FILED PURSUANT TO RULE 424(b)(2)
REGISTRATION NO. 333-58565
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JULY 15, 1998)
[AUTOZONE LOGO]
$150,000,000
6% NOTES DUE NOVEMBER 1, 2003
------------
The notes bear interest at the rate of 6% per year. Interest on the notes is
payable on May 1 and November 1 of each year, beginning May 1, 1999. The notes
are redeemable at any time at AutoZone's option.
The notes will be unsecured senior obligations of AutoZone. The notes will be
issued in registered form in denominations of $1,000.
PER NOTE TOTAL
-------- -----
Public Offering Price(1)............................. 99.741% $149,611,500
Underwriters' Discount............................... .6% $ 900,000
Proceeds, before expenses, to AutoZone............... 99.141% $148,711,500
(1) Purchasers will also be required to pay accrued interest from November
4, 1998 if settlement occurs after that date.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or the prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The notes are expected to be ready for delivery in book-entry form only
through The Depository Trust Company on or about November 4, 1998.
------------
MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
LEHMAN BROTHERS
NATIONSBANC MONTGOMERY SECURITIES LLC
------------
The date of this prospectus supplement is October 30, 1998.
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
The Company................................................................. S-3
Use of Proceeds............................................................. S-4
Ratio of Earnings to Fixed Charges.......................................... S-4
Description of Notes........................................................ S-5
Underwriting................................................................ S-7
Legal Matters............................................................... S-8
PROSPECTUS
Available Information....................................................... 2
Information Incorporated by Reference....................................... 3
The Company................................................................. 4
Use of Proceeds............................................................. 5
Ratio of Earnings to Fixed Charges.......................................... 5
General Description of Securities........................................... 5
Description of Debt Securities.............................................. 6
Description of Preferred Stock.............................................. 20
Description of Common Stock................................................. 26
The Nevada Code............................................................. 27
Description of Warrants..................................................... 27
Description of Units........................................................ 29
Plan of Distribution........................................................ 29
Legal Matters............................................................... 31
Experts..................................................................... 31
----------------
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the prospectus. Neither we nor any
underwriter has authorized any other person to provide you with different or
additional information. If anyone provides you with different or additional
information, you should not rely on it. Neither we nor any underwriter is
making an offer to sell these securities in any jurisdiction where the offer or
sale is not permitted. You should assume that the information contained or
incorporated by reference in this prospectus supplement and the prospectus is
accurate as of the date on the front cover of this prospectus supplement only.
S-2
THE COMPANY
AutoZone, Inc. (also referred to as "AutoZone" or the "Company") is the
nation's leading specialty retailer of automotive parts and accessories,
focusing primarily on "Do-It-Yourself" customers. As of August 29, 1998, we
operated 2,657 auto parts stores in 38 states under the AutoZone and Chief Auto
Parts names. Each of our auto parts stores carries an extensive automotive
aftermarket 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. Each of our
auto parts stores carries parts for domestic and foreign cars, vans and light
trucks. Many of our auto parts stores also offer a commercial sales program
which provides commercial credit and prompt delivery of parts and other
products to local repair garages, dealers and service stations. We do not
perform automotive repairs or installations.
In addition, we sell heavy duty truck parts and accessories through 43
TruckPro stores and automotive diagnostic and repair information software
through our ALLDATA subsidiary.
We are dedicated to providing customers with superior service, value and
parts selection at conveniently located, well-designed stores. We have
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. Our stores are generally situated in
high-visibility locations and provide a distinctive merchandise presentation in
an attractive store environment.
Our pledge, which is recited at the beginning of meetings at our stores and
store support center, is:
AutoZoners always put customers first.
We know our parts and products.
Our stores look great.
And we have the best merchandise at the right price.
Our executive offices are located at 123 South Front Street, Memphis,
Tennessee 38103, and our telephone number is (901) 495-6500. AutoZone is a
Nevada corporation.
S-3
USE OF PROCEEDS
The net proceeds from the offering will be used for general corporate
purposes and, pending such application, will be used to pay down borrowings
under AutoZone's commercial paper program and bank credit facilities. The debt
under the commercial paper program and the bank credit facilities was incurred
for general corporate purposes, including financing of working capital
requirements, common stock repurchases and new store expansion. At August 29,
1998, AutoZone had issued $305 million in commercial paper with a weighted
average interest rate of 5.7% per annum. In connection with the commercial
paper program, AutoZone has a credit facility with a group of banks for up to
$350 million which matures in December 2001 and a credit facility with another
group of banks for up to $150 million which matures in February 1999. The
interest rate on the bank credit facilities is a function of the London
Interbank Offered Rate (LIBOR), or the lending bank's base rate, or, for the
$350 million credit facility, a competitive bid rate, at AutoZone's option. At
August 29, 1998, AutoZone had $34 million outstanding under the $350 million
credit facility at a weighted average interest rate of 5.8% per annum.
Additionally, in October 1998, AutoZone entered into a new $150 million
revolving credit facility, with an interest rate based on a function of LIBOR
or a negotiated rate, at AutoZone's option, which matures in May 1999.
NationsBanc Montgomery Securities LLC is a dealer for the commercial paper
program. An affiliate of NationsBanc Montgomery Securities LLC is a lender
under the credit facilities and will receive its proportionate share of the
repayment thereof.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for the
Company for the periods indicated:
FISCAL YEAR ENDED
------------------------------------------------------------------------------------
AUGUST 27, AUGUST 26, AUGUST 31, AUGUST 30, AUGUST 29,
1994 1995 1996 1997 1998
---------- ---------- ---------- ---------- ----------
26.3 30.2 23.0 15.9 11.4
The ratio of earnings to fixed charges has been computed by dividing earnings
by fixed charges. Earnings consist of income before income taxes plus fixed
charges less capitalized interest. Fixed charges consist of interest on all
indebtedness, amortization of debt issuance costs and the interest portion of
rent expense.
S-4
DESCRIPTION OF NOTES
The following description of the particular terms of the notes offered hereby
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of Debt Securities set forth in the
prospectus as filed with the Securities and Exchange Commission (the
"Commission") on July 15, 1998. Please refer to the prospectus for further
information concerning the terms of the notes.
The following statements relating to the notes and the senior indenture are
summaries of certain provisions thereof and are subject to the detailed
provisions of the senior indenture as filed with the Commission in a Form 8-K
on July 21, 1998. Please refer to the senior indenture for a complete statement
of such provisions. The summary description of the senior indenture is also
contained in the prospectus.
GENERAL
The notes are to be issued under the senior indenture, dated as of July 22,
1998, between the Company and The First National Bank of Chicago, as trustee.
The notes will be issued in fully registered book-entry form without coupons
and in denominations of $1,000 and integral multiples thereof. The Company does
not intend to apply for the listing of the notes on a national securities
exchange.
The notes will be unsecured senior obligations of the Company, will mature on
November 1, 2003 (unless redeemed prior thereto in accordance with the
provisions described under "Description of Debt Securities--Optional
Redemption" in the prospectus), will be limited to $150 million aggregate
principal amount and will bear interest at the rate set forth on the cover page
of this prospectus supplement from date of issuance, payable semi-annually on
each May 1 and November 1, commencing May 1, 1999, to the persons in whose
names the notes are registered at the close of business on the April 15
immediately preceding each May 1 or the October 15 immediately preceding each
November 1. Interest will be computed on the basis of a 360-day year composed
of twelve 30-day months. Payments of principal, premium (if any) and interest
to owners of book-entry interests (as described below) are expected to be made
in accordance with the procedures of The Depository Trust Company ("DTC") and
its participants in effect from time to time. The notes are redeemable at any
time at the option of the Company. See "Description of Debt Securities--
Optional Redemption" in the accompanying prospectus.
BOOK-ENTRY SYSTEM
It is expected that the notes initially will be represented by one or more
global notes in definitive fully registered form without coupons and will be
deposited with, or on behalf of, DTC and registered in the name of Cede & Co.,
as the nominee of DTC. Except under the circumstances described in the
prospectus under the caption "Description of Debt Securities--Global Debt
Securities," the notes will not be issuable in definitive form. Unless and
until they are exchanged in whole or in part for the individual notes
represented thereby, any interests in the global notes may not be transferred
except as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or
another nominee of DTC or by DTC or any nominee of DTC to a successor
depository or any
S-5
nominee of such successor. See "Description of Debt Securities--Global Debt
Securities" in the prospectus.
DTC has advised the Company and the underwriters as follows: DTC is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC holds
securities that its participants ("Participants") deposit with DTC. DTC also
facilitates the settlement among Participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc. Access to the DTC system is also available to
others such as securities brokers and dealers, banks and trust companies that
clear through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly. The rules applicable to DTC and its Participants
are on file with the Commission.
SAME-DAY FUNDS SETTLEMENT AND PAYMENT
Settlement for the notes will be made by the underwriters in immediately
available funds. All payments of principal, premium (if any) and interest in
respect of notes in book-entry form will be made by the Company in immediately
available funds to the accounts specified by DTC.
CONCERNING THE TRUSTEE
The First National Bank of Chicago will be the trustee under the senior
indenture. The Company uses an affiliate of the trustee as transfer agent for
its common stock, and it maintains deposit accounts and conducts other banking
transactions with the trustee and its affiliates in the ordinary course of
business. The First National Bank of Chicago is one of a group of lenders under
the Company's $350 million bank credit facility.
S-6
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement between
the Company and the underwriters named below, the Company has agreed to sell to
each of the underwriters, and each of the underwriters has severally agreed to
purchase, the respective principal amount of the notes set forth opposite its
name below.
PRINCIPAL
UNDERWRITER AMOUNT
----------- ------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................................... $ 91,500,000
Donaldson, Lufkin & Jenrette Securities Corporation............ 19,500,000
Lehman Brothers Inc. .......................................... 19,500,000
NationsBanc Montgomery Securities LLC.......................... 19,500,000
------------
Total.......................................................... $150,000,000
============
In the purchase agreement, the underwriters have severally agreed, subject to
the terms and conditions set forth therein, to purchase all of the notes
offered hereby if any of the notes are purchased. The underwriters have advised
the Company that they propose initially to offer the notes to the public at the
public offering price set forth on the cover page of this prospectus
supplement, and to certain dealers at such price less a concession not in
excess of .35% of the principal amount. The underwriters may allow, and such
dealers may reallow, a discount not in excess of .25% of the principal amount
of the notes to certain other dealers. After the initial public offering, the
public offering price, concession and discount may be changed.
The notes are a new issue of securities with no established trading market.
The Company currently has no intention to list the notes on any securities
exchange. The Company has been advised by the underwriters that, following the
completion of the offering of the notes, the underwriters presently intend to
make a market in the notes, as permitted by applicable laws and regulations.
The underwriters, however, are under no obligation to do so and may discontinue
any market-making at any time without notice and at the sole discretion of the
underwriters. No assurance can be given as to the liquidity of any trading
market for the notes.
