AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 7, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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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/SENIOR 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)
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COPIES TO:
GARY OLSON GLENN M. REITER
EVA HERBST DAVIS SIMPSON THACHER & BARTLETT
LATHAM & WATKINS 425 LEXINGTON AVENUE
633 WEST FIFTH STREET, SUITE 4000 NEW YORK, NEW YORK 10017
LOS ANGELES, CALIFORNIA 90071 (212) 455-2000
(213) 485-1234
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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. / /
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CALCULATION OF REGISTRATION FEE
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
Common Stock, par value $.01 per
share............................. 10,166,000 $30.25 $307,521,500 $93,189
(1) Includes 1,000,000 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.
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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.
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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 8,132,800 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 2,033,200 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.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED NOVEMBER 7, 1997
REGISTRATION STATEMENT NO. 333-04087
RULE 424(b)(4)
9,166,000 SHARES
[LOGO]
AUTOZONE, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
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Of the 9,166,000 shares of Common Stock offered, 7,332,800 shares are being
offered hereby in the United States and 1,833,200 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, a director of the Company. After the
offerings, the KKR Partnerships will not own any shares of Common Stock, and Mr.
Hyde and KKR Associates will own approximately 6.8% and 7.8%, 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 November 6, 1997 was $29 15/16
per share. See "Price Range of Common Stock".
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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INITIAL PUBLIC UNDERWRITING PROCEEDS TO SELLING
OFFERING PRICE DISCOUNT(1) STOCKHOLDERS(2)
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Per Share....................................... $ $ $
Total(3)........................................ $ $ $
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(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 $ payable by the Selling
Stockholders.
(3) The Selling Stockholders have granted the U.S. Underwriters an option for 30
days to purchase up to an additional 800,000 shares of Common Stock at the
initial public offering price per share, less the underwriting discount,
solely to cover over-allotments. Additionally, the Selling Stockholders have
granted the International Underwriters an option for 30 days to purchase up
to an additional 200,000 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".
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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
November , 1997 against payment therefor in immediately available funds.
GOLDMAN, SACHS & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
FURMAN SELZ
LEHMAN BROTHERS
MORGAN STANLEY DEAN WITTER
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THE DATE OF THIS PROSPECTUS IS NOVEMBER , 1997.
[LOGO]
The following map identifies the locations of the Company's 1,728 stores in 32
states at August 30, 1997:
[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:
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
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Total........ 1,298
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In addition, the map identifies the locations of the Company's 6 distribution
centers in Georgia, Tennessee, Illinois, Louisiana, Texas, Arizona and Ohio.]
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CERTAIN PERSONS PARTICIPATING IN THE OFFERINGS MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK, INCLUDING
OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH SECURITIES,
AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE OFFERINGS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
2
AVAILABLE INFORMATION
AutoZone, Inc. ("AutoZone" or the "Company") 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. 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. Electronic
filings made through the Electronic Data Gathering, Analysis and Retrieval
system ("EDGAR") are also publicly available through the Commission's World Wide
Web site (http://www.sec.gov).
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 30, 1997
(the "1997 Form 10-K").
b. Proxy Statement dated October 29, 1997 (the "1997 Proxy Statement").
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
of 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 and may be obtained from the
Commission's World Wide Web site (http://www.sec.gov). 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: Investor Relations, 123 South Front Street, Memphis,
Tennessee 38103, telephone (901) 495-7185.
3
THE COMPANY
AutoZone is the nation's 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 August 30, 1997, operated 1,728 stores
in 32 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 also has a commercial sales program which provides
commercial credit and prompt delivery of parts and other products to local
repair garages, dealers and service stations. This program was offered in 1,265
of the Company's stores at August 30, 1997. 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 $1.2
billion in the Company's 1993 fiscal year to $2.7 billion in the 1997 fiscal
year, and net income has increased from $86.9 million to $195.0 million during
such period. In addition, the number of stores has increased from 678 at the
beginning of the 1993 fiscal year to 1,728 at August 30, 1997, representing an
increase in total store square footage from 4.0 million to 11.6 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 305 net new stores during its 1997 fiscal year and intends to
open 350 net new stores in its 1998 fiscal year 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 6.8% 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, L.P. ("KKR Associates"),
a New York limited partnership and an affiliate of Kohlberg Kravis Roberts &
Co., L.P. ("KKR"), and approximately 8.1% is held by Mr. Hyde, a director 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, the KKR Partnerships will not own any shares of Common
Stock, and Mr. Hyde will own approximately 6.8% of the outstanding shares of
Common Stock assuming exercise in full of the over-allotment options. The term
of two of the KKR Partnerships expired on December 31, 1996, in accordance with
the terms of the limited partnership agreements pursuant to which they were
organized (the "Limited Partnership Agreements"). The terminated KKR
Partnerships continue to be in existence for a winding-up period after the
termination date. In addition to the shares held by the KKR Partnerships, KKR
Associates owns approximately 6.3% of the outstanding shares of Common Stock and
will own approximately 7.8% of the outstanding shares of Common Stock after
giving effect to the offerings and assuming exercise in full of the
over-allotment options. 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
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 30, 1997 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 1997 Form 10-K, which is
incorporated by reference herein. The data provided below should be read in
conjunction with the separate financial statements and notes thereto,
incorporated by reference herein.
FISCAL YEAR ENDED AUGUST(1)
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1993 1994 1995 1996 1997
(52 WEEKS) (52 WEEKS) (52 WEEKS) (53 WEEKS) (52 WEEKS)
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(IN THOUSANDS, EXCEPT FOR PER SHARE DATA
AND SELECTED OPERATING DATA)
INCOME STATEMENT DATA:
Net sales........................ $1,216,793 $ 1,508,029 $ 1,808,131 $ 2,242,633 $ 2,691,440
Cost of sales, including
warehouse and delivery
expenses........................ 731,971 886,068 1,057,033 1,307,638 1,559,296
Operating, selling, general and
administrative expenses......... 344,060 431,219 523,440 666,061 810,793
---------- ----------- ----------- ----------- -----------
Operating profit................. 140,762 190,742 227,658 268,934 321,351
Interest income (expense)--net... 2,473 2,244 623 (1,969) (8,843)
---------- ----------- ----------- ----------- -----------
Income before income taxes....... 143,235 192,986 228,281 266,965 312,508
Income taxes..................... 56,300 76,600 89,500 99,800 117,500
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Net income....................... $ 86,935 $ 116,386 $ 138,781 $ 167,165 $ 195,008
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Net income per share............. $ 0.59 $ 0.78 $ 0.93 $ 1.11 $ 1.28
---------- ----------- ----------- ----------- -----------
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Average shares outstanding,
including common stock
equivalents..................... 147,608 148,726 149,302 151,238 152,535
---------- ----------- ----------- ----------- -----------
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SELECTED OPERATING DATA:
Number of stores (at fiscal year
end)............................ 783 933 1,143 1,423 1,728
Total store square footage (at
fiscal year end) (000s)(2)...... 4,839 5,949 7,480 9,437 11,611
Percentage increase in square
footage(2)...................... 20% 23% 26% 26% 23%
Average net sales per store
(000s)(2)....................... $ 1,666 $ 1,758 $ 1,742 $ 1,702 $ 1,691
Average net sales per store
square foot(2).................. $ 274 $ 280 $ 269 $ 258 $ 253
Percentage increase in comparable
store net sales(3).............. 9% 9% 6% 6% 8%
BALANCE SHEET DATA (AT FISCAL
YEAR END):
Current assets................... $ 378,467 $ 424,402 $ 447,822 $ 613,097 $ 778,802
Current liabilities.............. 286,136 339,029 417,549 612,878 592,452
Working capital.................. 92,331 85,373 30,273 219 186,350
Total assets..................... 696,547 882,102 1,111,778 1,498,397 1,884,017
Total debt....................... 4,458 4,252 13,503 94,400 198,400
Stockholders' equity............. 396,613 528,377 684,710 865,582 1,075,208
- -------------
(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 1996, 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 1996 and fiscal 1997 have been adjusted to
exclude the effect of the fifty-third week in fiscal 1996.
