<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 24, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
THE HOME DEPOT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------------
<TABLE>
<S> <C>
DELAWARE 95-3261426
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
</TABLE>
2727 PACES FERRY ROAD
ATLANTA, GEORGIA 30339-4089
(770) 433-8211
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------------
MARSHALL L. DAY
SENIOR VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
THE HOME DEPOT, INC.
2727 PACES FERRY ROAD
ATLANTA, GEORGIA 30339-4089
(770) 433-8211
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
Copies requested to:
<TABLE>
<S> <C> <C>
JEFFREY M. STEIN, ESQ. LAWRENCE K. MENTER, ESQ. GERALD S. BACKMAN, P.C.
KING & SPALDING THE HOME DEPOT, INC. WEIL, GOTSHAL & MANGES LLP
191 PEACHTREE STREET 2727 PACES FERRY ROAD 767 FIFTH AVENUE
ATLANTA, GEORGIA 30303-1763 ATLANTA, GEORGIA 30339-4089 NEW YORK, NEW YORK 10153
(404) 572-4600 (770) 433-8211 (212) 310-8000
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
- ------------------------------------------------------------------------------------------------------------
% Convertible Subordinated
Notes Due 2001.................... $920,000,000(2) 100% $920,000,000 $317,242
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Common Stock, $.05 par value........ (3) -- -- --
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</TABLE>
(1) Estimated solely for the purpose of computing the registration fee.
(2) Includes $120,000,000 principal amount of Notes which may be issued pursuant
to the exercise by the Underwriters of an over-allotment option.
(3) Such indeterminate number of shares of Common Stock of the Registrant as may
be issuable upon conversion of the Notes being registered hereunder. Such
shares of Common Stock will, if issued, be issued for no additional
consideration and therefore no registration fee is required.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED SEPTEMBER 24, 1996
$800,000,000
(HOME DEPOT LOGO)
% Convertible Subordinated Notes Due 2001
Interest payable April and October Due October , 2001
------------------
The Notes are convertible into Common Stock of The Home Depot, Inc. (the
"Company") at any time on or before October , 2001, unless previously
redeemed, at a conversion price of $ per share, subject to
adjustment in certain events. On September 23, 1996, the
reported last sale price of the Common Stock on the New York
Stock Exchange was $57.00 per share.
The Notes are redeemable, in whole or in part, at the option of the Company at
any time on or after October , 1999 at the redemption prices set forth
herein plus accrued interest. See "Description of Notes -- Optional
Redemption." The Notes are unsecured general obligations of the Company,
are subordinated in right of payment to all existing and future Senior
Indebtedness (as defined) of the Company and are structurally
subordinated to all liabilities of the Company's subsidiaries.
The Indenture does not restrict the incurrence of Senior
Indebtedness or other indebtedness by the Company or its
subsidiaries. At July 28, 1996, the Company had approximately
$175,491,000 of outstanding Senior Indebtedness, and its
subsidiaries had approximately $2,300,000,000 of
outstanding liabilities.
Application will be made to list the Notes on the New York Stock Exchange.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR AD-
EQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Underwriting
Discounts
Price to and Proceeds to
Public(1) Commissions Company(1)(2)
------------ ------------ ------------
<S> <C> <C> <C>
Per Note...................................... % % %
Total(3)...................................... $ $ $
</TABLE>
(1) Plus accrued interest, if any, from , 1996.
(2) Before deduction of expenses payable by the Company estimated at $500,000.
(3) The Company has granted the Underwriters an option, exercisable for 30 days
from the date of the initial public offering of the Notes, to purchase up
to an additional $120,000,000 principal amount of Notes solely to cover
over-allotments. If the option is exercised in full, the total price to the
public will be $ , underwriting discounts will be $ and
proceeds to the Company will be $ .
------------------
The Notes are offered by the Underwriters when, as and if issued by the
Company, delivered to and accepted by the Underwriters and subject to their
right to reject orders in whole or in part. It is expected that delivery of the
Notes, in book-entry form, will be made through the facilities of The Depository
Trust Company on or about , 1996 against immediately available
funds.
CS First Boston Invemed Associates, Inc.
The date of this Prospectus is , 1996
<PAGE> 3
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE NOTES OFFERED
HEREBY OR THE COMPANY'S COMMON STOCK AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK
STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DURING THIS OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING
IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE
ACCOUNTS OF OTHERS IN THE NOTES OFFERED HEREBY OR THE COMPANY'S COMMON STOCK
PURSUANT TO EXEMPTIONS FROM RULES 10B-6, 10B-7, AND 10B-8 UNDER THE SECURITIES
EXCHANGE ACT OF 1934.
------------------------
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (of which this Prospectus is a part)
under the Securities Act of 1933 (the "Securities Act"), with respect to the
Notes offered hereby. This Prospectus does not contain all of the information
set forth in the Registration Statement, certain portions of which have been
omitted as permitted by the rules and regulations of the Commission. Statements
contained in this Prospectus as to the contents of any contract or other
document are not necessarily complete, and in each instance reference is made to
the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference to such contract or document. For further information regarding
the Company and the Notes offered hereby, reference is hereby made to the
Registration Statement and the exhibits and schedules thereto which may be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith files
reports, proxy statements and other information with the Commission. The
Registration Statement, the exhibits and schedules forming a part thereof, and
the reports, proxy statements and other information filed by the Company with
the Commission in accordance with the Exchange Act can be inspected and copied
at the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following regional offices of the Commission:
Seven World Trade Center, 13th Floor, New York, New York 10048, and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials
can be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission also
maintains a Web site at http://www.sec.gov. which contains reports, proxy
statements and other information regarding registrants that file electronically
with the Commission. In addition, the Company's Common Stock is listed on the
New York Stock Exchange and similar information concerning the Company can be
inspected and copied at the New York Stock Exchange, 20 Broad Street, New York,
New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this Prospectus: (a) the
Company's Annual Report on Form 10-K for the year ended January 28, 1996;
(b) the Company's Quarterly Report on Form 10-Q for the quarter ended April 28,
1996; (c) the Company's Quarterly Report on Form 10-Q (as amended) for the
quarter ended July 28, 1996; and (d) the description of the Company's Common
Stock contained in the Registration Statement on Form 8-A, as filed with the
Commission.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of this offering shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the respective dates 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 or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any and all of the documents incorporated by reference in this Prospectus
(other than exhibits to such documents unless such exhibits are themselves
specifically incorporated by reference into such documents). Requests should be
directed to Lawrence K. Menter, Senior Corporate Counsel and Assistant
Secretary, The Home Depot, Inc., 2727 Paces Ferry Road, Atlanta, Georgia
30339-4089, telephone (770) 433-8211.
2
<PAGE> 4
THE COMPANY
Home Depot is the leading retailer in the home improvement industry and
ranks among the 10 largest retailers in the United States based on net sales
volume. As of July 28, 1996, the Company operated 456 full-service,
warehouse-style stores in 34 states in the United States (433 stores) and three
provinces in Canada (23 stores) which aggregate approximately 48 million square
feet of selling space. The Company's stores average approximately 105,300 square
feet of indoor selling space, with an additional 20,000 to 28,000 square feet of
outside garden center area. The Company's business strategy is to offer the
broadest assortment of high-quality merchandise at low "Day-In, Day-Out"
warehouse prices through highly-trained and knowledgeable customer service
associates. The Company employs over 93,000 associates.
Since a large proportion of the Company's customers are individual
homeowners, many of whom may have limited experience in do-it-yourself projects,
management considers its associates' knowledge of products and home improvement
techniques and applications to be very important to its marketing approach, as
well as to its ability to maintain customer satisfaction. The Company also
offers installation services for a variety of products, which target the
buy-it-yourself customer who desires to purchase an item but relies upon a
professional for installation services. In addition, Home Depot devotes
significant marketing, advertising and service efforts toward attracting
professional remodelers and commercial customers.
The Company's stores offer approximately 40,000-50,000 SKUs of high-quality
and nationally advertised brand name building materials and home improvement
products catering primarily to the do-it-yourself and professional business
customer. Product groups include building materials, lumber and floor and wall
covering (33.9% of fiscal 1995 sales); plumbing, heating, lighting and
electrical supplies (27.7%); seasonal and specialty items (14.8%); hardware and
tools (13.2%); and paint and other (10.4%). The Company sources its merchandise
from approximately 5,400 vendors worldwide, of which no single vendor accounts
for as much as 5% of purchases.
Home Depot expects to increase its store count on a basis consistent with
its current policy of not exceeding a maximum new store growth rate of
approximately 22% per year. The Company plans to open approximately 90 new
stores and relocate seven existing stores during fiscal 1996 (of which 45 have
been opened and five have been relocated as of September 19, 1996). While it is
anticipated that a large number of such stores will be opened in existing
markets, Home Depot has opened or plans to open stores in a number of new
markets in fiscal 1996, including Little Rock, Louisville, Memphis,
Minneapolis/St. Paul, Pittsburgh, St. Louis, Spokane, Syracuse and Windsor,
Ontario. The Company also plans to open approximately 117 stores, including
relocations, in fiscal 1997. As of July 28, 1996, the Company owned
approximately 73% of its stores (including those owned subject to a ground
lease). The Company prefers to own its stores, as compared to leasing, since it
provides the Company with greater levels of operating and financial flexibility.
For the six months ended July 28, 1996, the Company's sales increased 25%
to approximately $9.7 billion and net earnings increased 26% to approximately
$465.2 million as compared to the comparable period of fiscal 1995. Comparable
store sales for the six months ended July 28, 1996 increased 6%. The Company
intends to continue its long-term strategy, where appropriate, of opening new
stores within a close vicinity of existing stores that are operating at or above
their optimum capacities, thereby intentionally "cannibalizing" certain stores.
While such a strategy may initially have a negative impact on the rate of
comparable store sales growth, management believes the benefits include
increasing customer satisfaction and increasing market share by reducing
shopping delays, increasing utilization by existing customers and attracting new
customers to more convenient locations. Excluding the impact of cannibalized
stores, comparable store sales would have increased 10% for the six months ended
July 28, 1996.
The Company's corporate offices are located at 2727 Paces Ferry Road,
Atlanta, Georgia 30339-4089, telephone number (770) 433-8211.
3
<PAGE> 5
USE OF PROCEEDS
The net proceeds from the sale of the Notes offered hereby are estimated to
be $791,500,000 (assuming the over-allotment option is not exercised). The
proceeds of this offering will be used principally to refinance outstanding
commercial paper and to finance a portion of the Company's capital expenditure
programs, including planned store expansion and renovations, and for general
corporate purposes. On an interim basis, the Company intends to invest a portion
of the proceeds in interest-bearing securities.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Common Stock of the Company is listed on the New York Stock Exchange
under the symbol "HD". The table below sets forth the high and low sales prices
of the Common Stock on the New York Stock Exchange Composite Tape as reported in
The Wall Street Journal and the quarterly cash dividends declared per share of
Common Stock during the periods indicated.
<TABLE>
<CAPTION>
PRICE RANGE CASH
------------------- DIVIDENDS
LOW HIGH DECLARED
------- ------- ---------
<S> <C> <C> <C>
FISCAL YEAR 1994
First Quarter ended May 1, 1994............................. $37.13 $44.63 $ .03
Second Quarter ended July 31, 1994.......................... 39.63 46.38 .04
Third Quarter ended October 30, 1994........................ 39.75 46.25 .04
Fourth Quarter ended January 29, 1995....................... 44.13 48.25 .04
FISCAL YEAR 1995
First Quarter ended April 30, 1995.......................... 40.25 50.00 .04
Second Quarter ended July 30, 1995.......................... 38.63 45.25 .05
Third Quarter ended October 29, 1995........................ 36.63 44.88 .05
Fourth Quarter ended January 28, 1996....................... 37.13 48.00 .05
FISCAL YEAR 1996
First Quarter ended April 28, 1996.......................... 42.50 50.38 .05
Second Quarter ended July 28, 1996.......................... 45.50 57.00 .06
Third Quarter (through September 23, 1996).................. 50.25 58.25 .06
</TABLE>
For a recent sales price of the Common Stock on the New York Stock
Exchange, see the cover page of this Prospectus.
The Company paid its first cash dividend on June 22, 1987 and has paid
dividends in each quarter since then. Future dividend policy will depend on the
Company's earnings, capital requirements, financial condition and other factors
considered relevant by the Board of Directors.
4
<PAGE> 6
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data under the captions "Consolidated
Statement of Earnings Data" and "Consolidated Balance Sheet Data" in the
following table for each of the years in the five-year period ended January 28,
1996 are derived from the Company's consolidated financial statements. Such
financial statements have been audited by KPMG Peat Marwick LLP, independent
certified public accountants. The selected consolidated financial data in the
following table for each of the six-month periods ended July 30, 1995 and July
28, 1996 have not been audited by independent certified public accountants but
reflect, in the opinion of the Company, all adjustments necessary to present
fairly the results for such period. The information below should be read in
conjunction with the consolidated financial statements, related notes and other
information incorporated by reference herein and with the "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
----------------------------------------------------------------- ----------------------
FEBRUARY 2, JANUARY 31, JANUARY 30, JANUARY 29, JANUARY 28, JULY 30, JULY 28,
1992 1993 1994 1995 1996 1995 1996
------------ ------------ ----------- ----------- ----------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND SALES PER SQUARE FOOT DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF EARNINGS DATA:
Net sales........................ $5,136,674 $7,148,436 $ 9,238,763 $12,476,697 $15,470,358 $7,720,684 $9,655,132
Cost of merchandise sold......... 3,692,337 5,179,368 6,685,384 8,991,204 11,184,772 5,600,117 6,998,307
------------ ------------ ----------- ----------- ----------- ---------- ----------
Gross profit............ 1,444,337 1,969,068 2,553,379 3,485,493 4,285,586 2,120,567 2,656,825
------------ ------------ ----------- ----------- ----------- ---------- ----------
Operating expenses:
Selling and store operating.... 928,928 1,245,608 1,624,920 2,216,540 2,783,926 1,365,677 1,720,717
Pre-opening.................... 17,668 26,959 36,816 51,307 52,342 26,020 23,002
General and administrative..... 116,063 147,080 184,954 230,456 269,464 132,559 152,208
------------ ------------ ----------- ----------- ----------- ---------- ----------
Total operating
expenses.............. 1,062,659 1,419,647 1,846,690 2,498,303 3,105,732 1,524,256 1,895,927
------------ ------------ ----------- ----------- ----------- ---------- ----------
Operating income........ 381,678 549,421 706,689 987,190 1,179,854 596,311 760,898
------------ ------------ ----------- ----------- ----------- ---------- ----------
Interest income (expense):
Interest and investment
income....................... 26,790 67,562 60,896 28,510 19,597 8,855 6,959
Interest expense............... (12,348) (41,010) (30,714) (35,949) (4,148) (3,454) (2,734)
------------ ------------ ----------- ----------- ----------- ---------- ----------
Interest, net........... 14,442 26,552 30,182 (7,439) 15,449 5,401 4,225
------------ ------------ ----------- ----------- ----------- ---------- ----------
Earnings before income
taxes................. 396,120 575,973 736,871 979,751 1,195,303 601,712 765,123
Income taxes..................... 146,970 213,110 279,470 375,250 463,780 231,060 299,930
------------ ------------ ----------- ----------- ----------- ---------- ----------
Net earnings............ $ 249,150 $ 362,863 $ 457,401 $ 604,501 $ 731,523 $ 370,652 $ 465,193
=========== =========== ========== ============ ============ ========== ==========
Earnings per common and common
equivalent share(1)............ $ 0.60 $ 0.82 $ 1.01 $ 1.32 $ 1.54 $ 0.78 $ 0.97
=========== =========== ========== ============ ============ ========== ==========
Weighted average number of common
and common equivalent shares
(000s)(1)...................... 415,997 444,989 453,037 475,947 477,977 477,424 481,384
=========== =========== ========== ============ ============ ========== ==========
OTHER OPERATING DATA:
Ratio of earnings to fixed
charges(2)..................... 8.2x 7.7x 9.0x 9.9x 13.8x 14.1x 15.8x
Number of stores................. 174 214 264 340 423 379 456
Square footage at end of period
(000s)......................... 16,480 20,897 26,383 35,133 44,356 39,643 48,033
Weighted average sales per square
foot........................... $ 348 $ 387 $ 398 $ 404 $ 390 $ 414 $ 419
Comparable store sales........... 11% 15% 7% 8% 3% 4% 6%
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JULY 28, 1996
----------------------------------------------------------------- ----------------------
FEBRUARY 2, JANUARY 31, JANUARY 30, JANUARY 29, JANUARY 28, AS
1992 1993 1994 1995 1996 ACTUAL ADJUSTED(3)
------------ ------------ ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital.................. $ 623,937 $ 807,028 $ 993,963 $ 918,724 $ 1,255,487 $ 939,964 $1,565,464
Total assets..................... 2,510,292 3,931,790 4,700,889 5,778,041 7,354,033 7,997,552 8,631,552
Long-term debt................... 270,575 843,672 874,048 983,369 720,080 275,389 909,389
Stockholders' equity............. 1,691,212 2,304,081 2,814,100 3,442,223 4,987,766 5,468,552 5,468,552
</TABLE>
- ---------------
(1) Adjusted retroactively for three-for-two stock splits effected in the form
of stock dividends in June 1991 and July 1992 and a four-for-three stock
split effected in the form of a stock dividend in April 1993.
(2) For purposes of computing the ratios of earnings to fixed charges, earnings
represent earnings before income taxes, minority interest and fixed charges
(including the effects of capitalized interest). Fixed charges include gross
interest expense and one-third (the portion deemed representative of the
interest factor) of rents.
(3) Adjusted to reflect the sale of the Notes offered hereby and the application
of estimated net proceeds therefrom after the deduction of the estimated
offering expenses and underwriting discounts and commissions (assuming the
over-allotment option is not exercised). See "Use of Proceeds."
5
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
For an understanding of the significant factors that influenced the
Company's performance during the past three fiscal years ended January 28, 1996
and the six months ended July 28, 1996, the following discussion should be read
in conjunction with the consolidated financial statements, related notes and
other information incorporated by reference herein.
Six Months Ended July 28, 1996 Compared to July 30, 1995
For the first six months of fiscal 1996, sales increased 25% to
$9,655,132,000 from sales of $7,720,684,000 for the comparable period in fiscal
1995. The sales increase for such period was primarily attributable to new
stores (456 at the end of the second quarter of fiscal 1996 compared to 379 at
the end of the second quarter of fiscal 1995) and a comparable store-for-store
sales increase of 6% for the first six months of fiscal 1996. For the second
quarter of fiscal 1996, comparable store-for-store sales increased 9% as
compared to the comparable period in fiscal 1995.
For the first six months of fiscal 1996, gross profit as a percent of sales
was 27.5% compared to 27.5% for the comparable period of fiscal 1995.
For the first six months of fiscal 1996, operating expenses as a percent of
sales were down slightly to 19.6% from 19.7% for the same period of fiscal 1995.
Selling and store operating expenses as a percent of sales increased to 17.8%
for the first six months of fiscal 1996, from 17.7% for the first six months of
fiscal 1995. This increase was attributable to, among other things, one-time
expenditures related to the Olympic Games and higher store relocation and
remodeling costs resulting primarily from the adoption in fiscal 1996 of certain
accounting standards which changed the timing of recognition of these expenses.
Additionally, profits increased in the Home Depot Canada partnership resulting
in higher minority interest. Pre-opening expenses as a percent to sales
decreased to 0.2% for the first six months of fiscal 1996 from 0.3% for the
comparable period of fiscal 1995. This decrease was primarily attributable to
the timing of store openings, as many of the Company's fiscal third quarter 1996
store openings are expected to occur in the latter part of the quarter and as a
result have not yet incurred significant pre-opening expenses. General and
administrative expenses as a percent to sales decreased to 1.6% for the first
six months of fiscal 1996 from 1.7% in the first six months of fiscal 1995. This
decrease was attributable to higher sales volumes and continued focus on
controlling costs.
Net interest income for the first six months of fiscal 1996 as a percent to
sales was 0.1% compared to 0.1% for the first six months of fiscal 1995.
The Company's combined Federal and state effective income tax rate
increased to 39.2% for the first six months of fiscal 1996 from 38.4% for the
comparable period of fiscal 1995. In the fourth quarter of fiscal 1995, the
Company adjusted its combined Federal and state effective income tax rate to
38.8% for the fiscal year. The increase in the rate for the first six months of
fiscal 1996 from the adjusted 1995 tax rate was due to a higher effective state
tax rate.
Net earnings as a percent of sales were 4.8% for the first six months of
fiscal 1996, as well as for the comparable period of fiscal 1995.
Earnings per share was $0.97 for the first six months of fiscal 1996,
compared to $0.78 for the first six months of fiscal 1995.
Fiscal Year Ended January 28, 1996 Compared to January 29, 1995
Sales for fiscal year 1995 increased 24% from $12,476,697,000 in fiscal
1994 to $15,470,358,000. This increase was attributable to, among other things,
83 new store openings, five store relocations, a 3% comparable store-for-store
sales increase and full year sales from the 69 new store openings during fiscal
1994.
6
<PAGE> 8
Gross profit as a percent of sales was 27.7% for fiscal 1995 compared to
27.9% for fiscal 1994. This lower gross profit percentage resulted primarily
from maintaining competitive pressure in many markets as well as changes in
merchandise mix.
Operating expenses as a percent of sales increased to 20.1% for fiscal 1995
compared to 20.0% in fiscal 1994. Selling and store operating expenses as a
percent of sales increased to 18.0% in fiscal 1995 compared to 17.8% in fiscal
1994. This increase was attributable to, among other things, higher store
payroll expenses due to higher average hourly wage rates resulting from a
greater percentage of long-term associates versus new hires and higher credit
card costs due to a greater percentage of credit sales. The increase in selling
and store operating expenses as a percent of sales was partially offset by lower
general and administrative expenses as a percent of sales due to continued
emphasis on controlling costs.
Interest and investment income as a percent of sales decreased to 0.1% in
fiscal 1995 compared to 0.2% during fiscal 1994. This decrease was attributable
to a lower investment base due to the utilization of funds for capital
expansion, partially offset by higher yields. Interest expense as a percent of
sales decreased to 0.0% for fiscal 1995 compared to 0.3% for fiscal 1994. This
decrease was attributable to the conversion to common stock of the 4 1/2%
Convertible Subordinated Notes on March 31, 1995 and higher capitalized
interest.
The Company's combined Federal and state effective income tax rate was
38.8% for fiscal 1995 compared to 38.3% for fiscal 1994. This increase was
attributable to lower tax-advantaged investments, a higher effective state
income tax rate and the expiration of targeted jobs tax credits.
Net earnings as a percent of sales was 4.7% for fiscal 1995 compared to
4.8% for fiscal 1994, reflecting lower gross profits, higher operating expenses
and a higher effective income tax rate, partially offset by lower interest
expense, as described above. Earnings per share was $1.54 for fiscal 1995
compared to $1.32 for fiscal 1994.
Fiscal Year Ended January 29, 1995 Compared to January 30, 1994
Sales for fiscal year 1994 increased 35.0% from $9,238,763,000 in fiscal
1993 to $12,476,697,000. This increase was attributable to, among other things,
69 new store openings, nine store relocations, the acquisition of a 75%
partnership interest in seven Canadian stores then known as Aikenhead's Home
Improvement Warehouse, an 8% comparable store-for-store sales increase and full
year sales from the 50 new store openings during fiscal 1993.