In order to facilitate the offering of the notes, the underwriters may engage
in transactions that stabilize, maintain or otherwise affect the price of the
notes.
Until the distribution of the notes is completed, the rules of the Commission
may limit the ability of the underwriters and certain selling group members to
bid for and purchase the notes. As an exemption to these rules, the
underwriters are permitted to engage in certain transactions that stabilize the
price of the notes. Such transactions consist of bids or purchases for the
purpose of pegging, fixing or maintaining the price of the notes. If the
underwriters create a short position in the notes in connection with this
offering (i.e., if they sell more notes than are referred to on the cover page
of this prospectus supplement), the underwriters may reduce that short position
by purchasing notes in the open market. In general, purchases of a security for
the purpose of stabilization or to reduce a short position could cause the
price of the security to be higher than it might be in the absence of such
purchases.
S-7
Neither the Company nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the notes. In addition, neither the
Company nor any of the underwriters makes any representation that the
underwriters will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
Certain of the underwriters and their affiliates have provided financial
advisory, investment banking and commercial banking services to the Company and
its affiliates in the past, for which they received customary fees, and may do
so in the future. In addition, an affiliate of NationsBanc Montgomery
Securities LLC is a lender under the Company's credit facilities and will
receive its proportionate share of the repayment of such credit facilities by
the Company with the net proceeds of the offering. See "Use of Proceeds."
The Company has agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended, or to contribute to payments the underwriters may be required to make
in respect thereof.
LEGAL MATTERS
The validity of the notes offered hereby will be passed upon for the Company
by Latham & Watkins, Los Angeles, California and for the underwriters by Brown
& Wood llp, New York, New York. Certain other legal matters with respect to the
notes offered hereby will be passed upon for the Company by Schreck Morris, Las
Vegas, Nevada. Latham & Watkins and Brown & Wood llp may rely on Schreck Morris
with respect to all matters of Nevada law.
S-8
PROSPECTUS
AUTOZONE, INC.
$400,000,000
DEBT SECURITIES, PREFERRED STOCK, COMMON STOCK,
DEBT WARRANTS, EQUITY WARRANTS AND UNITS
----------------
AutoZone, Inc. (the "Company"), directly or through agents, dealers or
underwriters designated from time to time, may offer, issue and sell, in one or
more series or issuances, up to $400,000,000 in the aggregate of (a) secured or
unsecured debt securities (the "Debt Securities") of the Company, in one or
more series, which may be either senior debt securities (the "Senior Debt
Securities") or subordinated debt securities (the "Subordinated Debt
Securities"), (b) shares of preferred stock of the Company, par value $.01 per
share (the "Preferred Stock"), in one or more series, (c) shares of common
stock of the Company, par value $.01 per share (the "Common Stock"), (d)
warrants to purchase Debt Securities (the "Debt Warrants"), (e) warrants to
purchase Common Stock or Preferred Stock (the "Equity Warrants" and together
with the Debt Warrants, the "Warrants") or (f) units consisting of two or more
of the foregoing securities (the "Units"), each on terms to be determined at
the time of sale. The Debt Securities may be issued as exchangeable and/or
convertible Debt Securities exchangeable for or convertible into shares of
Common Stock or Preferred Stock. The Preferred Stock may also be exchangeable
for and/or convertible into shares of Common Stock or another series of
Preferred Stock. The Debt Securities, the Preferred Stock, the Common Stock,
the Warrants and the Units are collectively referred to herein as the
"Securities." When a particular series of Securities is offered, a supplement
to this Prospectus (each, a "Prospectus Supplement") will be delivered with
this Prospectus. The Prospectus Supplement will set forth the terms of the
offering and sale of the offered Securities.
The Common Stock is traded on the New York Stock Exchange under the symbol
"AZO." Any Common Stock sold pursuant to a Prospectus Supplement will be listed
on the New York Stock Exchange. On July 15, 1998, the last reported sale price
of the Common Stock on the New York Stock Exchange was $36.0625 per share. The
Company has not yet determined whether any of the Debt Securities, Preferred
Stock, Warrants or Units offered hereby will be listed on any exchange or over-
the-counter market. If the Company decides to seek listing of any such
Securities, the Prospectus Supplement relating thereto will disclose such
exchange or market.
----------------
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.
----------------
The Securities will be sold directly by the Company, through agents, dealers
or underwriters as designated from time to time, or through a combination of
such methods. If agents of the Company or any dealers or underwriters are
involved in the sale of the Securities, the names of such agents, dealers or
underwriters and any applicable commissions or discounts will be set forth in
the applicable Prospectus Supplement. See "Plan of Distribution" for possible
indemnification arrangements with agents, dealers and underwriters.
This Prospectus may not be used to consummate sales of Securities unless
accompanied by the applicable Prospectus Supplement.
----------------
The date of this Prospectus is July 15, 1998.
CAUTIONARY LANGUAGE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus, including any documents that are incorporated by reference
as set forth in "Information Incorporated by Reference," contains forward-
looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended (the "Securities Act"), and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Such statements are
indicated by words or phrases such as "anticipate," "estimate," "project,"
"believe," and similar words or phrases. Such statements are subject to certain
risks, uncertainties or assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated or
projected.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (together with all
amendments and exhibits thereto, the "Registration Statement") under the
Securities Act with respect to the Securities offered hereby. This Prospectus
does not contain all of the information set forth in the Registration
Statement, part of which has been omitted in accordance with the rules and
regulations of the Commission. For further information about the Company and
the Securities offered hereby, reference is made to the Registration Statement,
including the exhibits filed as a part thereof and otherwise incorporated
therein. Statements made in this Prospectus as to the contents of any agreement
or other document referred to herein are qualified by reference to the copy of
such agreement or other document filed as an exhibit to the Registration
Statement or such other document, each such statement being qualified in its
entirety by such reference.
The Company is subject to the informational requirements of the Exchange Act
and, in accordance therewith, files periodic reports, proxy statements and
other information with the Commission. The Registration Statement, including
the exhibits thereto, as well as such reports and other information filed by
the Company with the Commission, can be inspected, without charge, and copied
at the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Room 1024, Washington D.C., 20549; 7 World Trade Center,
New York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. The Commission also maintains a site on the World Wide Web at
http://www.sec.gov that contains reports, proxy statements and other
information regarding registrants that file electronically with the Commission,
and certain of the Company's filings are available at such web site. Copies of
such materials can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. Reports and other information concerning the Company can also be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
2
INFORMATION INCORPORATED BY REFERENCE
The following documents filed with the Commission pursuant to the Exchange
Act are incorporated by reference in this Prospectus:
(1) the Company's Annual Report on Form 10-K for the year ended August
30, 1997 ("1997 Form 10-K");
(2) the Company's Quarterly Reports on Form 10-Q for the quarters ended
November 22, 1997 and February 14, 1998 and the Company's Quarterly Report
on Form 10-Q/A for the quarter ended May 9, 1998;
(3) the Company's Current Reports on Form 8-K dated May 11, 1998 and June
29, 1998; and
(4) all other documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this Prospectus and before the termination of the offering, which shall be
deemed to be a part hereof from the date of filing of such documents.
Any statement contained 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 incorporated or
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.
The earnings per share ("EPS") amounts in the 1997 Form 10-K and the Form 10-
Q for the quarter ended November 22, 1997 are presented in accordance with
Accounting Principles Board Opinion No. 15 "Earnings Per Share" ("APB 15"),
which was superceded with the adoption of Statement of Financial Accounting
Standards No. 128 "Earnings Per Share" ("SFAS 128"), initially adopted for the
quarterly period ended February 14, 1998. The presentation of EPS in the 1997
Form 10-K and Form 10-Q for the quarter ended November 22, 1997 incorporated
herein by reference have not been restated to conform to the provisions of SFAS
128, as the presentation does not vary materially from the APB 15 presentation.
This Prospectus may not be used to consummate sales of offered Securities
unless accompanied by a Prospectus Supplement. The delivery of this Prospectus
together with a Prospectus Supplement relating to particular offered Securities
in any jurisdiction shall not constitute an offer in the jurisdiction of any
other Securities covered by this Prospectus.
The Company will provide without charge to each person (including any
beneficial owner) to whom this Prospectus is delivered, upon request, copies of
any documents incorporated into this Prospectus by reference (other than
exhibits incorporated by reference into such document). Requests for documents
should be submitted to AutoZone, Inc., Attention: Investor Relations, 123 South
Front Street, Memphis, Tennessee 38103 (telephone (901) 495-7185). The
information relating to the Company contained in this Prospectus does not
purport to be comprehensive and should be read together with the information
contained in the documents incorporated or deemed to be incorporated by
reference herein.
3
THE COMPANY
The Company was organized in 1979 and is the nation's leading specialty
retailer of automotive parts and accessories, focusing primarily on "Do-It-
Yourself" customers. Each AutoZone store carries an extensive automotive
aftermarket 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. AutoZone stores
carry parts for domestic and foreign cars, vans and light trucks. AutoZone
stores also have a commercial sales program which provides commercial credit
and prompt delivery of parts and other products to local repair garages,
dealers and service stations. The Company does not perform automotive repairs
or installations.
In addition, the Company sells heavy duty truck parts through its TruckPro
stores and automotive diagnostic and repair information software through its
ALLDATA subsidiary.
The Company 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. The Company's stores are generally situated in high-
visibility locations and provide a distinctive merchandise presentation in an
attractive store environment.
The Company's executive offices are located at 123 South Front Street,
Memphis, Tennessee 38103, and its telephone number is (901) 495-6500. The
Company is a Nevada corporation.
References in this Prospectus to the "Company" refer to AutoZone, Inc. and
its consolidated subsidiaries unless the context otherwise requires.
4
USE OF PROCEEDS
Except as otherwise provided in the Prospectus Supplement, the net proceeds
from the sale of Securities offered hereby will be used for general corporate
purposes, which may include the reduction of outstanding indebtedness, working
capital increases, acquisitions or capital expenditures. Pending the
application of the net proceeds, the Company may invest such proceeds in short-
term, interest-bearing instruments or other investment-grade securities.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for the
Company for the periods indicated:
THIRTY-SIX
FISCAL YEAR ENDED WEEKS ENDED
-----------------------------------------------------------------------
AUGUST 28, AUGUST 27, AUGUST 26, AUGUST 31, AUGUST 30, MAY 10, MAY 9,
1993 1994 1995 1996 1997 1997 1998
---------- ---------- ---------- ---------- ---------- ------- ------
20.1 26.3 30.2 23.0 15.9 14.0 12.3
The ratio of earnings to fixed charges has been computed by dividing earnings
by fixed charges. Earnings consist of income before income taxes plus fixed
charges less capitalized interest. Fixed charges consist of interest on all
indebtedness, amortization of debt issuance costs and the interest portion of
rent expense.
