules and
regulations of the Commission thereunder; and they have no reason to
believe that any of such documents, when such documents became
effective or were so filed, as the case may be, contained, in the case
of a registration statement which became effective under the Act, an
untrue statement of a material fact, or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, or, in the case of other documents which were
filed under the Exchange Act with the Commission, an untrue statement
of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made when such documents were so filed, not
misleading; and
(vii) The Registration Statement and the Prospectus and any further
amendments and supplements thereto made by the Company prior to such
Delivery Date (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the requirements of the
Act and the rules and regulations of the Commission thereunder.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company, and
representatives of the independent public accountants for the Company, at
which conferences the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although such counsel is
not passing upon, and does not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus (except for the information, to the extent it
comprises matters of law or legal conclusions, contained under the caption
"Description of Capital Stock" and except such counsel shall confirm that
the information contained in the Prospectus under the caption "Certain
United States Tax Consequences to Non-United States Holders" is accurate),
and such counsel has not made any independent check or verification thereof,
on the basis of the foregoing, no facts have come to such counsel's
attention that have led such counsel to believe that (I), as of its
effective date, the Registration Statement or any further amendment thereto
made by the Company prior to such Delivery Date (other than the financial
statements and related schedules and other financial data in the
Registration Statement, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, (II) as of its date, the Prospectus or
any further amendment or supplement thereto made by the Company prior to
such Delivery Date (other than the financial statements and other financial
data in the Prospectus, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, (III)
any document incorporated by reference in the Prospectus or any further
amendment or supplement thereto made by the Company prior to such Delivery
Date (other than the financial statements and related schedules therein, as
to which such counsel need express no opinion), when such document became
effective or was filed with the Commission, as the case may be, contained an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not
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<PAGE>
misleading or (IV) as of such Delivery Date, either the Registration
Statement or the Prospectus (including, in each case, any document
incorporated by reference in the Prospectus) or any further amendment or
supplement thereto made by the Company prior to such Delivery Date (other
than the financial statements and related schedules and other financial data
in the Registration Statement or the Prospectus, as to which such counsel
need express no opinion) contains an untrue statement of a material fact or
omits to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
and they do not know of any amendment to the Registration Statement required
to be filed or of any contracts or other documents of a character required
to be filed as an exhibit to the Registration Statement or required to be
incorporated by reference into the Prospectus or required to be described in
the Registration Statement or the Prospectus which are not filed or
incorporated by reference or described as required.
In rendering such opinion, such counsel may (i) state that such opinion
is limited to matters governed by U.S. federal law and New York law and (ii)
rely (to the extent such counsel deems proper and specifies in its opinion
with respect to the opinions set forth in clauses (i), (ii) and (iii)
above), as to matters of Nevada law, upon the opinion of Schreck, Jones,
Bernhard, Woloson & Godfrey referred to in Section 9(c) hereof.
(e) Harry L. Goldsmith, Esq., Vice President of the Company and
counsel for the Company, shall have furnished to the Representatives his
written opinion, addressed to the U.S. Underwriters and the International
Underwriters dated such Delivery Date, in form and substance satisfactory to
the Representatives, to the effect that:
(i) Each of the Company and its subsidiaries has been duly
organized and is validly existing as a corporation or limited
partnership under the laws of the jurisdiction of its organization,
with corporate or partnership, as the case may be, power and authority
to own its properties and conduct its business as described in the
Prospectus;
(ii) Each of the Company and its subsidiaries has been duly
qualified as a foreign corporation or limited partnership, as the case
may be, for the transaction of business and is in good standing under
the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification, or is subject to no material liability or disability by
reason of failure to be so qualified in any such jurisdiction (such
counsel being entitled to rely in respect of the opinion in this clause
upon opinions of local counsel and corporate service agents and in
respect of matters of fact upon certificates of officers of the
Company, provided that such counsel shall state that he believes that
the U.S. Underwriters and the International Underwriters and he are
justified in relying upon such opinions and certificates);
(iii) All of the outstanding shares of capital stock of, or equity
interests in, each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned,
directly or indirectly, by the Company, and, to the best knowledge of
such counsel, are owned free and clear of all liens, encumbrances,
equities or claims;
(iv) To the best of such counsel's knowledge (after reasonable
investigation) and other than as set forth in the Prospectus, there are
no legal or governmental proceedings
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<PAGE>
pending to which the Company or any of its subsidiaries is a party or
of which any property of the Company or any of its subsidiaries is the
subject which, either individually or in the aggregate, are reasonably
likely to have a material adverse effect on the general affairs,
business, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries; and, to the
best of such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others; and
(v) The execution, delivery and performance by the Company of
this Agreement and the International Underwriting Agreement and the
consummation of the transactions herein and therein contemplated will
not conflict with or result in a material breach or violation of any of
the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement, stock option or
other employee benefit plan, or other material agreement or instrument
known to such counsel to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound
or to which any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such action result in any violation
of the provisions of the Articles of Incorporation or By-laws of the
Company or any of its subsidiaries or any statute or of any order, rule
or regulation known to such counsel of any United States federal or
state court or governmental agency or body having jurisdiction over the
Company, any of its subsidiaries or any of their respective properties.
(f) Schreck, Jones, Bernhard, Woloson & Godfrey, Nevada counsel to the
Selling Stockholders, shall have furnished to the Representatives their
written opinion, addressed to the U.S. Underwriters and the International
Underwriters dated such Delivery Date, in form and substance satisfactory to
the Representatives, to the effect that:
(i) The execution, delivery and performance of this Agreement and
the International Underwriting Agreement and the consummation by each
Selling Stockholder of the transactions contemplated hereby and thereby
will not result in any violation of any statute or any order, rule or
regulation known to such counsel, which in its experience is normally
applicable to transactions of the type contemplated by this Agreement
and the International Underwriting Agreement, of any state court or
governmental agency or body having jurisdiction over such Selling
Stockholder or the property of such Selling Stockholder; and
(ii) No consent, approval, authorization, order, registration or
qualification of or with any state court or governmental agency or body
is required for the execution, delivery and performance by each Selling
Stockholder of this Agreement or the International Underwriting
Agreement and the consummation by such Selling Stockholder of the
transactions contemplated hereby and thereby, except for such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the U.S. Underwriters.
In rendering such opinion, such counsel may state that such opinion is
limited to matters governed by Nevada law.
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<PAGE>
(g) Latham & Watkins, counsel to the Selling Stockholders, shall have
furnished to the Representatives their written opinion, addressed to the
U.S. Underwriters and the International Underwriters dated such Delivery
Date, in form and substance satisfactory to the Representatives, to the
effect that:
(i) This Agreement and the International Underwriting Agreement
have been duly authorized, executed and delivered by or on behalf of
each Selling Stockholder;
(ii) Each Selling Stockholder has full right, power and authority
to enter into this Agreement and the International Underwriting
Agreement; the execution, delivery and performance of this Agreement
and the International Underwriting Agreement and the consummation by
such Selling Stockholder of the transactions contemplated hereby and
thereby will not result in any violation of the partnership agreement
relating to such Selling Stockholder or any statute or any order, rule
or regulation known to such counsel, which in its experience is
normally applicable to transactions of the type contemplated by this
Agreement and the International Underwriting Agreement, of any United
States federal or state court or governmental agency or body having
jurisdiction over such Selling Stockholder or the property of such
Selling Stockholder;
(iii) No consent, approval, authorization, order, registration or
qualification of or with any such United States federal or state court
or governmental agency or body is required for the execution, delivery
and performance by each Selling Stockholder of this Agreement or the
International Underwriting Agreement and the consummation by such
Selling Stockholder of the transactions contemplated hereby and
thereby, except the registration under the Act of the Shares, and such
consents, approvals, authorizations, registrations or qualifications as
may be required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the U.S.
Underwriters; and
(iv) Upon delivery of the Shares and payment therefor pursuant
hereto, the U.S. Underwriters will hold such Shares, free and clear of
all liens, encumbrances, equities or claims, assuming that such U.S.
Underwriters have purchased such Shares in good faith and without
notice of any such lien, encumbrance, equity or claim or any other
adverse claim within the meaning of the Uniform Commercial Code as in
effect in the State of New York.
In rendering such opinion, such counsel may (i) state that such opinion
is limited to matters governed by U.S. federal law, New York law and the
Delaware Revised Uniform Limited Partnership Act and (ii) rely as to matters
of fact upon the representations and warranties of the Selling Stockholders
contained herein as to the opinions set forth in clauses (i) and (iv) above.
(h) At 10:00 a.m., New York City time, on the effective date of the
Registration Statement and of the most recently filed post-effective
amendment to the Registration Statement, if any, and also on each Delivery
Date, Ernst & Young shall have furnished to the Representatives a "comfort"
letter or letters, addressed to the U.S. Underwriters and the International
Underwriters and dated the respective date of delivery thereof, as to such
matters as the Representatives may reasonably request and in form and
substance satisfactory to the Representatives;
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(i) (i) The Company and its subsidiaries shall not have sustained since
the date of the latest audited financial statements included or incorporated
by reference in the Prospectus any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Prospectus,
and (ii) since the respective dates as of which information is given in the
Prospectus there shall not have been any change in the capital stock (except
for any increase due to the exercise of stock options which were outstanding
as of May 4, 1996 or as a result of issuances of shares of Common Stock
pursuant to the Company's Stock Purchase Plan) or any increase in excess of
$3 million in the consolidated long-term debt of the Company and its
subsidiaries or any change, or any development involving a prospective
change, in or affecting the general affairs, business, management, financial
position, stockholders' equity or results of operations of the Company and
its subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case
described in Clause (i) or (ii), is in the Representatives' judgment so
material and adverse as to make it impracticable or inadvisable to proceed
with the public offering or the delivery of the Shares being delivered on
such Delivery Date on the terms and in the manner contemplated in the
Prospectus;
(j) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in the Common
Stock on the New York Stock Exchange shall have been suspended; (ii) trading
in securities generally on the New York Stock Exchange shall have been
suspended or minimum prices shall have been established on such Exchange by
the Commission, by such Exchange or by any other regulatory body or
governmental authority having jurisdiction; (iii) a banking moratorium shall
have been declared by Federal or New York State authorities; (iv) the United
States shall have become engaged in hostilities, there shall have been an
escalation in hostilities involving the United States or there shall have
been a declaration of a national emergency or war by the United States, if
the effect of any such event specified in this clause (iv) in the reasonable
judgment of the Representatives makes it impracticable or inadvisable to
proceed with the public offering or the delivery of the Shares being
delivered on such Delivery Date on the terms and in the manner contemplated
in the Prospectus; or (v) there shall have occurred such a material adverse
change in general economic, political or financial conditions (or the effect
of international conditions on the financial markets in the United States
shall be such) which, in the reasonable judgment of the Representatives,
would materially and adversely affect the financial markets or the market
for the Shares;
(k) The Company shall have furnished or caused to be furnished to the
Representatives on such Delivery Date certificates of officers of the
Company satisfactory to the Representatives as to the accuracy of the
representations and warranties of the Company herein at and as of such
Delivery Date, as to the performance by the Company of all of its
obligations hereunder to be performed at or prior to such Delivery Date, as
to the matters set forth in Sections 9(a) and 9(i) hereof and as to such
other matters as the Representatives may reasonably request;
(l) Each Selling Stockholder shall have furnished to the
Representatives on such Delivery Date a certificate as to the accuracy of
the representations and warranties of such Selling Stockholder contained
herein at and as of such Delivery Date, as to the performance by such
Selling Stockholder of all of its or his obligations hereunder to be
performed by such Selling
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<PAGE>
Stockholder at or prior to such Delivery Date and as to such other matters
as the Representatives may reasonably request;
(m) The Company shall have complied with the provisions of Section
6(c) hereof with respect to the furnishing of Prospectuses on the business
day next succeeding the date of this Agreement; and
(n) The closing under the International Underwriting Agreement shall
have occurred concurrently with the closing hereunder on the First Delivery
Date.