Gross profit as a percent of sales was 27.9% for fiscal 1994 compared to
27.7% for fiscal 1993. This higher gross profit percentage resulted primarily
from changes in merchandise mix including more decor products and upgraded
seasonal merchandise at higher margins, as well as decreased sales penetrations
in lumber which carries lower margins.
Operating expenses as a percent of sales were 20.0% for both fiscal 1994
and fiscal 1993. Selling and store operating expenses as a percent of sales
increased to 17.8% in fiscal 1994 compared to 17.6% in fiscal 1993. This
increase was attributable to, among other things, additional costs associated
with nine store relocations during fiscal 1994 compared to six store relocations
during fiscal 1993. The increase in selling and store operating expenses as a
percent of sales was offset by lower general and administrative expenses as a
percent of sales due to cost control measures and economies from higher sales
volumes.
Interest and investment income as a percent of sales decreased to 0.2% in
fiscal 1994 compared to 0.6% during fiscal 1993. This decrease was attributable
to a reduction of investment principal due to utilization of funds for capital
expansion, as well as lower yields due to shorter maturities on the investment
portfolio. Interest expense as a percent of sales was 0.3% for both fiscal 1994
and fiscal 1993. Higher interest expense from additional capital leases was
partially offset by higher capitalized interest resulting from constructing more
owned stores than in the previous year.
The Company's combined Federal and state effective income tax rate was
38.3% for fiscal 1994 compared to 38.2% in fiscal 1993, before cumulative effect
of change in accounting principle. This increase was attributable to lower
tax-advantaged investments. The Company implemented SFAS 109 "Accounting for
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Income Taxes" during fiscal 1993 which reduced the combined Federal and state
effective income tax rate to 37.9% in fiscal 1993.
Net earnings as a percent of sales was 4.8% for fiscal 1994 compared to
5.0% for fiscal 1993, reflecting lower interest income and a higher effective
income tax rate, partially offset by higher gross profits, as described above.
Earnings per share was $1.32 for fiscal 1994 compared to $1.01 during fiscal
1993.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow generated from store operations provides the Company with a
significant source of liquidity. Additionally, a significant portion of the
Company's inventory is financed under vendor credit terms.
During the first six months of fiscal 1996, the Company opened 33 stores
and relocated five stores. The Company currently plans to open approximately 57
new stores and relocate two stores during the last six months of fiscal 1996 and
open approximately 117 new stores, including relocations, during fiscal 1997. Of
the planned 90 new stores and 7 relocations in fiscal 1996, it is expected that
74 will be owned and 23 will be leased.
In June 1996, the Company entered into a $300,000,000 operating lease
agreement for the purpose of financing construction costs of certain new stores.
Under the agreement, the lessor will purchase the properties, pay for the
construction costs and subsequently lease the facilities to the Company. The
lease provides for substantial residual value guarantees and includes purchase
options at original cost on each property. This agreement will primarily cover
new stores planned to open in 1996 and 1997. In addition to this lease
agreement, some planned locations for the remainder of fiscal 1996 and 1997 will
be leased directly, and it is expected that many may be obtained through the
purchase of pre-existing leasehold interests, acquisition of land parcels and
the construction or purchase of buildings during fiscal 1996. While the cost of
new stores to be constructed and owned by the Company varies widely, principally
due to land costs, new store costs (including land, building and fixtures) are
currently estimated to average approximately $13,800,000 per location. The
Company may purchase leasehold interests at varying amounts depending upon the
value of such properties. The cost to remodel (including leasehold interests)
and fixture stores to be leased is expected to average approximately $2,300,000
per store. In addition, each new store will require approximately $2,800,000 to
finance inventories, net of vendor financing.
As of July 28, 1996, the Company had $33,457,000 in cash and short-term
investments, and $13,831,000 in long-term investments. Management believes that
its current cash position, the proceeds from short-term and long-term
investments, internally generated funds, funds available from the $300,000,000
operating lease agreement, its $800,000,000 commercial paper program
($166,000,000 outstanding as of July 28, 1996), the proceeds from this offering
and/or the ability to obtain alternate sources of financing should enable the
Company to complete its capital expenditure programs, including store expansion
and renovation, through the next several fiscal years.
RECENT ACCOUNTING PRONOUNCEMENT
In October 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123) was issued. SFAS 123
encourages companies to adopt a fair value based method of accounting for
stock-based compensation plans in place of the intrinsic value based method
provided for by Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" (APB 25). Companies which continue to apply the
provisions of APB 25 must make pro forma disclosures in the notes to their
financial statements of net income and earnings per share as if the fair value
based method of accounting defined in SFAS 123 has been applied. The Company
plans to adopt SFAS 123 in fiscal year 1996 on a pro forma disclosure basis.
IMPACT OF INFLATION AND CHANGING PRICES
Although the Company cannot accurately determine the precise effect of
inflation on its operations, it does not believe inflation has had a material
effect on sales or results of operations.
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DESCRIPTION OF NOTES
The Notes are to be issued under an Indenture, to be dated as of October 1,
1996 ( the "Indenture"), between the Company and The First National Bank of
Chicago, as Trustee (the "Trustee"). A copy of the Indenture substantially in
the form in which it is to be executed is included as an exhibit to the
Registration Statement of which this Prospectus forms a part. The following
statements are subject to the detailed provisions of the Indenture, including
the definitions therein of certain terms used herein without definition.
Wherever particular provisions of the Indenture are referred to below, such
provisions are incorporated by reference as a part of the statement made, and
the statement is qualified in its entirety by such reference. The section
references appearing below are to sections in the Indenture.
GENERAL
The Notes will be unsecured subordinated obligations of the Company, will
mature on October , 2001, and will be limited to $800,000,000 aggregate
principal amount, plus such additional amount not in excess of $120,000,000 as
may be purchased by the Underwriters upon exercise of their over-allotment
option. The Notes will bear interest at the rate per annum stated on the cover
page hereof from October , 1996 or from the most recent Interest Payment Date
to which interest has been paid or provided for, payable semi-annually on April
and October in each year, commencing April , 1997 to the person in whose
name such Note (or any predecessor Note) is registered at the close of business
on the or preceding such Interest Payment Date (Sections
301 and 307).
Principal of, and premium, if any, and interest on the Notes will be
payable, Notes may be presented for conversion and transfers of the Notes will
be registrable at the office or agency of the Company in the Borough of
Manhattan, The City of New York, and transfers of the Notes will also be
registrable at such other office or agency of the Company as may be maintained
for such purpose. In addition, payment of interest may be made, at the option of
the Company, by check mailed to the address of the person entitled thereto as
shown on the Security Register (Sections 301, 305, 1002 and 1202). The Notes are
to be registered Notes, without coupons, in denominations of $1,000 or any
integral multiple thereof (Section 302). No service charge will be made for any
conversion or registration of transfer or exchange of Notes, except for any tax
or other governmental charge that may be imposed in connection therewith
(Section 305).
FORM OF NOTES
The Notes will be represented by one or more global securities (a "Global
Security") registered in the name of The Depository Trust Company (the
"Depository"). Except as set forth below, a Global Security may be transferred
in whole and not in part, only to the Depository or another nominee of the
Depository or to a successor of the Depository or its nominee.
Upon the issuance of a Global Security, the Depository will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the Notes represented by such Global Security to the accounts of institutions
that have accounts with the Depository or its nominee ("Participants"). The
accounts to be credited will be designated by the Underwriters, dealers or
agents. Ownership of beneficial interests in a Global Security will be limited
to Participants or persons that may hold interests through Participants.
Ownership of interests in such Global Security will be shown on, and the
transfer of those ownership interests will be effected only through, records
maintained by the Depository (with respect to Participants' interests) and such
Participants (with respect to the owners of beneficial interests in such Global
Security). The laws of some jurisdictions may require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and laws may impair the ability to transfer or pledge beneficial
interests in a Global Security.
So long as the Depository, or its nominee, is the registered holder and
owner of such Global Security, the Depository or such nominee, as the case may
be, will be considered the sole owner and holder of the related Notes for all
purposes of such Notes and for all purposes under the Indenture. Except as set
forth below, owners of beneficial interests in a Global Security will not be
entitled to have the Notes represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of
Notes
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<PAGE> 11
in definitive form and will not be considered to be the owners or holders of any
Notes under the Indenture or such Global Security.
Accordingly, each person owning a beneficial interest in a Global Security
must rely on the procedures of the Depository and, if such person is not a
Participant, on the procedures of the Participant through which such person owns
its interest, to exercise all rights of a holder of Notes or such Global
Security. The Company understands that under existing industry practice, in the
event the Company requests any action of holders of Notes or an owner of a
beneficial interest in a Global Security desires to take any action that the
Depository, as the holder of such Global Security, is entitled to take, the
Depository would authorize the Participants to take such action, and that the
Participants would authorize beneficial owners owning through such Participants
to take such action or would otherwise act upon the instructions of beneficial
owners owning through them.
Payment of principal and interest on Notes represented by a Global Security
will be made to the Depository or its nominee, as the case may be, as the
registered owner and holder of such Global Security.
The Company expects that the Depository, upon receipt of any payment of
principal or interest, will immediately credit the accounts of the Participants
with such payment in amounts proportionate to their respective holdings in
principal amount of beneficial interest in the Global Security as shown in the
records of the Depository. Payments by Participants to owners of beneficial
interests in a Global Security held through such Participants will be governed
by standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in "street name", and
will be the responsibility of such Participants. The Company and the Trustee
will not have any responsibility or liability for any aspect of the records
relating to, or payments made on account of, beneficial ownership interests in a
Global Security for any Notes or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests or for any other aspect
of the relationship between the Depository and its Participants or the
relationship between such Participants and the owners of beneficial interests in
such Global Security owned through such Participants.
Unless and until it is exchanged in whole or in part for Notes in
definitive form, a Global Security may not be transferred except as a whole by
the Depository to a nominee of such Depository, by a nominee of such Depository
to such Depository or another nominee of such Depository, or to a successor of
the Depository or its nominee.
Notes represented by a Global Security will be exchangeable for Notes in
definitive form of like tenor as such Global Security in denominations of $1,000
and in any greater amount that is an integral multiple thereof if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for such Global Security or the Depository ceases to be a clearing
agency registered under the Exchange Act, (ii) the Company executes and delivers
to the Trustee a Company Order that such Global Security shall be so
transferable, registrable and exchangeable and such transfers shall be
registrable or (iii) there shall have occurred and be continuing an Event of
Default with respect to the Notes. Any Global Security that is exchangeable
pursuant to the preceding sentence is exchangeable for Notes issuable in
authorized denominations and registered in such names as the Depository shall
direct and an owner of a beneficial interest in a Global Security will be
entitled to physical delivery of such Security in definitive form. Subject to
the foregoing, a Global Security is not exchangeable except for a Global
Security or Global Securities of the same aggregate denominations to be
registered in the name of the Depository or its nominee.
The Depository has advised the Company and the Underwriters as follows: The
Depository is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. The
Depository was created to hold securities of Participants and to facilitate the
clearance and settlement of securities transactions among the Participants,
thereby eliminating the need for physical delivery of securities and
certificates. Participants include securities brokers and dealers (including the
Underwriters), banks, trust companies, clearing corporations and certain other
organizations, some of which (and/or their representatives) own the Depository.
Access to the
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Depository's book-entry system is also available to others such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with Participants, either directly or indirectly ("Indirect
Participants"). Persons who are not Participants may beneficially own securities
held by the Depository only through Participants or Indirect Participants. The
rules applicable to the Depository and the Participants are on file with the
Commission. The Depository currently accepts only notes denominated and payable
in U.S. dollars.
CONVERSION RIGHTS
The Notes will be convertible into Common Stock of the Company at any time
prior to redemption or maturity, initially at the conversion price stated on the
cover page hereof. The right to convert Notes called for redemption will
terminate at the close of business on the business day next preceding the
Redemption Date and will be lost if not exercised prior to that time. For
information as to notices of redemption, see "Optional Redemption".
If the Company, by dividend or otherwise, declares or makes a distribution
on its Common Stock referred to in clause (iv) or (v) below, the Holder of each
Note, upon the conversion thereof subsequent to the close of business on the
date fixed for the determination of stockholders entitled to receive such
distribution and prior to the effectiveness of the conversion price adjustment
in respect of such distribution pursuant to clause (iv) or (v) below, will be
entitled to receive for each share of Common Stock into which such Note is
converted the portion of the evidences of indebtedness, shares of capital stock,
cash and other assets so distributed applicable to one share of Common Stock;
provided, however, that the Company may, with respect to all Holders so
converting, in lieu of distributing any portion of such distribution not
consisting of cash or securities of the Company, pay such Holder cash equal to
the fair market value thereof (Section 1201).
The conversion price will be subject to adjustment in certain events
including: (i) dividends (and other distributions) payable in Common Stock on
any class of capital stock of the Company; (ii) the issuance to all holders of
Common Stock of rights or warrants entitling them to subscribe for or purchase
Common Stock at less than the current market price (as defined in the
Indenture); (iii) subdivisions, combinations and reclassifications of Common
Stock; (iv) distributions to all holders of Common Stock of evidences of
indebtedness of the Company, shares of capital stock, cash or assets (including
securities, but excluding those dividends, rights, warrants and distributions
referred to above and dividends and distributions paid exclusively in cash); (v)
distributions consisting exclusively of cash (excluding any cash distributions
referred to in (iv) above) to all holders of Common Stock in an aggregate amount
that, together with (A) other all-cash distributions made within the preceding
12 months and (B) any cash and the fair market value of other consideration
payable in respect of any tender offer by the Company or a Subsidiary for the
Company's Common Stock concluded within the preceding 12 months, exceeds 12.5%
of the Company's market capitalization (being the product of the current market
price (as defined in the Indenture) of the Common Stock times the number of
shares of Common Stock then outstanding) on the date of such distribution; and
(vi) the successful completion of a tender offer made by the Company or any
Subsidiary for the Company's Common Stock which involves an aggregate
consideration that, together with (X) any cash and other consideration payable
in respect of any tender offer by the Company or a Subsidiary for the Company's
Common Stock expiring within the 12 months preceding the expiration of such
tender offer and (Y) the aggregate amount of any all-cash distributions to all
holders of the Company's Common Stock within the 12 months preceding the
expiration of such tender offer, exceeds 12.5% of the Company's market
capitalization on the expiration of such tender offer. No adjustment of the
conversion price will be required to be made until cumulative adjustments amount
to 1% or more of the conversion price as last adjusted (Section 1204).
In addition to the foregoing adjustments, the Company will be permitted to
make such reductions in the conversion price as it considers to be advisable in
order that any event treated for Federal income tax purposes as a dividend of
stock or stock rights will not be taxable to the holders of the Common Stock
(Section 1204). In the case of certain consolidations or mergers to which the
Company is a party or the transfer of substantially all of the assets of the
Company, each Note then outstanding would, without the consent of any Holders of
Notes, become convertible only into the kind and amount of securities, cash and
other property
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<PAGE> 13
receivable upon the consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock into which such Note might have been converted
immediately prior to such consolidation, merger, sale or transfer (assuming such
holder of Common Stock failed to exercise any rights of election and received
per share the kind and amount received per share by a plurality of non-electing
shares) (Section 1211).
Fractional shares of Common Stock are not to be issued upon conversion,
but, in lieu thereof, the Company will pay a cash adjustment based upon market
price (Section 1203). Notes surrendered for conversion during the period from
the close of business on any Regular Record Date next preceding any Interest
Payment Date to the opening of business on any Interest Payment Date (except
Notes whose maturity is prior to such Interest Payment Date and Notes called for
redemption on a redemption date within such period) must be accompanied by
payment of an amount equal to the interest thereon which the registered Holder
is to receive. Except where Notes surrendered for conversion must be accompanied
by payment as described above, no interest on converted Notes will be payable by
the Company on any Interest Payment Date subsequent to the date of conversion.
No other payment or adjustment for interest or dividends is to be made upon
conversion (Sections 307 and 1202).
CERTAIN RIGHTS TO REQUIRE PURCHASE OF NOTES BY THE COMPANY
In the event any Repurchase Event (as defined below) occurs, each Holder of
Notes will have the right, at the Holder's option, to require the Company to
purchase all or any part of the Holder's Notes on the date (the "Repurchase
Date") that is 75 days after the date the Company gives notice of the Repurchase
Event as described below at a price (the "Repurchase Price") equal to 100% of
the principal amount thereof, together with accrued and unpaid interest to the
Repurchase Date (Section 1401). Prior to the Repurchase Date, the Company shall
deposit with a Paying Agent an amount of money sufficient to pay the Repurchase
Price of the Notes which are to be repaid on the Repurchase Date (Section 1403).
The Company may not purchase any Notes pursuant to the preceding paragraph
at any time when the subordination provisions of the Indenture would prohibit
the Company from making payments of principal in respect of the Notes. Failure
by the Company to repurchase the Notes when required under the preceding
paragraph will result in an Event of Default under the Indenture whether or not
such repurchase is permitted by the subordination provisions of the Indenture
(Section 501).
On or before the 15th day after the occurrence of a Repurchase Event, the
Company is obligated to mail to all Holders of record of the Notes a notice of
the occurrence of such Repurchase Event, the date by which the repurchase right
must be exercised, the Repurchase Price for Notes and the procedures which the
Holder must follow to exercise this right. To exercise the repurchase right, the
Holder of a Note must deliver, on or before the close of business on the
business day next preceding the Repurchase Date, written notice to the Company
(or an agent designated by the Company for such purpose) of the Holder's
exercise of such right, together with the certificates evidencing the Note or
Notes with respect to which the right is being exercised, duly endorsed for
transfer (Section 1402).
As used in the Indenture, (a) "Acquiring Person" means any person or group
as defined in Section 13(d)(3) of the Exchange Act and the rules and regulations
promulgated thereunder as in effect on the date of the Indenture) which,
together with all affiliates and associates (as defined in Rule 12b-2 under the
Exchange Act) becomes the owner or beneficial owner of shares of the Company
having more than 50% of the total number of votes that may be cast for the
election of directors of the Company; and (b) "Change in Control" means any
event by which an Acquiring Person has become such (other than by way of certain
mergers or consolidations effected in accordance with Section 801 of the
Indenture if within 7 days after the occurrence of such merger or consolidation,
no Person which may have become an Acquiring Person continues to be an Acquiring
Person). For purposes of the Indenture, a "Repurchase Event" shall have occurred
if (i) a Change in Control occurs on or prior to the maturity date and (ii) on
any date during the period commencing 90 days prior to the public disclosure of
an intent to effect such Change in Control and ending 90 days after the
occurrence of such Change in Control, the rating of the Notes is withdrawn or
downgraded to lower than BBB- by Standard & Poor's Corporation ("S&P") or
withdrawn or downgraded to lower than Baa3 by Moody's Investors Service, Inc.
("Moody's"), and if such withdrawal or downgrading
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<PAGE> 14
occurs prior to such public disclosure, the rating remains withdrawn by S&P or
Moody's, respectively, on the date of such public disclosure or the rating
assigned to the Notes by S&P or Moody's on the date of such public disclosure
remains lower than BBB- or lower than Baa3, respectively (Section 1406).
The right of holders of the Notes to require the Company to repurchase the
Notes would not be triggered by certain corporate restructurings and similar
technical changes in corporate form, i.e., in the event of a merger or
consolidation of the Company where the Person formed by such consolidation or
into which the Company is merged expressly and directly assumes the obligations
of the Company in compliance with Section 801 of the Indenture, if within 7 days
after the occurrence of such merger or consolidation no person or entity which
may have temporarily acquired shares of the Company having more than 50% of the
total number of votes that may be cast for the election of directors of the
Company continues to hold such voting control. Similarly, the Holders' right to
require repurchase of the Notes would not be triggered in the event of a Change
in Control alone but only in the event a Change in Control occurs and the rating
of the Notes is lower than BBB- or Baa3 during the period specified in clause
(ii) of the definition of Repurchase Event as described above. If the rating of
the Notes before the public disclosure of an intent to effect a Change in
Control has been withdrawn or is below BBB- or Baa3 (whether or not such public
disclosure results in a further downgrade or withdrawal of the rating of the
Notes) then a Repurchase Event would occur absent the Notes being rated at least
BBB- or Baa3 on the date of such public announcement of a Change in Control and
for the period ending 90 days after the occurrence of such Change in Control.
The Indenture does not limit the incurrence of additional indebtedness by
the Company. Consequently, the rating of the Notes may be withdrawn or
downgraded at any time as a result of the incurrence of additional indebtedness
(or for any other reason) and, except in the case of a Change in Control, no
right to require repurchase would arise as a result thereof.
Although certain of the agreements under which the Senior Indebtedness of
the Company is or may be outstanding contain limitations on the incurrence of
indebtedness by the Company, such agreements may be amended or modified as
provided therein, may provide only incidental protection to holders of Notes in
the event of a Change in Control, and are not intended for the benefit of the
holders of the Notes.
The effect of these provisions granting the Holders the right to require
the Company to purchase the Notes upon the occurrence of a Repurchase Event may
make it more difficult for any person or group to acquire control of the Company
or to effect a business combination with the Company. For a summary of certain
supermajority voting provisions of the Company's Certificate of Incorporation,
see "Description of Common Stock -- Voting Rights".
In the event a Repurchase Event occurs and the Holders exercise their
rights to require the Company to repurchase Notes, the Company intends to comply
with applicable tender offer rules under the Exchange Act, including Rules 13e-4
and 14e-1, as then in effect, with respect to any such purchase.
SUBORDINATION OF NOTES
Upon any distribution of assets of the Company upon any dissolution,
winding up, liquidation or reorganization, the payment of the principal of,
premium, if any, and interest on the Notes is to be subordinated to the extent
provided in the Indenture in right of payment to the prior payment in full of
all Senior Indebtedness of the Company (Sections 1301 and 1302), but the
obligation of the Company to make payments of principal of, premium, if any, and
interest on the Notes will not otherwise be affected (Section 1304). No payment
of principal of, premium, if any, or interest may be made on the Notes and no
repurchase of the Notes may be made as described under "Certain Rights to
Require Repurchase of Notes by the Company" at any time when there is a default
in the payment of principal of, premium, if any, interest or sinking fund on any
Senior Indebtedness of the Company (Section 1303). The Holders of the Notes will
be subrogated to the rights of the holders of the Senior Indebtedness of the
Company to the extent of payments made on Senior Indebtedness of the Company
upon any distribution of assets in any such proceedings out of the distributive
share of the Notes (Section 1302).
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By reason of such subordination, in the event of insolvency, creditors of
the Company who are such creditors other than by virtue of being holders of
Senior Indebtedness of the Company, or holders of the Notes may recover less,
ratably, than holders of Senior Indebtedness of the Company and may thus recover
more, ratably, than the Holders of the Notes.
Senior Indebtedness of the Company is defined in the Indenture as the
principal of, premium, if any, and unpaid interest on (a) indebtedness of the
Company (including indebtedness of others guaranteed by the Company), other than
the Notes, whether outstanding on the date of execution of the Indenture or
thereafter created, incurred, assumed or guaranteed, (i) for money owing to
banks, (ii) for money borrowed from other than banks or (iii) arising under a
lease of property, equipment or other assets, which indebtedness, pursuant to
generally accepted accounting principles then in effect, is classified upon the
balance sheet of the Company as a liability of the Company, unless in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding it is provided that such indebtedness is not superior in right of
payment to the Notes, and (b) renewals, extensions, modifications and refundings
of any such indebtedness (Section 101).