GENERAL DESCRIPTION OF SECURITIES
The Company directly or through agents, dealers or underwriters designated
from time to time, may offer, issue and sell, together or separately, up to
$400,000,000 in the aggregate of (a) secured or unsecured debt securities (the
"Debt Securities") of the Company, in one or more series, which may be either
senior debt securities (the "Senior Debt Securities") or subordinated debt
securities (the "Subordinated Debt Securities"), (b) shares of preferred stock
of the Company, par value $0.01 per share (the "Preferred Stock"), in one or
more series, (c) shares of common stock of the Company, par value $0.01 per
share (the "Common Stock"), (d) warrants to purchase Debt Securities (the "Debt
Warrants"), (e) warrants to purchase Common Stock or Preferred Stock (the
"Equity Warrants" and together with the Debt Warrants, the "Warrants") or (f)
units consisting of two or more of the foregoing securities (the "Units"), each
on terms to be determined at the time of sale. The Debt Securities may be
issued as exchangeable and/or convertible Debt Securities exchangeable for or
convertible into shares of Common Stock or Preferred Stock. The Preferred Stock
may also be exchangeable for and/or convertible into shares of Common Stock or
another series of Preferred Stock. The Debt Securities, the Preferred Stock,
the Common Stock, the Warrants and the Units are collectively referred to
herein as the "Securities." When a particular series of Securities is offered,
a supplement to this Prospectus (each, a "Prospectus Supplement") will be
delivered with this Prospectus. The Prospectus Supplement will set forth the
terms of the offering and sale of the offered Securities.
5
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions of
the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement,
and the extent, if any, to which such general provisions do not apply to the
Debt Securities so offered, will be described in the Prospectus Supplement
relating to such Debt Securities.
The Senior Debt Securities will be issued under an indenture (the "Senior
Indenture") and the Subordinated Debt Securities will be issued under an
indenture (the "Subordinated Indenture"). Unless the context otherwise
requires, each of the Senior Indenture and the Subordinated Indenture is
referred to herein as the "Indenture." Each of the Indentures shall be entered
into between the Company and a trustee (the "Trustee"). The terms of the Debt
Securities will include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (the "TIA") as in
effect on the date of the Indenture. The Debt Securities will be subject to all
such terms, and potential purchasers of the Debt Securities are referred to the
Indenture and the TIA for a statement thereof. The following summary of certain
provisions of the Indenture does not purport to be complete and is qualified in
its entirety by reference to the Indenture, including the definitions therein
of certain terms used below. A copy of the proposed form of Indenture has been
filed as an exhibit to the Registration Statement of which this Prospectus is a
part. As used under this caption, unless the context otherwise requires,
"Offered Debt Securities" shall mean the Debt Securities offered by this
Prospectus and an accompanying Prospectus Supplement.
At May 9, 1998, the Company and its subsidiaries had no secured indebtedness
outstanding (excluding capital leases) and the Company had approximately $338
million of Senior Indebtedness (as defined below) outstanding. At May 9, 1998,
the Company's subsidiaries had no indebtedness outstanding (excluding capital
leases).
GENERAL
The Indenture will provide for the issuance of Debt Securities in series and
will not limit the principal amount of Debt Securities which may be issued
thereunder. (Section 301). In addition, except as provided under "Certain Other
Covenants" or in the Prospectus Supplement relating to such Debt Securities,
the Indenture will not limit the amount of additional indebtedness the Company
may incur.
The applicable Prospectus Supplement or Prospectus Supplements will describe
the following terms of the series of Offered Debt Securities in respect of
which this Prospectus is being delivered: (1) the title of the Offered Debt
Securities; (2) whether the Offered Debt Securities are Senior Debt Securities
or Subordinated Debt Securities or any combination thereof; (3) the price or
prices (expressed as a percentage of the aggregate principal amount thereof) at
which the Offered Debt Securities will be issued; (4) any limit upon the
aggregate principal amount of the Offered Debt Securities; (5) the date or
dates on which the principal of the Offered Debt Securities is payable; (6) the
rate or rates (which may be fixed or variable) at which the Offered Debt
Securities will bear interest, if any, or the manner in which such rate or
rates are determined; (7) the date or dates from which any such interest will
accrue, the interest payment dates on which any such interest on the
6
Offered Debt Securities will be payable and the record dates for the
determination of holders to whom such interest is payable; (8) the place or
places where the principal of and any interest on the Offered Debt Securities
will be payable; (9) the obligation of the Company, if any, to redeem,
repurchase or repay the Offered Debt Securities in whole or in part pursuant to
any sinking fund or analogous provisions or at the option of the holders and
the price or prices at which and the period or periods within which and the
terms and conditions upon which the Offered Debt Securities shall be redeemed,
repurchased or repaid pursuant to such obligation; (10) the denominations in
which any Offered Debt Securities will be issuable, if other than denominations
of U.S. $1,000 and any integral multiple thereof; (11) if other than the
principal amount thereof, the portion of the principal amount of the Offered
Debt Securities of the series which will be payable upon declaration of the
acceleration of the maturity thereof; (12) any addition to or change in the
covenants which apply to the Offered Debt Securities; (13) any addition to or
change in the Events of Default with respect to the Offered Debt Securities;
(14) whether the Offered Debt Securities will be issued in whole or in part in
global form, the terms and conditions, if any, upon which such global Offered
Debt Securities may be exchanged in whole or in part for other individual
securities, and the depositary for the Offered Debt Securities; (15) the terms
and conditions, if any, upon which the Offered Debt Securities shall be
exchanged for or converted into Common Stock or Preferred Stock; (16) the
nature and terms of the security for any secured Offered Debt Securities; (17)
the form and terms of any guarantee of the Offered Debt Securities; (18) if the
principal amount payable at the stated maturity of any of such Offered Debt
Securities will not be determinable as of any one or more dates prior to the
stated maturity, the amount which will be deemed to be such principal amount as
of any such date for any purpose, including the principal amount thereof which
will be due and payable upon any maturity other than the stated maturity or
which will be deemed to be outstanding as of any such date (or, in any such
case, the manner in which such deemed principal amount is to be determined);
(19) if applicable, that such Offered Debt Securities, in whole or any
specified part, are defeasible pursuant to the provisions of the Indenture
described under "--Defeasance and Covenant Defeasance--Defeasance and
Discharge" or "--Defeasance and Covenant Defeasance--Covenant Defeasance", or
under both such captions; (20) whether the Offered Debt Securities will be
listed on any securities exchange or included in any other market or quotation
or trading system; (21) any trustee or fiscal or authenticating or payment
agent, issuing and paying agent, transfer agent or registrar or any other
person or entity to act in connection with such Offered Debt Securities for or
on behalf of the holders thereof or the Company or an affiliate; and (22) any
other terms of the Offered Debt Securities which terms shall not be
inconsistent with the provisions of the Indenture.
Debt Securities may be issued at a discount from their principal amount
("Original Issue Discount Securities"). Federal income tax considerations and
other special considerations applicable to any such Original Issue Discount
Securities will be described in the applicable Prospectus Supplement.
Debt Securities may be issued in bearer form, with or without coupons.
Federal income tax considerations and other special considerations applicable
to bearer securities will be described in the applicable Prospectus Supplement.
STATUS OF DEBT SECURITIES
The Senior Debt Securities will rank pari passu with all other unsecured and
unsubordinated indebtedness of the Company.
7
The obligations of the Company pursuant to Subordinated Debt Securities will
be subordinate in right of payment to all Senior Indebtedness of the Company.
With respect to any series of Subordinated Debt Securities, "Senior
Indebtedness" of the Company will be defined to mean the principal of, and
premium, if any, and any interest (including interest accruing subsequent to
the commencement of any proceeding for the bankruptcy or reorganization of the
Company under any applicable bankruptcy, insolvency or similar law now or
hereafter in effect) and all other monetary obligations of every kind or nature
due on or in connection with (a) all indebtedness of the Company (including
Senior Debt Securities) whether heretofore or hereafter incurred (i) for
borrowed money or (ii) in connection with the acquisition by the Company or a
subsidiary of the Company of assets other than in the ordinary course of
business, for the payment of which the Company is liable directly or indirectly
by guarantee, letter of credit, obligation to purchase or acquire or otherwise,
or the payment of which is secured by a lien, charge or encumbrance on assets
acquired by the Company, (b) amendments, modifications, renewals, extensions
and deferrals of any such indebtedness, and (c) any indebtedness issued in
exchange for any such indebtedness (clauses (a) through (c) hereof being
collectively referred to herein as "Debt"); provided, however, that the
following will not constitute Senior Indebtedness with respect to Subordinated
Debt Securities: (1) any Debt as to which, in the instrument evidencing such
Debt or pursuant to which such Debt was issued, it is expressly provided that
such Debt is subordinate in right of payment to all Debt of the Company not
expressly subordinated to such Debt; and (2) any Debt of the Company in respect
of Subordinated Debt Securities and any Debt which by its terms refers
explicitly to the Subordinated Debt Securities and states that such Debt shall
not be senior in right of payment.
No payment pursuant to the Subordinated Debt Securities may be made unless
all amounts of principal, premium, if any, and interest then due on all
applicable Senior Indebtedness of the Company shall have been paid in full or
if there shall have occurred and be continuing beyond any applicable grace
period a default in any payment with respect to any such Senior Indebtedness,
or if there shall have occurred any event of default with respect to any such
Senior Indebtedness permitting the holders thereof to accelerate the maturity
thereof, or if any judicial proceeding shall be pending with respect to any
such default. (Subordinated Indenture, Section 1401). However, the Company may
make payments pursuant to the Subordinated Debt Securities if a default in
payment or an event of default with respect to the Senior Indebtedness
permitting the holder thereof to accelerate the maturity thereof has occurred
and is continuing and judicial proceedings with respect thereto have not been
commenced within a certain number of days of such default in payment or event
of default. Upon any distribution of the assets of the Company upon
dissolution, winding-up, liquidation or reorganization, the holders of
Senior Indebtedness of the Company will be entitled to receive payment in full
of principal, premium, if any, and interest (including interest accruing
subsequent to the commencement of any proceeding for the bankruptcy or
reorganization of the Company under any applicable bankruptcy, insolvency or
similar law now or hereafter in effect) before any payment is made on the
Subordinated Debt Securities. By reason of such subordination, in the event of
insolvency of the Company, holders of Senior Indebtedness of the Company may
receive more, ratably, and holders of the Subordinated Debt Securities having a
claim pursuant to the Subordinated Debt Securities may receive less, ratably,
than the other creditors of the Company. Such subordination will not prevent
the occurrence of any event of default (an "Event of Default") in respect of
the Subordinated Debt Securities.
8
If the Company offers Debt Securities, the applicable Prospectus Supplement
will set forth the aggregate amount of outstanding indebtedness, if any, as of
the most recent practicable date that by the terms of such Debt Securities
would be senior to such Debt Securities. The applicable Prospectus Supplement
will also set forth any limitation on the issuance by the Company of any
additional Senior Indebtedness.
CONVERSION RIGHTS
The terms, if any, on which Debt Securities of a series may be exchanged for
or converted into shares of Common Stock or Preferred Stock will be set forth
in the Prospectus Supplement relating thereto. (Senior Indenture, Article 14;
Subordinated Indenture, Article 15).