10. INDEMNIFICATION AND CONTRIBUTION. (a) The Company shall
indemnify and hold harmless each U.S. Underwriter and each person, if any, who
controls any U.S. Underwriter within the meaning of the Act, from and against
any loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage, liability or
action relating to purchases and sales of Shares in connection herewith), to
which that U.S. Underwriter or controlling person may become subject, under the
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or supplement
thereto or (ii) 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 shall reimburse each U.S. Underwriter and each such
controlling person for any legal or other expenses reasonably incurred by that
U.S. Underwriter or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage, liability
or action as such expenses are incurred; PROVIDED, HOWEVER, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement or the Prospectus or in
any such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any U.S. Underwriter
through the Representatives expressly for use therein; and PROVIDED, FURTHER,
that as to any Preliminary Prospectus this indemnity agreement shall not inure
to the benefit of any U.S. Underwriter or any person controlling that U.S.
Underwriter on account of any loss, claim, damage, liability or action arising
from the sale of Shares to any person by that U.S. Underwriter if that U.S.
Underwriter failed to send or give a copy of the Prospectus, as the same may be
amended or supplemented, to that person within the time required by the Act, and
the untrue statement or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact in such Preliminary Prospectus was
corrected in the Prospectus, unless such failure resulted from non-compliance by
the Company with Section 6(c) hereof. For purposes of the last proviso to the
immediately preceding sentence, the term "Prospectus" shall not be deemed to
include the documents incorporated therein by reference, and no Underwriter
shall be obligated to send or give any supplement or amendment to any document
incorporated by reference in any Preliminary Prospectus or the Prospectus to any
person. The foregoing indemnity agreement is in addition to any liability which
the Company may otherwise have to any U.S. Underwriter or to any controlling
person of that U.S. Underwriter. The Company reaffirms its indemnification of
the Selling Stockholders pursuant to that certain Registration Rights Agreement
entered into by the Company, the Selling Stockholders and certain other holders
of Common Stock, dated as of February 18, 1987, and as amended to date.
(b) The Selling Stockholders (subject to the limitation on indemnity
contained in the last sentence of this Section 10(b)), severally and not
jointly, shall indemnify and hold harmless each U.S.
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<PAGE>
Underwriter and each person, if any, who controls any U.S. Underwriter within
the meaning of the Act, from and against any loss, claim, damage or liability,
joint or several, or action in respect thereof (including, but not limited to,
any loss, claim, damage, liability or action relating to purchases and sales of
Shares in connection herewith), to which that U.S. Underwriter or controlling
person may become subject, under the Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto or (ii) 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, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with information furnished in
writing to the Company by such Selling Stockholder expressly for use therein,
and shall reimburse each U.S. Underwriter and each such controlling person for
any legal or other expenses reasonably incurred by that U.S. Underwriter or
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred; PROVIDED, HOWEVER, that as to any Preliminary Prospectus
this indemnity agreement shall not inure to the benefit of any U.S. Underwriter
or any person controlling that U.S. Underwriter on account of any loss, claim,
damage, liability or action arising from the sale of Shares to any person by
that U.S. Underwriter if that U.S. Underwriter failed to send or give a copy of
the Prospectus, as the same may be amended or supplemented, to that person
within the time required by the Act, and the untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact in such Preliminary Prospectus was corrected in the Prospectus, unless such
failure resulted from non-compliance by the Company with Section 6(c) hereof.
For purposes of the last proviso to the immediately preceding sentence, the term
"Prospectus" shall not be deemed to include the documents incorporated therein
by reference, and no Underwriter shall be obligated to send or give any
supplement or amendment to any document incorporated by reference in any
Preliminary Prospectus or the Prospectus to any person other than a person to
whom such Underwriter had delivered such incorporated document or documents in
response to a written request therefor. The foregoing indemnity agreement is in
addition to any liability which the Selling Stockholders may otherwise have to
any U.S. Underwriter or any controlling person of that U.S. Underwriter. The
aggregate liability of any Selling Stockholder to indemnify the U.S.
Underwriters and any controlling persons of the U.S. Underwriters pursuant to
the foregoing indemnity agreement shall not exceed the proceeds received by such
Selling Stockholder from the Shares sold by it pursuant to this Agreement.
(c) Each U.S. Underwriter, severally and not jointly, shall indemnify
and hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement, each person, if any, who controls the Company
within the meaning of the Act and each Selling Stockholder from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof, to which the Company or any such director, officer or controlling
person or such Selling Stockholder may become subject, under the Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any amendment or supplement thereto or (ii)
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, but
in each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
that U.S. Underwriter through the Representatives expressly for use therein, and
shall reimburse the Company, any such director, officer or controlling person
and such
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<PAGE>
Selling Stockholder for any legal or other expenses reasonably incurred by the
Company, any such director, officer or controlling person or such Selling
Stockholder in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred. The foregoing indemnity agreement is in addition to any liability
which any U.S. Underwriter may otherwise have to the Company or any such
director, officer or controlling person.
(d) Promptly after receipt by an indemnified party under this Section
10 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 10, notify the indemnifying party in
writing of the claim or the commencement of that action; PROVIDED, HOWEVER, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 10. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 10 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation; PROVIDED,
HOWEVER, that the Representatives shall have the right to employ counsel to
represent jointly the U.S. Underwriters and their respective controlling persons
who may be subject to liability arising out of any claim in respect of which
indemnity may be sought by the U.S. Underwriters against the Company or any
Selling Stockholder under this Section 10 if, in the reasonable judgment of the
Representatives, it is advisable for the U.S. Underwriters and controlling
persons to be jointly represented by separate counsel, and in that event the
fees and expenses of one such separate counsel shall be paid by the Company or
such Selling Stockholder, as the case may be. No indemnifying party shall be
liable for any settlement of any such action effected without its written
consent (which consent shall not be unreasonably withheld), but if settled with
its written consent or if there be a final judgment of the plaintiff in any such
action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
(e) If the indemnification provided for in this Section 10 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 10(a), 10(b) or 10(c) hereof in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein, then
each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company and the Selling Stockholders on the one hand and the
U.S. Underwriters on the other from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law or if
the indemnified party failed to give the notice required under Section 10(d)
hereof, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company and the Selling Stockholders on the one hand and the U.S. Underwriters
on the other with respect to the statements or omissions which resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Selling Stockholders on the one hand and the U.S. Underwriters
on the other with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Shares
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<PAGE>
purchased under this Agreement (before deducting expenses) received by each of
the Selling Stockholders bear to the total underwriting discounts and
commissions received by the U.S. Underwriters with respect to the Shares
purchased under this Agreement, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault shall be determined by
reference to whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company, the Selling Stockholders or the U.S. Underwriters, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company, the
Selling Stockholders and the U.S. Underwriters agree that it would not be just
and equitable if contributions pursuant to this Section 10(e) were to be
determined by pro rata allocation (even if the U.S. Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim, damage
or liability, or action in respect thereof, referred to above in this Section
10(e) shall be deemed to include, for purposes of this Section 10(e), any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 10(e), no U.S. Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public was offered to the
public exceeds the amount of any damages which such U.S. Underwriter has
otherwise paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission, and no Selling Stockholder shall be
required to contribute any amount in excess of the amount by which the proceeds
received by such Selling Stockholder from the Shares sold by it pursuant to this
Agreement exceeds the amount of any damages which such Selling Stockholder has
otherwise paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The U.S. Underwriters' obligations to contribute as provided
in this Section 10(e) are several in proportion to their respective underwriting
obligations and not joint.
(f) Each Selling Stockholder severally confirms, and each of the U.S.
Underwriters agrees that the information (other than the percentage of shares
owned) pertaining to each Selling Stockholder under the caption "Principal and
Selling Stockholders" in the Prospectus constitutes the only information
furnished in writing to the Company by such Selling Stockholder expressly for
use in the Registration Statement and the Prospectus.
(g) The agreements contained in this Section 10 and the
representations, warranties and agreements of the Company in Sections 1, 6 and 8
hereof and of the Selling Stockholders in Sections 2, 7, 8 and 13 hereof shall
survive the delivery of the Shares and shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any indemnified party.
11. DEFAULTING U.S. UNDERWRITERS. If, on the First Delivery Date or
the Second Delivery Date, as the case may be, any U.S. Underwriter defaults in
the performance of its obligations under this Agreement, the remaining non-
defaulting U.S. Underwriters shall be obligated to purchase the Shares which the
defaulting U.S. Underwriter agreed but failed to purchase on such date in the
respective proportions which the number of Firm Shares set forth opposite the
name of each remaining non-defaulting U.S. Underwriter in Schedule 1 hereto
bears to the total number of Firm Shares set forth opposite the names of all the
remaining non-defaulting U.S. Underwriters in Schedule 1 hereto;
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<PAGE>
PROVIDED, HOWEVER, that the remaining non-defaulting U.S. Underwriters shall not
be obligated to purchase any of the Shares on such date if the total number of
Shares which the defaulting U.S. Underwriter or U.S. Underwriters agreed but
failed to purchase on such date exceeds 9.09% of the total number of Shares to
be purchased on such date, and any remaining non-defaulting U.S. Underwriter
shall not be obligated to purchase more than 110% of the number of Shares which
it agreed to purchase on such date pursuant to the terms of Section 3 hereof.
If the foregoing maximums are exceeded, the remaining non-defaulting U.S.
Underwriters, or those other underwriters satisfactory to the Representatives,
shall have the right, but shall not be obligated, to purchase (in such
proportions as may be agreed upon among them) all the Shares to be purchased by
the U.S. Underwriters on such date. If the foregoing maximums are exceeded and
the remaining U.S. Underwriters or other underwriters satisfactory to the
Representatives do not elect to purchase the shares which the defaulting U.S.
Underwriters agreed but failed to purchase, this Agreement shall terminate
without liability on the part of any non-defaulting U.S. Underwriter, the
Company or any Selling Stockholder, except that the Company and the Selling
Stockholders will continue to be jointly and severally liable for the payment of
expenses to any non-defaulting U.S. Underwriters as set forth in Section 8
hereof.
Nothing contained herein shall relieve a defaulting U.S. Underwriter of
any liability it may have to the Company or any Selling Stockholder for damages
caused by such U.S. Underwriter's default. If other underwriters are obligated
or agree to purchase the Shares of a defaulting U.S. Underwriter, either the
Representatives or the Selling Stockholders may postpone the related delivery
date for up to seven full business days in order to effect any changes that, in
the opinion of counsel for the Company or counsel for the U.S. Underwriters, may
be necessary in the Registration Statement, the U.S. Prospectus or in any other
document or arrangement.
12. TERMINATION. The obligations of the U.S. Underwriters hereunder
may be terminated by the Representatives, in their absolute discretion, by
notice given to and received by the Company and the Selling Stockholders prior
to delivery of any payment for the Firm Shares if, prior to that time, any of
the events described in Section 9(i) or 9(j) hereof shall have occurred.