At July 28, 1996, Senior Indebtedness of the Company aggregated
approximately $175,491,000. The Company expects from time to time to incur
additional indebtedness constituting Senior Indebtedness of the Company. The
Indenture does not prohibit or limit the incurrence of additional Senior
Indebtedness of the Company.
OPTIONAL REDEMPTION
The Notes are not subject to the provisions of any sinking fund.
The Notes are not redeemable by the Company prior to October , 1999.
Thereafter, the Notes will be redeemable upon at least 30 days' notice at the
option of the Company, in whole or from time to time in part at any time, at the
following redemption prices (expressed as a percentage of the principal amount)
set forth below, in each case together with accrued interest: if redeemed during
the period commencing on October , 1999 and ending on (and including) October
, 2000, %; and thereafter at 100% of the principal amount. (Sections 203,
1101, 1105 and 1107).
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee, with the consent of the Holders of not less than a majority in
principal amount of the Notes at the time outstanding; provided, however, that
no such modification or amendment may, without the consent of the Holder of each
outstanding Note affected thereby, (a) change the stated maturity of the
principal of, or any installment of interest on, any Note, (b) reduce the
principal amount of, or any premium or interest payable on, any Note, (c) change
the place or currency of payment of principal of, any premium or interest on,
any Note, (d) impair the right to institute suit for the enforcement of any
payment on or with respect to any Note, (e) adversely affect the right to
convert Notes, (f) modify the subordination provisions in a manner adverse to
the Holders of the Notes, (g) reduce the above-stated percentage of outstanding
Notes necessary to modify or amend the Indenture, (h) adversely affect the right
to require the Company to repurchase the Notes upon the occurrence of a
Repurchase Event or (i) reduce the percentage of aggregate principal amount of
outstanding Notes necessary for waiver of compliance with certain provisions of
the Indenture or for waiver of certain defaults. (Section 902).
The Holders of a majority in aggregate principal amount of the Outstanding
Notes may waive any past default under the Indenture, except a default in the
payment of principal, premium, if any, or interest (Section 513).
EVENTS OF DEFAULT
The following will be Events of Default under the Indenture: (i) failure to
pay principal of, or premium, if any, on any Note when due, whether or not such
payment is prohibited by the subordination provisions of the Indenture; (ii)
failure to pay any interest on any Note when due and continuance of such default
for 30 days,
14
<PAGE> 16
whether or not such payment is prohibited by the subordination provisions of the
Indenture; (iii) failure to pay the Repurchase Price in respect of any Note on
the Repurchase Date in the event of a Repurchase Event, whether or not such
payment is prohibited by the subordination provisions of the Indenture; (iv)
failure to perform any other covenant of the Company in the Indenture, continued
for 60 days after written notice as provided in the Indenture; (v) default on
any indebtedness of the Company in excess of $50,000,000 representing
indebtedness for borrowed money or any Senior Indebtedness of the Company, as
defined in the Indenture, resulting in such indebtedness being declared due and
payable or becoming due and payable and the Holders thereof taking action to
collect such indebtedness; and (vi) certain events in bankruptcy, insolvency or
reorganization of the Company (Section 501).
If an Event of Default shall occur and be continuing, either the Trustee or
the Holders of at least 25% in principal amount of the Outstanding Notes may
accelerate the maturity of all Notes; provided, however, that after such
acceleration, but before a judgment or decree based on acceleration, the Holders
of a majority in aggregate principal amount of Outstanding Notes may, under
certain circumstances, rescind and annul such acceleration if all Events of
Default, other than the non-payment of accelerated principal, have been cured or
waived as provided in the Indenture (Section 502). For information as to waiver
of defaults see "Modification and Waiver".
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default shall occur and be continuing, 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 indemnity (Section 603). Subject to
such provisions for the indemnification of the Trustee, the Holders of a
majority in principal amount of the Outstanding Notes 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 (Section 512).
No Holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such Holder shall
have previously given to the Trustee written notice of a continuing Event of
Default and unless also the Holders of at least 25% in principal amount of the
Outstanding Notes shall have made written request, and offered reasonable
indemnity, to the Trustee to institute such proceeding as trustee, and the
Trustee shall not have received from the Holders of a majority in principal
amount of the Outstanding Notes a direction inconsistent with such request and
shall have failed to institute such proceeding within 60 days (Section 507).
However, such limitations do not apply to a suit instituted by a Holder of a
Note for the enforcement or payment of the principal of, or any premium or
interest on, such Note on or after the respective due dates expressed in such
Note or of the right to convert such Note in accordance with the Indenture
(Section 508).
The Company will be required to furnish to the Trustee annually a statement
as to its performance of certain of its obligations under the Indenture and as
to any default in such performance (Section 1004).
CONCERNING THE TRUSTEE
The Trustee and its affiliates have in the past and may in the future
perform commercial banking services for the Company. The Trustee will also act
under the Indenture in connection with the Notes as registrar, paying agent and
authenticating agent.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain United States federal income tax
consequences of the purchase, ownership and disposition of the Notes is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change (possibly retroactively) by legislation, administrative action
or judicial decision. This summary is directed at United States persons and does
not address foreign persons or persons in special tax situations, such as
insurance companies, regulated investment companies, dealers in securities or
currencies, persons holding Notes as a hedge against currency risks or as a
position in a "straddle," or persons whose functional currency is not the United
States dollar. This summary also does not address holders other than original
purchasers. Persons considering the purchase of Notes should consult their own
tax advisors
15
<PAGE> 17
concerning the application of the federal income tax laws to their particular
situations as well as any consequences of a purchase, ownership and disposition
of the Notes arising under the laws of any state, local or foreign taxing
jurisdiction.
Payment of interest on a Note will generally be taxable to a U.S. holder as
ordinary interest income at the time such payments are accrued or received (in
accordance with the U.S. holder's regular method of accounting). Because the
Notes will be issued at par, the Notes should not be subject to the original
issue discount rules of the Internal Revenue Code of 1986. If the Notes were
issued for less than their principal amount, the Notes could be subject to such
original issue discount rules, in which case holders of the Notes could be
required to report interest income in respect of the Notes prior to their
receipt of cash.
Generally, no gain or loss should be recognized for Federal income tax
purposes upon the conversion of a Note into Common Stock (except to the extent
of cash received in lieu of fractional shares). The holder of a Note converted
into Common Stock should generally have a carryover basis in such shares and the
holding period for the Common Stock should include the holding period of the
Note.
If at any time the Company makes a distribution of property to its
stockholders which would be taxable to such stockholders as a dividend for
Federal income tax purposes (e.g., distributions of evidences of indebtedness or
assets of the Company, but generally not stock dividends or rights to subscribe
for Common Stock) and, pursuant to the anti-dilution provisions of the
Indenture, the conversion price of the Notes is reduced, such reduction may be
deemed to be the payment of a taxable dividend to holders of Notes.
DESCRIPTION OF COMMON STOCK
The authorized capital stock of the Company consists of 1,000,000,000
shares of Common Stock, par value $.05 per share, of which, at August 15, 1996,
479,107,754 shares were outstanding. The number of record holders of the
Company's Common Stock was approximately 68,000 as of August 15, 1996.
VOTING RIGHTS
Each holder of shares of Common Stock is entitled to one vote per share in
all matters to be voted on by stockholders. There are no cumulative voting
rights, which means that the holders of shares entitled to exercise more than
50% of the voting rights in the election of directors can elect 100% of the
directors if they choose. At each annual meeting of stockholders, approximately
one-third of the Board of Directors is elected.
All questions which must be voted on by the Company's stockholders are
determined by a majority of the votes cast at a stockholder meeting, except as
otherwise required by the laws of Delaware or the Company's Certificate of
Incorporation. The Company's Certificate of Incorporation provides that the
affirmative vote of 80% of the outstanding shares of its Common Stock is
required to amend the article which determines, among other things, the powers
and qualifications of the Board of Directors, unless such amendment is
unanimously recommended to the stockholders by the Board of Directors. Also, the
Company's Certificate of Incorporation provides that the affirmative vote of 80%
of the outstanding shares of its Common Stock is required for any of the
following transactions if proposed by a stockholder owning 20% or more of the
outstanding shares of Common Stock: (i) a "business combination" (as defined in
the Company's Certificate of Incorporation), including certain mergers,
acquisitions and asset sales; (ii) a proposed dissolution of the Company; or
(iii) a proposed amendment to the Certificate of Incorporation amending the
right of stockholders to vote in elections of directors or to authorize the
Company to issue shares, other than Common Stock, which could be entitled to
vote for the election of directors. This voting requirement may be reduced to
the statutory majority vote if the business combination or other transaction
meets certain specified requirements affecting the consideration received by the
Company's stockholders and the acquiror takes steps to ensure proportional Board
representation, does not acquire additional shares of the Company's securities
and does not receive the benefit of any financial assistance from the Company.
The Board of Directors may approve a business combination before an acquiror
becomes the beneficial owner of 5% of the Company's outstanding Common Stock and
may approve a business combination or other transaction prior to stockholder
adoption or authorization by a two-thirds vote of the disinterested directors.
The effect of this provision of the Company's
16
<PAGE> 18
Certificate of Incorporation is to make it improbable that a business
combination with the Company or other transaction as described above could be
accomplished without meeting the requirements necessary to reduce the level of
stockholder approval to a majority vote.
The Company's Certificate of Incorporation provides for a classified board
of directors with terms of three years in length, the terms of office of
approximately one-third of the directors expiring each year. The Certificate of
Incorporation also provides that stockholders may not take any action, including
action by written consent as currently permitted by Delaware law, except at
annual or special meetings of stockholders called by the Chairman of the Board
of Directors, the President or a majority of the Board of Directors or as
otherwise required by law. These provisions may have the effect of making it
more difficult to change the composition of the Board of Directors or to effect
a business combination with the Company.
DIVIDEND RIGHTS
The holders of Common Stock are entitled to dividends and other
distributions as and when declared by the Board of Directors out of assets
legally available therefor.
OTHER RIGHTS
Upon the liquidation, dissolution or winding up of the Company, the holder
of each share of Common Stock would be entitled to share equally in the
distribution of all of the Company's assets. The holders of Common Stock have no
preemptive rights to purchase shares of stock of the Company, nor are they
entitled to the benefits of any sinking fund provision. Shares of Common Stock
of the Company are not subject to any redemption provisions, nor are they
convertible into any other security or other property of the Company. All
outstanding shares of Common Stock are, and the shares of Common Stock issuable
upon conversion of the Notes will be, fully paid and nonassessable.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Company's Common Stock is The
First National Bank of Boston.
17
<PAGE> 19
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated , 1996 (the "Underwriting Agreement"), the
underwriters named below (the "Underwriters"), for whom CS First Boston
Corporation is acting as representative (the "Representative"), have severally
but not jointly agreed to purchase from the Company the following respective
principal amounts of the Notes:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
--------------------------------------------------------------------- -----------------
<S> <C>
CS First Boston Corporation.......................................... $
Invemed Associates, Inc..............................................
-----------------
Total...................................................... $ 800,000,000
=============
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all the Notes, if any are purchased.
The Underwriting Agreement provides that, in the event of a default by an
Underwriter, in certain circumstances the purchase commitment of the
non-defaulting Underwriter may be increased or the Underwriting Agreement may be
terminated.
The Company has granted the Underwriters an option, expiring at the close
of business on the 30th day after the date of the initial public offering of the
Notes, to purchase up to an additional $120,000,000 principal amount of Notes
endorsed thereon (the "Option Notes") at the initial public offering price less
the underwriting discount, all as set forth on the cover page of this
Prospectus. The Underwriters may exercise such option to cover over-allotments
in the sale of the Notes. To the extent that this option to purchase is
exercised, each Underwriter will become obligated, subject to certain
conditions, to purchase approximately the same percentage of the principal
amount of Option Notes being sold to the Underwriters as the principal amount
set forth next to such Underwriter's name in the preceding table bears to the
total principal amount of Notes in such table.
The Company has been advised by the Representative that the Underwriters
propose to offer the Notes to the public initially at the public offering prices
set forth on the cover page of this Prospectus and to certain dealers at such
prices less a concession of % of the principal amount per Note and the
Underwriters and such dealers may allow a discount of % of such principal
amount of each Note on sales to certain other dealers. After the initial public
offering, the public offering prices and concessions and discounts to dealers
may be changed by the Representative.
Application will be made to list the Notes on the New York Stock Exchange.
The Representative has advised the Company that each of the Underwriters
currently intends to act as a market maker for the Notes. However, the
Underwriters are not obligated to do so and may discontinue any market making at
any time without notice. No assurance can be given as to the liquidity of the
trading market for the Notes.
The Company has agreed that, for a period of 90 days after the date of this
Prospectus, it will not, and it will use its reasonable efforts to cause its
directors and executive officers for such period not to, without the prior
written consent of the Representative, sell, contract to sell, or otherwise
dispose of any Common Stock or any security convertible into or exchangeable for
Common Stock other than to the Underwriters pursuant to the Underwriting
Agreement and other than upon conversion of convertible securities outstanding
on the date hereof or pursuant to employee benefit plans (including stock option
plans), dividend reinvestment plans, stock purchase plans or similar plans in
effect on the date hereof.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act, or contribute
to payments which the Underwriters may be required to make in respect thereof.
The Underwriters and their respective affiliates have provided investment
banking, commercial banking, brokerage and financial advisory services to the
Company from time to time. The Underwriters and their respective affiliates
received customary fees and underwriting commissions in connection with
providing such services.
Kenneth G. Langone, a director of the Company, is Chairman of the Board and
President of Invemed Associates, Inc.
18
<PAGE> 20
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Notes in Canada is being made only on a private
placement basis exempt from the requirement that the Company prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of Notes are effected. Accordingly, any resale of the Notes in Canada
must be made in accordance with applicable securities laws which will vary
depending on the relevant jurisdiction, and which may require resales to be made
in accordance with available statutory exemptions or pursuant to a discretionary
exemption granted by the applicable Canadian securities regulatory authority.
Purchasers are advised to seek legal advice prior to any resale of the Notes.
REPRESENTATIONS OF PURCHASERS
Each purchaser of Notes in Canada who receives a purchase confirmation will
be deemed to represent to the Company and the dealer from whom such purchase
confirmation is received that (i) such purchaser is entitled under applicable
provincial securities laws to purchase such Notes without the benefit of a
prospectus qualified under such securities laws, (ii) where required by law,
such purchaser is purchasing as principal and not as agent, and (iii) such
purchaser has reviewed the text above under "Resale Restrictions".
RIGHTS OF ACTION AND ENFORCEMENT
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Ontario purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against the issuer or such persons in Canada
or to enforce a judgment obtained in Canadian courts against such issuer or
persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Notes to whom the Securities Act (British Columbia) applies
is advised that such purchaser is required to file with the British Columbia
Securities Commission a report within ten days of the sale of any Notes acquired
by such purchaser pursuant to this offering. Such report must be in the form
attached to British Columbia Securities Commission Blanket Order BOR #95/17, a
copy of which may be obtained from the Company. Only one such report must be
filed in respect of Notes acquired on the same date and under the same
prospectus exemption.
VALIDITY OF NOTES
The validity of the Notes will be passed upon for the Company by King &
Spalding, Atlanta, Georgia, and for the Underwriters by Weil, Gotshal & Manges
LLP, New York, New York, a limited liability partnership including professional
corporations. From time to time, Weil, Gotshal & Manges LLP has provided and may
in the future provide legal services to the Company.
EXPERTS
The consolidated financial statements of the Company as of January 29, 1995
and January 28, 1996 and for each of the years in the three-year period ended
January 28, 1996 have been incorporated by reference herein in reliance on the
report of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
19
<PAGE> 21
- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE SUCH DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 3
Use of Proceeds....................... 4
Price Range of Common Stock and
Dividends........................... 4
Selected Consolidated Financial
Data................................ 5
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 6
Description of Notes.................. 9
Description of Common Stock........... 16
Underwriting.......................... 18
Notice to Canadian Residents.......... 19
Validity of Notes..................... 19
Experts............................... 19
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
[LOGO THE HOME DEPOT(R)]
$800,000,000
% Convertible
Subordinated Notes
Due 2001
PROSPECTUS
CS First Boston
Invemed Associates, Inc.
- ------------------------------------------------------
<PAGE> 22
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are estimated
except the Securities and Exchange Commission registration fee and the NASD
filing fee.
<TABLE>
<S> <C>
SEC registration fee...................................................... $317,242
NASD Filing Fee........................................................... 30,000
Blue Sky fees and expenses................................................ 5,000
Printing and engraving expenses........................................... 70,000
Legal fees and expenses................................................... 30,000
Accounting fees and expenses.............................................. 30,000
Transfer agent and trustee fees........................................... 6,000
Miscellaneous............................................................. 11,758
--------
Total........................................................... $500,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article IV, Section 4, of the Registrant's Restated By-Laws provides that
to the fullest extent permitted by Delaware law, each former, present or future,
director, officer, employee or agent of the Registrant, and each person who may
serve at the request of the Registrant as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise
shall be indemnified by the Registrant in all events.
Article NINTH of the Registrant's Restated Certificate of Incorporation
provides that to the fullest extent permitted by Delaware law, no director of
the Registrant shall be liable to the Registrant or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the Registrant
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit.
Section 145 of the General Corporation Law of the State of Delaware sets
forth the applicable terms, conditions and limitations governing the
indemnification of officers, directors and other persons.
In addition, the Registrant maintains officers' and directors' liability
insurance for the benefit of its officers and directors.
Reference is made to Section 7 of the form of Underwriting Agreement filed
as Exhibit 1.1 to the Registration Statement for the Registrant's and the
Underwriters' respective agreements to indemnify each other, and to provide
contribution in circumstances where indemnification is unavailable.
II-1
<PAGE> 23
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ -----------------------------------------------------------------------------------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement
4.1 -- Form of Indenture, to be dated as of October 1, 1996, between the Registrant and
The First National Bank of Chicago, as Trustee, including the Form of %
Convertible Subordinated Note Due 2001
5.1 -- Opinion of King & Spalding
12.1 -- Computation of Ratios of Earnings to Fixed Charges
23.1 -- Consent of King & Spalding (included as part of its opinion filed as Exhibit 5.1)
23.2 -- Consent of KPMG Peat Marwick LLP
24.1 -- Powers of Attorney
25.1 -- Form T-1, Statement of Eligibility of Trustee
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933 (the "Securities
Act"), each filing of the Registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-2
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Atlanta, State of Georgia, on this 24th day of
September, 1996.
The Home Depot, Inc.
By: /s/ BERNARD MARCUS
------------------------------------
Bernard Marcus
Chairman of the Board, Chief
Executive Officer and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated below on September 24, 1996:
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
/s/ BERNARD MARCUS Chairman of the Board, Chief Executive Officer
- --------------------------------------------- and Secretary (Principal Executive Officer)
Bernard Marcus
/s/ ARTHUR M. BLANK President, Chief Operating Officer and
- --------------------------------------------- Director
Arthur M. Blank
/s/ RONALD M. BRILL Executive Vice President, Chief Administrative
- --------------------------------------------- Officer, Assistant Secretary and Director
Ronald M. Brill
* Director
- ---------------------------------------------
Frank Borman
* Director
- ---------------------------------------------
John L. Clendenin
* Director
- ---------------------------------------------
Johnnetta B. Cole
* Director
- ---------------------------------------------
Berry R. Cox
/s/ MARSHALL L. DAY Senior Vice President and Chief Financial
- --------------------------------------------- Officer (Principal Financial and Accounting
Marshall L. Day Officer)
* Director
- ---------------------------------------------
Milledge A. Hart, III
* Director
- ---------------------------------------------
Donald R. Keough
* Director
- ---------------------------------------------
Kenneth G. Langone
* Director
- ---------------------------------------------
M. Faye Wilson
*By: /s/ BERNARD MARCUS
-----------------------------------------
Bernard Marcus
Attorney-in-fact
</TABLE>
II-3
<PAGE> 25
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBITS PAGE
- ------ ----------------------------------------------------------------------- -------------
<C> <C> <S> <C>
1.1 -- Form of Underwriting Agreement
4.1 -- Form of Indenture, to be dated as of October 1, 1996, between the
Registrant and The First National Bank of Chicago, as Trustee,
including the Form of % Convertible Subordinated Note Due 2001
5.1 -- Opinion of King & Spalding
12.1 -- Computation of Ratio of Earnings to Fixed Charges
23.1 -- Consent of King & Spalding (included as part of its opinion filed as
Exhibit 5.1)
23.2 -- Consent of KPMG Peat Marwick LLP
24.1 -- Powers of Attorney
25.1 -- Form T-1, Statement of Eligibility of Trustee
</TABLE>
<PAGE> 1
EXHIBIT 1.1
THE HOME DEPOT, INC.
$800,000,000 __ % CONVERTIBLE SUBORDINATED NOTES DUE 2001
UNDERWRITING AGREEMENT
_________ __, 1996
CS FIRST BOSTON CORPORATION
INVEMED ASSOCIATES, INC.
C/O CS FIRST BOSTON CORPORATION,
As Representative of the Several Underwriters,
Park Avenue Plaza,
New York, N.Y. 10055
Dear Sirs:
1. Introductory. The Home Depot, Inc., a Delaware corporation
("Company"), proposes to issue and sell to the Underwriters (as defined herein)
$800,000,000 principal amount ("Firm Securities") of its __% Convertible
Subordinated Notes Due 2001 ("Securities") and also proposes to issue and sell
to the Underwriters, at the option of the Underwriters, an aggregate of not
more than $120,000,000 additional principal amount ("Optional Securities") of
its Securities as set forth below, all to be issued under an Indenture, dated
as of October 1, 1996 (the "Indenture"), between the Company and The First
National Bank of Chicago, as Trustee. The Firm Securities and the Optional
Securities are herein collectively called the "Offered Securities". The
Company hereby agrees with the several Underwriters named in Schedule A hereto
("Underwriters") as follows:
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the several Underwriters that:
(a) A registration statement on Form S-3 (No. 333- )
relating to the Offered Securities and the shares of common stock,
$.05 par value, of the Company ("Underlying Shares") into which such
Securities are convertible, including a form of prospectus, has been
filed with the Securities and Exchange Commission ("Commission") and
either (i) has been declared effective under the Securities Act of
1933, as amended (the "Act") and is not proposed to be
<PAGE> 2
amended or (ii) is proposed to be amended by amendment or
post-effective amendment. If such registration statement ("initial
registration statement") has been declared effective, either (i) an
additional registration statement ("additional registration
statement") relating to the Offered Securities and the Underlying
Shares into which the Securities are convertible may have been filed
with the Commission pursuant to Rule 462(b) ("Rule 462(b)") under the
Act and, if so filed, has become effective upon filing pursuant to
such Rule and the Offered Securities and such Underlying Shares all
have been duly registered under the Act pursuant to the initial
registration statement and, if applicable, the additional registration
statement or (ii) such an additional registration statement is
proposed to be filed with the Commission pursuant to Rule 462(b) and
will become effective upon filing pursuant to such Rule and upon such
filing the Offered Securities and such Underlying Shares will all have
been duly registered under the Act pursuant to the initial
registration statement and such additional registration statement. If
the Company does not propose to amend the initial registration
statement or if an additional registration statement has been filed
and the Company does not propose to amend it, and if any
post-effective amendment to either such registration statement has
been filed with the Commission prior to the execution and delivery of
this Agreement, the most recent amendment (if any) to each such
registration statement has been declared effective by the Commission
or has become effective upon filing pursuant to Rule 462(c) ("Rule
462(c)") under the Act or, in the case of the additional registration
statement, Rule 462(b). For purposes of this Agreement, "Effective
Time" with respect to the initial registration statement or, if filed
prior to the execution and delivery of this Agreement, the additional
registration statement means (i) if the Company has advised the
Representative that it does not propose to amend such registration
statement, the date and time as of which such registration statement,
or the most recent post-effective amendment thereto (if any) filed
prior to the execution and delivery of this Agreement, was declared
effective by the Commission or has become effective upon filing
pursuant to Rule 462(c), or (ii) if the Company has advised the
Representative that it proposes to file an amendment or post-
effective amendment to such registration statement, the date and time
as of which such registration statement, as amended by such amendment
or post-effective amendment, as the case may be, is declared effective
by the Commission. If an additional registration statement has not
been filed prior to the execution and delivery of this Agreement but
the Company has advised the Representative that it proposes to file
one, "Effective Time" with respect to such additional registration
statement means the date and time as of which such registration
statement is filed and becomes effective pursuant to Rule 462(b).