EXCHANGE, REGISTRATION, TRANSFER AND PAYMENT
Unless otherwise specified in the applicable Prospectus Supplement, payment
of principal, premium, if any, and any interest on the Debt Securities will be
payable, and the exchange of and the transfer of Debt Securities will be
registerable, at the office of the Trustee or at any other office or agency
maintained by the Company for such purpose subject to the limitations of the
Indenture. (Sections 305 and 1002). Unless otherwise indicated in the
applicable Prospectus Supplement, the Debt Securities will be issued in
denominations of U.S. $1,000 or integral multiples thereof. No service charge
will be made for any registration of transfer or exchange of the Debt
Securities, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge imposed in connection therewith. (Sections
302 and 305).
GLOBAL DEBT SECURITIES
The Debt Securities of a series may be issued in the form of one or more
Global Securities (the "Global Securities") that will be deposited with a
depositary (the "Depositary") or its nominee identified in the applicable
Prospectus Supplement. In such a case, one or more Global Securities will be
issued in a denomination or aggregate denominations equal to the portion of the
aggregate principal amount of outstanding Debt Securities of the series to be
represented by such Global Security or Securities. Each Global Security will be
deposited with such Depositary or nominee or a custodian therefor and will bear
a legend regarding the restrictions on exchanges and registration of transfer
thereof referred to below and any such other matters as may be provided for
pursuant to the applicable Indenture.
Notwithstanding any provision of the Indenture or any Debt Security described
herein, no Global Security may be transferred to, or registered or exchanged
for Debt Securities registered in the name of, any person or entity other than
the Depositary for such Global Security or any nominee of such Depositary, and
no such transfer may be registered, unless (i) the Depositary has notified the
Company that it is unwilling or unable to continue as Depositary for such
Global Security or has ceased to be qualified to act as such as required by the
applicable Indenture, (ii) the Company executes and delivers to the Trustee an
order that such Global Security shall be so transferable, registerable and
exchangeable, and such transfers shall be registerable, or (iii) there shall
exist such circumstances, if any, as may be described in the applicable
Prospectus Supplement. All Debt Securities issued in exchange for a Global
Security or any portion thereof will be registered in such names as the
Depositary may direct. (Section 303).
9
The specific terms of the depositary arrangement with respect to any portion
of a series of Debt Securities to be represented by a Global Security will be
described in the applicable Prospectus Supplement. The Company expects that the
following provisions will apply to depositary arrangements.
Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities which are to be represented by a Global Security to be deposited
with or on behalf of a Depositary will be represented by a Global Security
registered in the name of such Depositary or its nominee. Upon the issuance of
such Global Security, and the deposit of such Global Security with or on behalf
of the Depositary for such Global Security, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts
of the Debt Securities represented by such Global Security to the accounts of
institutions that have accounts with such Depositary or its nominee
("participants"). The accounts to be credited will be designated by the
underwriters or agents of such Debt Securities or by the Company, if such Debt
Securities are offered and sold directly by the Company. Ownership of
beneficial interests in such Global Security will be limited to participants or
persons that may hold interests through participants. Ownership of beneficial
interests by participants in such Global Security will be shown on, and the
transfer of that ownership interest will be effected only through, records
maintained by the Depositary or its nominee for such Global Security. Ownership
of beneficial interests in such Global Security by persons that hold through
participants will be shown on, and the transfer of that ownership interest
within such participant will be effected only through, records maintained by
such participant. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in
certificate form. The foregoing limitations and such laws may impair the
ability to transfer beneficial interests in such Global Securities.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture. Unless otherwise specified in the applicable Prospectus Supplement,
owners of beneficial interests in such Global Security will not be entitled to
have Debt Securities of the series represented by such Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of Debt Securities of such series in certificate form and will not be
considered the holders thereof for any purposes under the Indenture.
Accordingly, each person owning a beneficial interest in such Global Security
must rely on the procedures of the Depositary and, if such person is not a
participant, on the procedures of the participant through which such person
owns its interest, to exercise any rights of a holder under the Indenture. If
the Company requests any action of holders or if an owner of a beneficial
interest in such Global Security desires to give any notice or take any action
a holder is entitled to give or take under the Indenture, the Depositary will
authorize the participants to give such notice or take such action, and
participants would authorize beneficial owners owning through such participants
to give such notice or take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
Notwithstanding any other provisions to the contrary in the Indenture, the
rights of the beneficial owners of the Debt Securities to receive payment of
the principal and premium, if any, of and interest on such Debt Securities, on
or after the respective due dates expressed in such Debt
10
Securities, or to institute suit for the enforcement of any such payment on or
after such respective dates, shall not be impaired or affected without the
consent of the beneficial owners.
Principal of and any interest on a Global Security will be payable in the
manner described in the applicable Prospectus Supplement.
OPTIONAL REDEMPTION
Unless otherwise specified in the applicable Prospectus Supplement, the Debt
Securities will be redeemable, in whole or in part, at the option of the
Company at any time at a redemption price equal to the greater of (i) 100% of
the principal amount of such Debt Securities or (ii) as determined by an
Independent Investment Banker, the sum of the present values of the remaining
scheduled payments of principal and interest thereon discounted to the
redemption date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months ) at the Adjusted Treasury Rate, plus, in each case,
accrued interest thereon to the date of redemption.
"Adjusted Treasury Rate" means, with respect to any redemption date, the rate
per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date, plus .20%.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Debt Securities to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of such Debt Securities.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is
not published or does not contain such prices on such Business Day, (A) the
Reference Treasury Dealer Quotations for such redemption date, after excluding
the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the
Trustee obtains fewer than three such Reference Treasury Dealer Quotations, the
average of all such Quotations.
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by the Trustee after consultation with the Company.
"Reference Treasury Dealer" means each of Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation and
Lehman Brothers Inc. and their respective successors; provided, however, that
if any of the foregoing shall cease to be a primary U.S. Government securities
dealer in New York City (a "Primary Treasury Dealer"), the Company shall
substitute therefor another Primary Treasury Dealer.
11
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.
Notice of any redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of the Debt Securities to be
redeemed.
Unless the Company defaults in payment of the redemption price, on and after
the redemption date, interest will cease to accrue on the Debt Securities or
portions thereof called for redemption.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indenture will provide that the Company may not consolidate with or merge
with or into, or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its property or assets to any person in one or more
related transactions unless, among other things, (a) the Company is the
surviving corporation or the entity or the person formed by or surviving any
such consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized and existing under the laws of the United
States, any state thereof or the District of Columbia; (b) the person formed by
or surviving any such consolidation or merger (if other than the Company) or
the entity or person to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made assumes all the
obligations of the Company under the Debt Securities and the Indenture; and
(c) immediately prior to and after giving effect to the transaction, no Event
of Default shall have occurred and be continuing. (Section 801).
Notwithstanding the foregoing, any subsidiary of the Company may consolidate
with, merge into or transfer all or part of its properties and assets to the
Company.
CERTAIN OTHER COVENANTS
Limitation on Liens
With respect to any series of Debt Securities, the Senior Indenture will
provide that the Company will not, and will not permit any of its subsidiaries
to, create, incur, issue, assume or guarantee any Debt of the Company or any of
its subsidiaries secured by a Lien (other than Permitted Liens) upon any
Property, or upon shares of Capital Stock or evidence of Debt issued by any of
the Company's subsidiaries and owned by the Company or by any other subsidiary
of the Company, owned by the Company on the date of issuance of such Debt
Securities, without making effective provision to secure all of the Senior Debt
Securities, equally and ratably with any and all other Debt thereby secured, so
long as such Debt shall be so secured.
Certain Definitions
The Senior Indenture defines the following terms used in this Section (Senior
Indenture, Section 101):
"Capital Stock" means the capital stock of every class whether now or
hereafter authorized, regardless of whether such capital stock shall be limited
to a fixed sum or percentage with respect to
12
the rights of the holders thereof to participate in dividends and in the
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of such corporation.
"Consolidated Net Tangible Assets" means the aggregate amount of assets (less
applicable reserves and other properly deductible items) of the Company and its
consolidated subsidiaries after deducting therefrom (a) all current liabilities
(excluding any Debt for money borrowed having a maturity of less than 12 months
from the date of the most recent consolidated balance sheet of the Company but
which by its terms is renewable or extendible beyond 12 months from such date
at the option of the borrower) and (b) all goodwill, trade names, patents,
unamortized debt discount and expense and other like intangibles, all as set
forth on the most recent consolidated balance sheet of the Company and its
consolidated subsidiaries and computed in accordance with generally accepted
accounting principles.
"Lien" means, with respect to any Property, any mortgage or deed of trust,
pledge, hypothecation, security interest, lien, encumbrance or other security
arrangement of any kind or nature on or with respect to such Property.
"Permitted Liens" means:
(i) Liens (other than Liens created or imposed under ERISA) for taxes,
assessments or governmental changes or levies not yet due or Liens for
taxes being contested in good faith by appropriate proceedings for which
adequate reserves determined in accordance with GAAP have been established
(and as to which the Property subject to any such Lien is not yet subject
to foreclosure, sale or loss on account thereof);
(ii) statutory Liens of landlords and Liens of mechanics, materialmen and
suppliers and other Liens imposed by law or pursuant to customary
reservations or retentions of title arising in the ordinary course of
business, provided that any such Liens which are material secure only
amounts not yet due and payable or, if due and payable, are unfiled and no
other action has been taken to enforce the same or are being contested in
good faith by appropriate proceedings for which adequate reserves
determined in accordance with GAAP have been established (and as to which
the Property subject to any such Lien is not yet subject to foreclosure,
sale or loss on account thereof);
(iii) Liens (other than Liens created or imposed under ERISA) incurred or
deposits made by the Company and its subsidiaries in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
(iv) Liens in connection with attachments or judgments (including
judgment or appeal bonds), provided that the judgments secured shall,
within 30 days after the entry thereof, have been discharged or execution
thereof stayed pending appeal, or shall have been discharged within 30 days
after the expiration of any such stay;
13
(v) easements, rights-of-way, restrictions (including zoning
restrictions), minor defects or irregularities in title and other similar
charges or encumbrances not, in any material respect, impairing the use of
the encumbered Property for its intended purposes;
(vi) leases or subleases granted to others not interfering in any
material respect with the business of the Company and its subsidiaries
taken as a whole;
(vii) Liens on Property at the time such Property is acquired by the
Company or any of its subsidiaries;
(viii) Liens on Property of any Person at the time such Person becomes a
subsidiary of the Company;
(ix) Liens on receivables from customers sold to third parties pursuant
to credit arrangements in the ordinary course of business;
(x) Liens existing on the date of the Senior Indenture to secure Debt
existing on the date of the Senior Indenture or any extensions, amendments,
renewals, refinancings, replacements or other modifications thereto;
(xi) Liens on any Property created, assumed or otherwise brought into
existence in contemplation of the sale or other disposition of the
underlying Property, whether directly or indirectly, by way of share
disposition or otherwise;
(xii) Liens securing Debt of a subsidiary of the Company to the Company
or to another subsidiary of the Company;
(xiii) Liens in favor of the United States of America or any State
thereof, or any department, agency or instrumentality or political
subdivision thereof, to secure partial, progress, advance or other
payments;
(xiv) Liens to secure Debt of joint ventures in which the Company or any
of its subsidiaries has an interest, to the extent such Liens are on
Property of, or equity interests in, such joint ventures; and
(xv) other Liens on Property of the Company and its subsidiaries;
provided that (a) with respect to Property existing as of the date of the
Senior Indenture (including Property acquired to replace Property existing
on the date of the Senior Indenture and Property acquired from the sale or
refinancing of Property existing on the date of the Senior Indenture), the
aggregate fair market value of such Property does not exceed 15% of the
Company's Consolidated Net Tangible Assets or (b) with respect to Property
acquired after the date of the Senior Indenture, such Property shall be
acquired in the ordinary course of business.