5
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.
HIGH LOW
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1995
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Third Quarter................................................... $27 5/8 $25
Fourth Quarter.................................................. 30 1/8 24 3/4
1996
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First Quarter................................................... 34 24 1/8
Second Quarter.................................................. 37 1/2 32 3/8
Third Quarter................................................... 34 1/2 27
Fourth Quarter.................................................. 30 5/8 22 7/8
1997
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First Quarter................................................... 26 1/8 20 1/8
Second Quarter.................................................. 26 22 1/4
Third Quarter................................................... 31 5/8 23 3/4
Fourth Quarter (through November 6)............................. 32 9/16 28 7/16
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
CAPITALIZATION
The following table sets forth the capitalization of AutoZone at August 30,
1997 (in thousands):
Short-term debt............................................................ $ --
----------
----------
Long-term debt............................................................. $ 198,400
Stockholders' equity:
Preferred Stock, par value $.01 per share; 1,000,000 shares authorized;
no shares issued......................................................... --
Common Stock, par value $.01 per share; 200,000,000 shares authorized;
151,313,000 shares outstanding(1)........................................ 1,513
Additional paid-in capital............................................. 249,853
Retained earnings...................................................... 823,842
----------
Total stockholders' equity........................................... 1,075,208
----------
Total capitalization............................................... $1,273,608
----------
----------
- ------------
(1) Excludes 10,599,254 shares of Common Stock underlying stock options
outstanding at August 30, 1997 at an average exercise price of $19.84 per
share. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Principal and Selling Stockholders."
7
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:
FISCAL YEAR ENDED
-------------------------------------------
AUGUST 26, AUGUST 31, AUGUST 30,
1995 1996 1997
------------- ------------- -------------
Net sales.............................................. 100.0% 100.0% 100.0%
Cost of sales, including warehouse and delivery
expenses............................................. 58.5 58.3 58.0
----- ----- -----
Gross profit........................................... 41.5 41.7 42.0
Operating, selling, general and administrative
expenses............................................. 28.9 29.7 30.1
----- ----- -----
Operating profit....................................... 12.6 12.0 11.9
Interest expense--net.................................. -- 0.1 0.3
Income taxes........................................... 4.9 4.4 4.4
----- ----- -----
Net income............................................. 7.7% 7.5% 7.2%
----- ----- -----
----- ----- -----
FISCAL 1997 COMPARED TO FISCAL 1996
Net sales for fiscal 1997 increased by $448.8 million, or 20.0%, over net
sales for fiscal 1996. This increase was due to a comparable store net sales
increase of 8%, (which was primarily due to sales growth in the Company's newer
stores and the added sales of the Company's commercial program) and an increase
in net sales of $313.1 million for stores opened since the beginning of fiscal
1996, offset by net sales for the 53rd week of fiscal 1996. At August 30, 1997,
the Company had 1,728 stores in operation, a net increase of 305 stores, or
approximately 23% in new store square footage for the year.
Gross profit for fiscal 1997 was $1,132.1 million, or 42.0% of net sales,
compared with $935.0 million, or 41.7% of net sales, for fiscal 1996. The
increase in gross profit percentage was due primarily to improved leveraging of
warehouse and delivery expenses.
Operating, selling, general and administrative expenses for fiscal 1997
increased by $144.7 million over such expenses for fiscal 1996 and increased as
a percentage of net sales from 29.7% to 30.1%. The increase in the expense ratio
was primarily due to operating costs of ALLDATA and to costs of the Company's
commercial program.
Net interest expense for fiscal 1997 was $8.8 million compared with $2.0
million for fiscal 1996. The increase in interest expense was primarily due to
higher levels of borrowings.
AutoZone's effective income tax rate was 37.6% of pre-tax income for fiscal
1997 and 37.4% for fiscal 1996.
FISCAL 1996 COMPARED TO FISCAL 1995
Net sales for fiscal 1996 increased by $434.5 million, or 24.0%, over net
sales for fiscal 1995. 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 added sales of the Company's commercial program), an increase in net
sales of $275.1 million for stores opened since the beginning of fiscal 1995 and
net sales for the fifty-third week of fiscal 1996. At August 31, 1996, the
Company had 1,423 stores in operation, a net increase of 280 stores, or
approximately 26% in new store square footage for the year.
Gross profit for fiscal 1996 was $935.0 million, or 41.7% of net sales,
compared with $751.1 million, or 41.5% of net sales, for fiscal 1995. The
increase in gross profit percentage was due primarily to improved leveraging of
warehouse and delivery expenses, favorable results of store and distribution
center inventories, and the added sales of higher margin ALLDATA products.
8
Operating, selling, general and administrative expenses for fiscal 1996
increased by $142.6 million over such expenses for fiscal 1995 and increased as
a percentage of net sales from 28.9% to 29.7%. The increase in the expense ratio
was primarily due to acquisition and operating costs of ALLDATA and to costs of
the Company's commercial program.
Net interest expense for fiscal 1996 was $2.0 million compared with interest
income of $0.6 million for fiscal 1995. The increase in interest expense was
primarily due to higher levels of borrowings.
AutoZone's effective income tax rate was 37.4% of pre-tax income for fiscal
1996 and 39.2% for fiscal 1995. The decrease in the tax rate was primarily due
to a reduction in state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital requirements have been the funding of its
continued new store expansion program, the increase in distribution centers and
inventory requirements. The Company has opened 1,050 net new stores and
constructed four new distribution centers from the beginning of fiscal 1993 to
August 30, 1997. 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 $177.5 million in fiscal 1997, $174.2
million in fiscal 1996 and $180.1 million in fiscal 1995.
Capital expenditures were $297.5 million in fiscal 1997, $288.2 million in
fiscal 1996 and $258.1 million in fiscal 1995. The Company opened 305 net new
stores in fiscal 1997. Construction commitments totaled approximately $52
million at August 30, 1997.
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
obtaining such terms.
The Company anticipates that it will rely primarily on internally generated
funds to support a majority of its capital expenditures and working capital
requirements; the balance of such requirements will be funded through
borrowings. The Company has an unsecured revolving credit agreement with several
banks providing for borrowings up to $275 million. At August 30, 1997, the
Company had available borrowings under these agreements of $76.6 million.
At August 30, 1997, the Company had outstanding stock options to purchase
10,599,254 shares of Common Stock. Assuming all such options become vested and
are exercised, such options would result in proceeds of $210.3 million to the
Company. Such proceeds constitute an additional source for liquidity and capital
resources for the Company. For fiscal 1997, proceeds from sales of stock under
stock option and employee stock purchase plans were $14.6 million, 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 consists of sixteen weeks (seventeen weeks
in fiscal 1996). Because the fourth quarter contains
9
the seasonally high sales volume and consists of sixteen weeks (seventeen weeks
in fiscal 1996) 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 1997 and 1996, the fourth quarter
represented 35.2% and 37.0%, respectively, of annual net sales and 41.8% and
40.3%, respectively, of net income.
The following table sets forth quarterly unaudited financial information for
fiscal 1997 and 1996:
SIXTEEN
TWELVE WEEKS ENDED WEEKS ENDED
------------------------------------------- --------------
NOVEMBER 23, FEBRUARY 15, MAY 10, AUGUST 30,
1996 1997 1997 1997
-------------- -------------- ----------- --------------
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
Net sales............................................ $ 569,145 $ 538,012 $ 637,895 $ 946,388
Gross profit......................................... 240,298 226,956 268,975 395,915
Operating profit..................................... 61,898 49,217 76,775 133,461
Income before income taxes........................... 60,725 47,107 74,103 130,573
Net income........................................... 37,975 29,407 46,103 81,523
Net income per share................................. 0.25 0.19 0.30 0.53
SEVENTEEN
WEEKS ENDED
--------------
NOVEMBER 18, FEBRUARY 10, MAY 4, AUGUST 31,
1995 1996 1996 1996
-------------- -------------- ----------- --------------
Net sales............................................ $ 463,029 $ 425,838 $ 524,175 $ 829,591
Gross profit......................................... 193,220 176,033 215,531 350,211
Operating profit..................................... 55,397 43,424 60,432 109,681
Income before income taxes........................... 55,397 43,424 59,705 108,439
Net income........................................... 34,797 27,324 37,605 67,439
Net income per share................................. 0.23 0.18 0.25 0.44
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Prospectus are forward-looking
statements. These statements discuss, among other things, expected growth, store
development and expansion strategy, business strategies, future revenues and
future performance. The forward-looking statements are subject to risks,
uncertainties and assumptions including, but not limited to competitive
pressures, demand for the Company's products, the market for auto parts, the
economy in general, inflation, consumer debt levels and the weather. Actual
results may materially differ from anticipated results described in these
forward-looking statements.