"Effective Date" with respect to the initial registration statement or
the additional registration statement (if any) means the date of the
Effective Time thereof. The initial registration statement, as amended
at its Effective Time, including all material incorporated by
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<PAGE> 3
reference therein, all information contained or incorporated by
reference in the additional registration statement (if any) and deemed
to be a part of the initial registration statement as of the Effective
Time of the additional registration statement pursuant to the General
Instructions of the Form on which it is filed and including all
information (if any) deemed to be a part of the initial registration
statement as of its Effective Time pursuant to Rule 430A(b) ("Rule
430A(b)") under the Act, is hereinafter referred to as the "Initial
Registration Statement". The additional registration statement, as
amended at its Effective Time, including the contents of the initial
registration statement and any other material incorporated by
reference therein and including all information (if any) deemed to be
a part of the additional registration statement as of its Effective
Time pursuant to Rule 430A(b), is hereinafter referred to as the
"Additional Registration Statement". The Initial Registration
Statement and the Additional Registration Statement are herein
referred to collectively as the "Registration Statements" and
individually as a "Registration Statement". The form of prospectus
relating to the Offered Securities, as first filed with the Commission
pursuant to and in accordance with Rule 424(b) ("Rule 424(b)") under
the Act or (if no such filing is required) as included in a
Registration Statement, including all material incorporated by
reference in such prospectus, is hereinafter referred to as the
"Prospectus". No document has been or will be prepared or distributed
in reliance on Rule 434 under the Act.
(b) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement:
(i) on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement conformed in all respects to the
requirements of the Act, the Trust Indenture Act of 1939 ("Trust
Indenture Act") and the rules and regulations of the Commission
("Rules and Regulations") and did not include any untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, (ii) on the Effective Date of the Additional Registration
Statement (if any), each Registration Statement conformed, or will
conform, in all respects to the requirements of the Act, the Trust
Indenture Act and the Rules and Regulations and did not include, or
will not include, any untrue statement of a material fact and did not
omit, or will not omit, to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading and (iii) on the date of this Agreement, the Initial
Registration Statement and, if the Effective Time of the Additional
Registration Statement is prior to the execution and delivery of this
Agreement, the Additional Registration Statement each conforms, and at
the time of filing of the Prospectus pursuant to Rule 424(b) or (if no
such filing is required) at the Effective Date of the Additional
Registration Statement in which the Prospectus is included, each
Registration Statement and the Prospectus will conform, in all
respects to the requirements of the Act, the Trust Indenture Act
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<PAGE> 4
and the Rules and Regulations, and neither of such documents includes,
or will include, any untrue statement of a material fact or omits, or
will omit, to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. If the
Effective Time of the Initial Registration Statement is subsequent to
the execution and delivery of this Agreement: on the Effective Date of
the Initial Registration Statement, the Initial Registration Statement
and the Prospectus will conform in all respects to the requirements of
the Act, the Trust Indenture Act and the Rules and Regulations,
neither of such documents will include any untrue statement of a
material fact or will omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, and no Additional Registration Statement has been or will
be filed. The two preceding sentences do not apply to statements in or
omissions from a Registration Statement or the Prospectus based upon
written information furnished to the Company by any Underwriter
through the Representative specifically for use therein, it being
understood and agreed that the only such information is that described
as such in Section 7(b).
(c) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware.
(d) The Indenture has been duly authorized by all necessary
corporate action on the part of the Company and, if the Effective Time
of a Registration Statement is prior to the execution and delivery of
this Agreement, has been or otherwise upon such Effective Time will be
duly qualified under the Trust Indenture Act with respect to the
Offered Securities registered thereby; each of the Offered Securities
has been duly authorized by all necessary corporate action on the part
of the Company; and when each of the Offered Securities is delivered
and paid for pursuant to this Agreement on the Closing Date (as
defined below), the Indenture will have been duly executed and
delivered by the Company, such Offered Securities will have been duly
executed, authenticated, issued and delivered and such Offered
Securities will constitute valid and legally binding obligations of
the Company, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(e) When the Offered Securities are delivered and paid for
pursuant to this Agreement on each Closing Date, such Offered
Securities will be convertible into the Underlying Shares of the
Company in accordance with the terms of the Indenture; the Underlying
Shares initially issuable upon conversion of such Offered Securities
have been duly authorized and reserved for issuance upon such
conversion and, when issued upon such conversion, will be validly
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<PAGE> 5
issued, fully paid and nonassessable and conform to the description
thereof contained in the Prospectus; and the stockholders of the
Company have no statutory preemptive rights with respect to the
Offered Securities or the Underlying Shares.
(f) No consent, approval, authorization, or order of, or
filing with, any governmental agency or body or any court on the part
of the Company is required for the consummation of the transactions
contemplated by this Agreement in connection with the issuance and
sale of the Offered Securities by the Company, except such as have
been obtained and made under the Act and the Trust Indenture Act and
such as may be required under state securities laws.
(g) The execution, delivery and performance by the Company of
the Indenture and this Agreement, and the issuance and sale of each of
the Offered Securities and compliance with the terms and provisions
thereof will not result in a breach or violation of any of the terms
and provisions of, or constitute a default under, (i) the certificate
of incorporation or by-laws of the Company or of any subsidiary of the
Company, as currently in effect, (ii) any indenture, mortgage, deed of
trust, loan agreement, bond, debenture, note or other evidence of
indebtedness or any material lease, contract or other agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which any of them or their respective properties may be bound,
or (iii) any law, statute, rule, regulation or order of any
governmental agency or body or any court, domestic or foreign, having
jurisdiction over the Company or any subsidiary of the Company or any
of their properties.
(h) The Company has full legal right, power and authority to
enter into this Agreement and to perform the transactions contemplated
hereby; this
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<PAGE> 6
Agreement has been duly authorized, executed and delivered by the
Company, and constitutes the legal, valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms,
except as the indemnification and contribution provisions hereunder
may be limited by applicable law and except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights and remedies of
creditors generally or by general principles of equity.
(i) The conditions for use of a Registration Statement on
Form S-3 set forth in the General Instructions to Form S-3 have been
satisfied with respect to the Company and the transactions
contemplated by this Agreement and the Registration Statement.
(j) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida
Statutes and the Company agrees to comply with such Section if prior
to the completion of the distribution of the Offered Securities it
commences doing such business.
3. Purchase, Sale and Delivery of Offered Securities. On the basis
of the representations, warranties and agreements herein contained, but subject
to the terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to
purchase from the Company, at a purchase price of % of the principal amount
thereof plus accrued interest from _______, 1996 to the First Closing Date (as
hereinafter defined), the respective principal amounts of Firm Securities set
forth opposite the names of the Underwriters in Schedule A hereto.
The Company will deliver against payment of the purchase price the
Firm Securities in the form of one or more permanent global Securities in
definitive form (the "Firm Global Securities") deposited with the Trustee as
custodian for The Depository Trust Company ("DTC") and registered in the name
of Cede & Co., as nominee for DTC. Interests in any permanent global Securities
will be held only in book-entry form through DTC, except in the limited
circumstances described in the Prospectus. Payment for the Firm Securities
shall be made by the Underwriters by wire transfer of immediately available
funds to an account previously designated to the Representative by the Company
at a bank reasonably acceptable to the Representative at 10:00 A.M. (New York
time), on the third business day following the date of this Agreement, or at
such other time not later than seven full business days thereafter as the
Representative and the Company determine, such time being herein referred to as
the "First Closing Date," against delivery to the Trustee as custodian for DTC
of the Firm Global
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<PAGE> 7
Securities representing all of the Firm Securities. The Firm Global Securities
will be made available for checking at the offices of Weil Gotshal & Manges LLP
at least 24 hours prior to the Closing Date.
In addition, upon written notice from the Representative given to the
Company from time to time not more than 30 days subsequent to the date of the
initial public offering of the Securities, the Underwriters may purchase all or
less than all of the Optional Securities at the purchase price of __% of the
principal amount of the Optional Securities (including any accrued interest
thereon from _____, 1996 to the related Optional Closing Date). The Company
agrees to sell to the Underwriters the principal amount of Optional Securities
specified in such notice and the Underwriters agree, severally and not jointly,
to purchase such Optional Securities. Such Optional Securities shall be
purchased for the account of each Underwriter in the same proportion as the
principal amount of Firm Securities set forth opposite such Underwriter's name
bears to the total principal amount of Firm Securities (subject to adjustment
by the Representative to eliminate fractions by rounding purchases to the
nearest $1,000 principal amount) and may be purchased by the Underwriters only
for the purpose of covering over-allotments made in connection with the sale of
the Firm Securities. No Optional Securities shall be sold or delivered unless
the Firm Securities previously have been, or simultaneously are, sold and
delivered. The right to purchase the Optional Securities or any portion
thereof may be exercised from time to time and to the extent not previously
exercised may be surrendered and terminated at any time upon notice by the
Representative to the Company.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "Optional Closing Date", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by the
Representative but shall be not later than five full business days after
written notice of election to purchase Optional Securities is given. The
Company will deliver against payment of the purchase price the Optional
Securities being purchased on each Optional Closing Date in the form of one or
more permanent global Securities in definitive form (each, an "Optional Global
Security") deposited with the Trustee as custodian for DTC and registered in
the name of Cede & Co., as nominee for DTC. Payment for such Optional
Securities shall be made by the Underwriters by wire transfer of immediately
available funds to an account previously designated to the Representative by
the Company at a bank reasonably acceptable to the Representative, against
delivery to the Trustee as custodian for DTC of the Optional Global Securities
representing all of the Optional Securities being purchased on such Optional
Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
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<PAGE> 8
5. Certain Agreements of the Company. The Company agrees with the
several Underwriters that:
(a) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement,
the Company will file the Prospectus with the Commission pursuant to
and in accordance with subparagraph (1) or (2) (as consented to by the
Representative) of Rule 424(b) not later than the second business day
following the execution and delivery of this Agreement (or, if
applicable and if consented to by the Representative, subparagraph (4)
or (5)). The Company will advise the Representative promptly of
any such filing pursuant to Rule 424(b). If the Effective Time of the
Initial Registration Statement is prior to the execution and delivery
of this Agreement and an additional registration statement is
necessary to register a portion of the Offered Securities under the
Act but the Effective Time thereof has not occurred as of such
execution and delivery, the Company will file the additional
registration statement or, if filed, will file a post-effective
amendment thereto with the Commission pursuant to and in accordance
with Rule 462(b) on or prior to 10:00 P.M., New York time, on the date
of this Agreement or, if earlier, on or prior to the time the
Prospectus is printed and distributed to any Underwriter, or will make
such filing at such later date as shall have been consented to by the
Representative.
(b) The Company will advise the Representative promptly of
any proposal to amend or supplement the initial or any additional
registration statement as filed or the related prospectus or the
Initial Registration Statement, the Additional Registration Statement
(if any) or the Prospectus and will not effect such amendment or
supplementation without the Representative's consent; and the Company
will also advise the Representative promptly of the effectiveness of
each Registration Statement (if its Effective Time is subsequent to
the execution and delivery of this Agreement) and of any amendment or
supplementation of a Registration Statement or the Prospectus and of
the institution by the Commission of any stop order proceedings in
respect of a Registration Statement and will use its best efforts to
prevent the issuance of any such stop order and to obtain as soon as
possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection
with sales by any Underwriter or dealer, any event occurs as a result
of which the Prospectus as then amended or supplemented would include
an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Act,
the Company will promptly notify the Representative of such event and
will
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<PAGE> 9
promptly prepare and file with the Commission, at its own expense, an
amendment or supplement which will correct such statement or omission
or an amendment which will effect such compliance. Neither the
Representative's consent to, nor the Underwriters' delivery of, any
such amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 6.
(d) As soon as practicable, but not later than the
Availability Date (as defined below), the Company will make generally
available to its securityholders an earnings statement covering a
period of at least 12 months beginning after the Effective Date of the
Initial Registration Statement (or, if later, the Effective Date of
the Additional Registration Statement) which will satisfy the
provisions of Section 11(a) of the Act. For the purpose of the
preceding sentence, "Availability Date" means the 45th day after the
end of the fourth fiscal quarter following the fiscal quarter that
includes such Effective Date, except that, if such fourth fiscal
quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth
fiscal quarter.
(e) The Company will furnish to the Representative copies of
each Registration Statement (two of which will be signed and will
include all exhibits), each related preliminary prospectus, and, so
long as delivery of a prospectus relating to the Offered Securities is
required to be delivered under the Act in connection with sales by any
Underwriter or dealer, the Prospectus and all amendments and
supplements to such documents, in each case in such quantities as the
Representative reasonably requests. The Prospectus shall be so
furnished on or prior to 3:00 P.M., New York time, on the business day
following the later of the execution and delivery of this Agreement or
the Effective Time of the Initial Registration Statement. All other
documents shall be so furnished as soon as available. The Company will
pay the expenses of printing and distributing to the Underwriters all
such documents.
(f) The Company will endeavor in good faith in cooperation
with the Underwriters to arrange for the qualification of the Offered
Securities for sale and the determination of their eligibility for
investment under the laws of such jurisdictions as the Representative
designates and will continue such qualifications in effect so long as
required for the distribution. In each jurisdiction in which the
Offered Securities shall have been qualified as above provided, the
Company will make and file such statements and reports in each year as
are or may be reasonably required by the laws of such jurisdiction.
Notwithstanding the preceding two sentences, such registration or
qualification shall not be required in any jurisdiction in which the
Company would, as a condition to such qualification, be required to
file a general consent to service
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<PAGE> 10
of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject.
(g) During the period of five years hereafter, the Company
will furnish to the Representative and, upon request, to each of the
other Underwriters, (i) as soon as practicable after the end of each
fiscal year, a copy of its annual report to stockholders for such
year, (ii) as soon as available, a copy of each report or definitive
proxy statement of the Company filed with or otherwise furnished to
the Commission or mailed to stockholders, and (iii) from time to time,
such other information concerning the Company as the Representative
may reasonably request.
(h) The Company will pay all expenses incident to the
performance of its obligations under this Agreement and will reimburse
the Underwriters (if and to the extent incurred by them) for any
filing fees and other expenses (including fees and disbursements of
counsel) reasonably incurred by them in connection with qualification
of the Offered Securities for sale and determination of their
eligibility for investment under the laws of such jurisdictions as the
Representative designates and the printing of memoranda relating
thereto, for any fees charged by investment rating agencies for the
rating of the Offered Securities, for the filing fees of the NASD
relating to the Offered Securities, for any travel expenses of the
Company's officers and employees and any other expenses of the Company
in connection with attending or hosting meetings with prospective
purchasers of the Offered Securities and for expenses incurred in
distributing preliminary prospectuses and the Prospectus (including
any amendments and supplements thereto) to the Underwriters.
(i) The Company will not, and will use its reasonable efforts
to cause its directors and executive officers not to, offer, sell,
contract to sell or otherwise dispose of, or file with the Commission
a registration statement under the Act relating to, any Underlying
Shares or any security convertible into or exchangeable for Underlying
Shares without the Representative's prior written consent for a period
of 90 days after the date of the initial public offering of the
Offered Securities, except to the Underwriters pursuant to this
Agreement and other than upon conversion of convertible securities
outstanding on the date hereof or pursuant to employee benefit plans
(including stock option plans), dividend reinvestment plans, stock
purchase plans or similar plans in effect on the date hereof.
6. Conditions of the Obligations of the Underwriters. The obligations
of the several Underwriters to purchase and pay for the Firm Securities on the
First Closing
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<PAGE> 11
Date and the Optional Securities to be purchased on an Optional Closing Date
will be subject to the accuracy of the representations and warranties on the
part of the Company herein, to the accuracy of the statements of Company
officers made pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions
precedent:
(a) The Representative shall have received a letter, dated
the date of delivery thereof (which, if the Effective Time of the
Initial Registration Statement is prior to the execution and delivery
of this Agreement, shall be on or prior to the date of this Agreement
or, if the Effective Time of the Initial Registration Statement is
subsequent to the execution and delivery of this Agreement, shall be
prior to the filing of the amendment or post-effective amendment to
the registration statement to be filed shortly prior to such Effective
Time), of KPMG Peat Marwick LLP confirming that they are independent
public accountants within the meaning of the Act and the applicable
published Rules and Regulations thereunder and stating to the effect
that:
(i) in their opinion the consolidated financial statements and
schedules examined by them and included or incorporated by
reference in the Registration Statements comply as to form in
all material respects with the applicable accounting
requirements of the Act and the related published Rules and
Regulations;
(ii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a
review of interim financial information as described in
Statement of Auditing Standards No. 71, Interim Financial
Information, on the unaudited financial statements included in
the Registration Statements;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim consolidated
financial statements of the Company, inquiries of officials of
the Company who have responsibility for financial and
accounting matters and other specified procedures, nothing
came to their attention that caused them to believe that:
(A) the unaudited financial statements
included in the Registration Statements do not comply
as to form in all material respects with the
applicable accounting requirements of the Act and the
related published Rules and Regulations or any
material modifications should be made to such
unaudited financial statements for them to be in
conformity with generally accepted accounting
principles;
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<PAGE> 12
(B) at the date of the latest available
consolidated balance sheet read by such accountants,
or at a subsequent specified date not more than five
days prior to the date of this Agreement, there was
any change in the capital stock or any increase in
short-term indebtedness or long-term debt of the
Company and its consolidated subsidiaries or, at the
date of the latest available consolidated balance
sheet read by such accountants, there was any
decrease in consolidated net current assets or net
assets, as compared with amounts shown on the latest
balance sheet included or incorporated by reference
in the Prospectus; or
(C) for the period from the closing date of
the latest consolidated income statement included or
incorporated by reference in the Prospectus to the
closing date of the latest available consolidated
income statement read by such accountants there were
any decreases, as compared with the corresponding
period of the previous year, in consolidated net
sales, net operating income, the total or per share
amounts of consolidated net income or in the ratio of
earnings to fixed charges;
except in all cases set forth in clauses (A) and (B) above for
changes, increases or decreases which the Prospectus discloses
have occurred or may occur or which are described in such
letter; and
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other
financial information contained in the Registration Statements
(in each case to the extent that such dollar amounts,
percentages and other financial information are derived from
the general accounting records of the Company and its
subsidiaries subject to the internal controls of the Company's
accounting system or are derived directly from such records by
analysis or computation) with the results obtained from
inquiries, a reading of such general accounting records and
other procedures specified in such letter and have found such
dollar amounts, percentages and other financial information to
be in agreement with such results, except as otherwise
specified in such letter.
For purposes of this subsection, (i) if the Effective Time of the
Initial Registration Statement is subsequent to the execution and
delivery of this Agreement, "Registration Statements" shall mean the
initial registration statement as proposed to be amended by the
amendment or post-effective amendment to be filed shortly prior to its
Effective Time, (ii) if the Effective Time of the Initial Registration
Statement is prior to the execution and delivery
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<PAGE> 13
of this Agreement but the Effective Time of the Additional
Registration is subsequent to such execution and delivery,
"Registration Statements" shall mean the Initial Registration
Statement and the additional registration statement as proposed to be
filed or as proposed to be amended by the post-effective amendment to
be filed shortly prior to its Effective Time, and (iii) "Prospectus"
shall mean the prospectus included in the Registration Statements.
All financial statements and schedules included in material
incorporated by reference into the Prospectus shall be deemed included
in the Registration Statements for purposes of this subsection.
(b) If the Effective Time of the Initial Registration
Statement is not prior to the execution and delivery of this
Agreement, such Effective Time shall have occurred not later than
10:00 P.M., New York time, on the date of this Agreement or such later
date as shall have been consented to by the Representative. If the
Effective Time of the Additional Registration Statement (if any) is
not prior to the execution and delivery of this Agreement, such
Effective Time shall have occurred not later than 10:00 P.M., New York
time, on the date of this Agreement or, if earlier, the time the
Prospectus is printed and distributed to any Underwriter, or shall
have occurred at such later date as shall have been consented to by
the Representative. If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement,
the Prospectus shall have been filed with the Commission in accordance
with the Rules and Regulations and Section 5(a) of this Agreement.
Prior to the Closing Date, no stop order suspending the effectiveness
of a Registration Statement shall have been issued and no proceedings
for that purpose shall have been instituted or, to the knowledge of
the Company or the Representative, shall be contemplated by the
Commission.
(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or any
development or event involving a prospective change, in the business
or properties of the Company or its subsidiaries which, in the
judgment of the Representative, materially impairs the investment
quality of the Offered Securities; (ii) any downgrading in the rating
of any debt securities of the Company by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule
436(g) under the Act), or any public announcement that any such
organization has under surveillance or review its rating of any debt
securities of the Company (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); (iii) any suspension or limitation of
trading in securities generally on the New York Stock Exchange, or any
setting of minimum prices for trading on such exchange, or any
suspension of trading of any securities of the Company on any exchange
or in the over-the-counter market; (iv) any banking moratorium
declared by U.S.
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<PAGE> 14
Federal or New York authorities; or (v) any outbreak or escalation of
major hostilities in which the United States is involved, any
declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the judgment of the
Representative, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable
to proceed with completion of the sale of and payment for the Offered
Securities.