13. REIMBURSEMENT OF EXPENSES. If (a) any Selling Stockholder shall
fail to tender the Shares for delivery to the U.S. Underwriters for any reason
permitted under this Agreement or (b) the U.S. Underwriters shall decline to
purchase the Shares for any reason permitted under this Agreement, the Selling
Stockholders, jointly and severally, shall, subject to the next succeeding
sentence of this Section 13, reimburse the U.S. Underwriters for the reasonable
fees and expenses of their counsel and for such other out-of-pocket expenses as
shall have been incurred by them in connection with this Agreement and the
proposed purchase of the Shares, and upon demand the Selling Stockholders shall
pay the full amount thereof to the Representatives. If this Agreement is
terminated pursuant to Section 11 hereof by reason of the default of one or more
U.S. Underwriters or if this Agreement is terminated pursuant to Section 12
hereof because of the occurrence of any of the events described in Section 9(i)
hereof or as a result of the failure of any condition set forth in Section 9(j)
hereof, the Selling Stockholders shall not be obligated to reimburse any U.S.
Underwriter on account of those expenses and shall not have any other liability
to any U.S. Underwriter except as provided in Section 8 or 10 hereof.
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<PAGE>
14. NOTICES. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the U.S. Underwriters, shall be delivered or sent by
mail, telex or facsimile transmission c/o Goldman, Sachs & Co., 85 Broad
Street, New York, New York 10004, Attention: Registration Department;
(b) if to the Company, shall be delivered or sent by mail, telex
or facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Secretary; and
(c) if to any of the Selling Stockholders shall be delivered or sent
by mail, telex or facsimile transmission to such Selling Stockholder, care
of KKR Associates, at the address set forth in the Registration Statement
under the caption "Principal and Selling Stockholders";
PROVIDED, HOWEVER, that any notice to a U.S. Underwriter pursuant to Section
10(d) hereof shall be delivered or sent by mail, telex or facsimile transmission
to such U.S. Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company and
the Selling Stockholders shall be entitled to act and rely upon any request,
consent, notice or agreement given or made by Goldman, Sachs & Co. on behalf of
the Representatives, and the Company and the U.S. Underwriters shall be entitled
to act and rely upon any request, consent, notice or agreement given or made by
the Selling Stockholders.
15. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the U.S. Underwriters, the Company,
the Selling Stockholders and their respective personal representatives and
successors. This Agreement and the terms and provisions hereof are for the sole
benefit of only those persons, except that (A) the representations, warranties,
indemnities and agreements of the Company and the Selling Stockholders contained
in this Agreement shall also be deemed to be for the benefit of the person or
persons, if any, who control any U.S. Underwriter within the meaning of
Section 15 of the Act and for the benefit of each International Underwriter (and
controlling persons thereof) and (B) the indemnity agreement of the U.S.
Underwriters contained in Section 10(c) hereof shall be deemed to be for the
benefit of directors of the Company, officers of the Company who have signed the
Registration Statement, the Selling Stockholders and any person controlling the
Company or any Selling Stockholder within the meaning of Section 15 of the Act.
Nothing in this Agreement is intended or shall be construed to give any person,
other than the persons referred to in this Section 15, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
contained herein. No partner of any Selling Stockholder or any successor
general partner of any Selling Stockholder shall have any personal liability for
the performance of any Selling Stockholder's obligations hereunder, and any
liability or obligation of any Selling Stockholder arising hereunder shall be
limited to and satisfied only out of the property of such Selling Stockholder.
16. CERTAIN DEFINITION. For purposes of this Agreement, a "business
day" means any day on which the New York Stock Exchange is open for trading.
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<PAGE>
17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
18. COUNTERPARTS. This Agreement may be executed by any one or more
of the parties hereto 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 instrument.
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<PAGE>
If the foregoing is in accordance with your understanding, please sign
and return to us six counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the U.S. Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the U.S. Underwriters,
each of the Selling Stockholders and the Company.
Very truly yours,
Autozone, Inc.
By:
------------------------------------
Title:
THE SELLING STOCKHOLDERS:
Pittco Associates, L.P.
By: KKR Associates,
General Partner
By:
-------------------------------
Title: General Partner
Pittco Associates II, L.P.
By: KKR Associates,
General Partner
By:
-------------------------------
Title: General Partner
KKR Partners II, L.P.
By: KKR Associates,
General Partner
By:
-------------------------------
Title: General Partner
J.R. Hyde, III
------------------------------------
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<PAGE>
Accepted as of the date hereof:
Goldman, Sachs & Co.
Lehman Brothers Inc.
Donaldson, Lufkin & Jenrette
Securities Corporation
Furman Selz Incorporated
Merrill Lynch, Pierce,
Fenner & Smith Incorporated
Smith Barney Inc.
By:
------------------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
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<PAGE>
SCHEDULE 1
Number of
Underwriter Firm Shares
---------- ------------
Goldman, Sachs & Co. . . . . . . . . . . . . . . . . . . . .
Lehman Brothers Inc. . . . . . . . . . . . . . . . . . . . .
Donaldson, Lufkin & Jenrette Securities Corporation. . . . .
Furman Selz Incorporated . . . . . . . . . . . . . . . . . .
Merrill Lynch, Pierce, Fenner & Smith Incorporated . . . . .
Smith Barney Inc.. . . . . . . . . . . . . . . . . . . . . .
----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . 16,000,000
----------
----------
<PAGE>
SCHEDULE 2
Number of Number of
Name of Selling Stockholder Firm Shares Option Shares
--------------------------- ----------- -------------
Pittco Associates, L.P. _________ _________
Pittco Associates II, L.P. _________ _________
KKR Partners II, L.P. _________ _________
J. R. Hyde, III _________ _________
Total
--------- ---------
--------- ---------
<PAGE>
AUTOZONE, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
UNDERWRITING AGREEMENT
(INTERNATIONAL VERSION)
___________ ___, 1996
Goldman Sachs International,
Lehman Brothers International (Europe),
Donaldson, Lufkin & Jenrette Securities
Corporation
Furman Selz Incorporated
Merrill Lynch International Limited
Smith Barney Inc.
As Representatives for each of
the several International Underwriters
named in Schedule 1 hereto,
c/o Goldman Sachs International,
Peterborough Court
133 Fleet Street
London, EC4A 2BB
England
Ladies and Gentlemen:
The stockholders of AutoZone, Inc., a Nevada corporation (the
"Company"), named in Schedule 2 hereto (the "Selling Stockholders") propose to
sell to the International Underwriters named in Schedule 1 hereto (the
"International Underwriters") an aggregate of 4,400,000 shares (the "Firm
Shares") of the Company's Common Stock, par value $0.01 per share (the "Common
Stock"). In addition, the Selling Stockholders propose to grant to the
International Underwriters an option to purchase up to an additional 660,000
shares of Common Stock on the terms and for the purposes set forth in Section 3
hereof (the "Option Shares"). The Firm Shares and the Option Shares, if
purchased, are hereinafter collectively called the "Shares". This is to confirm
the agreement concerning the purchase of the Shares from the Selling
Stockholders by the International Underwriters.
It is understood and agreed to by all parties that the Company and the
Selling Stockholders are concurrently entering into an agreement (the "U.S.
Underwriting Agreement") providing for the sale by the Selling Stockholders of
up to a total of 20,240,000 shares of Common Stock (the "U.S. Shares"),
including the overallotment option thereunder, through arrangements with certain
underwriters in the United States (the "U.S. Underwriters"), for whom Goldman,
Sachs & Co., Lehman Brothers Inc., Donaldson, Lufkin & Jenrette Securities
Corporation, Furman Selz Incorporated, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, and Smith Barney Inc. are acting as
<PAGE>
representatives. The U.S. Underwriters and the International Underwriters are
simultaneously entering into an Agreement between U.S. and International
Underwriting Syndicates (the "Agreement between Syndicates") which provides,
among other things, for the transfer of shares of Common Stock between the two
syndicates. Two forms of prospectus are to be used in connection with the
offering and sale of shares of Common Stock contemplated by the foregoing, one
relating to the Shares hereunder and the other relating to the U.S. Shares. The
latter form of prospectus will be identical to the former except for certain
substitute pages as included in the registration statement and amendments
thereto as mentioned below. Except as used in Sections 3, 4, 5, 11 and 13
herein, and except as the context may otherwise require, references hereinafter
to the Shares shall include all the shares of Common Stock which may be sold
pursuant to either this Agreement or the U.S. Underwriting Agreement, and
references herein to any prospectus whether in preliminary or final form, and
whether as amended or supplemented, shall include both the U.S. and the
international versions thereof.
1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The
Company represents and warrants (at and as of the date hereof and at and as of
each Delivery Date (as defined in Section 5 hereof)) to, and agrees with, each
of the International Underwriters that:
(a) A registration statement on Form S-3 (File No. ________),
including a pre-effective amendment thereto, in respect of the Firm Shares
and Option Shares has been filed with the Securities and Exchange Commission
(the "Commission"); such registration statement in the form heretofore
delivered to you, as representatives for each of the several International
Underwriters (the "Representatives"), has been declared effective by the
Commission in such form; no other document with respect to such registration
statement (or document incorporated by reference therein) has heretofore
been filed with the Commission; and no stop order suspending the
effectiveness of such registration statement has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission (any preliminary prospectus included in such registration
statement or filed with the Commission pursuant to Rule 424(a) of the rules
and regulations of the Commission under the Securities Act of 1933, as
amended (the "Act"), being hereinafter called a "Preliminary Prospectus");
the various parts of such registration statement, including all exhibits
thereto and including (i) the information contained in the form of final
prospectus filed with the Commission pursuant to Rule 424(b) under the Act
in accordance with Section 6(a) hereof and deemed by virtue of Rule 430A
under the Act to be part of the registration statement at the time it was
declared effective and (ii) the documents incorporated by reference in the
prospectus contained in the registration statement at the time such part of
the registration statement became effective, each as amended at the time
such part of the registration statement became effective, being hereinafter
called the "Registration Statement"; such final prospectus, in the form
filed pursuant to Rule 424(b) under the Act, being hereinafter called the
"Prospectus"; any reference herein to any Preliminary Prospectus or
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
Act, as of the date of such Preliminary Prospectus or Prospectus, as the
case may be; any reference to any amendment or supplement to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include any
document filed after the date of such Preliminary Prospectus or Prospectus,
as the case may be, under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and incorporated by reference in such Preliminary
Prospectus or Prospectus, as the case may be; and any reference to any
amendment to the Registration Statement shall be deemed to refer to and
include any annual report of the Company filed pursuant to Section 13(a) or
15(d) of the
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Exchange Act after the effective date of the Registration Statement that is
incorporated by reference in the Registration Statement);
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations of the
Commission thereunder, and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; PROVIDED, HOWEVER, that this
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Company by an International Underwriter through the
Representatives or by a Selling Stockholder expressly for use therein;
(c) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the
Act and the rules and regulations of the Commission thereunder and do not
and will not, as of the applicable effective date as to the Registration
Statement and any amendment thereto and as of the applicable filing date as
to the Prospectus and any amendment or supplement thereto, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
PROVIDED, HOWEVER, that this representation and warranty shall not apply to
any statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an International
Underwriter through the Representatives or by a Selling Stockholder
expressly for use therein;
(d) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and any
further documents so filed and incorporated by reference in the Prospectus
or any further amendment or supplement thereto, when such documents become
effective or are filed with the Commission, as the case may be, will conform
in all material respects to the requirements of the Act or the Exchange Act,
as applicable, and the rules and regulations of the Commission thereunder
and will not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading;
(e) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus; and, since such date, there has not been
any change in the capital stock (except for any increase due to the exercise
of stock options which were outstanding as of May 4, 1996 or as a result of
issuances of shares of Common Stock pursuant to the Company's Stock Purchase
Plan) or any increase in excess of $3 million in the consolidated long-term
debt of the Company and its subsidiaries
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or any material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, business,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries taken as a whole, otherwise
than as set forth or contemplated in the Prospectus;
(f) The Company and its subsidiaries have good and marketable title in
fee simple to all real property and good and marketable title to all
personal property owned by them, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus or
such as would not and do not have, either individually or in the aggregate,
any material adverse effect on the general affairs, business, management,
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries taken as a whole; and any real property and
buildings held under lease by the Company and its subsidiaries are held by
them under valid, subsisting and enforceable leases with such exceptions as
would not and do not have, either individually or in the aggregate, any
material adverse effect on the general affairs, business, management,
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries taken as a whole;
(g) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Nevada, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectus, and has been duly qualified as
a foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction; each of
the Company's subsidiaries that is a corporation has been duly incorporated
and is validly existing as a corporation in good standing under the laws of
the jurisdiction of incorporation, with power and authority (corporate and
other) to own its properties and conduct its business as described in the
Prospectus, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, or is subject to no material
liability or disability by reason of the failure to be so qualified in any
such jurisdiction; the Company's subsidiary that is a limited partnership
has been duly organized and is validly existing as a limited partnership in
good standing under the laws of the State of Delaware with power and
authority (partnership and other) to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as a
foreign limited partnership for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction; and all
of the outstanding shares of capital stock of, or equity interests in, each
subsidiary of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and are owned by the Company, directly or
indirectly, free and clear of all liens, encumbrances, equities or claims;
(h) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
(including the Shares to be sold by the Selling Stockholders to the
International Underwriters hereunder and to the U.S. Underwriters under the
U.S. Underwriting Agreement) have been duly and validly authorized and
issued, are
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fully paid and non-assessable and conform to the description of the Common
Stock contained in the Prospectus;
(i) The execution, delivery and performance by the Company of this
Agreement and the U.S. Underwriting Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement, stock option or other employee benefit plan, or other agreement
or instrument to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries is bound or to which any of
the property or assets of the Company or any of its subsidiaries is subject,
nor will such action result in any violation of the provisions of the
Articles of Incorporation or By-laws of the Company or any of its
subsidiaries or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their respective properties; no consent,
approval, authorization, order, registration or qualification of or with any
such court or governmental agency or body is required for the execution,
delivery and performance by the Company of this Agreement and the U.S.