10
BUSINESS
INTRODUCTION
AutoZone is the nation's leading specialty retailer of automotive parts and
accessories, focusing primarily on D-I-Y customers. The Company began operations
in 1979 and, at August 30, 1997, operated 1,728 stores in 32 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 also has a commercial sales program which provides commercial credit and
prompt delivery of parts and other products to local repair garages, dealers and
service stations. This program was offered in 1,265 of the Company's stores at
August 30, 1997. 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 August 30, 1997, AutoZone had stores in the following 32 states:
Alabama.......... 77
Arizona.......... 64
Arkansas......... 39
California....... 8
Colorado......... 32
Florida.......... 82
Georgia.......... 96
Illinois......... 56
Indiana.......... 85
Iowa............. 10
Kansas........... 31
Kentucky......... 48
Louisiana........ 70
Maryland......... 1
Michigan......... 27
Mississippi...... 61
Missouri......... 72
Nevada........... 1
New Mexico....... 23
New York......... 11
North Carolina... 87
Ohio............. 166
Oklahoma......... 60
Pennsylvania..... 28
South Carolina... 49
Tennessee........ 106
Texas............ 264
Utah............. 19
Virginia......... 34
West Virginia.... 13
Wisconsin........ 5
Wyoming.......... 3
---------
Total............ 1,728
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 also has a
satellite system for all its stores which, among other things, enables the
Company to speed up credit card and check approval processes and locate parts at
neighboring
11
AutoZone stores. AutoZone stores generally open at 8 a.m. and close between 8
and 10 p.m. (with some open to midnight) Monday through Saturday and typically
open at 9 a.m. and close between 6 and 7 p.m. on Sunday.
During fiscal 1997, the Company discontinued the operations of the Memphis
and Houston call centers and offered to transfer all call center employees to
stores in the Memphis and Houston area. The Company anticipates that the
discontinuation of the call center operations will result in ongoing savings to
the Company.
Alldata Corporation, a wholly owned subsidiary of AutoZone, has developed a
database system that provides comprehensive and up-to-date automotive
diagnostic, service and repair information which it markets to professional
repair shops.
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 17,000 and 20,000 stock keeping units ("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" and
"Duralast" names 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.
COMMERCIAL SALES PROGRAM
The Company's commercial sales program provides credit and prompt delivery
of parts and other products to local repair garages, dealers and service
stations. At August 30, 1997, this program was offered in 1,265 of the Company's
stores. Commercial customers generally pay the same everyday low prices for
parts and other products as paid by the Company's D-I-Y customers.
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.
12
STORE DEVELOPMENT AND EXPANSION STRATEGY
The following table sets forth the Company's store development activities
during the past five fiscal years:
FISCAL YEAR
---------------------------------------------------------
1993 1994 1995 1996 1997
----------- ----------- --------- --------- ---------
Beginning Stores.............................................. 678 783 933 1,143 1,423
New Stores.................................................... 107 151 210 280 308
Replaced Stores(1)............................................ 20 20 29 31 17
Closed Stores(1).............................................. (22) (21) (29) (31) (20)
--- --- --------- --------- ---------
Ending Stores................................................. 783 933 1,143 1,423 1,728
--- --- --------- --------- ---------
--- --- --------- --------- ---------
----------------
(1) Replaced stores are either relocations or conversions of existing
smaller stores to larger formats. Closed stores include replaced stores.
The Company opened 305 net new stores in fiscal 1997, representing an
increase in total square footage from fiscal 1996 of approximately 23%, and had
52 stores under construction at the end of fiscal 1997. The Company plans to
open approximately 350 stores in fiscal 1998, representing an increase in total
store square footage of approximately 22% as compared with fiscal 1997.
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 $1,217 million in fiscal 1993 to $2,691 million in fiscal 1997.
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.
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
13
in 1991 and its 7,700 square foot store introduced in 1993. In fiscal 1998, 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 August 30, 1997 was
as follows:
TOTAL STORE
STORE FORMAT NUMBER OF STORES SQUARE FOOTAGE(1)
- ---------------------------------------------------------------- ------------------- ------------------
8,100 sq. ft.................................................... 230 1,863,000
7,700 sq. ft.................................................... 415 3,195,500
6,600 sq. ft.................................................... 610 4,026,000
5,400 sq. ft.................................................... 453 2,446,200
4,000 sq. ft.................................................... 20 80,000
----- ------------------
Total....................................................... 1,728 11,610,700
----- ------------------
----- ------------------
----------------
(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 three quarters 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 8 to 20
persons, including a manager and an assistant manager, and the larger stores
typically employ 9 to 21 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
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.
The Company supervises store operations primarily through approximately 286
area advisors who report to one of 33 district managers, who, in turn, report to
one of seven regional managers, as of August 30, 1997. Purchasing,
merchandising, advertising, accounting, cash management, store development,
systems technology and support and other store support functions are centralized
in the Company's store support center in Memphis, Tennessee. The Company
believes that such centralization enhances consistent execution of the Company's
merchandising and marketing strategy at the store level.
14
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 optical character recognition, 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 store
support center in Memphis. No one class of product accounts for as much as 10%
of the Company's total sales. In fiscal 1997, the Company purchased products
from approximately 300 suppliers and no single supplier accounted for more than
7% of the Company's total purchases. During fiscal 1997, the Company's ten
largest suppliers accounted for approximately 33% of the Company's purchases.
The Company generally has few 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 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 wholesale
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",
"Deutsch", "Albany" and "Alldata". The Company believes that the "AutoZone"
service mark and trademarks have become an important component in its
merchandising and marketing strategy.
EMPLOYEES
As of August 30, 1997, the Company employed approximately 28,700 persons,
approximately 20,000 of whom were employed full-time. Approximately 86% of the
Company's employees were employed in stores or in direct field supervision,
approximately 7% in distribution centers and approximately 7% in store support
functions.
15
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:
SQUARE NATURE OF
LOCATION PRIMARY USE FOOTAGE OCCUPANCY
- ------------------- ------------------------------------------- --------- -----------
Memphis, TN Store Support Center 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 and Fixture 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
The lease of the Express Parts and Fixture warehouse in Memphis expires in
March 2000. The Company also rents additional warehouse space, various district
offices and training and other office facilities which are not material in the
aggregate.
At August 30, 1997, the Company leased 595 and owned 1,133 of its 1,728
store properties. Original lease terms generally range from five to 20 years
with renewal options. Leases on 361 stores that are currently operating expire
prior to the end of fiscal 2002; however, leases on 334 of such stores contain
renewal options.
LEGAL PROCEEDINGS
The Company was a defendant in a purported class action entitled "Jack
Elliot and Greg Dobson, on behalf of themselves and all others similarly
situated, vs. AutoZone, Inc. and AutoZone Stores, Inc." filed on or about May 9,
1997, in the Circuit Court for Roane County, Tennessee. AutoZone Stores, Inc. is
a wholly owned subsidiary of AutoZone. In their complaint, which was similar to
class action complaints filed against several other retailers of aftermarket
automotive batteries, the plaintiffs alleged that the Company sold "old," "used"
or "out of warranty" automotive batteries to customers as if the batteries were
new, and purported to state causes of action for unfair or deceptive acts or
practices, breaches of contract, breaches of the duty of good faith and fair
dealing, intentional misrepresentation, fraudulent concealment, civil conspiracy
and unjust enrichment. The plaintiffs were seeking an accounting of all moneys
wrongfully received by the Company, compensatory and punitive damages, as well
as plaintiffs' costs. On September 4, 1997, on the plaintiffs' motion, the court
dismissed the case without prejudice.