(d) The Representative shall have received an opinion, dated
such Closing Date, of King & Spalding, counsel for the Company, to the
effect that:
(i) The Company is an existing corporation
in good standing under the laws of the State of Delaware, with
corporate power and authority to own its properties and
conduct its business substantially as described in the
Prospectus;
(ii) The Indenture has been duly authorized,
executed and delivered by the Company and has been duly
qualified under the Trust Indenture Act; the Offered
Securities delivered on such Closing Date have been duly
authorized, executed, authenticated, issued and delivered and
conform to the descriptions thereof contained in the
Prospectus; and the Indenture and such Offered Securities
constitute valid and legally binding obligations of the
Company enforceable against the Company in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of
general applicability affecting the rights and remedies of
creditors and to general principles of equity;
(iii) The Offered Securities delivered on such
Closing Date are convertible into the Underlying Shares of the
Company in accordance with the terms of the Indenture; the
Underlying Shares initially issuable upon conversion of such
Offered Securities have been duly authorized and reserved for
issuance upon such conversion and, when issued upon such
conversion, will be validly issued, fully paid and
nonassessable;
-14-
<PAGE> 15
(iv) No consent, approval, authorization or
order of, or filing with, any governmental agency or body or
any court on the part of the Company is required for the
consummation of the transactions contemplated by this
Agreement in connection with the issuance or sale of the
Offered Securities by the Company, except such as have been
obtained and made under the Act and the Trust Indenture Act
and such as may be required under state securities laws;
(v) The execution, delivery and performance
by the Company of the Indenture and this Agreement and the
issuance and sale of the Offered Securities and compliance
with the terms and provisions thereof will not result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, (A) the certificate of
incorporation or by-laws of the Company, as currently in
effect, and (B) any law, statute, rule, regulation or order of
any governmental agency or body or any court having
jurisdiction over the Company or any subsidiary of the
Company;
(vi) The Initial Registration Statement was
declared effective under the Act as of the date and time
specified in such opinion, the Additional Registration
Statement (if any) was filed and became effective under the
Act as of the date and time (if determinable) specified in
such opinion, the Prospectus either was filed with the
Commission pursuant to the subparagraph of Rule 424(b)
specified in such opinion on the date specified therein or was
included in the Initial Registration Statement or the
Additional Registration Statement (as the case may be), and,
to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of a Registration Statement or
any part thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated
under the Act, and each Registration Statement and the
Prospectus, and each amendment or supplement thereto, as of
their respective effective or issue dates, complied as to form
in all material respects with the requirements of the Act, the
Trust Indenture Act and the Rules and Regulations;
-15-
<PAGE> 16
it being understood that such counsel need express no opinion
as to the financial statements or other statistical or
financial data contained in the Registration Statements or the
Prospectus; and
(vii) The Company has full corporate power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been
duly authorized, executed and delivered by the Company, and
constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with
its terms, except as the indemnification and contribution
provisions hereunder may be limited by applicable law and
except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights and remedies of creditors
generally or by general principles of equity.
In addition, the letter containing such opinion shall include a
statement to the effect that such counsel have no reason to believe that any
part of a Registration Statement or any amendment thereto, as of its effective
date or as of the Closing Date, contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or that the Prospectus
or any amendment or supplement thereto, as of its issue date or as of the
Closing Date, contained any untrue statement of a material fact or omitted to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
In giving the opinions required by this subsection (d), King &
Spalding (i) may limit such opinion to the laws of the State of Georgia and New
York and the corporate law of the State of Delaware and the Federal laws of the
United States, and (ii) may rely, as to matters of fact, upon the
representations and warranties of the Company contained herein and upon
certificates of officers of the Company and of public officials. The foregoing
opinions may also be subject to such assumptions and qualifications as are
satisfactory to counsel for the Underwriters.
-16-
<PAGE> 17
(e) You shall have received an opinion, dated such Closing Date,
of Lawrence K. Menter, Senior Corporate Counsel of the Company, to the effect
that:
(i) The Company has been duly incorporated under the
laws of the State of Delaware;
(ii) To my knowledge, the execution, delivery and
performance by the Company of the Indenture and this Agreement
and the issuance and sale of the Offered Securities delivered
on such Closing Date and compliance with the terms and
provisions thereof will not result in a breach or violation of
any of the terms and provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement,
bond, debenture, note or other evidence of indebtedness or any
material lease, contract or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by
which any of them or any of their respective properties may be
bound;
(iii) The description in the Registration Statement
and Prospectus of statutes, legal and governmental proceedings
and contracts and other documents are accurate and fairly
present the information required to be shown; and
(iv) Such counsel does not know of any legal or
governmental proceedings required to be described in a
registration statement or the prospectus which are not
described as required or of any contracts or documents of a
character required to be described in the Registration
Statement or Prospectus or to be filed as exhibits to the
Registration Statement which are not described and filed as
required.
In giving the opinions required by this subsection (e), Mr.
Menter (i) may limit such opinion to the laws of the State of Georgia
and the corporate law of the State of Delaware and the Federal laws of
the United States, and (ii) may rely, as to matters of fact, upon the
representations and warranties of the Company contained herein and
upon certificates of officers of the Company and of public officials.
The foregoing opinions may also be subject to such assumptions and
qualifications as are satisfactory to counsel for the Underwriters.
(f) The Representative shall have received from Weil, Gotshal
& Manges LLP, counsel for the Underwriters, such opinion or opinions,
dated such Closing Date, with respect to the incorporation of the
Company, the validity of the Offered Securities delivered on such
Closing Date, the
-17-
<PAGE> 18
Registration Statements, the Prospectus and other related matters as
the Representative may reasonably require, and the Company shall have
furnished to such counsel such documents as they reasonably request
for the purpose of enabling them to pass upon such matters.
(g) The Representative shall have received a certificate,
dated the Closing Date, of the President or any Vice-President
and a principal financial or accounting officer of the Company in
which such officers, to the best of their knowledge after reasonable
investigation, shall state that: the representations and warranties of
the Company in this Agreement are true and correct, the Company has
complied with all agreements and satisfied all conditions on its part
to be performed or satisfied hereunder at or prior to the Closing
Date; no stop order suspending the effectiveness of any Registration
Statement has been issued and no proceedings for that purpose have
been instituted or are contemplated by the Commission; the Additional
Registration Statement (if any) satisfying the requirements of
subparagraphs (1) and (3) of Rule 462(b) was filed pursuant to Rule
462(b), including payment of the applicable filing fee in accordance
with Rule 111(a) or (b) under the Act, prior to the time the
Prospectus was printed and distributed to any Underwriter; and,
subsequent to the date of the most recent financial statements in the
Prospectus, there has been no material adverse change, nor any
development or event involving a prospective material adverse change,
in the condition (financial or other), business, properties or results
of operations of the Company and its subsidiaries taken as a whole
except as set forth in or contemplated by the Prospectus or as
described in such certificate.
(h) The Representative shall have received a letter, dated
such Closing Date, of KPMG Peat Marwick LLP which meets the
requirements of subsection (a) of this Section, except that the
specified date referred to in such subsection will be a date not more
than five days prior to the Closing Date for the purposes of this
subsection.
The Company will furnish the Representative with such conformed copies of such
opinions, certificates, letters and documents as the Representative may
reasonably request. The Representative may in its sole discretion waive on
behalf of the Underwriters compliance with any conditions to the obligations of
the Underwriters hereunder, whether in respect of an Optional Closing Date or
otherwise.
7. Indemnification and Contribution. (a) The Company will indemnify
and hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement
-18-
<PAGE> 19
of any material fact contained in any Registration Statement, the Prospectus,
or any amendment or supplement thereto, or any related preliminary prospectus,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Underwriter for any
legal or other expenses reasonably incurred by such Underwriter in connection
with investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement in or omission or alleged omission from any of such documents
in reliance upon and in conformity with written information furnished to the
Company by any Underwriter through the Representative specifically for use
therein, it being understood and agreed that the only such information
furnished by any Underwriter consists of the information described as such in
subsection (b) below; and provided, further, that with respect to any untrue
statement or omission or alleged untrue statement or omission made in any
preliminary prospectus the indemnity agreement contained in this subsection (a)
shall not inure to the benefit of any Underwriter from whom the person
asserting any such losses, claims, damages, or liabilities purchased the
Offered Securities concerned, to the extent that any such loss, claim, damage
or liability of such Underwriter results from the fact that there was not sent
or given to such person, at or prior to the written confirmation of the sale of
such Offered Securities to such person, a copy of the Prospectus (exclusive of
material incorporated by reference) if the Company had previously furnished
copies thereof to such Underwriter and the untrue statement or omission or
alleged untrue statement or omission was corrected in the Prospectus.
(b) Each Underwriter will severally and not jointly indemnify and
hold harmless the Company against any losses, claims, damages or liabilities to
which the Company may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any Registration Statement, the Prospectus,
or any amendment or supplement thereto, or any related preliminary prospectus,
or arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representative specifically for use therein, and will reimburse any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred, it being understood and agreed that the only such
information furnished by any Underwriter consists of the following information
in the Prospectus furnished on behalf of each Underwriter: the
-19-
<PAGE> 20
last paragraph at the bottom of the cover page concerning the terms of the
offering by the Underwriters, the legend concerning over-allotments and
stabilizing on the inside front cover page, the legend contained as the second
paragraph on the inside front cover page, and the information in the table, and
in the fourth, fifth, eight and ninth paragraphs, appearing under the
caption "Underwriting", and the Representative confirms on behalf of the
Underwriters that such information does not contain any untrue statement of any
material fact or omit to state a material fact required to be stated therein.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, which consent shall not be
unreasonably withheld, effect any settlement of any pending or threatened
action in respect of which any indemnified party is or could have been a party
and indemnity could have been sought hereunder by such indemnified party unless
such settlement includes an unconditional release of such indemnified party
from all liability on any claims that are the subject matter of such action.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters on the other from the
offering of the Offered Securities or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of
-20-
<PAGE> 21
the Company on the one hand and the Underwriters on the other in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company
bear to the total underwriting discounts and commissions received by the
Underwriters. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities referred to in
the first sentence of this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the subject of
this subsection (d). Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Offered Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act; and the obligations of
the Underwriters under this Section shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each director of the Company, to each officer of the
Company who has signed a Registration Statement and to each person, if any, who
controls the Company within the meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters
default in their obligations to purchase Offered Securities hereunder on either
the First Closing Date or the Optional Closing Date and the aggregate
principal amount of Offered Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase on such Closing Date does not exceed
10% of the total principal amount of Offered Securities that the Underwriters
are obligated to purchase on such Closing Date, the Representative may make
arrangements satisfactory to the Company for the purchase of such Offered
Securities by other persons, including any of the Underwriters, but if no such
arrangements are made by the Closing Date, the non-defaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Offered Securities that such defaulting Underwriters
agreed but failed to purchase on the Closing Date. If any Underwriter or
Underwriters so default and the aggregate principal amount of Offered
Securities with respect to which such default or defaults occur exceeds 10% of
the total principal amount of Securities that the Underwriters are obligated to
purchase on such Closing Date and arrangements satisfactory to the
Representative and the Company for the
-21-
<PAGE> 22
purchase of such Offered Securities by other persons are not made within 36
hours after such default, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter or the Company, except as provided
in Section 9 (provided that if such default occurs with respect to Optional
Securities after the First Closing Date, this Agreement will not terminate as
to the Firm Securities). As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section. Nothing
herein will relieve a defaulting Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Company or its officers and of the several Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation, or statement as to the results
thereof, made by or on behalf of any Underwriter, the Company or any of their
respective representatives, officers or directors or any controlling person,
and will survive delivery of and payment for the Offered Securities. If this
Agreement is terminated pursuant to Section 8 or if for any reason the purchase
of the Offered Securities by the Underwriters is not consummated, the Company
shall remain responsible for the expenses to be paid or reimbursed by it
pursuant to Section 5 and the respective obligations of the Company and the
Underwriters pursuant to Section 7 shall remain in effect, and if any Offered
Securities have been purchased hereunder the representations and warranties in
Section 2 and all obligations under Section 5 shall also remain in effect. If
the purchase of the Offered Securities by the Underwriters is not consummated
for any reason other than solely because of the termination of this Agreement
pursuant to Section 8 or the occurrence of any event specified in clause (iii),
(iv) or (v) of Section 6(c), the Company will reimburse the Underwriters for
all out-of-pocket expenses (including fees and disbursements of counsel)
reasonably incurred by them in connection with the offering of the Offered
Securities.
10. Notices. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and
confirmed to the Representative at Park Avenue Plaza, New York, N.Y. 10055,
Attention: Investment Banking Department--Transactions Advisory Group, or, if
sent to the Company, will
-22-
<PAGE> 23
be mailed, delivered or telegraphed and confirmed to it at 2727 Paces Ferry
Road, Atlanta, Georgia 30339-4089, Attention: Marshall L. Day, Senior Vice
President and Chief Financial Officer, with a copy to Lawrence K. Menter,
Senior Corporate Counsel; provided, however, that any notice to an Underwriter
pursuant to Section 7 will be mailed, delivered or telegraphed and confirmed to
such Underwriter.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 7, and no
other person will have any right or obligation hereunder.
12. Representation of Underwriters. The Representative will act for
the several Underwriters in connection with this financing, and any action
under this Agreement taken by the Representative will be binding upon all the
Underwriters.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to principles of conflicts of laws.
THE COMPANY HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE
FEDERAL AND STATE COURTS IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN
ANY SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
-23-
<PAGE> 24
If the foregoing is in accordance with the Representative's
understanding of our agreement, kindly sign and return to the Company one of
the counterparts hereof, whereupon it will become a binding agreement between
the Company and the several Underwriters in accordance with its terms.
Very truly yours,
THE HOME DEPOT, INC.
By:
-------------------------------
Title:
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
CS FIRST BOSTON CORPORATION
INVEMED ASSOCIATES, INC.
By: CS FIRST BOSTON CORPORATION
Acting on behalf of itself and as the
Representative of the several
Underwriters.
By:
-------------------------------
Title:
-24-
<PAGE> 25
SCHEDULE A
PRINCIPAL
AMOUNT OF
UNDERWRITER FIRM SECURITIES
---------------
CS First Boston Corporation [$]
Invemed Associates, Inc.
-----
TOTAL [$]
=====
-26-
<PAGE> 1
EXHIBIT 4.1
================================================================================
THE HOME DEPOT, INC.,
Issuer
to
THE FIRST NATIONAL BANK OF CHICAGO
Trustee
INDENTURE
Dated as of October 1, 1996
$800,000,000*
_____% Convertible Subordinated Notes Due 2001
================================================================================
* Subject to increase up to $920,000,000.
<PAGE> 2
THE HOME DEPOT, INC., AS ISSUER
Reconciliation and tie between Trust Indenture Act of 1939
and Indenture dated as of October 1, 1996.
<TABLE>
<CAPTION>
TRUST INDENTURE INDENTURE
ACT SECTION SECTION
- --------------- ----------
<S> <C>
Section 310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 608, 610
Section 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613(b)
Section 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701, 702(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702(c)
Section 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
Section 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 704
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101, 1004
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 602, 703
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601(b)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601(c)
(d)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601(a)(1)
(d)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601(c)(2)
(d)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601(c)(3)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514
</TABLE>
_________________
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
<PAGE> 3
<TABLE>
<CAPTION>
TRUST INDENTURE INDENTURE
ACT SECTION SECTION
- --------------- ---------
<S> <C>
Section 316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502, 512
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104(c)
Section 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1003
Section 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
</TABLE>
<PAGE> 4
THE HOME DEPOT, INC., AS ISSUER
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE ONE
Definitions and Other Provisionsof General Application
Section 101. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate; control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Closing Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Request; Company Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Global Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Predecessor Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Regular Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Security Register; Security Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Senior Indebtedness of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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Special Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Stated Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Trading Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Vice President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 102. Compliance Certificates and Opinions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 103. Form of Documents Delivered to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 104. Acts of Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 105. Notices, Etc., to Trustee and Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 106. Notice to Holders; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 107. Conflict with Trust Indenture Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 108. Effect of Headings and Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 109. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 110. Separability Clause. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 111. Benefits of Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 112. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 113. Legal Holidays. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE TWO
Forms of Securities
Section 201. Forms Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 202. Form of Face of Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 203. Form of Reverse of Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 204. Form of Trustee's Certificate of Authentication. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 205. Form of Election to Convert. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE THREE
The Securities
Section 301. Title and Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 302. Denominations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 303. Execution, Authentication, Delivery and Dating. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 304. Temporary Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 305. Registration, Registration of Transfer and Exchange. . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 306. Mutilated, Destroyed, Lost and Stolen Securities. . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 307. Payment of Interest; Interest Rights Preserved. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 308. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 309. Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 310. Computation of Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge of Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 402. Application of Trust Money. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE FIVE
Remedies
Section 501. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 502. Acceleration of Maturity; Rescission and Annulment. . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee. . . . . . . . . . . . . . . . . . . 30
Section 504. Trustee May File Proofs of Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 505. Trustee May Enforce Claims Without Possession of Securities. . . . . . . . . . . . . . . . . . . . . 31
Section 506. Application of Money Collected. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 507. Limitation on Suits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest and to Convert. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 509. Restoration of Rights and Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 510. Rights and Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 511. Delay or Omission Not Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 512. Control by Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 513. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 514. Undertaking for Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 515. Waiver of Stay or Extension Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE SIX
The Trustee
Section 601. Certain Duties and Responsibilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 602. Notice of Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 603. Certain Rights of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 604. Not Responsible for Recitals or Issuance of Securities. . . . . . . . . . . . . . . . . . . . . . . 37
Section 605. May Hold Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 606. Money Held in Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 607. Compensation and Reimbursement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 608. Disqualification; Conflicting Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 609. Corporate Trustee Required; Eligibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 610. Resignation and Removal; Appointment of Successor. . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 611. Acceptance of Appointment by Successor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 612. Merger, Conversion, Consolidation or Succession to Business. . . . . . . . . . . . . . . . . . . . . 41
Section 613. Preferential Collection of Claims Against Company. . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 614. Appointment of Authenticating Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
Section 701. Company to Furnish Trustee Names and Addresses of Holders. . . . . . . . . . . . . . . . . . . . . . 47
Section 702. Preservation of Information; Communications to Holders. . . . . . . . . . . . . . . . . . . . . . . 47
Section 703. Reports by Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 704. Reports by Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE EIGHTConsolidation, Merger, Conveyance, Transfer or Lease
Section 801. Company May Consolidate, Etc., Only on Certain Terms. . . . . . . . . . . . . . . . . . . . . . . . 49
Section 802. Successor Substituted for Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE NINESupplemental Indentures
Section 901. Supplemental Indentures Without Consent of Holders. . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 902. Supplemental Indentures with Consent of Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 903. Execution of Supplemental Indentures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 904. Effect of Supplemental Indentures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 905. Conformity with Trust Indenture Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 906. Reference in Securities to Supplemental Indentures. . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, Premium and Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 1002. Maintenance of Office or Agency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 1003. Money for Security Payments to be Held in Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 1004. Statements of Officers of Company as to Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE ELEVEN
Redemption of Securities
Section 1101. Right of Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 1102. Applicability of Article. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 1103. Election to Redeem; Notice to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 1104. Selection by Trustee of Securities to Be Redeemed. . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 1105. Notice of Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 1106. Deposit of Redemption Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 1107. Securities Payable on Redemption Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
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Section 1108. Securities Redeemed in Part. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 1109. Conversion Arrangements on Call for Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE TWELVE
Conversion of Securities
Section 1201. Conversion Privilege and Conversion Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 1202. Exercise of Conversion Privilege. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 1203. Fractions of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 1204. Adjustment of Conversion Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 1205. Notice of Adjustments of Conversion Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 1206. Notice of Certain Corporate Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 1207. Company to Reserve Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 1208. Taxes on Conversions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 1209. Covenant as to Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 1210. Cancellation of Converted Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 1211. Provisions in Case of Consolidation, Merger or Sale of Assets. . . . . . . . . . . . . . . . . . . . 68
ARTICLE THIRTEEN
Subordination of Securities
Section 1301. Agreements to Subordinate by Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 1302. Distribution on Dissolution, Liquidation and Reorganization; Subrogation. . . . . . . . . . . . . . 69
Section 1303. No Payment in Event of Default on Senior Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . 71
Section 1304. Payments Permitted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 1305. Authorization to Trustee to Effect Subordination. . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 1306. Notices to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 1307. Trustee as Holder of Senior Indebtedness of Company. . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 1308. Modification of Terms of Senior Indebtedness of Company. . . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE FOURTEEN
Right to Require Repurchase
Section 1401. Right to Require Repurchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 1402. Notice; Method of Exercising Repurchase Right. . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 1403. Deposit of Repurchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 1404. Securities Not Repurchased on Repurchase Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 1405. Securities Repurchased in Part. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 1406. Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
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INDENTURE, dated as of October 1, 1996, between The Home Depot, Inc.,
a corporation duly organized and existing under the laws of the State of
Delaware (herein called the "Company") having its principal office at 2727
Paces Ferry Road, Atlanta, Georgia 30339-4089, and The First National Bank of
Chicago, a national banking association organized under the laws of the United
States of America, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of its _____%
Convertible Subordinated Notes Due 2001 (herein called the "Securities") of
substantially the tenor and amount hereinafter set forth, and to provide
therefor the Company has duly authorized the execution and delivery of this
Indenture.
All things necessary to make the Securities, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities, as
follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
Section 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles;
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(4) all references in this instrument to designated Articles,
Sections and other subdivisions are to the designated Articles,
Sections and other subdivisions of this Indenture; and
(5) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
"Act", when used with respect to any Holder, has the meaning specified
in Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee to
act on behalf of the Trustee to authenticate Securities.
"Board of Directors" means any of (a) the board of directors of the
Company, (b) any duly authorized committee of that board or (c) any officer of
the Company duly authorized by the board of directors of the Company to take a
specified action.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee. Where any provision of this
Indenture refers to action to be taken pursuant to a Board Resolution, such
action may be taken by the board of directors of the Company, any duly
authorized committee of that board or any officer of the Company duly
authorized by the board of directors of the Company to take such action.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the cities of
Atlanta or New York are authorized or obligated by law or executive order to
close.
"Closing Price" on any Trading Day with respect to the per share price
of Common Stock means the last reported sales price regular way or, in case no
such reported sale takes place on such Trading Day, the average of the reported
closing bid and asked prices regular way, in either case on the New York Stock
Exchange or, if the Common Stock is not listed or admitted to trading on such
Exchange, on the principal national securities exchange on which the Common
Stock is listed or admitted to trading or, if not listed or admitted to trading
on any national securities exchange, on the
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<PAGE> 11
National Association of Securities Dealers Automated Quotations National Market
System or, if the Common Stock is not listed or admitted to trading on any
national securities exchange or quoted on such National Market System, the
average of the closing bid and asked prices in the over-the-counter market as
furnished by any New York Stock Exchange member firm that is selected from time
to time by the Company for that purpose and is reasonably acceptable to the
Trustee.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934,
or, if at any time after the execution of this instrument such Commission is
not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
"Common Stock" includes any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding-up of the
Company and which is not subject to redemption by the Company. However,
subject to the provisions of Section 1211, shares issuable on conversions of
Securities shall include only shares of the class designated as Common Stock of
the Company at the date of this Indenture or shares of any class or classes
resulting from any reclassification or reclassifications thereof and which have
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which are not subject to redemption by the Company; provided that if at any
time there shall be more than one such resulting class, the shares of each such
class then so issuable shall be substantially in the proportion which the total
number of shares of such class resulting from all such reclassifications bears
to the total number of shares of all such classes resulting from all such
reclassifications.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by the Chairman of the Board, any Vice
Chairman of the Board, the President or a Vice President of the Company, and by
the Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller,
the Secretary or an Assistant Secretary of the Company, and delivered to the
Trustee.
"Corporate Trust Office" means the principal office of the Trustee in
New York, New York, at which at any particular time its corporate trust
business shall be administered.
"Corporation" means a corporation, association, company, joint-stock
company or business trust.
"Defaulted Interest" has the meaning specified in Section 307.
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"Depository" means, with respect to any Securities issuable or issued
in whole or in part in the form of one or more Global Securities, the clearing
agency registered under the Securities Exchange Act of 1934 and any other
applicable statute or regulation specified for that purpose, with respect to
such Securities. If at any time there is more than one such Person,
"Depository" shall mean, with respect to any Securities, the qualifying entity
which has been appointed with respect to such Securities.