Underwriting Agreement and the consummation of the transactions contemplated
hereby and thereby, except the registration under the Act of the Shares and
such consents, approvals, authorizations, registrations or qualifications as
may be required under state securities or Blue Sky laws in connection with
the purchase and distribution of the Shares by the International
Underwriters and the U.S. Underwriters; and this Agreement and the U.S.
Underwriting Agreement have been duly authorized, executed and delivered by
the Company;
(j) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is subject which, if determined adversely to the Company or
any of its subsidiaries, would, either individually or in the aggregate,
have a material adverse effect on the general affairs, business, management,
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries taken as a whole; and, to the best of the
Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(k) There are no contracts or other documents of a character required
to be described in the Prospectus or filed as exhibits to the Registration
Statement by the Act or by the rules and regulations of the Commission
thereunder which have not been described in the Prospectus or filed as
exhibits to the Registration Statement; and
(l) Ernst & Young, who have certified certain financial statements of
the Company, are independent public accountants as required by the Act and
the rules and regulations of the Commission thereunder.
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE SELLING
STOCKHOLDERS. Each Selling Stockholder severally represents and warrants (at
and as of the date hereof and at and as of each Delivery Date) to, and agrees
with, each of the International Underwriters that:
(a) Such Selling Stockholder holds the Shares owned on the date hereof
and being sold by such Selling Stockholder hereunder and under the U.S.
Underwriting Agreement, free and clear of all liens, encumbrances, equities
or claims; immediately prior to each Delivery Date such
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<PAGE>
Selling Stockholder will hold the Shares being sold by such Selling
Stockholder hereunder and under the U.S. Underwriting Agreement on such
date, free and clear of all liens, encumbrances, equities or claims; and
upon delivery of such Shares and payment therefor pursuant hereto and the
U.S. Underwriting Agreement, the International Underwriters and U.S.
Underwriters will hold such Shares, free and clear of all liens,
encumbrances, equities or claims, assuming that such International
Underwriters and U.S. Underwriters purchase such Shares in good faith and
without notice of any such lien, encumbrance, equity or claim or other
adverse claim within the meaning of the Uniform Commercial Code as in effect
in the State of New York;
(b) Such Selling Stockholder has full right, power and authority to
enter into each of this Agreement and the U.S. Underwriting Agreement; the
execution, delivery and performance of each of this Agreement and the U.S.
Underwriting Agreement and the consummation by such Selling Stockholder of
the transactions contemplated hereby and thereby will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement, stock option or other employee benefit plan, or other agreement
or instrument to which such Selling Stockholder is a party or by which such
Selling Stockholder is bound or to which any of the property or assets of
such Selling Stockholder is subject, nor will such action result in any
violation of the provisions of the charter, bylaws, deed of trust,
partnership agreement or other constituent documents, if any, relating to
such Selling Stockholder or any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over such
Selling Stockholder or any properties of such Selling Stockholder; and no
consent, approval, authorization, order, registration or qualification of or
with any such court or governmental agency or body is required for the
execution, delivery and performance by such Selling Stockholder of each of
this Agreement or the U.S. Underwriting Agreement and the consummation of
the transactions contemplated hereby and thereby, except the registration
under the Act of the Shares and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of the Shares
by the International Underwriters and the U.S. Underwriters; and this
Agreement and the U.S. Underwriting Agreement have been duly authorized,
executed and delivered by the Selling Stockholders;
(c) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto are made in reliance upon and in conformity
with information furnished in writing to the Company by such Selling
Stockholder expressly for use therein, the Registration Statement and such
Preliminary Prospectus do not, and the Prospectus and any amendments or
supplements thereto will not, as of the applicable effective date or as of
the applicable filing date, as the case may be, contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and
(d) Such Selling Stockholder has not taken and will not take, directly
or indirectly, any action which is designed to or which has constituted or
which might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares.
3. PURCHASE OF SHARES. On the basis of the representations and
warranties contained in, and subject to the terms and conditions of, this
Agreement, each Selling Stockholder hereby,
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<PAGE>
severally and not jointly, agrees to sell the number of Firm Shares set forth
opposite such Selling Stockholder's name in Schedule 2 hereto to the several
International Underwriters and each of the International Underwriters, severally
and not jointly, agrees to purchase the number of Firm Shares set forth opposite
that International Underwriter's name in Schedule 1 hereto. Each International
Underwriter shall be obligated to purchase from each Selling Stockholder that
number of Firm Shares which represents the same proportion of the number of Firm
Shares to be sold by each Selling Stockholder as the number of Firm Shares set
forth opposite the name of such International Underwriter in Schedule 1
represents of the total number of Firm Shares to be purchased by all of the
International Underwriters pursuant to this Agreement. The respective purchase
obligations of the International Underwriters with respect to the Firm Shares
shall be rounded among the International Underwriters to avoid fractional
shares, as the Representatives may determine.
In addition, the Selling Stockholders grant to the International
Underwriters an option to purchase an aggregate of up to 660,000 shares of
Option Shares as set forth in Schedule 2 hereto. Such option is granted solely
for the purpose of covering over-allotments in the sale of Firm Shares and is
exercisable as provided in Section 5 hereof. Option Shares shall be purchased
severally for the account of the International Underwriters in proportion to the
number of Firm Shares set forth opposite the name of such International
Underwriters in Schedule 1 hereto. The respective purchase obligations of each
International Underwriter with respect to the Option Shares shall be adjusted by
the Representatives so that no International Underwriter shall be obligated to
purchase Option Shares other than in 100 share amounts.
The price of both the Firm Shares and any Option Shares shall be $_____
per share.
The Selling Stockholders shall not be obligated to deliver any of the
Shares to be delivered on the First Delivery Date or the Second Delivery Date
(as hereinafter defined), as the case may be, except upon payment for all the
Shares to be purchased on such Delivery Date as hereinafter provided.
4. OFFERING OF SHARES BY THE INTERNATIONAL UNDERWRITERS. Upon the
authorization by the Representatives of the release of the Firm Shares, the
several International Underwriters propose to offer the Firm Shares for sale
upon the terms and conditions set forth in the Prospectus.
5. DELIVERY OF AND PAYMENT FOR THE SHARES. Delivery of and payment
for the Firm Shares shall be made in New York, New York, at 10:00 A.M., New York
City time, on the fourth full business day following the date of this Agreement
or at such other date or place as shall be determined by agreement between the
Representatives and the Selling Stockholders. This date and time are sometimes
referred to as the "First Delivery Date". On the First Delivery Date, each
Selling Stockholder shall deliver or cause to be delivered certificates
representing the Firm Shares to the Representatives for the account of each
International Underwriter against payment to or upon the order of such Selling
Stockholder of the purchase price for the Firm Shares by certified or official
bank check or checks payable in New York Clearing House (next-day) funds. Time
shall be of the essence, and delivery at the time and place specified pursuant
to this Agreement is a further condition of the obligation of each International
Underwriter hereunder. Upon delivery, the Firm Shares shall be registered in
such names and in such denominations as the Representatives shall request in
writing not less than two full business days prior to the First Delivery Date.
For the purpose of expediting the checking and packaging of the certificates for
the Firm Shares, the Selling Stockholders shall make the certificates
representing the Firm Shares available for inspection by the Representatives in
New
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<PAGE>
York, New York, not later than 2:00 P.M., New York City time, on the business
day prior to the First Delivery Date.
At any time on or before the thirtieth day after the date of this
Agreement, the option granted in Section 3 hereof may be exercised by written
notice being given to the Selling Stockholders by the Representatives. Such
notice shall set forth the aggregate number of Option Shares as to which the
option is being exercised, the names in which the Option Shares are to be
registered, the denominations in which the Option Shares are to be issued and
the date and time, as determined by the Representatives, when the Option Shares
are to be delivered; PROVIDED, HOWEVER, that this date and time shall not be
earlier than the First Delivery Date nor earlier than the second business day
after the date on which the option shall have been exercised nor later than the
third business day after the date on which the option shall have been exercised.
The date and time the Option Shares are delivered are sometimes referred to as
the "Second Delivery Date", and the First Delivery Date and the Second Delivery
Date are sometimes each referred to as a "Delivery Date".
Delivery of and payment for the Option Shares shall be made in New
York, New York (or at such other place as shall be determined by agreement
between the Representatives and the Selling Stockholders) at 10:00 A.M., New
York City time, on the Second Delivery Date. On the Second Delivery Date, each
Selling Stockholder shall deliver or cause to be delivered the certificates
representing the Option Shares to the Representatives for the account of each
International Underwriter against payment to or upon the order of such Selling
Stockholder of the purchase price for the Option Shares by certified or official
bank check or checks payable in New York Clearing House (next-day) funds. Time
shall be of the essence, and delivery at the time and place specified pursuant
to this Agreement is a further condition of the obligation of each International
Underwriter hereunder. Upon delivery, the Option Shares shall be registered in
such names and in such denominations as the Representatives shall request in the
aforesaid written notice. For the purpose of expediting the checking and
packaging of the certificates for the Option Shares, the Selling Stockholders
shall make the certificates representing the Option Shares available for
inspection by the Representatives in New York, New York, not later than 2:00
P.M., New York City time, on the business day prior to the Second Delivery Date.
6. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under
the Act not later than the Commission's close of business on the second
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under
the Act; to file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Representatives, be required
by the Act or requested by the Commission; to make no further amendment or
any supplement to the Registration Statement or Prospectus prior to the last
Delivery Date which shall be disapproved by the Representatives promptly
after reasonable notice thereof; to advise the Representatives promptly
after it receives notice thereof, of the time when the Registration
Statement, or any amendment thereto, has been filed or becomes effective or
any supplement to the Prospectus or any amended Prospectus has been filed
and to furnish the Representatives with copies thereof; to file promptly all
reports and any definitive proxy or information statements required to be
filed by the Company with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of the
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Prospectus and for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Shares; to advise the
Representatives promptly after it receives notice thereof, of the issuance
by the Commission of any stop order or of any order preventing or suspending
the use of any Preliminary Prospectus or prospectus, of the suspension of
the qualification of the Shares for offering or sale in any jurisdiction, of
the initiation or threatening of any proceeding for any such purpose, or of
any request by the Commission for the amending or supplementing of the
Registration Statement or the Prospectus or for additional information; and,
in the event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus or suspending
any such qualification, to use promptly its best efforts to obtain its
withdrawal;
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Shares for offering
and sale under the securities laws of such jurisdictions as the
Representatives may request and to continue such qualifications in effect in
such jurisdictions for as long as may be necessary to complete the
distribution of the Shares; PROVIDED that in connection therewith the
Company shall not be required to qualify as a foreign corporation or to file
a general consent to service of process in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the business day next
succeeding the date of this Agreement and from time to time to furnish
promptly to each of the Representatives and to counsel for the International
Underwriters a signed copy of the Registration Statement as originally filed
with the Commission, and each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith; prior to 10:00 a.m.,
New York City time, on the business day next succeeding the date of this
Agreement and from time to time to deliver promptly to the Representatives
in New York City such number of the following documents as the
Representatives shall reasonably request: (i) conformed copies of the
Registration Statement as originally filed with the Commission and each
amendment thereto (in each case excluding exhibits other than this Agreement
and the computation of per share earnings), (ii) each Preliminary
Prospectus, the Prospectus and any amended or supplemented Prospectus and
(iii) any document incorporated by reference in the Prospectus (excluding
exhibits thereto); and, if the delivery of a prospectus is required at any
time prior to the expiration of nine months after the time of issue of the
Prospectus in connection with the offering or sale of the Shares and if at
such time any event shall have occurred 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 in order 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 for any
other reason it shall be necessary during such period to amend or supplement
the Prospectus or to file under the Exchange Act any document incorporated
by reference in the Prospectus in order to comply with the Act or the
Exchange Act, to notify the Representatives and upon the Representatives'
request to file such document and to prepare and furnish without charge to
each International Underwriter and to any dealer in securities as many
copies as the Representatives may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance, and in case any
International Underwriter is required to deliver a prospectus in connection
with sales of any of the Shares at any time nine months or more after the
time of issue of the Prospectus, upon the Representatives' request but at
the expense of such International Underwriter, to prepare and deliver to
such International Underwriter as many
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copies as the Representatives may request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its security holders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earning statement of the Company (which need not be
audited) complying with Section 11(a) of the Act and the rules and
regulations of the Commission thereunder (including, at the option of the
Company, Rule 158 under the Act);
(e) During the period beginning from the date hereof and continuing to
and including the date 60 days after the date of the Prospectus not,
directly or indirectly, to offer, sell, contract to sell or otherwise
transfer or dispose of any capital stock of the Company or securities
convertible or exchangeable or exercisable for capital stock of the Company
(other than (A) Shares to be sold to the International Underwriters and the
U.S. Underwriters and (B) Common Stock issuable pursuant to employee stock
option plans or the employee stock purchase plan, in each case as in effect
on the date hereof);
(f) For so long as any reports or proxy or information statements are
required to be filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), to furnish to its stockholders (i) as soon as
practicable after the end of each fiscal year an annual report (including a
balance sheet and statements of income, stockholders' equity and cash flow
of the Company certified by independent public accountants) and (ii) as soon
as practicable after the end of each of the first three quarters of each
fiscal year, summary financial information of the Company for such quarter,
in each case, complying with the requirements of the Act and the Exchange
Act;
(g) During a period of three years from the effective date of the
Registration Statement, to furnish to the Representatives copies of all
reports or other communications (financial or other) furnished to
stockholders, and deliver to the Representatives as soon as they are
available, copies of any reports and financial statements furnished to or
filed with the Commission or any national securities exchange on which any
class of securities of the Company is listed; and
(h) To use its best efforts to comply with the rules and regulations
of the New York Stock Exchange with respect to the offering of the Shares.
7. FURTHER AGREEMENTS OF THE SELLING STOCKHOLDERS. Each Selling
Stockholder agrees:
(a) During the period beginning from the date hereof and continuing to
and including the date 60 days after the date of the Prospectus not,
directly or indirectly, to offer, sell, contract to sell or otherwise
transfer or dispose of any capital stock of the Company or securities
convertible or exchangeable or exercisable for capital stock of the Company
(other than Shares to be sold to the International Underwriters and the U.S.
Underwriters), without the prior written consent of the Representatives;
(b) That the obligations of such Selling Stockholder hereunder shall
not be terminated by any act of such Selling Stockholder, by operation of
law or, in the case of an individual, by
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the death or incapacity of such individual Selling Stockholder or, in the
case of a partnership, by the termination of such partnership, or, in the
case of a corporation, the dissolution or liquidation of such corporation,
or, in the case of a trust, by the death or incapacity of any executor or
trustee or the termination of such trust or the occurrence of any other
event;
(c) To deliver to the Representatives prior to the First Delivery Date
a properly completed and executed United States Treasury Department Form W-9
(or other applicable form or statement specified by Treasury Department
regulations in lieu thereof); and
(d) To advise the Representatives promptly of any material adverse
change, or any development involving a prospective material adverse change,
in or affecting the accuracy of any of its or his representations or
warranties or its or his inability to perform the agreements and indemnities
herein at any time prior to payment being made to such Selling Stockholder
on either Delivery Date and take such steps as may be reasonably requested
by the Representatives to remedy any such material adverse change or
inability.
8. EXPENSES. The Selling Stockholders, jointly and severally,
covenant and agree with the several International Underwriters and the U.S.
Underwriters that the Selling Stockholders will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of the Company's counsel
and accountants in connection with the registration of the Shares under the Act
and all other expenses in connection with the preparation, printing and filing
of the Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the International Underwriters and dealers; (ii) the cost of
delivering, printing or producing any Agreement among Underwriters (U.S.
Version), Agreement among Underwriters (International Version), this Agreement,
the U.S. Underwriting Agreement, the Agreement between U.S. and International
Underwriting Syndicates, any Selling Agreement, the Blue Sky Memorandum and any
other documents in connection with the offering, purchase, sale and delivery of
the Shares; (iii) all expenses in connection with the qualification of the
Shares for offering and sale under state securities laws as provided in Section
6(b) hereof, including the fees and disbursements of counsel for the
International Underwriters in connection with such qualification and in
connection with the Blue Sky Memorandum; (iv) the filing fees incident to
securing any required review by the National Association of Securities Dealers,
Inc. of the terms of the sale of the Shares; (v) the cost of preparing stock
certificates; (vi) the cost and charges of any transfer agent or registrar;
(vii) any stock transfer taxes payable in connection with sales of Shares to the
International Underwriters and the U.S. Underwriters; and (viii) all other costs
and expenses incident to the performance of the Company's and the Selling
Stockholders' obligations hereunder which are not otherwise specifically
provided for in this Section 8. It is understood, however, that, except as
provided in this Section 8, Section 10 and Section 13 hereof, the International
Underwriters will pay all of their own costs and expenses, including the fees of
their counsel, stock transfer taxes on resale of any of the Shares by them, and
any advertising expenses in connection with any offers they may make.
9. CONDITIONS OF INTERNATIONAL UNDERWRITERS OBLIGATIONS. The
respective obligations of the International Underwriters hereunder, as to the
Shares to be delivered on each Delivery Date, shall be subject, in their
discretion, to the accuracy, when made and on and as of such Delivery Date, of
all representations and warranties of the Company and each of the Selling
Stockholders contained herein, to the performance by the Company and each of the
Selling Stockholders of all of their respective obligations hereunder, and to
the following additional conditions:
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(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing
by the rules and regulations of the Commission under the Act and in
accordance with Section 6(a) hereof; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on
the part of the Commission shall have been complied with to the
Representatives' reasonable satisfaction;
(b) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the International
Underwriting Agreement, the Registration Statement and the Prospectus, and
all other legal matters relating to this Agreement and the U.S. Underwriting
Agreement and the transactions contemplated hereby and thereby, shall be
reasonably satisfactory in all material respects to Simpson Thacher &
Bartlett, counsel for the International Underwriters and the U.S.
Underwriters, and the Company and the Selling Stockholders shall have
furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters;
(c) Schreck, Jones, Bernhard, Woloson & Godfrey, Nevada counsel for
the Company, shall have furnished to the Representatives their written
opinion, addressed to the International Underwriters and the U.S.
Underwriters dated such Delivery Date, in form and substance satisfactory to
the Representatives, to the effect that:
(i) The Company has been duly incorporated and is validly existing
as a corporation under the laws of the State of Nevada, with corporate
power and authority to own its properties and conduct its business as
described in the Prospectus;
(ii) The Company has authorized capital stock as set forth in the
Prospectus, and all of the issued shares of capital stock of the
Company (including the Shares being delivered on such Delivery Date)
have been duly and validly authorized and issued and are fully paid and
nonassessable; and the Shares conform to the description of the Common
Stock contained in the Prospectus;
(iii) This Agreement and the U.S. Underwriting Agreement have been
duly authorized, executed and delivered by the Company;
(iv) The execution, delivery and performance by the Company of this
Agreement and the U.S. Underwriting Agreement and the consummation of
the transactions herein and therein contemplated will not result in any
violation of the provisions of the Articles of Incorporation or By-laws
of the Company or any statute or of any order, rule or regulation known
to such counsel, which in its experience is normally applicable to
transactions of the type contemplated by this Agreement and the U.S.
Underwriting Agreement, of any court or governmental agency or body
having jurisdiction over the Company, any of its subsidiaries or any of
their respective properties; and
(v) No consent, approval, authorization, order, registration or
qualification of or with any state court or governmental agency or body
is required for the consummation by the Company of the transactions
contemplated by this Agreement and the U.S. Underwriting Agreement,
except for such consents, approvals, authorizations, registrations or
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qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Shares by
the International Underwriters.
In rendering such opinion, such counsel may state that such opinion is
limited to matters governed by Nevada law.