The Company is a defendant in a purported class action entitled "Joe C.
Proffitt, Jr., on behalf of himself and all others similarly situated, vs.
AutoZone, Inc., and AutoZone Stores, Inc.," filed in the Circuit Court for
Jefferson County, Tennessee, on or about October 17, 1997. Along with the
complaint, the plaintiff filed a motion to conditionally certify a multistate
class. In the complaint, which is similar to the class action complaint in the
action "Elliott v. AutoZone, Inc." described above (and with substantially the
same lawyers representing the plaintiff), and is similar to other class action
complaints filed against several other retailers of aftermarket automotive
batteries, the plaintiff alleged that the Company sold "old," "used" or "out of
warranty" automotive batteries to customers as if the batteries were new, and
purports to state causes of action for unfair or deceptive acts or practices,
breach of contract, breach of duty of good faith and fair dealing, intentional
misrepresentation, fraudulent concealment, civil conspiracy, and unjust
enrichment. The plaintiffs are seeking an accounting of all moneys wrongfully
received by the Company, compensatory and punitive damages, as well as
plaintiffs' costs. The Company believes the claims are without merit and intends
to vigorously defend this action.
The Company is also a party to various claims and lawsuits arising in the
ordinary course of business. The Company does not believe that such claims and
lawsuits, individually or in the aggregate, will have a material adverse effect
on its results of operations or financial condition.
16
MANAGEMENT
The following table lists AutoZone's executive officers as of the date of
this Prospectus. 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.
NAME AGE POSITION
- ------------------------------------------ --- --------------------------------------------------------------
Johnston C. Adams, Jr. ................... 49 Chairman and Chief Executive Officer
Customer Satisfaction
Timothy D. Vargo.......................... 46 President and Chief Operating Officer
Customer Satisfaction
Lawrence E. Evans......................... 53 Executive Vice President-Development
Customer Satisfaction
Robert J. Hunt............................ 48 Executive Vice President-Finance
and Chief Financial Officer
Customer Satisfaction
Shawn P. McGhee........................... 34 Executive Vice President-Merchandising
Customer Satisfaction
Gerald E. Colley.......................... 45 Senior Vice President-Stores
Customer Satisfaction
Harry L. Goldsmith........................ 46 Senior Vice President, Secretary
and General Counsel
Customer Satisfaction
Anthony Dean Rose, Jr. ................... 37 Senior Vice President-Advertising
Customer Satisfaction
Stephen W. Valentine...................... 35 Senior Vice President-Systems Technology and Support and Chief
Information Officer
Customer Satisfaction
David J. Wilhite.......................... 35 Senior Vice President-Merchandising
Customer Satisfaction
Michael E. Butterick...................... 46 Vice President-Controller
Customer Satisfaction
Andrew M. Clarkson........................ 60 Chairman, Finance Committee
Customer Satisfaction
The Company's Board of Directors consists of Mr. Adams, Mr. Vargo, Mr. Hunt,
Mr. Clarkson, N. Gerry House, J.R. Hyde III, James F. Keegan, Michael W.
Michelson, John E. Moll, George R. Roberts and Ronald A. Terry. Messrs.
Michelson and Roberts are general partners of KKR. See "Principal and Selling
Stockholders."
17
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of AutoZone's outstanding Common Stock as of October 10, 1997, and as
adjusted to reflect the sale of 10,166,000 shares by the Selling Stockholders in
the offerings (assuming exercise in full of the over-allotment options), by (i)
any person or group that has reported to the Company that such person or group
is 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.
BENEFICIAL OWNERSHIP
AS OF BENEFICIAL OWNERSHIP
OCTOBER 10, 1997(1) SHARES AFTER OFFERING(1)
------------------------- BEING -------------------------
NAME OF BENEFICIAL OWNER SHARES PERCENT OFFERED SHARES PERCENT
- ---------------------------------------------------- ------------ ----------- ------------ ------------ -----------
KKR Associates, L.P.(2)............................. 19,908,488 13.1% 8,165,983 11,742,505 7.8%
J.R. Hyde, III(3)................................... 12,319,846 8.1% 2,000,017 10,319,829 6.8%
The Equitable Companies, Inc.(4).................... 13,224,725 8.7% -- 13,224,725 8.7%
FMR Corp.(5)........................................ 9,023,490 6.0% -- 9,023,490 6.0%
Michael W. Michelson(2)............................. 19,908,488 13.1% 8,165,983 11,742,505 7.8%
George R. Roberts(2)................................ 19,908,488 13.1% 8,165,983 11,742,505 7.8%
All directors and executive officers as a group
including Mr. Hyde (19 persons)(6)................ 13,927,837 9.2% 2,000,017 11,927,820 7.9%
- -------------
(1) For purposes of this table, "beneficial ownership" includes any shares which
such person has the right to acquire within 60 days of October 10, 1997. 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) 10,227,594 shares (6.8%) owned of record by the KKR
Partnerships, of which KKR Associates is the sole general partner and as to
which it possesses sole voting and investment power, and (ii) 9,680,894
shares (6.3%) owned by KKR Associates. Two of the Company's directors
(Messrs. Michelson and Roberts), as well as Edward A. Gilhuly, Perry Golkin,
James H. Greene, Jr., Henry R. Kravis, Robert I. MacDonnell, Paul E.
Raether, Clifton S. Robbins, Scott M. Stuart and Michael T. Tokarz, are
general partners of KKR Associates, a limited partnership. As general
partners of KKR Associates, such persons may be deemed to share beneficial
ownership of the shares of Common Stock owned by KKR Associates. Such
persons disclaim beneficial ownership of such shares (except for the shares
allocated to the account of any general partner). Messrs. Michelson and
Roberts, as general partners of KKR Associates, have 434,372 and 2,576,511
shares, respectively, allocated to the accounts of such persons, and
accordingly, beneficially own such allocated shares. Not included in the
number of shares listed are 120,000 shares held in an irrevocable trust
created by Mr. Roberts for the benefit of Mr. Roberts' children with respect
to which Messrs. Kravis and Michelson serve as trustees (the "Roberts
Trust"), 120,000 shares held in an irrevocable trust created by Mr. Kravis
for the benefit of his children with respect to which Mr. Kravis' wife
serves as trustee, 120,000 shares held in an irrevocable trust created by
Mr. MacDonnell for the benefit of Mr. MacDonnell's children with respect to
which Mr. Roberts serves as trustee (the "MacDonnell Trust"), 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. Messrs. Michelson and Roberts disclaim
beneficial ownership of the shares held in the Roberts Trust, and Mr.
Roberts also disclaims beneficial ownership of the shares held in the
MacDonnell Trust. The address of KKR Associates is 9 West 57th Street, New
York, New York 10019.
(3) Includes 570,000 shares which are held in trusts for which Mr. Hyde is a
trustee, and 885,000 shares held by a charitable foundation for which Mr.
Hyde is an officer and a director and over which he shares investment power.
Does not include 2,000 shares owned by Mr. Hyde's spouse. The address of Mr.
Hyde is 123 South Front Street, Memphis, Tennessee 38103.
(4) All information regarding The Equitable Companies, Inc. ("Equitable") is
based upon the Schedule 13G dated February 14, 1997, filed jointly by
Equitable, on behalf of itself and its subsidiaries; AXA which beneficially
owns a majority interest in Equitable, and the Mutuelles AXA, as a group
which beneficially own a majority interest in AXA. The shares are held by
Equitable, AXA or Mutuelles AXA either directly or through one or more
direct or
18
indirect subsidiaries or affiliates, and of which Equitable, AXA, Mutuelles
AXA or their subsidiaries or affiliates will be deemed to have sole power to
vote or to direct the vote for 12,820,225 shares, deemed to share power to
vote or to direct the vote for 320,100 shares, deemed to have sole power to
dispose or to direct the disposition of 13,125,425 shares and deemed to
share power to dispose or to direct the disposition of 9,300 shares. The
address of Equitable is 787 Seventh Avenue, New York, New York 10019.