"Property" means any building, structure or other facility, together with the
land upon which it is erected and fixtures comprising a part thereof, used
primarily for selling automotive parts and accessories or the warehousing or
distributing of such products, owned or leased by the Company or any subsidiary
of the Company.
Other Covenants
The applicable Prospectus Supplement will describe any material covenants in
respect of a series of Debt Securities. Other than the covenants of the Company
included in the Indenture as
14
described above or as described in the applicable Prospectus Supplement, the
Debt Securities will not have the benefit of any covenants that limit or
restrict the Company's business or operations or the incurrence of indebtedness
by the Company, and there are no covenants or other provisions in the Indenture
providing for a put or increased interest or otherwise that would afford
holders of Debt Securities additional protection in the event of a
recapitalization transaction, a change of control of the Company or a highly
leveraged transaction.
EFFECT OF CORPORATE STRUCTURE
The Debt Securities are obligations exclusively of the Company. Because the
operations of the Company are currently conducted through subsidiaries, the
cash flow and the consequent ability to service debt of the Company, including
the Debt Securities, are dependent, in part, upon the earnings of its
subsidiaries and the distribution of those earnings to the Company or upon
loans or other payments of funds by those subsidiaries to the Company. The
subsidiaries are separate and distinct legal entities and have no obligation,
contingent or otherwise, to pay any amounts due pursuant to the Debt Securities
or to make any funds available therefor, whether by dividends, loans or other
payments. In addition, the payment of dividends and the making of loans and
advances to the Company by its subsidiaries may be subject to statutory or
contractual restrictions, are contingent upon the earnings of those
subsidiaries and are subject to various business considerations.
The Debt Securities will be effectively subordinated to all indebtedness and
other liabilities, including current liabilities and commitments under leases,
if any, of the Company's subsidiaries. Any right of the Company to receive
assets of any of its subsidiaries upon liquidation or reorganization of the
subsidiary (and the consequent right of the holders of the Debt Securities to
participate in those assets) will be effectively subordinated to the claims of
that subsidiary's creditors (including trade creditors), except to the extent
that the Company is itself recognized as a creditor of such subsidiary, in
which case the claims of the Company would still be subordinated to any
security interests in the assets of such subsidiary and any indebtedness of
such subsidiary senior to that held by the Company.
NO RESTRICTION ON SALE OR ISSUANCE OF STOCK OF SUBSIDIARIES
The Indentures contain no covenant that the Company will not sell, transfer
or otherwise dispose of any shares of, or securities convertible into, or
options, warrants or rights to subscribe for or purchase shares of, voting
stock of any of its subsidiaries, nor does it prohibit any subsidiary from
issuing any shares of, securities convertible into, or options, warrants or
rights to subscribe for or purchase shares of, voting stock of such subsidiary.
EVENTS OF DEFAULT
Unless otherwise specified in the applicable Prospectus Supplement, the
following will constitute Events of Default under the Indenture with respect to
Debt Securities of any series: (a) failure to pay principal of (or premium, if
any, on) any Debt Security of that series when due and payable at maturity,
upon redemption or otherwise; (b) failure to pay any interest on any Debt
Security of that series when due, and the Default continues for thirty days;
(c) default in the deposit of any mandatory sinking fund payment, when and as
due by the terms of the Securities of that series;
15
(d) the Company fails to comply with any of its other agreements in the Debt
Securities of that series or in the Indenture with respect to that series and
the Default continues for the period and after the notice provided therein (and
described below); (e) default in the payment of principal when due or resulting
in acceleration of other Debt of the Company where the aggregate principal
amount with respect to which such default or acceleration has occurred exceeds
$20 million, providing that such Event of Default will be cured or waived if
the default that resulted in the acceleration of such other indebtedness is
cured or waived or such indebtedness is discharged; and (f) certain events of
bankruptcy, insolvency or reorganization. A Default under clause (d) or (e)
above is not an Event of Default with respect to a particular series of Debt
Securities until the Trustee or the holders of at least 25% in principal amount
of the then outstanding Debt Securities of that series notify the Company of
the Default and the Company does not cure the Default within sixty days after
receipt of the notice in the event of a Default under clause (d) or fifteen
days after receipt of the notice in the event of a Default under clause (e).
(Section 501). The notice must specify the Default, demand that it be remedied
and state that the notice is a "Notice of Default."
If an Event of Default with respect to outstanding Debt Securities of any
series (other than an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization) shall occur and be continuing, either
the Trustee or the holders of at least 25% in principal amount of the
outstanding Debt Securities of that series by notice, as provided in the
Indenture, may declare the unpaid principal amount (or, if the Debt Securities
of that series are Original Issue Discount Securities, such lesser amount as
may be specified in the terms of that series) of, and any accrued and unpaid
interest on, all Debt Securities of that series to be due and payable
immediately. However, at any time after a declaration of acceleration with
respect to Debt Securities of any series has been made, but before a judgment
or decree based on such acceleration has been obtained, the holders of a
majority in principal amount of the outstanding Debt Securities of that series
may, under certain circumstances, rescind and annul such acceleration. (Section
502). For information as to waiver of defaults, see "Modification and Waiver"
below.
The Indenture will provide that, subject to the duty of the Trustee during an
Event of Default to act with the required standard of care, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request or direction of any of the holders, unless such holders shall
have offered to the Trustee reasonable security or indemnity. (Sections 601 and
603). Subject to certain provisions, including those requiring security or
indemnification of the Trustee, the holders of a majority in principal amount
of the outstanding Debt Securities of any series will have the right to direct
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, with respect to the Debt Securities of that series. (Section 512).
The Company will be required to furnish to the Trustee under the Indenture
annually a statement as to the performance by the Company of its obligations
under that Indenture and as to any default in such performance. (Section 1005).
MODIFICATION AND WAIVER
Subject to certain exceptions, the Company and the Trustee may amend the
Indenture or the Debt Securities with the written consent of the holders of a
majority in principal amount of the then
16
outstanding Debt Securities of each series affected by the amendment with each
series voting as a separate class. The holders of a majority in principal
amount of the then outstanding Debt Securities of any series may also waive
compliance in a particular instance by the Company with any provision of the
Indenture with respect to the Debt Securities of that series; provided,
however, that without the consent of each holder of Debt Securities affected,
an amendment or waiver may not, among other things, (i) reduce the percentage
of the principal amount of Debt Securities whose holders must consent to an
amendment or waiver; (ii) reduce the rate or change the time for payment of
interest on any Debt Security (including default interest); (iii) reduce the
principal of, premium, if any, or change the fixed maturity of any Debt
Security, or reduce the amount of, or postpone the date fixed for, redemption
or the payment of any sinking fund or analogous obligation with respect
thereto; (iv) make any Debt Security payable in currency other than that stated
in the Debt Security; (v) make any change in the provisions concerning waivers
of Default or Events of Default by holders or the rights of holders to recover
the principal of, premium, if any, or interest on, any Debt Security;
(vi) waive a default in the payment of the principal of, or interest on, any
Debt Security, except as otherwise provided in the Indenture or (vii) reduce
the principal amount of Original Issue Discount Securities payable upon
acceleration of the maturity thereof. (Sections 901 and 902). The Company and
the Trustee may amend the Indenture or the Debt Securities without notice to or
the consent of any holder of a Debt Security to, among other things: (i) cure
any ambiguity, defect or inconsistency; (ii) comply with the Indenture's
provisions with respect to successor corporations; (iii) comply with any
requirements of the Commission in connection with the qualification of the
Indenture under the TIA; (iv) provide for uncertificated Debt Securities in
addition to or in place of certificated Debt Securities; (v) add to, change or
eliminate any of the provisions of the Indenture in respect of one of more
series of Debt Securities, provided, however, that any such addition, change or
elimination (A) shall neither (1) apply to any Debt Security of any series
created prior to the execution of such amendment and entitled to the benefit of
such provision, nor (2) modify the rights of a holder of any such Debt Security
with respect to such provision, or (B) shall become effective only when there
is no outstanding Debt Security of any series created prior to such amendment
and entitled to the benefit of such provision; (vi) make any change that does
not adversely affect in any material respect the interest of any holder; or
(vii) establish additional series of Debt Securities as permitted by the
Indenture.
The holders of a majority in principal amount of the then outstanding Debt
Securities of any series, by notice to the Company and the Trustee, may waive
an existing Default or Event of Default and its consequences except a Default
or Event of Default in the payment of the principal of (or premium, if any), or
any interest on, any Debt Security with respect to the Debt Securities of that
series or in the payment of any sinking fund installment with respect to the
Securities of that series or in respect of any provision in the Indenture which
cannot be modified or amended without the consent of the holder of each
outstanding Debt Security of such series affected; provided, however, that the
holders of a majority in principal amount of the outstanding Debt Securities of
any series may rescind an acceleration and its consequences, including any
related payment default that resulted from such acceleration. (Section 513).
DEFEASANCE OF DEBT SECURITIES AND CERTAIN COVENANTS IN CERTAIN CIRCUMSTANCES
Legal Defeasance. Unless otherwise specified in the applicable Prospectus
Supplement, the Indenture will provide that the Company may be discharged from
any and all obligations in respect
17
of the Debt Securities of any series (except for certain obligations to
register the transfer or exchange of Debt Securities of such series, to replace
stolen, lost or mutilated Debt Securities of such series, and to maintain
paying agencies) upon the deposit with the Trustee, in trust, of money and/or
U.S. government obligations, that, through the payment of interest and
principal in respect thereof in accordance with their terms, will provide money
in an amount sufficient in the opinion of a nationally recognized firm of
independent public accountants to pay and discharge each installment of
principal, premium, if any, and interest, if any, on and any mandatory sinking
fund payments in respect of the Debt Securities of such series on the stated
maturity of such payments in accordance with the terms of the Indenture and
such Debt Securities. Such discharge may occur only if, among other things, the
Company has received from, or there has been published by, the United States
Internal Revenue Service a ruling, or, since the date of execution of the
Indenture, there has been a change in the applicable United States federal
income tax law, in either case to the effect that holders of the Debt
Securities of such series will not recognize income, gain or loss for United
States federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to United States federal income tax on the same
amount and in the same manner and at the same times as would have been the case
if such deposit, defeasance and discharge had not occurred.