(d) Latham & Watkins, counsel for the Company, shall have furnished to
the Representatives their written opinion, addressed to the International
Underwriters and the U.S. Underwriters dated such Delivery Date, in form and
substance satisfactory to the Representatives, to the effect that:
(i) The Company has been duly incorporated and is validly existing
as a corporation under the laws of the State of Nevada, with corporate
power and authority to own its properties and conduct its business as
described in the Prospectus;
(ii) All of the issued shares of capital stock of the Company
(including the Shares being delivered on such Delivery Date) have been
duly and validly authorized and issued and are fully paid and non-
assessable;
(iii) This Agreement and the U.S. Underwriting Agreement have been
duly authorized, executed and delivered by the Company and, assuming
due authorization, execution and delivery by the International
Underwriters and the U.S. Underwriters, constitute valid and legally
binding agreements of the Company enforceable against the Company in
accordance with their respective terms, except as may be limited (A) by
the effect of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting the rights and remedies of creditors;
(B) by the effect of general principles of equity, whether enforcement
is considered in a proceeding in equity or at law, and the discretion
of the court before which any proceeding therefor may be brought; (C)
by an implied covenant of good faith and fair dealing; and (D) by
considerations of public policy;
(iv) The execution, delivery and performance by the Company of this
Agreement and the U.S. Underwriting Agreement and the consummation of
the transactions herein and therein contemplated will not conflict with
or result in a material breach or violation of any of the terms or
provisions of, or constitute a default under, any agreement or
instrument, or stock option or other employee benefit plan listed or
referred to in Items 4 or 10 of the exhibits to the Company's Annual
Report on Form 10-K for the fiscal year ended August 26, 1995, nor will
such action result in any violation of any statute or of any order,
rule or regulation known to such counsel, which in its experience is
normally applicable to transactions of the type contemplated by this
Agreement and the U.S. Underwriting Agreement, of any United States
federal or state court or governmental agency or body having
jurisdiction over the Company, any of its subsidiaries or any of their
respective properties;
(v) No consent, approval, authorization, order, registration or
qualification of or with any United States federal or state court or
governmental agency or body is required for the consummation by the
Company of the transactions contemplated by this Agreement and the U.S.
Underwriting Agreement, except the registration under the Act of the
Shares,
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<PAGE>
and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Shares by
the International Underwriters;
(vi) The documents incorporated by reference in the Prospectus or
any further amendment or supplement thereto made by the Company prior
to such Delivery Date (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion),
when they became effective or were filed with the Commission, as the
case may be, complied as to form in all material respect with the
requirements of the Act or the Exchange Act, as applicable and the
rules and regulations of the Commission thereunder; and they have no
reason to believe that any of such documents, when such documents
became effective or were so filed, as the case may be, contained, in
the case of a registration statement which became effective under the
Act, an untrue statement of a material fact, or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or, in the case of other documents
which were filed under the Exchange Act with the Commission, an untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such documents were so
filed, not misleading; and
(vii) The Registration Statement and the Prospectus and any further
amendments and supplements thereto made by the Company prior to such
Delivery Date (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the requirements of the
Act and the rules and regulations of the Commission thereunder.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company, and
representatives of the independent public accountants for the Company, at
which conferences the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although such counsel is
not passing upon, and does not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus (except for the information, to the extent it
comprises matters of law or legal conclusions, contained under the caption
"Description of Capital Stock" and except such counsel shall confirm that
the information contained in the Prospectus under the caption "Certain
United States Tax Consequences to Non-United States Holders" is accurate),
and such counsel has not made any independent check or verification thereof,
on the basis of the foregoing, no facts have come to such counsel's
attention that have led such counsel to believe that (I), as of its
effective date, the Registration Statement or any further amendment thereto
made by the Company prior to such Delivery Date (other than the financial
statements and related schedules and other financial data in the
Registration Statement, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, (II) as of its date, the Prospectus or
any further amendment or supplement thereto made by the Company prior to
such Delivery Date (other than the financial statements and other financial
data in the Prospectus, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, (III)
any
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<PAGE>
document incorporated by reference in the Prospectus or any further
amendment or supplement thereto made by the Company prior to such Delivery
Date (other than the financial statements and related schedules therein, as
to which such counsel need express no opinion), when such document became
effective or was filed with the Commission, as the case may be, contained an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading or (IV) as of such
Delivery Date, either the Registration Statement or the Prospectus
(including, in each case, any document incorporated by reference in the
Prospectus) or any further amendment or supplement thereto made by the
Company prior to such Delivery Date (other than the financial statements and
related schedules and other financial data in the Registration Statement or
the Prospectus, as to which such counsel need express no opinion) contains
an untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and they do not know of any
amendment to the Registration Statement required to be filed or of any
contracts or other documents of a character required to be filed as an
exhibit to the Registration Statement or required to be incorporated by
reference into the Prospectus or required to be described in the
Registration Statement or the Prospectus which are not filed or incorporated
by reference or described as required.
In rendering such opinion, such counsel may (i) state that such opinion
is limited to matters governed by U.S. federal law and New York law and (ii)
rely (to the extent such counsel deems proper and specifies in its opinion
with respect to the opinions set forth in clauses (i), (ii) and (iii)
above), as to matters of Nevada law, upon the opinion of Schreck, Jones,
Bernhard, Woloson & Godfrey referred to in Section 9(c) hereof.
(e) Harry L. Goldsmith, Esq., Vice President of the Company and
counsel for the Company, shall have furnished to the Representatives his
written opinion, addressed to the International Underwriters and the U.S.
Underwriters dated such Delivery Date, in form and substance satisfactory to
the Representatives, to the effect that:
(i) Each of the Company and its subsidiaries has been duly
organized and is validly existing as a corporation or limited
partnership under the laws of the jurisdiction of its organization,
with corporate or partnership, as the case may be, power and authority
to own its properties and conduct its business as described in the
Prospectus;
(ii) Each of the Company and its subsidiaries has been duly
qualified as a foreign corporation or limited partnership, as the case
may be, for the transaction of business and is in good standing under
the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification, or is subject to no material liability or disability by
reason of failure to be so qualified in any such jurisdiction (such
counsel being entitled to rely in respect of the opinion in this clause
upon opinions of local counsel and corporate service agents and in
respect of matters of fact upon certificates of officers of the
Company, provided that such counsel shall state that he believes that
the International Underwriters and the U.S. Underwriters and he are
justified in relying upon such opinions and certificates);
(iii) All of the outstanding shares of capital stock of, or equity
interests in, each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-
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<PAGE>
assessable and are owned, directly or indirectly, by the Company, and,
to the best knowledge of such counsel, are owned free and clear of all
liens, encumbrances, equities or claims;
(iv) To the best of such counsel's knowledge (after reasonable
investigation) and other than as set forth in the Prospectus, there are
no legal or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject which, either
individually or in the aggregate, are reasonably likely to have a
material adverse effect on the general affairs, business, management,
financial position, stockholders' equity or results of operations of
the Company and its subsidiaries; and, to the best of such counsel's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others; and
(v) The execution, delivery and performance by the Company of this
Agreement and the U.S. Underwriting Agreement and the consummation of
the transactions herein and therein contemplated will not conflict with
or result in a material breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement, stock option or other employee benefit
plan, or other material agreement or instrument known to such counsel
to which the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the provisions
of the Articles of Incorporation or By-laws of the Company or any of
its subsidiaries or any statute or of any order, rule or regulation
known to such counsel of any United States federal or state court or
governmental agency or body having jurisdiction over the Company, any
of its subsidiaries or any of their respective properties.
(f) Schreck, Jones, Bernhard, Woloson & Godfrey, Nevada counsel to the
Selling Stockholders, shall have furnished to the Representatives their
written opinion, addressed to the International Underwriters and the U.S.
Underwriters dated such Delivery Date, in form and substance satisfactory to
the Representatives, to the effect that:
(i) The execution, delivery and performance of this Agreement and
the U.S. Underwriting Agreement and the consummation by each Selling
Stockholder of the transactions contemplated hereby and thereby will
not result in any violation of any statute or any order, rule or
regulation known to such counsel, which in its experience is normally
applicable to transactions of the type contemplated by this Agreement
and the U.S. Underwriting Agreement, of any state court or governmental
agency or body having jurisdiction over such Selling Stockholder or the
property of such Selling Stockholder; and
(ii) No consent, approval, authorization, order, registration or
qualification of or with any state court or governmental agency or body
is required for the execution, delivery and performance by each Selling
Stockholder of this Agreement or the U.S. Underwriting Agreement and
the consummation by such Selling Stockholder of the transactions
contemplated hereby and thereby, except for such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws
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<PAGE>
in connection with the purchase and distribution of the Shares by the
International Underwriters.
In rendering such opinion, such counsel may state that such opinion is
limited to matters governed by Nevada law.
(g) Latham & Watkins, counsel to the Selling Stockholders, shall have
furnished to the Representatives their written opinion, addressed to the
International Underwriters and the U.S. Underwriters dated such Delivery
Date, in form and substance satisfactory to the Representatives, to the
effect that:
(i) This Agreement and the U.S. Underwriting Agreement have been
duly authorized, executed and delivered by or on behalf of each Selling
Stockholder;
(ii) Each Selling Stockholder has full right, power and authority
to enter into this Agreement and the U.S. Underwriting Agreement; the
execution, delivery and performance of this Agreement and the U.S.
Underwriting Agreement and the consummation by such Selling Stockholder
of the transactions contemplated hereby and thereby will not result in
any violation of the partnership agreement relating to such Selling
Stockholder or any statute or any order, rule or regulation known to
such counsel, which in its experience is normally applicable to
transactions of the type contemplated by this Agreement and the U.S.
Underwriting Agreement, of any United States federal or state court or
governmental agency or body having jurisdiction over such Selling
Stockholder or the property of such Selling Stockholder;
(iii) No consent, approval, authorization, order, registration or
qualification of or with any such United States federal or state court
or governmental agency or body is required for the execution, delivery
and performance by each Selling Stockholder of this Agreement or the
U.S. Underwriting Agreement and the consummation by such Selling
Stockholder of the transactions contemplated hereby and thereby, except
the registration under the Act of the Shares, and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the International
Underwriters; and
(iv) Upon delivery of the Shares and payment therefor pursuant
hereto, the International Underwriters will hold such Shares, free and
clear of all liens, encumbrances, equities or claims, assuming that
such International Underwriters have purchased such Shares in good
faith and without notice of any such lien, encumbrance, equity or claim
or any other adverse claim within the meaning of the Uniform Commercial
Code as in effect in the State of New York.
In rendering such opinion, such counsel may (i) state that such opinion
is limited to matters governed by U.S. federal law, New York law and the
Delaware Revised Uniform Limited Partnership Act and (ii) rely as to matters
of fact upon the representations and warranties of the Selling Stockholders
contained herein as to the opinions set forth in clauses (i) and (iv) above.