(5) All information regarding FMR Corp. is based upon the Schedule 13G dated
February 14, 1997, which is filed on behalf of FMR Corp. and its
subsidiaries and affiliates. FMR Corp. has the sole power to vote or direct
the vote for 601,040 shares and sole power to dispose or to direct the
disposition of 9,023,490 shares. The address of FMR Corp. is 82 Devonshire
Street, Boston, Massachusetts 02109.
(6) Other than as set forth in relation to KKR Associates and excluding any
shares allocated to Messrs. Michelson and Roberts.
The KKR Partnerships are Pittco Associates, L.P., Pittco Associates II,
L.P., and KKR Partners II, L.P. Each of the KKR Partnerships is a Delaware
limited partnership, the general partner of which is KKR Associates. The KKR
Partnerships own of record an aggregate of 10,227,594 shares of Common Stock,
representing approximately 6.8% of the outstanding Common Stock. These shares of
Common Stock consist of the 8,165,983 shares offered hereby (including 803,264
shares offered in the over-allotment option) and approximately 2,061,611 of
additional shares of Common Stock which are to be distributed to KKR Associates,
as discussed below. In addition to the shares held by the KKR Partnerships, KKR
Associates owns of record 9,680,894 shares of Common Stock, representing
approximately 6.3% of the outstanding Common Stock.
The term of Pittco Associates, L.P. and Pittco Associates II, L.P. expired
on December 31, 1996 in accordance with the terms of the Limited Partnership
Agreements. The terminated KKR Partnerships continue to be in existence for a
winding-up period after such date. The Limited Partnership Agreements provide
that, in connection with the dissolution and winding up of the KKR Partnerships,
KKR Associates has the sole discretion regarding the disposition of the Common
Stock owned by the KKR Partnerships, 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, pursuant to
the Limited Partnership Agreements, the KKR Partnerships will distribute to KKR
Associates for its own account, concurrently with any sales of shares owned by
the Selling Stockholders, cash and/or shares of Common Stock that together have
a fair market value equal to approximately 20% of the profits realized with
respect to the shares sold and distributed. After giving effect to the sale of
all of the shares offered hereby, the assumed exercise in full of the
over-allotment options and the distribution of shares to KKR Associates in
connection therewith, the KKR Partnerships will not own any shares of Common
Stock, and KKR Associates will own approximately 11,742,505 shares of Common
Stock, representing approximately 7.8% of the outstanding shares of Common
Stock. Messrs. Michelson and Roberts, as general partners of KKR Associates,
will beneficially own approximately 512,012 and 3,037,014 shares, respectively,
of such 11,742,505 shares owned by KKR Associates.
After the offerings and assuming exercise in full of the over-allotment
options, Mr. Hyde will own approximately 6.8% of the outstanding Common Stock.
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.
19
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 October 10, 1997, AutoZone had outstanding 151,446,220
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.
20
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.
21
CERTAIN UNITED STATES TAX CONSEQUENCES
TO NON-UNITED STATES HOLDERS
GENERAL
The following is a general discussion of certain 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
purposes of this discussion, the term "Non-U.S. Holder" is defined as any person
or entity who is, for United States federal income tax purposes, 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 preceding 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 and, where a tax treaty applies,
are attributable to a United States permanent establishment of the Non-U.S.
Holder, 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.
Dividends paid to an address outside the United States are presumed to be
paid to a resident of such country (unless the payor has actual knowledge to the
contrary) for purposes of the withholding discussed above, and, under United
States Treasury regulations, for purposes of determining the applicability of a
tax treaty rate. Under recently promulgated final United States Treasury
regulations, which are generally effective with respect to payments made after
December 31, 1998, a Non-U.S. Holder of Common Stock who wishes to claim the
benefit of an applicable treaty rate (and avoid backup withholding as discussed
below) will be required to satisfy applicable certification and other
requirements which will include filing a Form W-8 containing the Non-U.S.
Holder's name, address and a certification that such Holder is eligible for the
benefits of such treaty under its Limitations on Benefits Article. Certain
certification and disclosure requirements must be complied with in order to be
exempt from withholding under the effectively connected income exemption
discussed above.
22
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 withheld by filing an appropriate claim for refund with the
United States Internal Revenue Service (the "Service").
GAIN ON DISPOSITION OF COMMON STOCK
A Non-U.S. Holder generally will not be subject to United States federal
income or withholding tax on any gain realized on a sale or other 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
United States 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
source 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
23
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.
FEDERAL ESTATE TAXES
An individual Non-U.S. Holder who (i) is not a citizen or resident of the
United States (as specifically defined for United States federal estate tax
purposes) at the time of his or her death and (ii) owns, or is treated as owning
Common Stock at the time of his or her death or has made certain lifetime
transfers of an interest in Common Stock, will be required to include the value
of such Common Stock in his or her gross estate for 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 Department of Treasury recently promulgated final
regulations regarding the withholding and information reporting rules applicable
to Non-U.S. Holders (the "New Withholding Regulations"). In general, the New
Withholding Regulations do not significantly alter the substantive withholding
and information reporting requirements, but rather, unify current certification
procedures and forms and clarify reliance standards. The New Withholding
Regulations are generally effective for payments made after December 31, 1998,
subject to certain transition rules. NON-U.S. HOLDERS SHOULD CONSULT THEIR OWN
TAX ADVISORS WITH RESPECT TO THE IMPACT, IF ANY, OF THE NEW WITHHOLDING
REGULATIONS.
24
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:
NUMBER OF
SHARES OF
COMMON
U.S. UNDERWRITER STOCK
- ----------------------------------------------------------------------------------------- -------------
Goldman, Sachs & Co. ....................................................................
Donaldson, Lufkin & Jenrette Securities Corporation......................................
Furman Selz LLC .........................................................................
Lehman Brothers Inc. ....................................................................
Morgan Stanley & Co. Incorporated .......................................................
-------------
Total.......................................................................... 7,332,800
-------------
-------------
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" and, together with
the U.S. Underwriters, the "Underwriters")providing for the concurrent offer and
sale of 1,833,200 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.
25
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 Selling Stockholders 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 800,000 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
9,166,000 shares of Common Stock offered hereby. The Selling Stockholders have
granted the International Underwriters a similar option exercisable for up to an
aggregate of 200,000 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.
In connection with the offerings, the Underwriters may purchase and sell the
Common Stock in the open market. These transactions may include over-allotment
and stabilizing transactions and purchases to cover syndicate short positions
created in connection with the offerings. Stabilizing transactions consist of
certain bids or purchases for the purpose of preventing or retarding a decline
in the market price of the Common Stock; and syndicate short positions involve
the sale by the Underwriters of a greater number of shares of Common Stock that
they are required to purchase from the Selling Stockholders in the offerings.
The Underwriters also may impose a penalty bid, whereby selling concessions
allowed to syndicate members or other broker-dealers in respect of the Common
Stock sold in the offerings for their account may be reclaimed by the syndicate
if such shares of Common Stock are repurchased by the syndicate in stabilizing
or covering transactions. These activities may stabilize, maintain or otherwise
affect the market price of the Common Stock, which may be higher than the price
that might otherwise prevail in the open market; and these activities, if
commenced, may be discontinued at any time. These transactions may be effected
on the New York Stock Exchange, in the over-the-counter market or otherwise.
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 KKR Associates 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.
26
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.
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 Morris,
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. Latham & Watkins
and Simpson Thacher & Bartlett render legal services to KKR on a regular basis.
EXPERTS
The financial statements and related schedule of AutoZone as of August 30,
1997 and August 31, 1996 and for each year in the three-year period ended August
30, 1997, 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.