Defeasance of Certain Covenants. Unless otherwise specified in the applicable
Prospectus Supplement, the Indenture will provide that, upon compliance with
certain conditions, the Company may omit to comply with the restrictive
covenants contained in the Indenture, as well as any additional covenants or
Events of Default contained in a supplement to the Indenture, a Board
Resolution or an Officers' Certificate delivered pursuant thereto. The
conditions include: the deposit with the Trustee of money and/or U.S.
government obligations, that, through the payment of interest and principal in
respect thereof in accordance with their terms, will provide money in an amount
sufficient in the opinion of a nationally recognized firm of independent public
accountants to pay principal, premium, if any, and interest, if any, on and any
mandatory sinking fund payments in respect of the Debt Securities of such
series on the stated maturity of such payments in accordance with the terms of
the Indenture and such Debt Securities; and the delivery to the Trustee of an
opinion of counsel to the effect that the holders of the Debt Securities of
such series will not recognize income, gain or loss for United States federal
income tax purposes as a result of such deposit and related covenant defeasance
and will be subject to United States federal income tax in the same amount and
in the same manner and at the same times as would have been the case if such
deposit and related covenant defeasance had not occurred.
Defeasance and Events of Default. In the event the Company exercises its
option to omit compliance with certain covenants of the Indenture with respect
to any series of Debt Securities and the Debt Securities of such series are
declared due and payable because of the occurrence of any Event of Default, the
amount of money and/or U.S. government obligations on deposit with the Trustee
will be sufficient to pay amounts due on the Debt Securities of such series at
the time of their stated maturity but may not be sufficient to pay amounts due
on the Debt Securities of such series at the time of the acceleration resulting
from such Event of Default. However, the Company will remain liable for such
payments.
18
REGARDING THE TRUSTEES
The First National Bank of Chicago is the Trustee under the Senior Indenture.
Notice to the Senior Trustee Bank should be directed to its Corporate Trust
Office, located at One First National Plaza, Suite 0126, Chicago, Illinois
60670-0126, Attention: Corporate Trust Administrator.
The First National Bank of Chicago is the Trustee under the Subordinated
Indenture. Notice to the Subordinated Trustee Bank should be directed to its
Corporate Trust Office, located at One First National Plaza, Suite 0126,
Chicago, Illinois 60670-0126, Attention: Corporate Trust Administrator.
The Indenture and provisions of the TIA incorporated by reference therein
contain certain limitations on the rights of the Trustee, should it become a
creditor of the Company, to obtain payment of claims in certain cases, or to
realize on certain property received in respect of any such claim, as security
or otherwise. The Trustee and its affiliates may engage in, and will be
permitted to continue to engage in, other transactions with the Company and its
affiliates; provided, however, that if it acquires any conflicting interest (as
defined in the TIA), it must eliminate such conflict or resign.
The holders of a majority in principal amount of the then outstanding Debt
Securities of any series will have the right to direct the time, method and
place of conducting any proceeding for exercising any remedy available to the
Trustee. The TIA and the Indenture provide that in case an Event of Default
shall occur (and be continuing), the Trustee will be required, in the exercise
of its rights and powers, to use the degree of care and skill of a prudent
person in the conduct of such person's affairs. Subject to such provision, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request of any of the holders of the Debt Securities
issued thereunder, unless they have offered to the Trustee indemnity
satisfactory to it.
19
DESCRIPTION OF PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. Certain other terms of any series of the
Preferred Stock offered by any Prospectus Supplement will be described in such
Prospectus Supplement. The description of certain provisions of the Preferred
Stock set forth below and in any Prospectus Supplement does not purport to be
complete and is subject to and qualified in its entirety by reference to the
Articles of Incorporation and the Amendment to Articles of Incorporation (as
amended, the "Articles of Incorporation") and the certificate of designations
(a "Certificate of Designations") relating to each series of the Preferred
Stock which will be filed with the Commission and incorporated by reference in
the Registration Statement of which this Prospectus is a part at or prior to
the time of the issuance of such series of the Preferred Stock.
GENERAL
The Company has authority to issue 1,000,000 shares of preferred stock, $.01
par value per share ("preferred stock of the Company," which term, as used
herein, includes the Preferred Stock offered hereby). As of June 30, 1998, the
Company had no shares of preferred stock of the Company outstanding.
Prior to issuance of shares of each series, the Board of Directors is
required by the Nevada Revised Statutes Chapter 78 (the "Nevada Code") and the
Articles of Incorporation to adopt resolutions and file a Certificate of
Designation with the Secretary of State of the State of Nevada, fixing for each
such class or series the designations, powers, preferences and rights of the
shares of such class or series and the qualifications, limitations or
restrictions thereon, including, but not limited to, dividend rights, dividend
rate or rates, conversion rights, voting rights, rights and terms of redemption
(including sinking fund provisions), the redemption price or prices, and the
liquidation preferences as are permitted by the Nevada Code. The Board of
Directors could authorize the issuance of shares of Preferred Stock with terms
and conditions which could have the effect of discouraging a takeover or other
transaction which holders of some, or a majority, of such shares might believe
to be in their best interests or in which holders of some, or a majority, of
such shares might receive a premium for their shares over the then-market price
of such shares.
Subject to limitation prescribed by the Nevada Code, the Articles of
Incorporation and the Bylaws of the Company, the Board of Directors of the
Company is authorized without further stockholder action to provide for the
issuance of up to 1,000,000 shares of preferred stock of the Company, in one or
more series, with such voting powers, full or limited, and with such
designations, preferences and relative participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, as shall be
stated in the resolution or resolutions providing for the issuance of a series
of such stock adopted, at any time or from time to time, by the Board of
Directors of the Company (as used herein the term "Board of Directors of the
Company" includes any duly authorized committee thereof).
The Preferred Stock shall have the dividend, liquidation, redemption and
voting rights set forth below unless otherwise provided in a Prospectus
Supplement relating to a particular series of the Preferred Stock. Reference is
made to the Prospectus Supplement relating to the particular series of
20
the Preferred Stock offered thereby for specific terms, including: (i) the
designation and stated value per share of such Preferred Stock and the number
of shares offered; (ii) the amount of liquidation preference per share; (iii)
the initial public offering price at which such Preferred Stock will be issued;
(iv) the dividend rate (or method of calculation), the dates on which dividends
shall be payable and the dates from which dividends shall commence to cumulate,
if any; (v) any redemption or sinking fund provisions; (vi) any conversion or
exchange rights; and (vii) any additional voting, dividend, liquidation,
redemption, sinking fund and other rights, preferences, privileges, limitations
and restrictions.
The Preferred Stock will, when issued, be fully paid and nonassessable and
will have no preemptive rights. The rights of the holders of each series of the
Preferred Stock will be subordinate to those of the Company's general
creditors.
DIVIDEND RIGHTS
Holders of the Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors of the Company, out of funds
of the Company legally available therefor, cash dividends on such dates and at
such rates as set forth in, or as are determined by the method described in,
the Prospectus Supplement relating to such series of the Preferred Stock. Such
rate may be fixed or variable or both. Each such dividend will be payable to
the holders of record as they appear on the stock books of the Company on such
record dates, fixed by the Board of Directors of the Company, as specified in
the Prospectus Supplement relating to such series of Preferred Stock.
Such dividends may be cumulative or noncumulative, as provided in the
Prospectus Supplement relating to such series of Preferred Stock. If the Board
of Directors of the Company fails to declare a dividend payable on a dividend
payment date on any series of Preferred Stock for which dividends are
noncumulative, then the right to receive a dividend in respect of the dividend
period ending on such dividend payment date will be lost, and the Company will
have no obligation to pay any dividend for such period, whether or not
dividends on such series are declared payable on any future dividend payment
dates. Dividends on the shares of each series of Preferred Stock for which
dividends are cumulative will accrue from the date on which the Company
initially issues shares of such series.
Unless otherwise specified in the applicable Prospectus Supplement, so long
as the shares of any series of the Preferred Stock are outstanding, unless (i)
full dividends (including if such Preferred Stock is cumulative, dividends for
prior dividend periods) have been paid or declared and set apart for payment on
all outstanding shares of the Preferred Stock of such series and all other
classes and series of preferred stock of the Company (other than Junior Stock
(as defined below)) and (ii) the Company is not in default or in arrears with
respect to the mandatory or optional redemption or mandatory repurchase or
other mandatory retirement of, or with respect to any sinking or other
analogous funds for, any shares of Preferred Stock of such series or any shares
of any other preferred stock of the Company of any class or series (other than
Junior Stock, the Company may not declare any dividends on any shares of Common
Stock of the Company or any other stock of the Company ranking as to dividends
or distributions of assets junior to such series of Preferred Stock (the Common
Stock and any such other stock being herein referred to as "Junior Stock"), or
make any payment on account of, or set apart money for, the purchase,
redemption or other retirement of, or
21
for a sinking or other analogous fund for, any shares of Junior Stock or make
any distribution in respect thereof, whether in cash or property or in
obligations of stock of the Company, other than in Junior Stock which is
neither convertible into, nor exchangeable or exercisable for, any securities
of the Company other than Junior Stock.
LIQUIDATION PREFERENCES
Unless otherwise specified in the applicable Prospectus Supplement, in the
event of any liquidation, dissolution or winding up of the Company, whether
voluntary or involuntary, the holders of each series of the Preferred Stock
will be entitled to receive out of the assets of the Company available for
distribution to stockholders, before any distribution of assets is made to the
holders of Common Stock or any other shares of stock of the Company ranking
junior as to such distribution to such series of the Preferred Stock, the
amount set forth in the Prospectus Supplement relating to such series of the
Preferred Stock. If, upon any voluntary or involuntary liquidation, dissolution
or winding up of the Company, the amounts payable with respect to the Preferred
Stock of any series and any other shares of preferred stock of the Company
(including any other series of the Preferred Stock) ranking as to any such
distribution on a parity with such series of the Preferred Stock are not paid
in full, the holders of the Preferred Stock of such series and of such other
shares of preferred stock of the Company will share ratably in any such
distribution of assets of the Company in proportion to the full respective
preferential amounts to which they are entitled. After payment to the holders
of the Preferred Stock of each series of the full preferential amounts of the
liquidating distribution to which they are entitled, unless otherwise provided
in the applicable Prospectus Supplement, the holders of each such series of the
Preferred Stock will be entitled to no further participation in any
distribution of assets by the Company.
REDEMPTION
A series of the Preferred Stock may be redeemable, in whole or from time to
time in part, at the option of the Company, and may be subject to mandatory
redemption pursuant to a sinking fund or otherwise, in each case upon terms, at
the times and at the redemption prices set forth in the Prospectus Supplement
relating to such series. Shares of the Preferred Stock redeemed by the Company
will be restored to the status of authorized but unissued shares of preferred
stock of the Company.