"Event of Default" has the meaning specified in Section 501.
"Global Security" means a Security bearing the legend required by
Section 311 evidencing all or part of the Securities, issued to the Depository
or its nominee and registered in the name of such Depository or nominee.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, any Vice Chairman of the Board, the President or a Vice President,
and by the Treasurer, an Assistant Treasurer, the Controller, an Assistant
Controller, the Secretary or an Assistant Secretary of the Company, and
delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for, or an employee of, the Company.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
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(ii) Securities for whose payment, redemption or repurchase
money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) in trust or set
aside and segregated in trust by the Company (if the Company shall act
as its own Paying Agent) for the Holders of such Securities; provided
that, if such Securities are to be redeemed, notice of such redemption
has been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; and
(iii) Securities which have been paid pursuant to Section 306
or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by
a bona fide purchaser in whose hands such Securities are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Subsidiary of
the Company or of such obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee knows to be so owned shall
be so disregarded. Securities so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction
of the Trustee the pledgee's right so to act with respect to such Securities
and that the pledgee is not the Company or any obligor upon the Securities or
any Subsidiary of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
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"Regular Record Date" for the interest payable on any Interest Payment
Date means the __________ or __________ (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date.
"Responsible Officer", when used with respect to the Trustee, means
the chairman or any vice-chairman of the board of directors, the chairman or
any vice-chairman of the executive committee of the board of directors, the
chairman of the trust committee, the president, any vice president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer, the
cashier, any assistant cashier, any trust officer or assistant trust officer,
the controller or any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Securities" has the meaning specified in the first recital of this
Indenture and more particularly means any Securities authenticated and
delivered under this Indenture.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Senior Indebtedness of the Company" means the principal of, premium,
if any, and unpaid interest on (a) indebtedness of the Company (including
indebtedness of others guaranteed by the Company), other than the Securities,
whether outstanding on the date hereof or thereafter created, incurred,
assumed, or guaranteed, (i) for money owing to banks, (ii) for money borrowed
from other than banks or (iii) arising under a lease of property, equipment or
other assets, which indebtedness, pursuant to generally accepted accounting
principles then in effect, is classified upon the balance sheet of the Company
as a liability of the Company, unless in the instrument creating or evidencing
the same or pursuant to which the same is outstanding it is provided that such
indebtedness is not superior in right of payment to the Securities, and (b)
renewals, extensions, modifications and refundings of any such indebtedness.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by
one or more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means stock
which ordinarily has voting power for the election of directors, whether at all
times or only so long as no senior class of stock has such voting power by
reason of any contingency.
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"Trading Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday, other than any day on which securities are not traded on the applicable
securities exchange or in the applicable securities market.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
Section 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate
or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
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Section 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for
any purpose of this Indenture and (subject to Section 601) conclusive in favor
of the Trustee and the Company, if made in the manner provided in this Section.
Without limiting the generality of this Section 104, unless otherwise
provided in or pursuant to this Indenture, a Holder, including a Depository or
its nominee that is a Holder of a Global Security, may make, give or take, by a
proxy or proxies duly appointed in writing, any request, demand, authorization,
direction, notice, consent, waiver or other action provided in or pursuant to
this Indenture to be made, given or taken by Holders, and a Depository or its
nominee that is a Holer of a Global Security may provide its proxy or proxies
to the beneficial owners of interests in any such Global Security through such
Depository's standing instructions and customary practices.
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(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a Person acting in a capacity other than such Person's
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of the authority of the Person executing the same. The fact
and date of the execution of any such instrument or writing, or the authority
of the Person executing the same, may also be proved in any other manner which
the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the Security
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee or
the Company in reliance thereon, whether or not notation of such action is made
upon such Security.
(e) The Company may set any day as a record date for the purpose
of determining the Holders of Outstanding Securities entitled to give or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given or taken by Holders
of Securities. With regard to any record date set pursuant to this paragraph,
the Holders of Outstanding Securities on such record date (or their duly
appointed agents), and only such Persons, shall be entitled to give or take the
relevant action, whether or not such Holders remain Holders after such record
date. With regard to any action that may be given or taken hereunder only by
Holders of a requisite principal amount of Outstanding Securities (or their
duly appointed agents) and for which a record date is set pursuant to this
paragraph, the Company may, at its option, set an expiration date after which
no such action purported to be given or taken by any Holder shall be effective
hereunder unless given or taken on or prior to such expiration date by Holders
of the requisite principal amount of Outstanding Securities on such record date
(or their duly appointed agents). On or prior to any expiration date set
pursuant to this paragraph, the Company may, on one or more occasions at its
option, extend such date to any later date. Notwithstanding the foregoing, the
Company shall not set a record date for, and the provisions of this paragraph
shall not apply with respect to, any action to be given or taken by Holders
pursuant to Section 501, 502 or 512.
Without limiting the foregoing, a Holder entitled hereunder to give or
take any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents, each of which may do so pursuant to such
appointment with regard to all or any part of such principal amount.
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Section 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trustee
Office, Attention: Corporate Trust Department, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company, addressed to it to the attention of its
Treasurer at the address of its principal office specified in the
first paragraph of this instrument or at any other address previously
furnished in writing to the Trustee by the Company.
Section 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed for
the giving of such notice. In any case where notice to Holders is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders. Any notice to Holders which is mailed in the
manner herein provided shall be conclusively presumed to have been duly given
or provided.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken
in reliance upon such waiver.
Section 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act which is required to be a part of and
govern this Indenture, such required provision of the Trust Indenture Act shall
control. If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, the provision
of the Trust Indenture
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Act shall be deemed to apply to this Indenture as so modified or shall be
excluded, as the case may be.
Section 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, the holders of Senior Indebtedness of the Company and the Holders of
Securities, any benefit or any legal or equitable right, remedy or claim under
this Indenture.
Section 112. Governing Law.
This Indenture and the Securities shall be construed in accordance
with and governed by the internal laws (and not the law of conflicts) of the
State of New York applicable to agreements made or instruments entered into and
performed in said state.
Section 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security or the last date on which a Holder has the right to
convert his Securities shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Securities) payment of interest or
principal (and premium, if any) or conversion of the Securities need not be
made on such date, but may be made on the next succeeding Business Day with the
same force and effect as if made on the Interest Payment Date or Redemption
Date, or at the Stated Maturity, or on such last day for conversion, provided
that no interest shall accrue for the period from and after such Interest
Payment Date, Redemption Date or Stated Maturity, as the case may be.
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ARTICLE TWO
FORMS OF SECURITIES
Section 201. Forms Generally.
The Securities and the Trustee's certificates of authentication shall
be in substantially the forms set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution thereof.
The definitive Securities relating thereto shall be printed,
lithographed or engraved or produced by any combination of these methods on
steel engraved borders or may be produced in any other manner permitted by the
rules of any securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as evidenced by their
execution thereof.
Section 202. Form of Face of Security.
THE HOME DEPOT, INC.
_____% Convertible Subordinated Note Due 2001
No._____ $_______
The Home Depot, Inc., a Delaware corporation (herein called the
"Company", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
____________, or registered assigns, the principal sum of _____________ Dollars
on October __, 2001 and to pay interest thereon from October __, 1996 or from
the most recent Interest Payment Date to which interest has been paid or duly
provided for, semi-annually on April __ and October __ in each year, commencing
April __, 1997, at the rate of _____% per annum, until the principal hereof is
paid or made available for payment. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which shall be the __________ or
_________ (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof shall be given to Holders of Securities not less
than 10 days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the
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<PAGE> 21
requirements of any securities exchange on which the Securities may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture. Payment of the principal of (and premium, if any)
and interest on this Security will be made at the office or agency of the
Company maintained for that purpose in the Borough of Manhattan, The City of
New York and at any other office or agency maintained by the Company for such
purpose, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts;
provided, however, that at the option of the Company payment of interest may be
made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
THE HOME DEPOT, INC.
By
---------------------
Attest:
- -----------------------
Section 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of Securities of the
Company designated as its _____% Convertible Subordinated Notes Due 2001
(herein called the "Securities"), limited in aggregate principal amount to
$800,000,000 (subject to increase as provided in the Indenture up to
$920,000,000 aggregate principal amount), issued and to be issued under an
Indenture, dated as of October 1, 1996, (herein called the "Indenture"), among
the Company and The First National Bank of Chicago, as Trustee (herein called
the "Trustee", which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made
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for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee, the holders of Senior
Indebtedness of the Company and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered.
Subject to and upon compliance with the provisions of the Indenture,
the Holder of this Security is entitled, at his option, at any time on or
before the close of business on _________, 2001, or in case this Security or a
portion hereof is called for redemption, then in respect of this Security or
such portion hereof until and including, but (unless the Company defaults in
making the payment due upon redemption) not after, the close of business on the
Business Day next preceding the Redemption Date, to convert this Security (or
any portion of the principal amount hereof which is $1,000 or an integral
multiple thereof), at the principal amount hereof, or of such portion, into
fully paid and non-assessable shares (calculated as to each conversion to the
nearest 1/100 of a share) of Common Stock of the Company at a conversion price
equal to $_____ aggregate principal amount of Securities for each share of
Common Stock (or at the current adjusted conversion price if an adjustment has
been made as provided in the Indenture) by surrender of this Security, duly
endorsed or assigned to the Company or in blank, to the Company at its office
or agency in the Borough of Manhattan, The City of New York or at any other
office or agency maintained by the Company for such purpose, accompanied by
written notice to the Company that the Holder hereof elects to convert this
Security, or if less than the entire principal amount hereof is to be
converted, the portion hereof to be converted, and, in case such surrender
shall be made during the period from the close of business on any Regular
Record Date next preceding any Interest Payment Date to the opening of business
on such Interest Payment Date (unless this Security or the portion thereof
being converted matures prior to such Interest Payment Date or has been called
for redemption on a Redemption Date within such period), also accompanied by
payment in New York Clearing House or other funds acceptable to the Company of
an amount equal to the interest payable on such Interest Payment Date on the
principal amount of this Security then being converted. Subject to the
aforesaid requirement for payment and, in the case of a conversion after the
Regular Record Date next preceding any Interest Payment Date and on or before
such Interest Payment Date, to the right of the Holder of this Security (or any
Predecessor Security) of record at such Regular Record Date to receive an
installment of interest (with certain exceptions provided in the Indenture), no
payment or adjustment is to be made on conversion for interest accrued hereon
or for dividends on the Common Stock issued on conversion. No fractions of
shares or scrip representing fractions of shares will be issued on conversion,
but instead of any fractional interest the Company shall pay a cash adjustment
as provided in the Indenture. The conversion price is subject to adjustment as
provided in the Indenture. In addition, the Indenture provides that in case of
certain consolidations or mergers to which the Company is a party or the
transfer of substantially all of the assets of the Company, the Indenture shall
be amended, without the consent of any Holders of Securities, so that this
Security, if then outstanding, will be convertible thereafter, during the
period this Security shall be convertible as specified above, only into the
kind and amount of securities, cash and other property receivable upon the
consolidation, merger or transfer by a holder of the number of shares of Common
Stock into which this Security might have been converted immediately prior to
such consolidation, merger or transfer (assuming such holder of Common Stock
failed to exercise any rights of election and received per share the kind and
amount received per share by a plurality of non-electing shares).
14
<PAGE> 23
The Securities are redeemable, at the Company's option, as a whole or
in part, upon not less than 30 days' notice mailed to each Holder of Securities
to be redeemed at his address appearing in the Security Register, on any date
on or after October __, 1999 and prior to maturity, at the following Redemption
Prices (expressed as percentages of principal amount) plus accrued interest to
the redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the Interest Payment Date that is on or
prior to the redemption date): if redeemed during the period commencing on
October __, 1999 and ending on (and including) ____________, 2000, ___%; and
thereafter at a Redemption Price equal to 100% of the principal amount,
together in the case of any such redemption, with accrued interest to the
Redemption Date, but interest installments whose Stated Maturity is on or prior
to such Redemption Date will be payable to the Holders of such Securities, or
one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.
In the event of redemption or conversion of this Security in part
only, a new Security or Securities for the unredeemed or unconverted portion
hereof will be issued in the name of the Holder hereof upon the cancellation
hereof.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and subject in right of payment to the prior
payment in full of all Senior Indebtedness of the Company, and this Security is
issued subject to the provisions of the Indenture with respect thereto. Each
Holder of this Security, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Trustee on his behalf
to take such action as may be necessary or appropriate to effectuate the
subordination so provided and (c) appoints the Trustee his attorney-in-fact for
any and all such purposes.
In the event there shall occur any Repurchase Event with respect to
the Company, each Holder of Securities shall have the right, at such Holder's
option but subject to the conditions set forth in the Indenture, to require the
Company to purchase on the Repurchase Date all or any part of such Holder's
Securities at a Repurchase Price equal to 100% of the principal amount thereof,
together with accrued and unpaid interest to the Repurchase Date and in the
manner specified in the Indenture.
If an Event of Default shall occur and be continuing, the principal of
all the Securities may be declared due and payable in the manner and with the
effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Securities at the
time Outstanding, on behalf of the Holders of all the Securities, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this
15
<PAGE> 24
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any)
and interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed or to convert this Security as provided in the
Indenture.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in the Borough of Manhattan, The City of New
York or at any other office or agency maintained by the Company for such
purpose, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Company and the Security Registrar duly executed
by, the Holder hereof or his attorney duly authorized in writing, and thereupon
one or more new Securities, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
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<PAGE> 25
Section 204. Form of Trustee's Certificate of Authentication.
This is one of the Securities referred to in the within-mentioned
Indenture.
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
By
----------------------------------------
Authorized Officer
Section 205. Form of Election to Convert.
To The Home Depot, Inc.:
The undersigned owner of this Security hereby irrevocably exercises
the option to convert this Security, or the portion below designated, into
shares of Common Stock of The Home Depot, Inc. in accordance with the terms of
the Indenture referred to in this Security, and directs that the shares
issuable and deliverable upon conversion, together with any check in payment
for fractional shares, be issued in the name of and delivered to the
undersigned registered Holder hereof, unless a different name has been
indicated in the assignment below. If shares are to be issued in the name of a
person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto. Any amount required to be paid by the
undersigned on account of interest accompanies this Security.
Dated:
Portion of Security to be
converted ($1,000 or an
integral multiple thereof):
$
------------------------------------------
Signature (for conversion only)
If shares of Common Stock are to be issued
and registered otherwise than to the
registered Holder named above, please print
or typewrite name and address, including zip
code, and social security or other taxpayer
identification number.
------------------------------------------
------------------------------------------
------------------------------------------
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<PAGE> 26
ARTICLE THREE
THE SECURITIES
Section 301. Title and Terms.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to (a) $800,000,000
plus (b) such aggregate principal amount (which may not exceed $120,000,000
principal amount) of Securities as shall be purchased by the Underwriters on
the Second Closing Date pursuant to the Underwriting Agreement, dated _____,
1996, between the Company and CS First Boston and Invemed Associates, Inc., as
Underwriters, except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities pursuant to Sections 304, 305, 306, 906, 1108, 1202 or 1402.
The Securities shall be known and designated as the "_____%
Convertible Subordinated Notes Due 2001" of the Company. Their Stated Maturity
shall be October __, 2001, and they shall bear interest at the rate of _____%
per annum, from October ___, 1996 or from the most recent Interest Payment Date
to which interest has been paid or duly provided for, as the case may be,
payable semiannually on April __ and October ___, commencing April __, 1997,
until the principal thereof is paid or made available for payment.
The principal of (and premium, if any) and interest on the Securities
shall be payable at the office or agency of the Company in the Borough of
Manhattan, The City of New York maintained for such purpose and at any other
office or agency maintained by the Company for such purpose; provided, however,
that at the option of the Company payment of interest may be made by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register.
The Securities shall be redeemable as provided in Article Eleven.
The Securities shall be convertible as provided in Article Twelve.
The Securities shall be subordinated in right of payment to Senior
Indebtedness of the Company, as provided in Article Thirteen.
The Securities shall be subject to repurchase by the Company, at the
option of the Holders, as provided in Article Fourteen.
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<PAGE> 27
Section 302. Denominations.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 and any integral multiple thereof.
Section 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by the
Chairman of the Board, a Vice Chairman of the Board, the President or one of
its Vice Presidents, under its corporate seal reproduced thereon attested by
its Secretary or one of its Assistant Secretaries. The signature of any or all
of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities as in
this Indenture provided and not otherwise.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder. Notwithstanding
the foregoing, if any Security shall have been authenticated and delivered
hereunder but never issued and sold by the Company, and the Company shall
deliver such Security to the Trustee for cancellation as provided in Section
309, for all purposes of this Indenture such Security shall be deemed never to
have been authenticated and delivered hereunder and shall never be entitled to
the benefits of this Indenture.
Section 304. Temporary Securities.
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which may be printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
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<PAGE> 28
Except in the case of temporary Securities in global form, which can
be issued in accordance with the provisions thereof, if temporary Securities
are issued, the Company will cause definitive Securities to be prepared without
unreasonable delay. After the preparation of definitive Securities, the
temporary Securities shall be exchangeable for definitive Securities upon
surrender of the temporary Securities at any office or agency of the Company
designated pursuant to Section 1002, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Securities, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Securities of authorized
denominations. Until so exchanged, the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as definitive
Securities.
Section 305. Registration, Registration of Transfer and Exchange.
The Company shall keep or cause to be kept a register (the register
maintained either at the Corporate Trust Office of the Trustee or in any other
office or agency designated pursuant to Section 1002 being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. Any such register
shall be in written form or in any other form capable of being converted into
written form within a reasonable time. At all reasonable times the information
contained in such register or registers shall be available for inspection by
the Trustee at the office or agency to be maintained by the Company as provided
in Section 1002. The Trustee is hereby appointed "Security Registrar" for the
purpose of registering Securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any Security at an
office or agency of the Company designated pursuant to Section 1002 for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of any authorized denominations and of a like aggregate
principal amount.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations and of a like aggregate principal
amount, upon surrender of the Securities to be exchanged at such office or
agency. Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligation of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar (if other than the
Company) duly executed, by the Holder thereof or his attorney duly authorized
in writing.
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<PAGE> 29
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of conversion, transfer or exchange of Securities, other
than exchanges pursuant to Section 304, 906, 1108, 1202 or 1302 not involving
any transfer.
The Company may but shall not be required (i) to issue, register the
transfer of or exchange any Security during a period beginning at the opening
of business 15 days before the day of the mailing of a notice of redemption of
Securities selected for redemption under Section 1104 and ending at the close
of business on the day of such mailing, or (ii) to register the transfer of or
exchange any Security so selected for redemption in whole or in part, except
the unredeemed portion of any Security being redeemed in part.
Each Global Security authenticated under this Indenture shall be
registered in the name of the Depository designated for such Global Security or
a nominee thereof and delivered to such Depository or a nominee thereof or
custodian therefor, and each such Global Security shall constitute a single
Security for all purposes of this Indenture.
Any exchange of a Global Security for other Securities may be made in
whole or in part, and all Securities issued in exchange for a Global Security
or any portion thereof shall be registered in such names as the Depository for
such Global Security shall direct.
If at any time the Depository for the Securities notifies the Company
that it is unwilling or unable to continue as Depository for the Securities or
if at any time the Depository for the Securities shall no longer be qualified
to serve as the Depository, the Company shall appoint a successor Depository
with respect to the Securities. If a successor Depository for the Securities
is not appointed by the Company within 90 days after the Company receives such
notice or becomes aware of such ineligibility, the Company will execute, and
the Trustee, upon receipt of a Company Order for the authentication and
delivery of definitive Securities, will authenticate and deliver Securities of
like tenor and terms in definitive form in an aggregate principal amount equal
to the principal amount of the Global Security or Securities in exchange for
such Global Security or Securities.
The Company may at any time and in its sole discretion determine that
Securities issued in the form of one or more Global Securities shall no longer
be represented by such Global Securities. In such event, the Company will
execute, and the Trustee, upon receipt of a Company Order for the
authentication and delivery of definitive Securities, will authenticate and
deliver Securities of like tenor and terms in definitive form in an aggregate
principal amount equal to the principal amount of the Global Security or
Securities in exchange for such Global Security or Securities.
Notwithstanding any other provision in this Indenture, no Global
Security may be transferred to, or registered or exchanged for Securities
registered in the name of, any Person other than the Depository for such Global
Security or any nominee thereof, and no such transfer may be registered, unless
(1) such Depository (A) notifies the Company that it is unwilling or unable to
continue as
21
<PAGE> 30
Depository for such Global Security or (B) ceases to be qualified to serve as
Depository, (2) the Company executes and delivers to the Trustee a Company
Order that such Global Security shall be so transferable, registrable and
exchangeable, and such transfers shall be registrable, or (3) there shall have
occurred and be continuing an Event of Default. Notwithstanding any other
provision in this Indenture, a Global Security to which the restriction set
forth in the preceding sentence shall have ceased to apply may be transferred
only to, and may be registered and exchanged for Securities registered only in
the name or names of, such Person or Persons as the Depository for such Global
Security shall have directed and no transfer thereof other than such a transfer
may be registered.
Every Security authenticated and delivered upon registration of
transfer, or in exchange for or in lieu, of a Global Security to which the
restriction set forth in the first sentence of the preceding paragraph shall
apply, whether pursuant to this Section, Sections 304, 306 or 1108 or
otherwise, shall be authenticated and delivered in the form of, and shall be, a
Global Security unless such Security is registered in the name of a Person
other than the Depository for such Global Security or a nominee thereof.
Section 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be required by them to
save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has been
acquired by a bona fide purchaser, the Company shall execute and upon its
request the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled
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<PAGE> 31
to all the benefits of this Indenture equally and proportionately with any and
all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 307. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date notwithstanding the fact that such Holder was a
Holder on such Regular Record Date, and such Defaulted Interest may be paid by
the Company, at its election, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Company shall deposit with
the Trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such Defaulted
Interest as in this Clause provided. Thereupon the Trustee shall fix
a Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and no less than 10 days prior to the
date of the proposed payment and not less than 10 days after the
receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date
and, in the name and at the expense of the Company shall cause notice
of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage prepaid, to
each Holder at his address as it appears in the Security Register, not
less than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record
Date therefor having been so mailed, such Defaulted Interest shall be
paid to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on
such Special Record Date and shall no longer be payable pursuant to
the following Clause (2).
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<PAGE> 32
(2) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon
such notice as may be required by such exchange, if, after notice
given by the Company to the Trustee of the proposed payment pursuant
to this Clause, such manner of payment shall be deemed practicable by
the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
In the case of any Security which is converted after any Regular
Record Date and on or prior to the next succeeding Interest Payment Date (other
than any Security whose Maturity is prior to such Interest Payment Date),
interest whose Stated Maturity is on such Interest Payment Date shall be
payable on such Interest Payment Date notwithstanding such conversion, and such
interest (whether or not punctually paid or duly provided for) shall be paid to
the Person in whose name that Security (or one or more Predecessor Securities)
is registered at the close of business on such Regular Record Date. Except as
otherwise expressly provided in the immediately preceding sentence, in the case
of any Security which is converted, interest whose Stated Maturity is after the
date of conversion of such Security shall not be payable.