27
- ---------------------------------------------
---------------------------------------------
- ---------------------------------------------
---------------------------------------------
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
PAGE
-----
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.......................................... 11
Management........................................ 17
Principal and Selling Stockholders................ 18
Description of Capital Stock...................... 20
Certain United States Tax Consequences to
Non-United States Holders........................ 22
Underwriting...................................... 25
Legal Matters..................................... 27
Experts........................................... 27
9,166,000 SHARES
AUTOZONE, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
-------------------
[LOGO]
-------------------
GOLDMAN, SACHS & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
FURMAN SELZ
LEHMAN BROTHERS
MORGAN STANLEY DEAN WITTER
- ---------------------------------------------
---------------------------------------------
- ---------------------------------------------
---------------------------------------------
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.
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
REGISTRATION STATEMENT NO. 333-04087
RULE 424(b)(4)
SUBJECT TO COMPLETION, DATED NOVEMBER 7, 1997
9,166,000 SHARES
UVW
AUTOZONE, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
-------------------
Of the 9,166,000 shares of Common Stock offered, 1,833,200 shares are being
offered hereby in an international offering outside the United States and
7,332,800 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, a director of the Company. After the
offerings, the KKR Partnerships will not own any shares of Common Stock, and Mr.
Hyde and KKR Associates will own approximately 6.8% and 7.8%, 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 November 6, 1997 was $29 15/16
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.
---------------------
INITIAL PUBLIC UNDERWRITING PROCEEDS TO SELLING
OFFERING PRICE DISCOUNT(1) STOCKHOLDERS(2)
--------------------- --------------------------- -------------------
Per Share........... $ $ $
Total(3)............ $ $ $
- --------------------------
(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 $ payable by the Selling
Stockholders.
(3) The Selling Stockholders have granted the U.S. Underwriters an option for 30
days to purchase up to an additional 200,000 shares of Common Stock at the
initial public offering price per share, less the underwriting discount,
solely to cover over-allotments. Additionally, the Selling Stockholders have
granted the U.S. Underwriters an option for 30 days to purchase up to an
additional 800,000 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 November , 1997 against payment therefor in immediately
available funds.
GOLDMAN SACHS INTERNATIONAL
DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL
FURMAN SELZ
LEHMAN BROTHERS
MORGAN STANLEY DEAN WITTER
---------------------
THE DATE OF THIS PROSPECTUS IS NOVEMBER , 1997.
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
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:
NUMBER OF
SHARES OF
COMMON
INTERNATIONAL UNDERWRITER STOCK
- ------------------------------------------------------------ -----------
Goldman Sachs International.................................
Donaldson, Lufkin & Jenrette International..................
Furman Selz LLC ............................................
Lehman Brothers International (Europe)......................
Morgan Stanley & Co. International Limited..................
-----------
Total............................................. 1,833,200
-----------
-----------
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 7,332,800 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.
The Selling Stockholders 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 200,000 additional
25
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
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
9,166,000 shares of Common Stock offered hereby. The Selling Stockholders have
granted the U.S. Underwriters a similar option exercisable for up to an
aggregate of 800,000 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.
In connection with the offerings, the Underwriters may purchase and sell the
Common Stock in the open market. These transactions may include over-allotment
and stabilizing transactions and purchases to cover syndicate short positions
created in connection with the offerings. Stabilizing transactions consist of
certain bids or purchases for the purpose of preventing or retarding a decline
in the market price of the Common Stock; and syndicate short positions involve
the sale by the Underwriters of a greater number of shares of Common Stock that
they are required to purchase from the Selling Stockholders in the offerings.
The Underwriters also may impose a penalty bid, whereby selling concessions
allowed to syndicate members or other broker-dealers in respect of the Common
Stock sold in the offerings for their account may be reclaimed by the syndicate
if such shares of Common Stock are repurchased by the syndicate in stabilizing
or covering transactions. These activities may stabilize, maintain or otherwise
affect the market price of the Common Stock, which may be higher than the price
that might otherwise prevail in the open market; and these activities, if
commenced, may be discontinued at any time. These transactions may be effected
on the New York Stock Exchange, in the over-the-counter market or otherwise.
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 KKR Associates 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.
26
- ---------------------------------------------
---------------------------------------------
- ---------------------------------------------
---------------------------------------------
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
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
PAGE
-----
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.......................................... 11
Management........................................ 17
Principal and Selling Stockholders................ 18
Description of Capital Stock...................... 20
Certain United States Tax Consequences to
Non-United States Holders........................ 22
Underwriting...................................... 25
Legal Matters..................................... 27
Experts........................................... 27
9,166,000 SHARES
AUTOZONE, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
------------------------
XYZ
---
GOLDMAN SACHS INTERNATIONAL
DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL
FURMAN SELZ
LEHMAN BROTHERS
MORGAN STANLEY DEAN WITTER
- ---------------------------------------------
---------------------------------------------
- ---------------------------------------------
---------------------------------------------
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:
SEC registration fee.................................................. $ 93,189
NASD filing fee....................................................... 30,500
Printing and engraving expenses....................................... 85,000
Legal fees............................................................ 100,000
Accounting fees and expenses.......................................... 67,000
Blue Sky fees and expenses............................................ 10,000
Transfer agent and registrar's fees................................... 2,500
Miscellaneous......................................................... 11,181
---------
Total............................................................. $ 400,000
---------
---------
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 paragraph, or in defense of any claim,
issue or matter therein, he must be indemnified by AutoZone
II-1
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, 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.
II-2
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
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 6th day of
November 1997.
AUTOZONE, INC.
By: /s/ J.C. ADAMS, JR.
...........................................
J.C. ADAMS, JR.
CHAIRMAN, CHIEF EXECUTIVE OFFICER
AND DIRECTOR
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints 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:
SIGNATURE TITLE DATE
- -------------------------------------------------- ------------------------- ------------
Chairman, Chief Executive
/s/ J.C. ADAMS, JR. Officer and Director November 6,
................................................. (Principal Executive 1997
(J.C. Adams, Jr.) Officer)
Executive Vice President,
/s/ ROBERT J. HUNT Chief Financial Officer November 6,
................................................. and Director (Principal 1997
(Robert J. Hunt) Financial Officer)
/s/ MICHAEL E. BUTTERICK Vice President and November 6,
................................................. Controller (Principal 1997
(Michael E. Butterick) Accounting Officer)
/s/ TIMOTHY D. VARGO President, Chief November 6,
................................................. Operating Officer 1997
(Timothy D. Vargo) and Director
/s/ ANDREW M. CLARKSON November 6,
................................................. Director 1997
(Andrew M. Clarkson)
II-4
SIGNATURE TITLE DATE
- -------------------------------------------------- ------------------------- ------------
................................................. Director
(N. Gerry House)
/s/ J.R. HYDE, III November 6,
................................................. Director 1997
(J.R. Hyde, III)
/s/ JAMES F. KEEGAN November 6,
................................................. Director 1997
(James F. Keegan)
/s/ MICHAEL W. MICHELSON November 6,
................................................. Director 1997
(Michael W. Michelson)
................................................. Director
(John E. Moll)
/s/ GEORGE R. ROBERTS November 6,
................................................. Director 1997
(George R. Roberts)
/s/ RONALD A. TERRY November 6,
................................................. Director 1997
(Ronald A. Terry)
II-5
AUTOZONE, INC.
EXHIBIT INDEX
EXHIBIT
NUMBERS DESCRIPTION OF EXHIBIT
- ----------- -------------------------------------------------------------------------------------------------------
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 the Securities Act (No. 33-67550).
4.4 Amendment No. 2 to the Registration Rights Agreement dated as of November 6, 1997, by and among
AutoZone and certain stockholders.
5.1 Opinion of Schreck Morris regarding legality of Common Stock.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Schreck Morris (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).