(h) At 10:00 a.m., New York City time, on the effective date of the
Registration Statement and of the most recently filed post-effective
amendment to the Registration Statement, if any,
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and also on each Delivery Date, Ernst & Young shall have furnished to the
Representatives a "comfort" letter or letters, addressed to the
International Underwriters and the U.S. Underwriters and dated the
respective date of delivery thereof, as to such matters as the
Representatives may reasonably request and in form and substance
satisfactory to the Representatives;
(i) (i) The Company and its subsidiaries shall not have sustained since
the date of the latest audited financial statements included or incorporated
by reference in the Prospectus any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Prospectus,
and (ii) since the respective dates as of which information is given in the
Prospectus there shall not have been any change in the capital stock (except
for any increase due to the exercise of stock options which were outstanding
as of May 4, 1996 or as a result of issuances of shares of Common Stock
pursuant to the Company's Stock Purchase Plan) or any increase in excess of
$3 million in the consolidated long-term debt of the Company and its
subsidiaries or any change, or any development involving a prospective
change, in or affecting the general affairs, business, management, financial
position, stockholders' equity or results of operations of the Company and
its subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case
described in Clause (i) or (ii), is in the Representatives' judgment so
material and adverse as to make it impracticable or inadvisable to proceed
with the public offering or the delivery of the Shares being delivered on
such Delivery Date on the terms and in the manner contemplated in the
Prospectus;
(j) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in the Common
Stock on the New York Stock Exchange shall have been suspended; (ii) trading
in securities generally on the New York Stock Exchange shall have been
suspended or minimum prices shall have been established on such Exchange by
the Commission, by such Exchange or by any other regulatory body or
governmental authority having jurisdiction; (iii) a banking moratorium shall
have been declared by Federal or New York State authorities; (iv) the United
States shall have become engaged in hostilities, there shall have been an
escalation in hostilities involving the United States or there shall have
been a declaration of a national emergency or war by the United States, if
the effect of any such event specified in this clause (iv) in the reasonable
judgment of the Representatives makes it impracticable or inadvisable to
proceed with the public offering or the delivery of the Shares being
delivered on such Delivery Date on the terms and in the manner contemplated
in the Prospectus; or (v) there shall have occurred such a material adverse
change in general economic, political or financial conditions (or the effect
of international conditions on the financial markets in the United States
shall be such) which, in the reasonable judgment of the Representatives,
would materially and adversely affect the financial markets or the market
for the Shares;
(k) The Company shall have furnished or caused to be furnished to the
Representatives on such Delivery Date certificates of officers of the
Company satisfactory to the Representatives as to the accuracy of the
representations and warranties of the Company herein at and as of such
Delivery Date, as to the performance by the Company of all of its
obligations hereunder to be performed at or prior to such Delivery Date, as
to the matters set forth in Sections 9(a) and 9(i) hereof and as to such
other matters as the Representatives may reasonably request;
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(l) Each Selling Stockholder shall have furnished to the
Representatives on such Delivery Date a certificate as to the accuracy of
the representations and warranties of such Selling Stockholder contained
herein at and as of such Delivery Date, as to the performance by such
Selling Stockholder of all of its or his obligations hereunder to be
performed by such Selling Stockholder at or prior to such Delivery Date and
as to such other matters as the Representatives may reasonably request;
(m) The Company shall have complied with the provisions of Section
6(c) hereof with respect to the furnishing of Prospectuses on the business
day next succeeding the date of this Agreement; and
(n) The closing under the U.S. Underwriting Agreement shall have
occurred concurrently with the closing hereunder on the First Delivery Date.
10. INDEMNIFICATION AND CONTRIBUTION. (a) The Company shall
indemnify and hold harmless each International Underwriter and each person, if
any, who controls any International Underwriter within the meaning of the Act,
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and sales of Shares in
connection herewith), to which that International Underwriter or controlling
person may become subject, under the Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto or (ii) 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 shall reimburse each International
Underwriter and each such controlling person for any legal or other expenses
reasonably incurred by that International Underwriter or controlling person in
connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred;
PROVIDED, HOWEVER, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out of, or
is based upon, any untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or in any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
any International Underwriter through the Representatives expressly for use
therein; and PROVIDED, FURTHER, that as to any Preliminary Prospectus this
indemnity agreement shall not inure to the benefit of any International
Underwriter or any person controlling that International Underwriter on account
of any loss, claim, damage, liability or action arising from the sale of Shares
to any person by that International Underwriter if that International
Underwriter failed to send or give a copy of the Prospectus, as the same may be
amended or supplemented, to that person within the time required by the Act, and
the untrue statement or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact in such Preliminary Prospectus was
corrected in the Prospectus, unless such failure resulted from non-compliance by
the Company with Section 6(c) hereof. For purposes of the last proviso to the
immediately preceding sentence, the term "Prospectus" shall not be deemed to
include the documents incorporated therein by reference, and no Underwriter
shall be obligated to send or give any supplement or amendment to any document
incorporated by reference in any Preliminary Prospectus or the Prospectus to any
person. The foregoing indemnity agreement is in addition to any liability which
the Company may otherwise have to any International Underwriter or to any
controlling person of that International Underwriter. The Company reaffirms its
indemnification of the Selling Stockholders
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pursuant to that certain Registration Rights Agreement entered into by the
Company, the Selling Stockholders and certain other holders of Common Stock,
dated as of February 18, 1987, and as amended to date.
(b) The Selling Stockholders (subject to the limitation on indemnity
contained in the last sentence of this Section 10(b)), severally and not
jointly, shall indemnify and hold harmless each International Underwriter and
each person, if any, who controls any International Underwriter within the
meaning of the Act, from and against any loss, claim, damage or liability, joint
or several, or action in respect thereof (including, but not limited to, any
loss, claim, damage, liability or action relating to purchases and sales of
Shares in connection herewith), to which that International Underwriter or
controlling person may become subject, under the Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based upon,
(i) any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus or in any amendment or supplement thereto or (ii) 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, but in each case
only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
information furnished in writing to the Company by such Selling Stockholder
expressly for use therein, and shall reimburse each International Underwriter
and each such controlling person for any legal or other expenses reasonably
incurred by that International Underwriter or controlling person in connection
with investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred; PROVIDED,
HOWEVER, that as to any Preliminary Prospectus this indemnity agreement shall
not inure to the benefit of any International Underwriter or any person
controlling that International Underwriter on account of any loss, claim,
damage, liability or action arising from the sale of Shares to any person by
that International Underwriter if that International Underwriter failed to send
or give a copy of the Prospectus, as the same may be amended or supplemented, to
that person within the time required by the Act, and the untrue statement or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact in such Preliminary Prospectus was corrected in the
Prospectus, unless such failure resulted from non-compliance by the Company with
Section 6(c) hereof. For purposes of the last proviso to the immediately
preceding sentence, the term "Prospectus" shall not be deemed to include the
documents incorporated therein by reference, and no Underwriter shall be
obligated to send or give any supplement or amendment to any document
incorporated by reference in any Preliminary Prospectus or the Prospectus to any
person other than a person to whom such Underwriter had delivered such
incorporated document or documents in response to a written request therefor.
The foregoing indemnity agreement is in addition to any liability which the
Selling Stockholders may otherwise have to any International Underwriter or any
controlling person of that International Underwriter. The aggregate liability
of any Selling Stockholder to indemnify the International Underwriters and any
controlling persons of the International Underwriters pursuant to the foregoing
indemnity agreement shall not exceed the proceeds received by such Selling
Stockholder from the Shares sold by it pursuant to this Agreement.
(c) Each International Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company, each of its directors, each of its
officers who signed the Registration Statement, each person, if any, who
controls the Company within the meaning of the Act and each Selling Stockholder
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company or any such director, officer or
controlling person or such Selling Stockholder may become subject, under the Act
or otherwise, insofar as such loss, claim,
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damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto or (ii) 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, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information furnished
to the Company by or on behalf of that International Underwriter through the
Representatives expressly for use therein, and shall reimburse the Company, any
such director, officer or controlling person and such Selling Stockholder for
any legal or other expenses reasonably incurred by the Company, any such
director, officer or controlling person or such Selling Stockholder in
connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred.
The foregoing indemnity agreement is in addition to any liability which any
International Underwriter may otherwise have to the Company or any such
director, officer or controlling person.
(d) Promptly after receipt by an indemnified party under this Section
10 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 10, notify the indemnifying party in
writing of the claim or the commencement of that action; PROVIDED, HOWEVER, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 10. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 10 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation; PROVIDED,
HOWEVER, that the Representatives shall have the right to employ counsel to
represent jointly the International Underwriters and their respective
controlling persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the International Underwriters
against the Company or any Selling Stockholder under this Section 10 if, in the
reasonable judgment of the Representatives, it is advisable for the
International Underwriters and controlling persons to be jointly represented by
separate counsel, and in that event the fees and expenses of one such separate
counsel shall be paid by the Company or such Selling Stockholder, as the case
may be. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment of the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
(e) If the indemnification provided for in this Section 10 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 10(a), 10(b) or 10(c) hereof in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein, then
each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company and the Selling Stockholders on the one hand and the
International
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<PAGE>
Underwriters on the other from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law or if
the indemnified party failed to give the notice required under Section 10(d)
hereof, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company and the Selling Stockholders on the one hand and the International
Underwriters on the other with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. The relative benefits
received by the Company and the Selling Stockholders on the one hand and the
International Underwriters on the other with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Shares purchased under this Agreement (before deducting expenses)
received by each of the Selling Stockholders bear to the total underwriting
discounts and commissions received by the International Underwriters with
respect to the Shares purchased under this Agreement, in each case as set forth
in the table on the cover page of the Prospectus. The relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company, the Selling Stockholders or the
International Underwriters, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, the Selling Stockholders and the
International Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section 10(e) were to be determined by pro rata
allocation (even if the International Underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 10(e)
shall be deemed to include, for purposes of this Section 10(e), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 10(e), no International Underwriter shall be required
to contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by it and distributed to the public was offered to
the public exceeds the amount of any damages which such International
Underwriter has otherwise paid or become liable to pay by reason of any untrue
or alleged untrue statement or omission or alleged omission, and no Selling
Stockholder shall be required to contribute any amount in excess of the amount
by which the proceeds received by such Selling Stockholder from the Shares sold
by it pursuant to this Agreement exceeds the amount of any damages which such
Selling Stockholder has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The International Underwriters' obligations
to contribute as provided in this Section 10(e) are several in proportion to
their respective underwriting obligations and not joint.
(f) Each Selling Stockholder severally confirms, and each of the
International Underwriters agrees that the information (other than the
percentage of shares owned) pertaining to each Selling Stockholder under the
caption "Principal and Selling Stockholders" in the Prospectus constitutes the
only information furnished in writing to the Company by such Selling Stockholder
expressly for use in the Registration Statement and the Prospectus.
(g) The agreements contained in this Section 10 and the
representations, warranties and agreements of the Company in Sections 1, 6 and 8
hereof and of the Selling Stockholders in Sections 2, 7, 8 and 13 hereof shall
survive the delivery of the Shares and shall remain in full force and effect,
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<PAGE>
regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any indemnified party.
11. DEFAULTING INTERNATIONAL UNDERWRITERS. If, on the First Delivery
Date or the Second Delivery Date, as the case may be, any International
Underwriter defaults in the performance of its obligations under this Agreement,
the remaining non-defaulting International Underwriters shall be obligated to
purchase the Shares which the defaulting International Underwriter agreed but
failed to purchase on such date in the respective proportions which the number
of Firm Shares set forth opposite the name of each remaining non-defaulting
International Underwriter in Schedule 1 hereto bears to the total number of Firm
Shares set forth opposite the names of all the remaining non-defaulting
International Underwriters in Schedule 1 hereto; PROVIDED, HOWEVER, that the
remaining non-defaulting International Underwriters shall not be obligated to
purchase any of the Shares on such date if the total number of Shares which the
defaulting International Underwriter or International Underwriters agreed but
failed to purchase on such date exceeds 9.09% of the total number of Shares to
be purchased on such date, and any remaining non-defaulting International
Underwriter shall not be obligated to purchase more than 110% of the number of
Shares which it agreed to purchase on such date pursuant to the terms of Section
3 hereof. If the foregoing maximums are exceeded, the remaining non-defaulting
International Underwriters, or those other underwriters satisfactory to the
Representatives, shall have the right, but shall not be obligated, to purchase
(in such proportions as may be agreed upon among them) all the Shares to be
purchased by the International Underwriters on such date. If the foregoing
maximums are exceeded and the remaining International Underwriters or other
underwriters satisfactory to the Representatives do not elect to purchase the
shares which the defaulting International Underwriters agreed but failed to
purchase, this Agreement shall terminate without liability on the part of any
non-defaulting International Underwriter, the Company or any Selling
Stockholder, except that the Company and the Selling Stockholders will continue
to be jointly and severally liable for the payment of expenses to any non-
defaulting International Underwriters as set forth in Section 8 hereof.