In the event that fewer than all of the outstanding shares of a series of the
Preferred Stock are to be redeemed, whether by mandatory or optional
redemption, the number of shares to be redeemed will be determined by lot or
pro rata (subject to rounding to avoid fractional shares) as may be determined
by the Company or by any other method as may be determined by the Company in
its sole discretion to be equitable. From and after the redemption date (unless
default is made by the Company in providing for the payment of the redemption
price plus accumulated and unpaid dividends, if any) dividends will cease to
accumulate on the shares of the Preferred Stock called for redemption and all
rights of the holders thereof (except the right to receive the redemption price
plus accumulated and unpaid dividends, if any) will cease.
Unless otherwise specified in the applicable Prospectus Supplement, so long
as any dividends on shares of any series of the Preferred Stock or any other
series of preferred stock of the Company
22
ranking on a parity as to dividends and distribution of assets with such series
of the Preferred Stock are in arrears, no shares of any such series of the
Preferred Stock or such other series of preferred stock of the Company will be
redeemed (whether by mandatory or optional redemption) unless all such shares
are simultaneously redeemed, and the Company will not purchase or otherwise
acquire any such shares; provided, however, that the foregoing will not prevent
the purchase or acquisition of such shares pursuant to a purchase or exchange
offer made on the same terms to holders of all such shares outstanding.
CONVERSION AND EXCHANGE RIGHTS
The terms, if any, on which shares of Preferred Stock of any series may be
exchanged for or converted into shares of Common Stock, another series of
Preferred Stock or any other Security will be set forth in the Prospectus
Supplement relating thereto. Such terms may include provisions for conversion,
either mandatory, at the option of the holder or at the option of the Company,
in which case the number of shares of Common Stock, the shares of another
series of Preferred Stock or the amount of any other securities to be received
by the holders of Preferred Stock would be calculated as of a time and in the
manner stated in the Prospectus Supplement.
VOTING RIGHTS
Except as indicated below or in the Prospectus Supplement relating to a
particular series of Preferred Stock, or except as expressly required by the
laws of the State of Nevada or other applicable law, the holders of the
Preferred Stock will not be entitled to vote. Except as indicated in the
Prospectus Supplement relating to a particular series of Preferred Stock, each
such share will be entitled to one vote on matters on which holders of such
series of the Preferred Stock are entitled to vote. However, as more fully
described below under "Depositary Shares," if the Company elects to issue
Depositary Shares representing a fraction of a share of a series of Preferred
Stock, each such Depositary Share will, in effect, be entitled to such fraction
of a vote, rather than a full vote. Because each full share of any series of
Preferred Stock shall be entitled to one vote, the voting power of such series,
on matters on which holders of such series and holders of other series of
preferred stock are entitled to vote as a single class, shall depend on the
number of shares in such series, not the aggregate liquidation preference or
initial offering price of the shares of such series of Preferred Stock.
DEPOSITARY SHARES
General. The Company may, at its option, elect to offer fractional shares of
Preferred Stock, rather than full shares of Preferred Stock. In the event such
option is exercised, the Company will issue to the public receipts for
Depositary Shares, each of which will represent a fraction (to be set forth in
the Prospectus Supplement relating to a particular series of Preferred Stock)
of a share of a particular series of Preferred Stock as described below.
The shares of any series of Preferred Stock represented by Depositary Shares
will be deposited under a Deposit Agreement (the "Deposit Agreement") between
the Company and a bank or trust company selected by the Company having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000 (the "Depositary Bank"). Subject to the terms of the
Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the
23
applicable fraction of a share of Preferred Stock represented by such
Depositary Share, to all the rights and preferences of the Preferred Stock
represented thereby (including dividend, voting, redemption and liquidation
rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts
will be distributed to those persons purchasing the fractional shares of
Preferred Stock in accordance with the terms of the offering. If Depositary
Shares are issued, copies of the forms of Deposit Agreement and Depositary
Receipt will be incorporated by reference in the Registration Statement of
which this Prospectus is a part, and the following summary is qualified in its
entirety by reference to such documents.
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary Bank may, upon the written order of the Company, issue temporary
Depositary Receipts substantially identical to (and entitling the holders
thereof to all the rights pertaining to) the definitive Depositary Receipts but
not in definitive form. Definitive Depositary Receipts will be prepared
thereafter without unreasonable delay, and temporary Depositary Receipts will
be exchangeable for definitive Depositary Receipts at the Company's expense.
Withdrawal of Preferred Stock. Upon surrender of the Depositary Receipts to
the Depositary Bank, the owner of the Depositary Shares evidenced thereby is
entitled to delivery at such office of the number of whole shares of Preferred
Stock represented by such Depositary Shares. If the Depositary Receipts
delivered by the holder evidence a number of Depositary Shares in excess of the
number of Depositary Shares representing the number of whole shares of
Preferred Stock to be withdrawn, the Depositary Bank will deliver to such
holder at the same time a new Depositary Receipt evidencing such excess number
of Depositary Shares. Owners of Depositary Shares will be entitled to receive
only whole shares of Preferred Stock. In no event will fractional shares of
Preferred Stock (or cash in lieu thereof) be distributed by the Depositary
Bank. Consequently, a holder of a Depositary Receipt representing a fractional
share of Preferred Stock would be able to liquidate his position only by sale
to a third party (in a public trading market transaction or otherwise), unless
the Depositary Shares are redeemed by the Company or converted by the holder.
Dividends and Other Distributions. The Depositary Bank will distribute all
cash dividends or other cash distributions received in respect of the Preferred
Stock to the record holders of Depositary Shares relating to such Preferred
Stock in proportion to the number of such Depositary Shares owned by such
holders.
In the event of a distribution other than in cash, the Depositary Bank will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary Bank determines that it is not feasible
to make such distribution, in which case the Depositary Bank may, with the
approval of the Company, sell such property and distribute the net proceeds
from such sale to such holders.
Redemption of Depositary Shares. If a series of Preferred Stock represented
by Depositary Shares is subject to redemption, the Depositary Shares will be
redeemed from the proceeds received by the Depositary Bank resulting from the
redemption, in whole or in part, of such series of Preferred Stock held by the
Depositary Bank. The redemption price per Depositary Share will be equal to the
24
applicable fraction of the redemption price per share payable with respect to
such series of Preferred Stock. Whenever the Company redeems shares of
Preferred Stock held by the Depositary Bank, the Depositary Bank will redeem as
of the same redemption date the number of Depositary Shares representing the
shares of Preferred Stock so redeemed. If fewer than all the Depositary Shares
are to be redeemed, the Depositary Shares to be redeemed will be selected by
lot or pro rata as may be determined by the Depositary Bank.
Voting the Preferred Stock. Upon receipt of notice of any meeting at which
the holders of Preferred Stock are entitled to vote, the Depositary Bank will
mail the information contained in such notice of meeting to the record holders
of the Depositary Shares relating to such Preferred Stock. Each record holder
of such Depositary Shares on the record date (which will be the same date as
the record date for the Preferred Stock) will be entitled to instruct the
Depositary Bank as to the exercise of the voting rights pertaining to the
amount of Preferred Stock represented by such holder's Depositary Shares. The
Depositary Bank will endeavor, insofar as practicable, to vote the amount of
Preferred Stock represented by such Depositary Shares in accordance with such
instructions, and the Company will agree to take all action that may be deemed
necessary by the Depositary Bank in order to enable the Depositary Bank to do
so. The Depositary Bank may abstain from voting shares of Preferred Stock to
the extent it does not receive specific instructions from the holders of
Depositary Shares representing such Preferred Stock.
Amendment and Termination of the Depositary Agreement. The form of Depositary
Receipt evidencing the Depositary Shares and any provision of the Deposit
Agreement may at any time be amended by agreement between the Company and the
Depositary Bank. However, any amendment that materially and adversely alters
the rights of the holders of Depositary Shares will not be effective unless
such amendment has been approved by the holders of at least a majority of the
Depositary Shares then outstanding. The Deposit Agreement may be terminated by
the Company or the Depositary Bank only if (i) all outstanding Depositary
Shares have been redeemed or (ii) there has been a final distribution in
respect of the Preferred Stock in connection with any liquidation, dissolution
or winding up of the Company and such distribution has been distributed to the
holders of Depositary Receipts.
Charges of Depositary Bank. The Company will pay all transfer and other taxes
and governmental charges arising solely from the existence of the depositary
arrangements. The Company will pay charges of the Depositary Bank in connection
with the initial deposit of the Preferred Stock and any redemption of the
Preferred Stock. Holders of Depositary Receipts will pay other transfer and
other taxes and governmental charges and such other charges, including any fee
for the withdrawal of shares of Preferred Stock upon surrender of Depositary
Receipts, as are expressly provided in the Deposit Agreement to be for their
accounts.
Miscellaneous. The Depositary Bank will forward to holders of Depository
Receipts all reports and communications from the Company that are delivered to
the Depositary Bank and that the Company is required to furnish to the holders
of Preferred Stock.
Neither the Depositary Bank nor the Company will be liable if it is prevented
or delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and the
Depositary Bank under the Deposit Agreement will be
25
limited to performance in good faith of their duties thereunder and they will
not be obligated to prosecute or defend any legal proceeding in respect of any
Depositary Shares or Preferred Stock unless satisfactory indemnity is
furnished. They may rely upon written advice of counsel or accountants, or upon
information provided by persons presenting Preferred Stock for deposit, holders
of Depositary Receipts or other persons believed to be competent and on
documents believed to be genuine.
Resignation and Removal of Depositary Bank. The Depositary Bank may resign at
any time by delivering to the Company notice of its election to do so, and the
Company may at any time remove the Depositary Bank, any such resignation or
removal to take effect upon the appointment of a successor Depositary Bank and
its acceptance of such appointment. Such successor Depositary Bank must be
appointed within 60 days after delivery of the notice of resignation or removal
and must be a bank or trust company having its principal office in the United
States and having a combined capital and surplus of at least $50,000,000.
DESCRIPTION OF COMMON STOCK
The Company has authority to issue 200,000,000 shares of Common Stock. At the
close of business on June 30, 1998, the Company had outstanding 152,752,056
shares of Common Stock (including 284,987 treasury shares). All outstanding
shares of Common Stock are fully paid and nonassessable.
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 directors must be
elected by a plurality of votes cast in the election at the annual meeting of
stockholders and, 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 the
Company, the holders of Common Stock are entitled to share equally and ratably
in the assets of the Company, if any, remaining after the payment of all debts
and liabilities of the Company 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, the Company would not be able to pay its
debts as they become due in the usual course of business, or the Company's
total assets would be less than the sum of its total liabilities plus the
amount that would be needed, if the Company 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.
26
THE NEVADA CODE
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% or more 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, the Company's Board of
Directors may have considerable discretion in considering and responding to
unsolicited offers to purchase a controlling interest in AutoZone.