Section 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the absolute owner of
such Security for the purpose of receiving payment of principal of (and
premium, if any) and (subject to Section 307) interest on such Security and for
all other purposes whatsoever, whether or not such Security be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
No Person entitled to any beneficial interest in any Global Security
held on its behalf by a Depository or its nominee shall, as such, have any
rights under this Indenture with respect to such Global Security, and such
Depository or its nominee may be treated by the Company, the Trustee and any
agent of the Company or the Trustee as the owner of such Global Security for
all purposes whatsoever. None of the Company, the Trustee, any Authenticating
Agent, any Paying Agent or the Security Registrar will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in a Global Security or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
Section 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or conversion shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly canceled by
it. The Company may at any time deliver to the Trustee for
24
<PAGE> 33
cancellation any Securities previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and may deliver
to the Trustee (or any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder which the
Company has not issued and sold. All Securities so delivered shall be promptly
canceled by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Securities held by the
Trustee shall be disposed of as directed by a Company Order.
Section 310. Computation of Interest.
Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months.
Section 311. Form of Legend for Global Securities.
Every Global Security authenticated and delivered hereunder shall bear
a legend in substantially the following form:
This Security is a Global Security within the meaning of the
Indenture hereinafter referred to and is registered in the
name of a Depository or a nominee of a Depository. This
Security is exchangeable for Securities registered in the name
of a Person other than the Depository or its nominee only in
the limited circumstances described in the Indenture and no
transfer of this Security (other than a transfer of this
Security as a whole by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository
or another nominee of the Depository) may be registered except
in such limited circumstances.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as to any
surviving rights of conversion, registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, on demand of and at
the expense of the Company shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when:
(1) either
25
<PAGE> 34
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 306 and
(ii) Securities for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 1003) have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the name, and
at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust
funds in trust for the purpose an amount sufficient to pay and
discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest to the date of
such deposit (in the case of Securities which have become due
and payable) or to the Stated Maturity or Redemption Date, as
the case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Trustee to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003, shall survive.
Section 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the
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Persons entitled thereto, of the principal (and premium, if any) and interest
for whose payment such money has been deposited with the Trustee. All moneys
deposited with the Trustee pursuant to Section 401 (and held by it or any
Paying Agent) for the payment of Securities subsequently converted shall be
returned to the Company upon Company Request.
ARTICLE FIVE
REMEDIES
Section 501. Events of Default.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of Article Thirteen or be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order or any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of any interest upon any Security
when it becomes due and payable, whether or not such payment is
prohibited by the provisions of Article Thirteen, and continuance of
such default for a period of 30 days; or
(2) default in the payment of the principal of (or premium,
if any, on) any Security at its Maturity, whether or not such payment
is prohibited by the provisions of Article Thirteen; or
(3) default in the payment of the Repurchase Price (as
defined in Section 1401) in respect of any Security on the Repurchase
Date (as defined in Section 1401) therefor in accordance with the
provisions of Article Fourteen, whether or not such payment is
prohibited by the provisions of Article Thirteen; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere
in this Section specifically dealt with), and continuance of such
default or breach for a period of 60 days after there has been given,
by registered or certified mail, to the Company by the Trustee or to
the Company and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
(5) default under any mortgage, indenture or instrument under
which there is then issued, or by which there is then secured or
evidenced, any indebtedness of the Company in excess of $50,000,000
representing indebtedness for borrowed money or any Senior
Indebtedness of the Company which results
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in such indebtedness (i) being declared due and payable prior to the
date on which it would otherwise become due and payable or (ii)
becoming due and payable prior to the date on which it would otherwise
become due and payable and the holders of such indebtedness take any
action to collect such indebtedness; provided, however, that if such
default under such mortgage, indenture or instrument shall be remedied
or cured by the Company or waived by the holders of such indebtedness,
then the Event of Default hereunder by reason thereof shall be deemed
likewise to have been thereupon remedied, cured or waived without
further action upon the part of either the Trustee or any of the
Holders of the Securities; and provided, further, that the Trustee
(subject to Sections 601 and 602) shall not have any rights, duties,
liabilities or responsibilities with respect to such default unless
and until the Trustee shall have received written notice thereof at
the Corporate Trust Office from the Company, the trustee under any
such mortgage, indenture or instrument, the holder or holders of any
such indebtedness or the agent of any such holder or holders or the
Holder or Holders of any Outstanding Securities; or
(6) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or (B) a
decree or order adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company
under any applicable Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 60 consecutive
days; or
(7) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by the Company to the entry of a decree or order for relief in
respect of the Company in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under
any applicable Federal or State law, or the consent by the Company to
the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Company or of any substantial
part of its property, or the making by it of an assignment for the
benefit of creditors, or the admission by it in writing of its
inability to pay its debts generally as they become due, or the taking
of corporate action by the Company in furtherance of any such action.
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Section 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default occurs and is continuing, then and in every
such case the Trustee or the Holders of not less than 25% in principal amount
of the Outstanding Securities may declare the principal of all the Securities
to be due and payable immediately, by a notice in writing to the Company (and
to the Trustee if given by Holders), and upon any such declaration such
principal shall become immediately due and payable.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article provided, the Holders of a majority
in principal amount of the Outstanding Securities by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if:
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay:
(A) all overdue installments of interest on the
Securities,
(B) the principal of (and premium, if any, on) any
Securities which have become due otherwise than by such
declaration of acceleration, and interest thereon at the rate
borne by the Securities,
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate borne by
the Securities, and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel; and
(2) all Events of Default, other than the non-payment of the
principal of Securities which have become due solely by such
acceleration or declaration of acceleration, have been cured or waived
as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Upon receipt by the Trustee of written notice declaring such an
acceleration, or any rescission and annulment of any such declaration, pursuant
to this Section 502 with respect to the Securities, a record date shall
automatically and without any other action by any Person be set for the purpose
of determining the Holders of Outstanding Securities entitled to join in such
declaration, or rescission and annulment, as the case may be, which record date
shall be the close of business on the day the Trustee receives such notice.
The Holders of Outstanding Securities on such record date (or their duly
appointed agents), and only such Persons, shall be entitled to join in such
declaration, or rescission and annulment, as the case may be, whether or not
such Holders remain Holders after such
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record date; provided that, unless such declaration, or rescission and
annulment, as the case may be, shall have become effective by virtue of Holders
of the requisite principal amount of Outstanding Securities on such record date
(or their duly appointed agents) having joined therein on or prior to the 90th
day after such record date, such declaration, or rescission and annulment, as
the case may be, shall automatically and without any action by any Person be
canceled and of no further effect.
Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if:
(1) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest, and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest, at the
rate borne by the Securities, and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute
a judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
Section 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due
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and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of overdue principal or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in
respect of the Securities and to file such other papers or documents
as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel) and of the Holders allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan or
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors or
other similar committee.
Section 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
Section 506. Application of Money Collected.
Subject to Article Thirteen, any money collected by the Trustee
pursuant to this Article shall be applied in the following order, at the date
or dates fixed by the Trustee and, in case of the distribution of such money on
account of principal (or premium, if any) or interest, upon presentation
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of the Securities and the notation thereon of the payment if only partially
paid and upon surrender thereof if fully paid:
First: To the payment of all amounts due the Trustee under
Section 607;
Second: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for
principal (and premium, if any) and interest, respectively; and
Third: The balance, if any, to the Person or Persons entitled
thereto, including, without limitation, the Company.
Section 507. Limitation on Suits.
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of
the Outstanding Securities shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of
a majority in principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
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Section 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest and to Convert.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 307) interest on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption or repurchase, on the
Redemption Date or Repurchase Date) and to convert such Security in accordance
with Article Twelve and to institute suit for the enforcement of any such
payment and right to convert, and such rights shall not be impaired without the
consent of such Holder.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders
shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
Section 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 306, no right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by
law to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
Section 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, provided that
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(1) such direction shall not be in conflict with any rule of
law or with this Indenture, and
(2) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction.
Upon receipt by the Trustee of any such direction with respect to the
Securities, a record date shall automatically and without any other action by
any Person be set for determining the Holders of Outstanding Securities
entitled to join in such direction, which record date shall be the close of
business on the day the Trustee receives such direction. The Holders of
Outstanding Securities on such record date (or their duly appointed agents),
and only such Persons, shall be entitled to join in such direction, whether or
not such Holders remain Holders after such record date; provided that, unless
such direction shall have become effective by virtue of Holders of the
requisite principal amount of Outstanding Securities on such record date (or
their duly appointed agents) having joined therein on or prior to the 90th day
after such record date, such direction shall automatically and without any
action by any Person be canceled and of no further effect.
Section 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities may on behalf of the Holders of all the Securities waive
any past default hereunder and its consequences, except a default:
(1) in the payment of the principal of (or premium, if any)
or interest on any Security, or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture, but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
Section 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions
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of this Section shall not apply to any suit instituted by the Company, to any
suit instituted by the Trustee, to any suit instituted by any Holder, or group
of Holders, holding in the aggregate more than 25% in principal amount of the
Outstanding Securities, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium, if any) or interest
on any Security on or after the respective Stated Maturities expressed in such
Security (or, in the case of redemption or repurchase, on or after the
Redemption Date or Repurchase Date) or for the enforcement of the right to
convert any Security in accordance with Article Twelve.
Section 515. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any
such law and covenants that it will not hinder, delay or impede the execution
of any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
Section 601. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements
of this Indenture.
(b) In case an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
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(c) No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act, or its own wilful misconduct, except that:
(1) this Subsection shall not be construed to limit the
effect of Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of a majority in principal amount of
the Outstanding Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture; and
(4) no provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to
it.
(d) Whether or not therein expressly so provided, every provision
of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
Section 602. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder, the
Trustee shall transmit by mail to all Holders, as their names and addresses
appear in the Security Register, notice of such default hereunder known to the
Trustee, unless such default shall have been cured or waived; provided,
however, that, except in the case of a default in the payment of the principal
of (or premium, if any) or interest on any Security or in the payment of any
sinking fund instalment, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or a
trust committee of directors or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the interest of the
Holders; and provided, further, that in the case of any default of the
character specified in Section 501(3), no such notice to Holders shall be given
until at least 30 days after the occurrence thereof. For the purpose of this
Section, the term "default" means any event which is, or after notice or lapse
of time or both would become, an Event of Default.
Section 603. Certain Rights of Trustee.
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Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction or any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney; and
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
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Section 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not be accountable for the
use or application by the Company of Securities or the proceeds thereof.
Section 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to
Sections 608 and 613, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other agent.
Section 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
Section 607. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or
bad faith on its part, arising out of or in connection with the
acceptance or administration of this trust, including the costs and
expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or
duties hereunder.
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The Company's payment obligations pursuant to this Section 607 shall survive
the discharge of this Indenture. When the Trustee incurs expenses after the
occurrence of an Event of Default specified in Section 501(6) or (7), the
expenses are intended to constitute expenses of administration under any
bankruptcy law.
Section 608. Disqualification; Conflicting Interest.
(a) If the Trustee has or shall acquire a conflicting interest within
the meaning of the Trust Indenture Act, the Trustee shall, within 90 days after
ascertaining that it has such conflicting interest, either eliminate such
conflicting interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Indenture.
(b) In the event that the Trustee shall fail to comply with the
provisions of Subsection (a) of this Section with respect to the Securities,
the Trustee shall, within 10 days after the expiration of such 90-day period,
transmit by mail to all Holders of Securities, as their names and addresses
appear in the Security Register, notice of such failure.
Section 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $50,000,000 and subject to supervision or examination by Federal or
State authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
Section 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 611.
(b) The Trustee may resign subject to the provisions of Section
310 of the Trust Indenture Act at any time by giving written notice thereof to
the Company. If an instrument of acceptance by a successor Trustee shall not
have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
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(c) The Trustee may be removed at any time by Act of the Holders
of a majority in principal amount of the Outstanding Securities, delivered to
the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after
written request therefor by the Company or by any Holder who has been
a bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609
and shall fail to resign after written request therefor by the Company
or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may
remove the Trustee, or (ii) subject to Section 514, any Holder who has
been a bona fide Holder of a Security for at least six months may, on
behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee.
If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of
the Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company or the
Holders and accepted appointment in the manner hereinafter provided, any Holder
who has been a bona fide Holder of a Security for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders as their names and addresses appear in the Security Register. Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office.
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Section 611. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee; but, on request of the Company or
the successor Trustee, such retiring Trustee shall, upon payment of its
charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder. Upon request of any such
successor Trustee, the Company shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all
such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
Section 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be otherwise qualified and eligible under
this Article, without the execution or filing of any paper or any further act
on the part of any of the parties hereto. In case any Securities shall have
been authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such authentication and deliver the Securities so authenticated with
the same effect as if such successor Trustee had itself authenticated such
Securities.
Section 613. Preferential Collection of Claims Against Company.
(a) Subject to Subsection (b) of this Section, if the Trustee
shall be or shall become a creditor, directly or indirectly, secured or
unsecured, of the Company within three months prior to a default, as defined in
Subsection (c) of this Section, or subsequent to such a default, then, unless
and until such default shall be cured, the Trustee shall set apart and hold in
a special account for the benefit of the Trustee individually, the Holders of
the Securities and the holders of other indenture securities, as defined in
Subsection (c) of this Section:
(1) an amount equal to any and all reductions in the amount
due and owing upon any claim as such creditor in respect of principal
or interest, effected after the beginning of such three months' period
and valid as against the Company and its other creditors, except any
such reduction resulting from the receipt or disposition of any
property described in paragraph (2)
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of this Subsection, or from the exercise of any right of setoff which
the Trustee could have exercised if a petition in bankruptcy had been
filed by or against the Company upon the date of such default; and
(2) all property received by the Trustee in respect of any
claims as such creditor, either as security therefor, or in
satisfaction or composition thereof, or otherwise, after the beginning
of such three months' period, or an amount equal to the proceeds of
any such property, if disposed of, subject, however, to the rights, if
any, of the Company and its other creditors in such property or such
proceeds.
Nothing herein contained, however, shall affect the right of the
Trustee:
(A) to retain for its own account (i) payments made
on account of any such claim by any Person (other than the
Company) who is liable thereon, and (ii) the proceeds of the
bona fide sale of any such claim by the Trustee to a third
Person, and (iii) distributions made in cash, securities or
other property in respect of claims filed against the Company
in bankruptcy or receivership or in proceedings for
reorganization pursuant to the Federal Bankruptcy Act or
applicable State law;
(B) to realize, for its own account, upon any
property held by it as security for any such claim, if such
property was so held prior to the beginning of such four
months' period;
(C) to realize, for its own account, but only to the
extent of the claim hereinafter mentioned, upon any property
held by it as security for any such claim, if such claim was
created after the beginning of such three months' period and
such property was received as security therefor simultaneously
with the creation thereof, and if the Trustee shall sustain
the burden of proving that at the time such property was so
received the Trustee had no reasonable cause to believe that a
default, as defined in Subsection (c) of this Section, would
occur within three months; or
(D) to receive payment on any claim referred to in
paragraph (B) or (C), against the release of any property held
as security for such claim as provided in paragraph (B) or
(C), as the case may be, to the extent of the fair value of
such property.
For the purposes of paragraphs (B), (C) and (D), property substituted
after the beginning of such three months' period for property held as security
at the time of such substitution shall, to the extent of the fair value of the
property released, have the same status as the property released, and, to the
extent that any claim referred to in any such paragraphs is created in renewal
of or in substitution for or for the purpose of repaying or refunding any
pre-existing claim of the Trustee as such creditor, such claim shall have the
same status as such pre-existing claim.
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If the Trustee shall be required to account, the funds and property
held in such special account and the proceeds thereof shall be apportioned
among the Trustee, the Holders and the holders of other indenture securities in
such manner that the Trustee, the Holders and the holders of other indenture
securities realize, as a result of payments from such special account and
payments of dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Federal
Bankruptcy Act or applicable State law, the same percentage of their respective
claims, figured before crediting to the claim of the Trustee anything on
account of the receipt by it from the Company of the funds and property in such
special account and before crediting to the respective claims of the Trustee
and the Holders and the holders of other indenture securities dividends on
claims filed against the Company in bankruptcy or receivership or in
proceedings for reorganization pursuant to the Federal Bankruptcy Act or
applicable State law, but after crediting thereon receipts on account of the
indebtedness represented by their respective claims from all sources other than
from such dividends and from the funds and property so held in such special
account. As used in this paragraph, with respect to any claim, the term
"dividends" shall include any distribution with respect to such claim, in
bankruptcy or receivership or proceedings for reorganization pursuant to the
Federal Bankruptcy Act or applicable State law, whether such distribution is
made in cash, securities or other property, but shall not include any such
distribution with respect to the secured portion, if any, of such claim. The
court in which such bankruptcy, receivership or proceedings for reorganization
is pending shall have jurisdiction (i) to apportion among the Trustee, the
Holders and the holders of other indenture securities, in accordance with the
provisions of this paragraph, the funds and property held in such special
account and proceeds thereof, or (ii) in lieu of such apportionment, in whole
or in part, to give to the provisions of this paragraph due consideration in
determining the fairness of the distributions to be made to the Trustee and the
Holders and the holders of other indenture securities with respect to their
respective claims, in which event it shall not be necessary to liquidate or to
appraise the value of any securities or other property held in such special
account or as security for any such claim, or to make a specific allocation of
such distributions as between the secured and unsecured portions of such
claims, or otherwise to apply the provisions of this paragraph as a
mathematical formula.
Any Trustee which has resigned or been removed after the beginning of
such three months' period shall be subject to the provisions of this Subsection
as though such resignation or removal had not occurred. If any Trustee has
resigned or been removed prior to the beginning of such three months' period,
it shall be subject to the provisions of this Subsection if and only if the
following conditions exist:
(i) the receipt of property or reduction of claim, which
would have given rise to the obligation to account, if such Trustee
had continued as Trustee, occurred after the beginning of such three
months' period; and
(ii) such receipt of property or reduction of claim occurred
within three months after such resignation or removal.
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(b) There shall be excluded from the operation of Subsection (a)
of this Section a creditor relationship arising from:
(1) the ownership or acquisition of securities issued under
any indenture, or any security or securities having a maturity of one
year or more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court
of competent jurisdiction or by this Indenture, for the purpose of
preserving any property which shall at any time be subject to the lien
of this Indenture or of discharging tax liens or other prior liens or
encumbrances thereon, if notice of such advances and of the
circumstances surrounding the making thereof is given to the Holders
at the time and in the manner provided in this Indenture;
(3) disbursements made in the ordinary course of business in
the capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, fiscal agent or depositary, or other similar
capacity;
(4) an indebtedness created as a result of services rendered
or premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction, as defined in Subsection (c) of
this Section;
(5) the ownership of stock or of other securities of a
corporation organized under the provisions of Section 25(a) of the
Federal Reserve Act, as amended, which is directly or indirectly a
creditor of the Company; and
(6) the acquisition, ownership, acceptance or negotiation of
any drafts, bills of exchange, acceptances or obligations which fall
within the classification of self-liquidating paper, as defined in
Subsection (c) of this Section.
(c) For the purposes of this Section only:
(1) the term "default" means any failure to make payment in
full of the principal of or interest on any of the Securities or upon
the other indenture securities when and as such principal or interest
becomes due and payable;
(2) the term "other indenture securities" means securities
upon which the Company is an obligor outstanding under any other
indenture (i) under which the Trustee is also trustee, (ii) which
contains provisions substantially similar to the provisions of this
Section, and (iii) under which a default exists at the time of the
apportionment of the funds and property held in such special account;
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(3) the term "cash transaction" means any transaction in
which full payment for goods or securities sold is made within seven
days after delivery of the goods or securities in currency or in
checks or other orders drawn upon banks or bankers and payable upon
demand;
(4) the term "self-liquidating paper" means any draft, bill
of exchange, acceptance or obligation which is made, drawn, negotiated
or incurred by the Company for the purpose of financing the purchase,
processing, manufacturing, shipment, storage or sale of goods, wares
or merchandise and which is secured by documents evidencing title to,
possession of, or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of goods, wares or
merchandise previously constituting the security, provided the
security is received by the Trustee simultaneously with the creation
of the creditor relationship with the Company arising from the making,
drawing, negotiating or incurring of the draft, bill of exchange,
acceptance or obligation;
(5) the term "Company" means any obligor upon the Securities;
and
(6) the Term "Federal Bankruptcy Act" means the Bankruptcy
Act or Title 11 of the United States Code.
Section 614. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents which shall
be authorized to act on behalf of the Trustee to authenticate Securities issued
upon original issue and upon exchange, registration of transfer, partial
conversion or partial redemption or pursuant to Section 306, and Securities so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the authentication
and delivery of Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the
United States of America, any State thereof or the District of Columbia,
authorized under such laws to act as Authenticating Agent, having a combined
capital and surplus of not less than $50,000,000 and subject to supervision or
examination by Federal or State authority. If such Authenticating Agent
publishes reports of condition at least annually pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Authenticating Agent
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time an Authenticating
Agent shall cease to be eligible in accordance with the provisions of this
Section, such Authenticating Agent shall resign immediately in the manner and
with the effect specified in this Section.
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Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee, the Company, the Authenticating Agent or such
successor corporation.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders as their
names and addresses appear in the Security Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 607.
If an appointment is made pursuant to this Section, the Securities may
have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternate certificate of authentication in the following
form:
This is one of the Securities described in the within mentioned
Indenture.
THE FIRST NATIONAL BANK OF CHICAGO
As Trustee
By:
---------------------------------------
As Authenticating Agent
By:
---------------------------------------
Authorized Officer
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 15 days after each Regular
Record Date, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders as of such Regular
Record Date, and
(b) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not more than
15 days prior to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
Section 702. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the
most recent list furnished to the Trustee as provided in Section 701 and the
names and addresses of Holders received by the Trustee in its capacity as
Security Registrar, if so acting. The Trustee may destroy any list furnished
to it as provided in Section 701 upon receipt of a new list so furnished.
(b) If three or more Holders (herein referred to as "applicants")
apply in writing to the Trustee, and furnish to the Trustee reasonable proof
that each such applicant has owned a Security for a period of at least six
months preceding the date of such application, and such application states that
the applicants desire to communicate with other Holders with respect to their
rights under this Indenture or under the Securities and is accompanied by a
copy of the form of proxy or other communication which such applicants propose
to transmit, then the Trustee shall, within five business days after the
receipt of such application, at its election, either
(i) afford such applicants access to the information
preserved at the time by the Trustee in accordance with Section
702(a), or
(ii) inform such applicants as to the approximate number of
Holders whose names and addresses appear in the information preserved
at the time by the Trustee in accordance with Section 702(a), and as
to the approximate cost of mailing to such Holders the form of proxy
or other communication, if any, specified in such application.
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If the Trustee shall elect not to afford such applicants access to
such information, the Trustee shall, upon the written request of such
applicants, mail to each Holder whose name and address appear in the
information preserved at the time by the Trustee in accordance with Section
702(a) a copy of the form of proxy or other communication which is specified in
such request, with reasonable promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision for the payment, of the
reasonable expenses of mailing, unless within five days after such tender the
Trustee shall mail to such applicants and file with the Commission, together
with a copy of the material to be mailed, a written statement to the effect
that, in the opinion of the Trustee, such a mailing would be contrary to the
best interest of the Holders or would be in violation of applicable law. Such
written statement shall specify the basis of such opinion. If the Commission,
after opportunity for a hearing upon the objections specified in the written
statement so filed, shall enter an order refusing to sustain any of such
objections or if, after the entry of an order sustaining one or more of such
objections, the Commission shall find, after notice and opportunity for
hearing, that all the objections so sustained have been met and shall enter an
order so declaring, the Trustee shall mail copies of such material to all such
Holders with reasonable promptness after the entry of such order and the
renewal of such tender; otherwise the Trustee shall be relieved of any
obligation or duty to such applicants respecting their application.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of any of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
in accordance with Section 702(b), regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Section 702(b).