EXHIBIT 1.1
AUTOZONE, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
UNDERWRITING AGREEMENT
(U.S. VERSION)
----------------------
November , 1997
Goldman, Sachs & Co.,
Lehman Brothers Inc.,
Donaldson, Lufkin & Jenrette
Securities Corporation,
Furman Selz LLC,
Morgan Stanley & Co. Incorporated
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 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 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 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 LLC and Morgan Stanley & Co. International Limited,
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 (the "Agreement between Syndicates")
which provides, among other things, for the transfer of shares of Common
Stock between the two syndicates.
-1-
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 herein 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. 333- ) 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, (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, and (iii) any post-effective amendment or amendments to the
registration statement filed pursuant to Rule 462 under the Act, 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-
(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) Since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus, neither the
Company nor any of its subsidiaries has sustained 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 since such date
through November , 1997, 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,
stockholders' equity or results of operations
-3-
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, [except for 139 shares of the 1,200
outstanding shares of preferred stock of AutoZone Development
Corporation];
(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-
(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 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, encumbrances, equities or claims; and upon
delivery of such Shares and payment therefor
-5-
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 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 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
-6-
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 _________ 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 [third] 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 wire transfer or certified or official bank check or checks payable in
immediately available (same 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.
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
-7-
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 wire transfer or certified or official bank check
or checks payable in immediately available (same 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 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
-8-
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 defined in Rule 158(c)
under the Act), an earning statement of the Company (which need not
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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 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);
(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;
(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
-10-
(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 any 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 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
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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 Morris, 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.
(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:
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(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;
(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 30, 1997, 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 (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
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(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 that 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
expressno 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 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.
-14-
In rendering such opinion, such counsel may state that such opinion
is limited to matters governed by U.S. federal law, New York law, and
Nevada law (with respect to the opinions to be rendered pursuant to
Section 9(d)(i), (ii) and (iii) hereof as to which such counsel may
state that they have relied exclusively upon the opinion of Schreck
Morris referred to in Section 9(c) hereof to the extent such matters are
governed by Nevada law).
(e) Harry L. Goldsmith, Esq., Senior 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[, except
for 139 shares of the 1,200 outstanding shares of preferred stock
of AutoZone Development Corporation];
(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 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
-15-
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 Morris, 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, that in their
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.
(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 of Pittco Associates, L.P., a Delaware limited
partnership, Pittco Associates II, L.P., a Delaware limited
partnership, and KKR Partners II, L.P., a Delaware limited
partnership (together, the "Common Stock Partnerships") 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 Common Stock Partnership of
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the transactions contemplated hereby and thereby will not result in
any violation of the partnership agreement relating to such Common
Stock Partnership or any statute or any order, rule or regulation
known to such counsel, that in their 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 Common Stock Partnership or the
property of such Common Stock Partnership;
(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 of the
Shares under the Act, 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. federallaw, 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;
(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 November __, 1997
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
-17-
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 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;
(n) Each of , , ,
and shall have executed and delivered to the U.S.
Underwriters and the International Underwriters a letter to the effect
that during a period of 60 days from the date hereof, without the prior
written consent of the U.S. Underwriters and the International
-18-
Underwriters, such person will not, directly or indirectly, offer,
sell, contract to sell or otherwise transfer or dispose of any shares
of Common Stock or any securities convertible or exchangeable or
exercisable for Common Stock beneficially owned as of the date hereof
or acquired hereafter or any interest therein, other than any pledge of
such shares in connection with a bona fide loan transaction which does not
permit the pledgee, directly or indirectly, to offer, sell, contract to
sell or otherwise transfer or dispose of any interest in such shares
during such 60-day period; and
(o) 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.
-19-
(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. 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
-20-
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 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
-21-
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 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
-22-
Shares set forth opposite the names of all the remaining non-defaulting U.S.
Underwriters in Schedule 1 hereto; 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.
-23-
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;
(c) if to any of the Common Stock Partnerships shall be delivered or
sent by mail, telex or facsimile transmission to such Common Stock
Partnership, care of KKR Associates, at 9 West 57th Street, New York, New
York 10019; and
(d) if to J.R. Hyde, III, shall be delivered or sent by mail, telex or
facsimile transmission to him, care of the Company, at the address of the
Company set forth in the Registration Statement;
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 Common Stock Partnership or any successor
general partner of any Common Stock Partnership shall have any personal
liability for the performance of any Common Stock Partnership's obligations
hereunder, and any liability or obligation of any Common Stock Partnership
arising hereunder shall be limited to and satisfied only out of the property
of such Common Stock Partnership.
-24-
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.
-25-
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: Vice President
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
By:
-----------------------
J.R. Hyde, III
-26-
Accepted as of the date hereof:
Goldman, Sachs & Co.
[other underwriters]
By:
-------------------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
-27-
SCHEDULE 1
Underwriter Number of
- ----------- Firm Shares
------------
Goldman, Sachs & Co. . . . . . . . . . . . . . . . . . . . . . .
[underwriter]. . . . . . . . . . . . . . . . . . . . . . . . . .
------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . .
------------
------------
SCHEDULE 2
Number of Number of
Name of Selling Stockholder Firm Shares Option Shares
- --------------------------- ----------- -------------
Pittco Associates, L.P.
Pittco Associate II, L.P.
KKR Partners II, L.P.
J.R. Hyde, III
----------- ------------
Total
----------- ------------
----------- ------------
EXHIBIT 1.2
AUTOZONE, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
UNDERWRITING AGREEMENT
(INTERNATIONAL VERSION)
------------------------
November , 1997
Goldman Sachs International,
[other underwriters]
As Representative[s] 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 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
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 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., [other underwriters] 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 (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 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 herein 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. 333-) 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 (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, and
(iii) any post-effective amendment or amendments to the registration
statement filed pursuant to Rule 462 under the Act, 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;
(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
-2-
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) Since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus, neither the
Company nor any of its subsidiaries has sustained 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 since such date
through November , 1997 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, 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
-3-
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[, except for 139 shares of the 1,200
outstanding shares of preferred stock of AutoZone Development
Corporation];
(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 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
-4-
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 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 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;
-5-
(b) Such 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 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, 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
-6-
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 __________ 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 [third] 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 wire transfer or certified or official bank check or checks payable in
immediately available (same 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 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
-7-
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 wire transfer or certified or official bank check or checks payable in
immediately available (same 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 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;
-8-
(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 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
-9-
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 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);
(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 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.
-10-
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 any
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:
(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;
-11-
(c) Schreck Morris, 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 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;
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(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 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 30, 1997, 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, 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
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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 that 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 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 state that such opinion
is limited to matters governed by U.S. federal law, New York law, and
Nevada law (with respect to the opinions to be rendered pursuant to
Section 9(d)(i), (ii) and (iii) hereof as to which such counsel may
state that they have relied exclusively upon the opinion of Schreck
Morris referred to in Section 9(c) hereof to the extent such matters are
governed by Nevada law).
(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
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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-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, [except
for 139 shares of the 1,200 outstanding shares of preferred stock
of AutoZone Development Corporation;]
(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.