DESCRIPTION OF WARRANTS
The Company may issue Warrants to purchase Debt Securities ("Debt Warrants"),
as well as Warrants to purchase Preferred Stock or Common Stock ("Equity
Warrants") (together, the "Warrants"). Warrants may be issued independently or
together with any Securities and may be attached to or separate from such
Securities. The Warrants are to be issued under warrant agreements (each, a
"Warrant Agreement") to be entered into between the Company and a bank or trust
company, as warrant agent (the "Warrant Agent"), all as shall be set forth in
the Prospectus Supplement relating to Warrants being offered pursuant thereto.
A copy of the proposed form of Warrant Agreement has been filed as an exhibit
to the Registration Statement of which this Prospectus is a part.
DEBT WARRANTS
The applicable Prospectus Supplement will describe the terms of Debt Warrants
offered thereby, the Warrant Agreement relating to such Debt Warrants and the
debt warrant certificates representing such Debt Warrants ("Debt Warrant
Certificates"), including the following: (1) the title of such Debt Warrants;
(2) the aggregate number of such Debt Warrants; (3) the price or prices at
which such Debt Warrants will be issued; (4) the designation, aggregate
principal amount and terms of the Debt Securities purchasable upon exercise of
such Debt Warrants, and the procedures and conditions relating to the exercise
of such Debt Warrants; (5) the designation and terms of any related Debt
Securities with which such Debt Warrants are issued, and the number of such
Debt Warrants issued
27
with each such Debt Security; (6) the date, if any, on and after which such
Debt Warrants and the related Debt Securities will be separately transferable;
(7) the principal amount of Debt Securities purchasable upon exercise of each
Debt Warrant; (8) the date on which the right to exercise such Debt Warrants
will commence, and the date on which such right will expire; (9) the maximum or
minimum number of such Debt Warrants which may be exercised at any time; (10)
information with respect to book-entry procedures, if any; (11) a discussion of
any material federal income tax considerations; and (12) any other terms of
such Debt Warrants and terms, procedures and limitations relating to the
exercise of such Debt Warrants.
Debt Warrant Certificates will be exchangeable for new Debt Warrant
Certificates of different denominations, and Debt Warrants may be exercised at
the corporate trust office of the Warrant Agent or any other office indicated
in the Prospectus Supplement. Prior to the exercise of their Debt Warrants,
holders of Debt Warrants will not have any of the rights of holders of the Debt
Securities purchasable upon such exercise and will not be entitled to payment
of principal of or any premium, if any, or interest on the Debt Securities
purchasable upon such exercise.
EQUITY WARRANTS
The applicable Prospectus Supplement will describe the following terms of
Equity Warrants offered thereby: (1) the title of such Equity Warrants; (2) the
Securities (i.e., Preferred Stock or Common Stock) for which such Equity
Warrants are exercisable; (3) the price or prices at which such Equity Warrants
will be issued; (4) if applicable, the designation and terms of the Preferred
Stock or Common Stock with which such Equity Warrants are issued, and the
number of such Equity Warrants issued with each such share of Preferred Stock
or Common Stock; (5) if applicable, the date on and after which such Equity
Warrants and the related Preferred Stock or Common Stock will be separately
transferable; (6) if applicable, a discussion of any material federal income
tax considerations; and (7) any other terms of such Equity Warrants, including
terms, procedures and limitations relating to the exchange and exercise of such
Equity Warrants.
Holders of Equity Warrants will not be entitled, by virtue of being such
holders, to vote, consent, receive dividends, receive notice as stockholders
with respect to any meeting of stockholders for the election of directors of
the Company or any other matter, or to exercise any rights whatsoever as
stockholders of the Company.
The exercise price payable and the number of shares of Common Stock or
Preferred Stock purchasable upon the exercise of each Equity Warrant will be
subject to adjustment in certain events, including the issuance of a stock
dividend to holders of Common Stock or Preferred Stock or a stock split,
reverse stock split, combination, subdivision or reclassification of Common
Stock or Preferred Stock. In lieu of adjusting the number of shares of Common
Stock or Preferred Stock purchasable upon exercise of each Equity Warrant, the
Company may elect to adjust the number of Equity Warrants. No adjustments in
the number of shares purchasable upon exercise of the Equity Warrants will be
required until cumulative adjustments require an adjustment of at least 1%
thereof. The Company may, at its option, reduce the exercise price at any time.
No fractional shares will be issued upon exercise of Equity Warrants, but the
Company will pay the cash value of any fractional shares otherwise issuable.
Notwithstanding the foregoing, in case of any consolidation, merger, or sale or
conveyance of the property of the Company as an entirety or substantially as an
entirety, the holder
28
of each outstanding Equity Warrant shall have the right to the kind and amount
of shares of stock and other securities and property (including cash)
receivable by a holder of the number of shares of Common Stock of Preferred
Stock into which such Equity Warrant was exercisable immediately prior thereto.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder to purchase such principal amount of
Securities at such exercise price as shall in each case be set forth in, or be
determinable as set forth in, the Prospectus Supplement relating to the
Warrants offered thereby. Warrants may be exercised at any time up to the close
of business on the expiration date set forth in the Prospectus Supplement
relating to the Warrants offered thereby. After the close of business on the
expiration date, unexercised Warrants will become void.
Warrants may be exercised as set forth in the Prospectus Supplement relating
to the Warrants offered thereby. Upon receipt of payment and the warrant
certificate properly completed and duly executed at the corporate trust office
of the Warrant Agent or any other office indicated in the Prospectus
Supplement, the Company will, as soon as practicable, forward the Securities
purchasable upon such exercise. If less than all of the Warrants represented by
such warrant certificate are exercised, a new warrant certificate will be
issued for the remaining Warrants.
DESCRIPTION OF UNITS
The Company may issue Units consisting of two or more other constituent
Securities, which Units may be issuable as, and for the period of time
specified therein may be transferable as, a single Security only, as
distinguished from the separate constituent Securities comprising such Units.
Any such Units will be offered pursuant to a Prospectus Supplement which will
(i) identify and designate the title of any series of Units; (ii) identify and
describe the separate constituent Securities comprising such Units; (iii) set
forth the price or prices at which such Units will be issued; (iv) describe, if
applicable, the date on and after which the constituent Securities comprising
the Units will become separately transferable; (v) provide information with
respect to book-entry procedures, if any; (vi) discuss applicable United States
federal income tax considerations relating to the Units; and (vii) set forth
any other terms of the Units and their constituent Securities.
PLAN OF DISTRIBUTION
The Securities may be sold for public offering to underwriters or dealers,
which may be a group of underwriters represented by one or more managing
underwriters, or through such firms or other firms acting alone or through
dealers. The Securities may also be sold directly by the Company or through
agents to investors. The names of any agents, dealers or managing underwriters,
and of any underwriters, involved in the sale of the Securities in respect of
which this Prospectus is being delivered, the applicable agent's commission,
dealer's purchase price or underwriter's discount and the net proceeds to the
Company from such sale will also be set forth in the Prospectus Supplement.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Securities and any discounts, concessions or
commissions allowed by
29
underwriters to participating dealers will be set forth in the Prospectus
Supplement. Underwriters, dealers and agents participating in the distribution
of the Securities may be deemed to be "underwriters" within the meaning of the
Securities Act, and any discounts and commissions received by them and any
profit realized by them on resale of the Securities may be deemed to be
underwriting discounts and commissions under the Securities Act.
If any underwriter or underwriters are utilized in the sale of the
Securities, the Company will execute an underwriting agreement or a purchase
agreement with such underwriter or underwriters at the time an agreement for
such sale is reached. The underwriting agreement or purchase agreement will
provide that the obligations of the underwriters are subject to certain
conditions precedent and that the underwriters with respect to a sale of
Securities will be obligated to purchase all such Securities if any are
purchased. In connection with the sale of Securities, underwriters may be
deemed to have received compensation from the Company in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of Securities for whom they may act as agent. Underwriters may sell
Securities to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions from the underwriters and/or
commissions from the purchasers for whom they may act as agent. Under such
underwriting agreements or purchase agreements, underwriters, dealers and
agents who participate in the distribution of the Securities, may be entitled
to indemnification by the Company against certain civil liabilities, including
liabilities under the Securities Act or contribution with respect to payments
that the underwriters, dealers or agents may be required to make in respect
thereof. The underwriter or underwriters with respect to an underwritten
offering of Securities will be set forth in the Prospectus Supplement relating
to such offering and, if an underwriting syndicate is used, the managing
underwriter or underwriters will be set forth on the cover of such Prospectus
Supplement.
If so indicated in an applicable Prospectus Supplement, the Company will
authorize dealers acting as the Company's agents to solicit offers by certain
institutions to purchase Securities from the Company at the public offering
price set forth in such Prospectus Supplement pursuant to Delayed Delivery
Contracts ("Contracts") providing for payment and delivery on the date or dates
stated in such Prospectus Supplement. Each Contract will be for an amount not
less than, and the aggregate principal amount of Securities sold pursuant to
Contracts shall not be less nor more than, the respective amounts stated in
such Prospectus Supplement. Institutions with whom Contracts, when authorized,
may be made include commercial and savings banks, insurance companies, pension
funds, investment companies, educational and charitable institutions and other
institutions, but will in all cases be subject to the approval of the Company.
Contracts will not be subject to any conditions except (i) the purchase by an
institution of the Securities covered by its Contracts shall not at the time of
delivery be prohibited under the laws of any jurisdiction in the United States
to which such institution is subject and (ii) if the Securities are being sold
to underwriters, the Company shall have sold to such underwriters the total
principal amount of the Securities less the principal amount thereof covered by
Contracts. Agents and underwriters will have no responsibility in respect of
the delivery or performance of Contracts.
The Securities may or may not be listed on a national securities exchange or
a foreign securities exchange. No assurances can be given that there will be a
market for the Securities.
30
Certain of the underwriters and their affiliates may be customers of, engage
in transactions with and perform services for the Company and its subsidiaries
and the Trustees in the ordinary course of business.
LEGAL MATTERS
The validity of the Securities offered hereby will be passed upon for the
Company by Latham & Watkins, Los Angeles, California, and certain other legal
matters with respect to the Securities offered hereby will be passed upon for
the Company by Schreck Morris, Las Vegas, Nevada. Certain partners of Latham &
Watkins, members of their families, related persons and other own or 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. The validity
of the Securities offered hereby will be passed upon for any agents or
underwriters by Brown & Wood LLP, New York, New York. Brown & Wood LLP may rely
on Schreck Morris with respect to all matters of Nevada law.
EXPERTS
The financial statements and related schedule of the Company 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 Company's 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.
31
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[LOGO OF AUTOZONE]
$150,000,000
6% NOTES DUE NOVEMBER 1, 2003
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PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
LEHMAN BROTHERS
NATIONSBANC MONTGOMERY SECURITIES LLC
OCTOBER 30, 1998
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