Nothing contained herein shall relieve a defaulting International
Underwriter of any liability it may have to the Company or any Selling
Stockholder for damages caused by such International Underwriter's default. If
other underwriters are obligated or agree to purchase the Shares of a defaulting
International Underwriter, either the Representatives or the Selling
Stockholders may postpone the related delivery date for up to seven full
business days in order to effect any changes that, in the opinion of counsel for
the Company or counsel for the International Underwriters, may be necessary in
the Registration Statement, the U.S. Prospectus or in any other document or
arrangement.
12. TERMINATION. The obligations of the International Underwriters
hereunder may be terminated by the Representatives, in their absolute
discretion, by notice given to and received by the Company and the Selling
Stockholders prior to delivery of any payment for the Firm Shares if, prior to
that time, any of the events described in Section 9(i) or 9(j) hereof shall have
occurred.
13. REIMBURSEMENT OF EXPENSES. If (a) any Selling Stockholder shall
fail to tender the Shares for delivery to the International Underwriters for any
reason permitted under this Agreement or (b) the International Underwriters
shall decline to purchase the Shares for any reason permitted under this
Agreement, the Selling Stockholders, jointly and severally, shall, subject to
the next succeeding sentence of this Section 13, reimburse the International
Underwriters for the reasonable fees and expenses of their counsel and for such
other out-of-pocket expenses as shall have been
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<PAGE>
incurred by them in connection with this Agreement and the proposed purchase of
the Shares, and upon demand the Selling Stockholders shall pay the full amount
thereof to the Representatives. If this Agreement is terminated pursuant to
Section 11 hereof by reason of the default of one or more International
Underwriters or if this Agreement is hereof terminated pursuant to Section 12
hereof because of the occurrence of any of the events described in Section 9(i)
hereof or as a result of the failure of any condition set forth in Section 9(j)
hereof, the Selling Stockholders shall not be obligated to reimburse any
International Underwriter on account of those expenses and shall not have any
other liability to any International Underwriter except as provided in Section 8
or 10 hereof.
14. NOTICES. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the International Underwriters, shall be delivered or
sent by mail, telex or facsimile transmission c/o Goldman Sachs
International, Peterborough Court, 133 Fleet Street, London EC4A 2BB,
England, Attention: Registration Department;
(b) if to the Company, shall be delivered or sent by mail, telex
or facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Secretary; and
(c) if to any of the Selling Stockholders, shall be delivered or sent
by mail, telex or facsimile transmission to such Selling Stockholder, care
of KKR Associates, at the address set forth in the Registration Statement
under the caption "Principal and Selling Stockholders";
PROVIDED, HOWEVER, that any notice to an International Underwriter pursuant to
Section 10(d) hereof shall be delivered or sent by mail, telex or facsimile
transmission to such International Underwriter at its address set forth in its
acceptance telex to the Representatives, which address will be supplied to any
other party hereto by the Representatives upon request. Any such statements,
requests, notices or agreements shall take effect at the time of receipt
thereof. The Company and the Selling Stockholders shall be entitled to act and
rely upon any request, consent, notice or agreement given or made by Goldman
Sachs International on behalf of the Representatives, and the Company and the
International Underwriters shall be entitled to act and rely upon any request,
consent, notice or agreement given or made by the Selling Stockholders.
15. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the International Underwriters, the
Company, the Selling Stockholders and their respective personal representatives
and successors. This Agreement and the terms and provisions hereof are for the
sole benefit of only those persons, except that (A) the representations,
warranties, indemnities and agreements of the Company and the Selling
Stockholders contained in this Agreement shall also be deemed to be for the
benefit of the person or persons, if any, who control any International
Underwriter within the meaning of Section 15 of the Act and for the benefit of
each U.S. Underwriter (and controlling persons thereof) and (B) the indemnity
agreement of the International Underwriters contained in Section 10(c) hereof
shall be deemed to be for the benefit of directors of the Company, officers of
the Company who have signed the Registration Statement, the Selling Stockholders
and any person controlling the Company or any Selling Stockholder within the
meaning of Section 15 of the Act. Nothing in this Agreement is intended or
shall be construed to give any person, other than the persons referred to in
this Section 15, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein. No partner of any
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<PAGE>
Selling Stockholder or any successor general partner of any Selling Stockholder
shall have any personal liability for the performance of any Selling
Stockholder's obligations hereunder, and any liability or obligation of any
Selling Stockholder arising hereunder shall be limited to and satisfied only out
of the property of such Selling Stockholder.
16. CERTAIN DEFINITION. For purposes of this Agreement, a "business
day" means any day on which the New York Stock Exchange is open for trading.
17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
18. COUNTERPARTS. This Agreement may be executed by any one or more
of the parties hereto 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 instrument.
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<PAGE>
If the foregoing is in accordance with your understanding, please sign
and return to us six counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the International Underwriters, this letter and such
acceptance hereof shall constitute a binding agreement among each of the
International Underwriters, each of the Selling Stockholders and the Company.
Very truly yours,
Autozone, Inc.
By:
------------------------------------
Title:
THE SELLING STOCKHOLDERS:
Pittco Associates, L.P.
By: KKR Associates,
General Partner
By:
-------------------------------
Title: General Partner
Pittco Associates II, L.P.
By: KKR Associates,
General Partner
By:
-------------------------------
Title: General Partner
KKR Partners II, L.P.
By: KKR Associates,
General Partner
By:
-------------------------------
Title: General Partner
J.R. Hyde, III
-----------------------------------
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<PAGE>
Accepted as of the date hereof:
Goldman Sachs International,
Lehman Brothers International (Europe),
Donaldson, Lufkin & Jenrette Securities
Corporation
Furman Selz Incorporated
Merrill Lynch International Limited
Smith Barney Inc.
By:
-------------------------------------
(Attorney-in-fact)
On behalf of each of the Underwriters
-27-
<PAGE>
SCHEDULE 1
Number of
Underwriter Firm Shares
----------- -----------
Goldman Sachs International. . . . . . . . . . . . . . . ___________
Lehman Brothers International (Europe) . . . . . . . . . ___________
Donaldson, Lufkin & Jenrette Securities Corporation. . . ___________
Furman Selz Incorporated . . . . . . . . . . . . . . . . ___________
Merrill Lynch International Limited . . . . . . . . . . ___________
Smith Barney Inc.. . . . . . . . . . . . . . . . . . . . ___________
Total . . . . . . . . . . . . . . . . . . . . . . .
---------
---------
<PAGE>
SCHEDULE 2
Number of Number of
Name of Selling Stockholder Firm Shares Option Shares
--------------------------- ----------- -------------
Pittco Associates, L.P. __________ __________
Pittco Associates II, L.P. __________ __________
KKR Partners II, L.P. __________ __________
J. R. Hyde, III __________ __________
Total
---------- ----------
---------- ----------
<PAGE>
EXHIBIT 5.1
[SCHRECK, JONES, BERNHARD, WOLOSON & GODFREY LETTERHEAD]
May 20, 1996
AutoZone, Inc.
123 South Front Street
Memphis, Tennessee 38103
Re: AUTOZONE, INC.
REGISTRATION ON FORM S-3
-------------------------------
Ladies and Gentlemen:
This opinion is rendered in connection with the filing by AutoZone, Inc., a
Nevada corporation (the "Company"), of its Registration Statement on Form S-3
(the "Registration Statement) with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"), with
respect to the offer and sale of up to 25,300,000 shares (the "Offering") of the
Company's common stock, par value $.01 (the "Common Stock"), by a certain
stockholders of the Company, both in the United States and in a concurrent
international offering outside the United States, including up to 3,300,000
shares which may be sold upon the exercise of over-allotment options, and any
subsequent registration statement the Company may hereafter file with the
Commission pursuant to Rule 462(b) under the Act to register additional shares
of Common Stock in connection with the Offering (collectively, the "Shares"). We
have acted as special Nevada counsel to the Company in connection with the
preparation of the Registration Statement.
In our capacity as such counsel, we are familiar with the proceedings taken
and to be taken by the Company in connection with the Shares. In addition, we
have made such legal and factual examinations and inquiries, including an
examination of originals or copies certified or otherwise identified to our
satisfaction as being true reproductions of originals, of such documents,
agreements, records and other instruments, and have obtained from officers of
the Company and agents thereof such certificates and other representations and
assurances, as we have deemed necessary or appropriate for the purposes of this
opinion.
Without limiting the generality of the foregoing, in our examination, we
have assumed without independent verification, that (i) each of the parties
thereto has duly and validly executed and delivered each instrument, document,
and agreement to which such party is a signatory, and such party's obligations
set forth therein are its legal, valid, and binding obligations, enforceable in
accordance with their respective terms, (ii) each natural person executing any
such instrument, document, or agreement is legally competent to do so, (iii)
that all documents submitted to us as originals are authentic, the signatures on
all documents that we examined are genuine, and all documents submitted to us as
certified, conformed, photostatic or facsimile copies conform to the original
document, and (iv) all corporate records made available to us by the Company and
all public records reviewed are accurate and complete.
Based upon the foregoing and the proceedings to be taken by the Company as
referred to above, we are of the opinion that the Shares have been duly
authorized and validly issued, and are fully paid and nonassessable.
We are qualified to practice law in the State of Nevada. Our opinion herein
is limited to the effect on the subject transaction of the laws of the State of
Nevada. We express no opinion herein concerning and
<PAGE>
assume no responsibility regarding the applicability to, or the effect thereon,
of the laws of any other jurisdiction and we express no opinion herein
concerning any federal law, including any federal securities law, or any state
securities or blue sky laws.
This opinion is furnished to you in connection with the registration of the
Shares, is solely for your benefit and may not be relied upon, quoted from or
circulated by, nor copies delivered to, any other person or entity without our
prior written consent. We consent to your filing this opinion as an exhibit to
the Registration Statement, to the reference to our firm contained under the
heading "Legal Matters" of the prospectuses included therein, and to the
incorporation by reference of this opinion and consent into a registration
statement filed with the Commission pursuant to Rule 462(b) under the Act
relating to the Offering.
Very truly yours,
SCHRECK, JONES, BERNHARD,
WOLOSON & GODFREY
<PAGE>
EXHIBIT 23.1
Auditors' Consent
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectuses of AutoZone, Inc. for
the registration of 25,300,000 shares of its common stock and to the
incorporation by reference therein of our reports dated September 18, 1995 with
respect to the financial statements of AutoZone, Inc. incorporated by reference
in its Annual Report on Form 10-K as of August 26, 1995 and August 27, 1994 and
for each year in the three year period ended August 26, 1995 and the related
financial statement schedules included therein, filed with the Securities and
Exchange Commission.
ERNST & YOUNG LLP
May 16, 1996
Memphis, Tennessee