-15-
(f) Schreck Morris, 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, that in their
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 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 of Pittco Associates, L.P., a Delaware limited
partnership, Pittco Associates II, L.P., a Delaware limited
partnership, and KKR Partners II, L.P., a Delaware limited
partnership (together, the "Common Stock Partnerships") 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 Common Stock Partnership of the
transactions contemplated hereby and thereby will not result in any
violation of the partnership agreement relating to such Common
Stock Partnership or any statute or any order, rule or regulation
known to such counsel, that in their 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 Common Stock Partnership or the property of
such Common Stock Partnership;
-16-
(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 of the Shares under the Act,
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, 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 November __, 1997
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;
-17-
(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 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;
(n) Each of
shall have executed and delivered to the U.S. Underwriters
and the International Underwriters a letter to the effect that during a
period of 60 days from the date hereof, without the prior written consent
of the U.S. Underwriters and the International Underwriters, such person
will not, directly or indirectly, offer, sell, contract to sell or
otherwise transfer or dispose of any shares of Common Stock or any
securities convertible or exchangeable or exercisable for Common Stock
beneficially owned as of the date hereof or acquired hereafter or any
interest therein, other than any pledge of such shares in connection with
a bona fide loan transaction which does not permit the pledgee, directly
or indirectly, to offer, sell, contract to sell or otherwise transfer or
dispose of any interest in such shares during such 60-day period; and
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(o) 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 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
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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 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, 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 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
claim, damage, liability or action as such expenses are incurred. The
foregoing
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indemnity agreement is in addition to any liability which any
International Underwriter may otherwise have to 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 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 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
-21-
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, 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
-22-
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 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 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;
-23-
(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;
(c) if to any of the Common Stock Partnerships, shall be delivered
or sent by mail, telex or facsimile transmission to such Common Stock
Partnership, care of KKR Associates, at 9 West 57th Street, New York,
New York 10019; and
(d) if to J.R. Hyde, III, shall be delivered or sent by mail,
telex, or facsimile transmission to him, care of the Company, at the
address of the Company set forth in the Registration Statement;
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 Common Stock Partnership or any successor
general partner of any Common Stock Partnership shall have any personal
liability for the performance of any Common Stock Partnership's obligations
hereunder, and any liability or obligation of any Common Stock Partnership
arising hereunder shall be limited to and satisfied only out of the property
of such Common Stock Partnership.
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.
-24-
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.
-25-
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:
Pittco Associates II, L.P.
By: KKR Associates,
General Partner
By:
-----------------------
Title:
KKR Partners II, L.P.
By: KKR Associates,
General Partner
By:
-----------------------
Title:
J.R. Hyde, III
-----------------------
J.R. Hyde, III
-26-
Accepted as of the date hereof:
Goldman Sachs International,
[underwriters]
By:
-------------------------------------
(Attorney-in-fact)
On behalf of each of the Underwriters
-27-
SCHEDULE 1
Number of
Underwriter Firm Shares
- ----------- -----------
Goldman Sachs International . . . . . . . . . . . . . . . .
[underwriter] . . . . . . . . . . . . . . . . . . . . . . . .
[underwriter] . . . . . . . . . . . . . . . . . . . . . . . .
-----------
Total. . . . . . . . . . . . . . . . . . . . . . . . . .
-----------
-----------
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
----------- -------------
----------- -------------
EXHIBIT 4.4
AMENDMENT NO. 2 TO REGISTRATION RIGHTS AGREEMENT AND WAIVER
This AMENDMENT NO. 2 TO REGISTRATION RIGHTS AGREEMENT AND WAIVER
dated as of November 6, 1997 is made by and among AutoZone, Inc., a Nevada
corporation (formerly known as Auto Shack, Inc., a Delaware corporation) (the
"Company"), Pittco Associates, L.P., a Delaware limited partnership
("Pittco"), Pittco Associates II, L.P., a Delaware limited partnership
("Pittco II"), KKR Partners II, L.P., a New York limited partnership ("KKR
Partners"), KKR Associates, a New York limited partnership ("Associates") and
certain stockholders of the Company.
Capitalized terms not otherwise defined herein shall have the meanings
ascribed to such terms in the Registration Rights Agreement dated as of February
18, 1987, as amended as of August 1, 1993 (the "Registration Rights Agreement"),
by and among Auto Shack, Inc., a Delaware corporation, Pittco, Pittco II, KKR
Partners, Associates and the Individuals.
WHEREAS, pursuant to Section 4 of the Registration Rights Agreement,
the Pittco Affiliates have the right to request that the Company file a
registration statement (a "Pittco Registration Statement") and effect a
registration of certain of the Registrable Securities held by the Pittco
Affiliates (a "Registration Request");
WHEREAS, as of the date hereof, all of the Individuals (except for Mr.
Hyde) can effect sales of all of the Registrable Securities held by such
Individuals pursuant to Rule 144 of the Securities Act or pursuant to another
exemption from the registration requirements of the Securities Act;
WHEREAS, the parties hereto desire to amend the Registration Rights
Agreement to exclude from the definition of Registrable Securities, those shares
of Stock that can be sold pursuant to Rule 144 of the Securities Act or pursuant
to another exemption from the registration requirements of the Securities Act;
NOW THEREFORE, in consideration of the mutual covenants and premises
contained herein and for other good and valuable consideration, the receipt an
adequacy of which are hereby acknowledge, the parties hereto agree as follows:
1. AMENDMENT. This Amendment No. 2 amends the Registration Rights
Agreement in accordance with the provisions of Section 9(b) of the Registration
Rights Agreement as follows:
The definition of "Registrable Securities" in Section 2(a) shall be
amended to read as follows:
1
REGISTRABLE SECURITIES - Any shares of the Stock issued in the Distribution
or issuable pursuant to the Non-Qualified Stock Option Agreements. As to any
particular Registrable Securities, once distributed such securities shall cease
to be Registrable Securities when (i) a registration statement with respect to
the sale of such securities shall have become effective under the Securities Act
and such securities shall have been disposed of in accordance with such
registration statement, (ii) they are distributed or may be distributed by any
holder thereof (along with all of the other Registrable Securities held by such
holder) to the public pursuant to Rule 144 (or any successor provision) under
the Securities Act, (iii) any disposition of them shall not require registration
or qualification of them under the Securities Act or any similar state law then
in force, or (iv) they shall have ceased to be outstanding.
2. WAIVER AND NOTIFICATION. Mr. Formanek hereby waives any right to
receive written notice of any Registration Request and hereby notifies the
Company that such Individual will not request that any shares of Registrable
Securities held by such Individual be registered pursuant to any Pittco
Registration Statement.
3. MISCELLANEOUS.
(a) GOVERNING LAW. This Amendment No. 2 shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware,
without regard to the conflicts of laws rules thereof.
(b) COUNTERPARTS. This Amendment No. 2 may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and make the same instrument, and it shall not be necessary
in making proof of this Amendment No. 2 to produce or account for more than one
such counterpart.
2
IN WITNESS WHEREOF, the parties have executed this Amendment No. 2 as
of the date first written above.
KKR ASSOCIATES
By /S/ MICHAEL W. MICHELSON
- ------------------------------------
General Partner
PITTCO ASSOCIATES, L.P.
By KKR Associates, General Partner
By /S/ MICHAEL W. MICHELSON
- ------------------------------------
General Partner
PITTCO ASSOCIATES II, L.P.
By KKR Associates, General Partner
By /S/ MICHAEL W. MICHELSON
- ------------------------------------
General Partner
KKR PARTNERS II, L.P.
By KKR Associates, General Partner
By /S/ MICHAEL W. MICHELSON
- ------------------------------------
General Partner
AUTOZONE, INC.
By /s/ HARRY GOLDSMITH
- ------------------------------------
Name: Harry Goldsmith
Title: Senior Vice President
and General Counsel
/s/ PETER R. FORMANEK
- ------------------------------------
Peter R. Formanek
/s/ J.R. HYDE, III
- ------------------------------------
Joseph R. Hyde, III
S-1
EXHIBIT 5.1
[SCHRECK MORRIS LETTERHEAD]
November 6, 1997
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 10,166,000 shares (the "Offering") of the
Company's common stock, par value $.01 (the "Common Stock"), by certain
stockholders of the Company, both in the United States and in a concurrent
international offering outside the United States, including up to 1,000,000
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
Offering.
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 and
agents of the Company and from public officials and have relied upon 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 laws of the State of Nevada. We express no opinion herein
concerning and 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.
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" 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. In giving this consent, we do not
admit that we are in the category of persons whose consent is required under
Section 7 of the Act or the rules and regulations of the Commission promulgated
thereunder.
Very truly yours,
SCHRECK MORRIS
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of AutoZone, Inc. for
the registration of 10,166,000 shares of its common stock and to the
incorporation by reference therein of our report dated September 19, 1997, with
respect to the consolidated financial statements of AutoZone, Inc. incorporated
by reference in its Annual Report (Form 10-K) for the year ended August 30, 1997
and our report dated November 4, 1997, with respect to the financial statement
schedule included therein, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Memphis, Tennessee
November 4, 1997