Section 703. Reports by Trustee.
The term "reporting date", as used in this Section, shall be February
1, commencing with February 1 of the year following the first issue of any
Securities under this Indenture. Within 60 days after the reporting date in
each year, or at any other times as may be required by the Trust Indenture Act,
the Trustee shall transmit by mail to all Holders, as their names and addresses
appear in the Security Register, such reports concerning the Trustee and its
actions under this Indenture as may be required pursuant to the Trust Indenture
Act dated as of such reporting date or at other times as may be required by the
Trust Indenture Act.
A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each securities exchange upon which
Securities are listed, and also with the Commission and with the Company. The
Company will notify the Trustee when Securities are listed on any securities
exchange.
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Section 704. Reports by Company.
The Company will file with the Trustee and the Commission and transmit
to Holders, such information, documents and other reports as may be required
pursuant to the Trust Indenture Act.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, unless:
(1) the Person formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or
transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a Person organized and validly
existing under the laws of the United States of America, any State
thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered by such Person
to the Trustee, in form satisfactory to the Trustee, the due and
punctual payment of the principal of (and premium, if any) and
interest on all the Securities and the performance of every covenant
of this Indenture on the part of the Company to be performed or
observed and shall have provided for conversion rights in accordance
with Section 1211;
(2) immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of time or
both, would become an Event of Default, shall have happened and be
continuing; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such
transaction, such supplemental indenture comply with this Article and
that all conditions precedent herein provided for relating to such
transaction have been complied with.
For purposes of this Section and Section 802, a conveyance, transfer
or lease of the properties and assets of the Company "substantially as an
entirety" shall mean a conveyance, transfer or lease of properties and assets
of the Company representing 80% or more of the fair value (as determined in
good faith by the Board of Directors) of all of the properties and assets of
the Company on the date of such conveyance, transfer or lease.
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Section 802. Successor Substituted for Company.
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of the properties
and assets of the Company substantially as an entirety in accordance with
Section 801, the successor Person formed by such consolidation or into which
the Company is merged or to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein, and thereafter, except
in the case of a lease, the predecessor Person shall be relieved of all
obligations and covenants under this Indenture and the Securities. In the
event of any such conveyance or transfer, the Company as the predecessor
corporation may be dissolved, wound up and liquidated at any time thereafter.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of
the Company herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of
the Holders, or to surrender any right or power herein conferred upon
the Company; or
(3) to secure the Securities; or
(4) to make provision with respect to the conversion rights
of Holders pursuant to the requirements of Section 1211; or
(5) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be inconsistent
with the provision of this Indenture, provided such action pursuant to
this Clause (5) shall not adversely affect the interests of the
Holders in any material respect; or
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(6) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect or maintain
the qualification of this Indenture under the Trust Indenture Act, or
under any similar Federal statute hereafter enacted, and to add to
this Indenture such other provisions as may be expressly permitted by
the Trust Indenture Act, excluding, however, the provisions referred
to in Section 316(a)(2) of the Trust Indenture Act or any
corresponding provision in any similar Federal statute hereafter
enacted.
Section 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Act of said Holders
delivered to the Company and the Trustee, the Company, when authorized by a
Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby:
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable
upon the redemption thereof, or change the place of payment where, or
the coin or currency in which, any Security or any premium or the
interest thereon is payable, or impair the right to institute suit for
the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption
Date or, in the case of a repurchase pursuant to Article Fourteen, on
or after the Repurchase Date), or adversely affect the right to
convert any Security as provided in Article Twelve (except as
permitted by Section 901(5)), or adversely affect the right to require
the Company to repurchase the Securities as provided in Article
Fourteen or modify the provisions of this Indenture with respect to
the subordination of the Securities in a manner adverse to the
Holders, or
(2) reduce the percentage in principal amount of the
Outstanding Securities the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture, or
(3) modify any of the provisions of this Section or Section
513, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security
affected thereby.
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It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 601) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture. The Trustee may, but shall not
(except to the extent required in the case of a supplemental indenture entered
into under Section 9.01(6)) be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
Section 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
Section 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so
determine, new Securities so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities.
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ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal, Premium and Interest.
The Company will duly and punctually pay the principal of (and
premium, if any) and interest on the Securities in accordance with the terms of
the Securities and this Indenture.
Section 1002. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, The City of New
York an office or agency where Securities may be presented or surrendered for
payment, where Securities may be surrendered for registration of transfer or
exchange, where Securities may be surrendered for conversion and where notices
and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at
the Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside of the Borough of Manhattan, The City of New
York) where the Securities may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York for such purposes. The Company will give
prompt written notice to the Trustee of any such designation or rescission and
of any change in the location of any such other office or agency.
Section 1003. Money for Security Payments to be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of (and premium, if any) or
interest on any of the Securities, segregate and hold in trust for the benefit
of the Persons entitled thereto a sum sufficient to pay the principal (and
premium, if any) or interest so becoming due until such sums shall be paid to
such Persons or otherwise disposed of as herein provided and will promptly
notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will,
prior to each due date of the principal of (and premium, if any) or interest on
any Securities, deposit with a Paying Agent a sum sufficient to pay the
principal (and premium, if any) or interest so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such principal,
premium or interest, and
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(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the principal
of (and premium, if any) or interest on Securities in trust for the
benefit of the Persons entitled thereto until such sums shall be paid
to such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or
any obligor upon the Securities) in the making of any payment of
principal (and premium, if any) or interest; and
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company in trust for the payment of the principal of (and premium, if
any) or interest on any Security and remaining unclaimed for two years after
such principal (and premium, if any) or interest has become due and payable
shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company
for payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.
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Section 1004. Statements of Officers of Company as to Default.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers
thereof the Company is in default in the performance and observance of any of
the terms, provisions and conditions hereof, and if the Company shall be in
default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Right of Redemption.
The Securities may be redeemed at the election of the Company, as a
whole or from time to time in part, at any time on or after October __, 1999,
at the Redemption Prices specified in the form of Security hereinbefore set
forth for redemptions, together with accrued interest to the Redemption Date.
Section 1102. Applicability of Article.
Redemption of Securities at the election of the Company, as permitted
or required by any provision of this Indenture, shall be made in accordance
with such provision and this Article.
Section 1103. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant to
Section 1101 shall be evidenced by a Board Resolution. In case of any
redemption at the election of the Company of less than all the Securities, the
Company shall, at least 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date and of the principal amount of Securities
to be redeemed.
Section 1104. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities not previously
called for redemption, by such method as the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $1,000 or any integral multiple thereof) of the principal amount of
Securities of a denomination larger than $1,000.
If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such
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Security shall be deemed (so far as may be) to be the portion selected for
redemption. Securities which have been converted during a selection of
Securities to be redeemed shall be treated by the Trustee as Outstanding for
the purpose of such selection.
The Trustee shall promptly notify the Company and each Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
Section 1105. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 days prior to the Redemption Date, to each
Holder of Securities to be redeemed, at his address appearing in the Security
Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities are to be
redeemed, the identification (and, in the case of partial redemption,
the principal amounts) of the particular Securities to be redeemed,
(4) that, on the Redemption Date, the Redemption Price will
become due and payable upon each such Security to be redeemed and that
interest thereon will cease to accrue on and after said date,
(5) the conversion price, the date on which the right to
convert the principal of the Securities to be redeemed will terminate
and the place or places where such Securities may be surrendered for
conversion, and
(6) the place or places where such Securities are to be
surrendered for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
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Section 1106. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date other than any Securities called for
redemption on that date which have been converted prior to the date of such
deposit.
If any Security called for redemption is converted, any money
deposited with the Trustee or with any Paying Agent or so segregated and held
in trust for the redemption of such Security shall (subject to any right of the
Holder of such Security or any Predecessor Security to receive interest as
provided in the last paragraph of Section 307) be paid to the Company upon
Company Request or, if then held by the Company, shall be discharged from such
trust.
Section 1107. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security
shall be paid by the Company at the Redemption Price, together with accrued
interest to the Redemption Date; provided, however, that instalments of
interest whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Security.
Section 1108. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered
at an office or agency of the Company designated for that purpose pursuant to
Section 1002 (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing), and the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security without service charge,
a new Security or Securities, of any authorized denomination as requested by
such Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.
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Section 1109. Conversion Arrangements on Call for Redemption.
Notwithstanding anything to the contrary contained in this Indenture,
in connection with any redemption of Securities, the Company, by an agreement
with one or more investment bankers or other purchasers, may arrange for such
purchasers to purchase all Securities called for redemption (the "Called
Securities") which are either (i) surrendered for redemption or (ii) not duly
surrendered for redemption or conversion prior to the close of business on the
Redemption Date, and to convert the same into shares of Common Stock, by the
purchasers' depositing with the Trustee (acting as Paying Agent with respect to
the deposit of such amount and as conversion agent with respect to the
conversion of such Called Securities), in trust for the Holders of the Called
Securities, on or prior to the Redemption Date in the manner agreed to by the
Company and such purchasers, an amount sufficient to pay the Redemption Price,
payable by the Company on redemption of such Called Securities. In connection
with any such arrangement for purchase and conversion, the Trustee as Paying
Agent shall pay on or after the Redemption Date such amounts so deposited by
the purchasers in exchange for Called Securities surrendered for redemption
prior to the close of business on the Redemption Date and for all Called
Securities surrendered after such Redemption Date. Notwithstanding anything to
the contrary contained in this Article Eleven, the obligation of the Company to
pay the Redemption Price of such Called Securities shall be satisfied and
discharged to the extent such amount is so paid by such purchasers, provided,
however, that nothing in this Section 1109 shall in any way relieve the Company
of the obligation to pay such Redemption Price on all Called Securities to the
extent such amount is not so paid by said purchasers. For all purposes of this
Indenture, any Called Securities surrendered by the Holders for redemption, and
any Called Securities not duly surrendered for redemption or conversion prior
to the close of business on the Redemption Date, shall be deemed acquired by
such purchasers from such Holders and surrendered by such purchasers for
conversion and shall in all respects be deemed to have been converted, all as
of immediately prior to the close of business on the Redemption Date, subject
to the deposit by the purchasers of the above amount as aforesaid. Nothing in
this Section 1109 shall in any way limit the right of any Holder of a Security
to convert his Security pursuant to the terms of this Indenture any time prior
to the close of business on the Redemption Date.
ARTICLE TWELVE
CONVERSION OF SECURITIES
Section 1201. Conversion Privilege and Conversion Price.
Subject to and upon compliance with the provisions of this Article, at
the option of the Holder thereof, any Security or any portion of the principal
amount thereof which is $1,000 or an integral multiple of $1,000 may be
converted at the principal amount thereof, or of such portion thereof, into
fully paid and nonassessable shares (calculated as to each conversion to the
nearest 1/100 of a share) of Common Stock of the Company, at the conversion
price, determined as hereinafter provided, in effect at the time of conversion.
Such conversion right shall expire at the close of business on
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October __, 2001. In case a Security or portion thereof is called for
redemption, such conversion right in respect of the Security or portion so
called shall expire at the close of business on the Business Day next preceding
the Redemption Date, unless the Company defaults in making the payment due upon
redemption.
The price at which shares of Common Stock shall be delivered upon
conversion (herein called the "conversion price") shall be initially $____ per
share of Common Stock. The conversion price shall be reduced in certain
instances as provided in paragraphs (1), (2), (3), (4), (5), (6) and (9) of
Section 1304 and shall be increased in certain instances as provided in
paragraph (3) of Section 1204.
In case the Company shall, by dividend or otherwise, declare or make a
distribution on its Common Stock referred to in paragraph (4) or (5) of Section
1204, the Holder of each Security, upon the conversion thereof pursuant to this
Article subsequent to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution and prior
to the effectiveness of the conversion price adjustment in respect of such
distribution pursuant to paragraph (4) or (5) of Section 1204, shall also be
entitled to receive for each share of Common Stock into which such Security is
converted, the portion of the evidences of indebtedness, shares of capital
stock, cash and assets so distributed applicable to one share of Common Stock,
provided that, at the election of the Company (whose election shall be
evidenced by a Board Resolution) with respect to all Holders so converting, the
Company may, in lieu of distributing to such Holder any portion of such
distribution not consisting of cash or securities of the Company, pay such
Holder an amount in cash equal to the fair market value thereof (as determined
by the Board of Directors, whose determination shall be conclusive and
described in a Board Resolution). If any conversion of a Security described in
the immediately preceding sentence occurs prior to the payment date for a
distribution to holders of Common Stock which the Holder of the Security so
converted is entitled to receive in accordance with the immediately preceding
sentence, the Company may elect (such election to be evidenced by a Board
Resolution) to distribute to such Holder a due bill for the evidences of
indebtedness, shares of capital stock, cash or assets to which such Holder is
so entitled, provided that such due bill (i) meets any applicable requirements
of the principal national securities exchange or other market on which the
Common Stock is then traded and (ii) requires payment or delivery of such
evidences of indebtedness, shares of capital stock, cash or assets no later
than the date of payment or delivery thereof to holders of Common Stock
receiving such distribution.
Section 1202. Exercise of Conversion Privilege.
In order to exercise the conversion privilege, the Holder of any
Security to be converted shall surrender such Security, duly endorsed or
assigned to the Company or in blank, at any office or agency maintained by the
Company pursuant to Section 1002, accompanied by written notice to the Company
at such office or agency that the Holder elects to convert such Security or, if
less than the entire principal amount thereof is to be converted, the portion
thereof to be converted. Securities surrendered for conversion during the
period from the close of business on any Regular Record Date next preceding any
Interest Payment Date to the opening of business on such Interest Payment Date
shall (except for Securities whose Maturity is prior to such Interest Payment
Date and Securities
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called for redemption on a Redemption Date within such period) be accompanied
by payment in New York Clearing House funds or other funds acceptable to the
Company of an amount equal to the interest payable on such Interest Payment
Date on the principal amount of Securities being surrendered for conversion.
Except as provided in the preceding sentence and subject to the fourth
paragraph of Section 307, no payment or adjustment shall be made upon any
conversion on account of any interest accrued on the Securities surrendered for
conversion or on account of any dividends on the Common Stock issued upon
conversion.
Securities shall be deemed to have been converted immediately prior to
the close of business on the day of surrender of such Securities for conversion
in accordance with the foregoing provisions, and at such time the rights of the
Holders of such Securities as Holders shall cease, and the Person or Persons
entitled to receive the Common Stock issuable upon conversion shall be treated
for all purposes as the record holder or holders of such Common Stock at such
time. As promptly as practicable on or after the conversion date, the Company
shall issue and shall deliver at such office or agency a certificate or
certificates for the number of full shares of Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a share, as
provided in Section 1203.
In the case of any Security which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Security or
Securities of authorized denominations in aggregate principal amount equal to
the unconverted portion of the principal amount of such Security.
Section 1203. Fractions of Shares.
No fractional shares of Common Stock shall be issued upon conversion
of Securities. If more than one Security shall be surrendered for conversion
at one time by the same Holder, the number of full shares which shall be
issuable upon conversion thereof shall be computed on the basis of the
aggregate principal amount of the Securities (or specified portions thereof) so
surrendered. Instead of any fractional share of Common Stock which would
otherwise by issuable upon conversion of any Security or Securities (or
specified portions thereof), the Company shall pay a cash adjustment in respect
of such fraction in an amount equal to the same fraction of the Closing Price
per share of the Common Stock at the close of business on the day of conversion
(or, if such day is not a Trading Day, on the Trading Day immediately preceding
such day).
Section 1204. Adjustment of Conversion Price.
(1) In case the Company shall pay or make a dividend or other
distribution on its Common Stock exclusively in Common Stock or shall pay or
make a dividend or other distribution on any other class of capital stock of
the Company which dividend or distribution includes Common Stock, the
conversion price in effect at the opening of business on the day following the
date fixed for the determination of stockholders entitled to receive such
dividend or other distribution shall be reduced by multiplying such conversion
price by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination
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and the denominator shall be the sum of such number of shares and the total
number of shares constituting such dividend or other distribution, such
reduction to become effective immediately after the opening of business on the
day following the date fixed for such determination. For the purposes of this
paragraph (1), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company but shall include
shares issuable in respect of scrip certificates issued in lieu of fractions of
shares of Common Stock. The Company shall not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the Company.
(2) Subject to the last sentence of paragraph (7) of this Section, in
case the Company shall pay or make a dividend or other distribution on its
Common Stock consisting exclusively of, or shall otherwise issue to all holders
of its Common Stock, rights or warrants entitling the holders thereof to
subscribe for or purchase shares of Common Stock at a price per share less than
the current market price per share (determined as provided in paragraph (8) of
this Section) of the Common Stock on the date fixed for the determination of
stockholders entitled to receive such rights or warrants, the conversion price
in effect at the opening of business on the day following the date fixed for
such determination shall be reduced by multiplying such conversion price by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination
plus the number of shares of Common Stock which the aggregate of the offering
price of the total number of shares of Common Stock so offered for subscription
or purchase would purchase at such current market price and the denominator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of shares of
Common Stock so offered for subscription or purchase, such reduction to become
effective immediately after the opening of business on the day following the
date fixed for such determination. For the purposes of this paragraph (2), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of Common
Stock. The Company shall not issue any rights or warrants in respect of shares
of Common Stock held in the treasury of the Company.
(3) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the conversion price in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately reduced, and,
conversely, in case outstanding shares of Common Stock shall each be combined
into a smaller number of shares of Common Stock, the conversion price in effect
at the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately increased, such
reduction or increase, as the case may be, to become effective immediately
after the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(4) Subject to the last sentence of this paragraph (4), in case the
Company shall, by dividend or otherwise, distribute to all holders of its
Common Stock evidences of its indebtedness, shares of any class of capital
stock, cash or assets (including securities, but excluding any rights or
warrants referred to in paragraph (2) of this Section, excluding any dividend
or distribution paid exclusively
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in cash and excluding any dividend or distribution referred to in paragraph (1)
of this Section), the conversion price shall be reduced so that the same shall
equal the price determined by multiplying the conversion price in effect
immediately prior to the effectiveness of the conversion price reduction
contemplated by this paragraph (4) by a fraction of which the numerator shall
be the current market price per share (determined as provided in paragraph (8)
of this Section) of the Common Stock on the date of such effectiveness less the
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a Board Resolution), on the date of such
effectiveness, of the portion of the evidences of indebtedness, shares of
capital stock, cash and assets so distributed applicable to one share of Common
Stock and the denominator shall be such current market price per share of the
Common Stock, such reduction to become effective immediately prior to the
opening of business on the day following the later of (a) the date fixed for
the payment of such distribution and (b) the date 20 days after the notice
relating to such distribution is given pursuant to Section 1206(a) (such later
date of (a) and (b) being referred to as the "Reference Date"). If the Board
of Directors determines the fair market value of any distribution for purposes
of this paragraph (4) by reference to the actual or when issued trading market
for any securities comprising such distribution, it must in doing so consider
the prices in such market over the same period used in computing the current
market price per share pursuant to paragraph (8) of this Section. For purposes
of this paragraph (4), any dividend or distribution that includes shares of
Common Stock, rights or warrants to subscribe for or purchase shares of Common
Stock or other securities convertible into or exchangeable for shares of Common
Stock shall be deemed instead to be (a) a dividend or distribution of the
evidences of indebtedness, cash, assets or shares of capital stock other than
such shares of Common Stock, such rights or warrants or such other convertible
or exchangeable securities (making any conversion price reduction required by
this paragraph (4)) immediately followed by (b) in the case of such shares of
Common Stock or such rights or warrants, a dividend or distribution thereof
(making any further conversion price reduction required by paragraph (1) or (2)
of this Section, except (i) the Reference Date of such dividend or distribution
as defined in this paragraph (4) shall be substituted as "the date fixed for
the determination of stockholders entitled to receive such distribution" and
"the date fixed for such determination" within the meaning of paragraphs (1)
and (2) of this Section and (ii) any shares of Common Stock included in such
dividend or distribution shall not be deemed "outstanding at the close of
business on the date fixed for such determination" within the meaning of
paragraph (1) of this Section) or (c) in the case of such other convertible or
exchangeable securities, a dividend or distribution of such number of shares of
Common Stock as would then be issuable upon the conversion exchange thereof,
whether or not the conversion or exchange of such securities is subject to any
conditions (making any further conversion price reduction required by paragraph
(1) of this Section, except (i) the Reference Date of such dividend or
distribution as defined in this paragraph (4) shall be substituted as "the date
fixed for the determination of stockholders entitled to receive such
distribution" and "the date fixed for such determination" and (ii) the shares
deemed to constitute such dividend or distribution shall not be deemed
"outstanding at the close of business on the date fixed for such
determination," each within the meaning of paragraph (1) of this Section).
(5) In case the Company shall, by dividend or otherwise, at any time
distribute to all holders of its Common Stock cash (excluding any cash that is
distributed as part of a distribution referred to
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in paragraph (4) of this Section) in an aggregate amount that, together with
(i) the aggregate amount of any other distributions to all holders of its
Common Stock made exclusively in cash within the 12 months preceding the date
of payment of such distribution and in respect of which no conversion price
adjustment pursuant to this paragraph (5) has been made and (ii) the aggregate
of any cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution) of consideration payable in respect of any tender offer by the
Company, or a Subsidiary for all or any portion of the Company's Common Stock
concluded within the 12 months preceding the date of payment of such
distribution and in respect of which no conversion price adjustment pursuant to
paragraph (6) of this Section has been made, exceeds 12.5% of the product of
the current market price per share (determined as provided in paragraph (8) of
this Section) of the Common Stock on the date fixed for stockholders entitled
to receive such distribution times the number of shares of Common Stock
outstanding on such date, the conversion price shall be reduced so that the
same shall equal the price determined by multiplying the conversion price in
effect immediately prior to the effectiveness of the conversion price reduction
contemplated by this paragraph (5) by a fraction of which the numerator shall
be the current market price per share (determined as provided in paragraph (8)
of this Section) of the Common Stock on the date of such effectiveness less the
amount of cash so distributed applicable to one share of Common Stock and the
denominator shall be such current market price per share of the Common Stock,
such reduction to become effective immediately prior to the opening of business
on the later of (a) the day following the date fixed for the payment of such
distribution and (b) the date 20 days after the notice relating to such
distribution is given pursuant to Section 1206(a).
(6) In case a tender offer made by the Company or any Subsidiary for
all or any portion of the Company's Common Stock shall expire and such tender
offer shall involve an aggregate consideration having a fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) on the last time (the "Expiration Time")
tenders may be made pursuant to such tender offer (as it may be amended) that,
together with (i) the aggregate of the cash plus the fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution), as of the expiration of such tender
offer, of consideration payable in respect of any tender offer by the Company
or a Subsidiary for all or any portion of the Company's Common Stock expiring
within the 12 months preceding the expiration of such tender offer and in
respect of which no conversion price adjustment pursuant to this paragraph (6)
has been made and (ii) the aggregate amount of any distributions to all holders
of the Company's Common Stock made exclusively in cash within the 12 months
preceding the expiration of such tender offer and in respect of which no
conversion price adjustment pursuant to paragraph (5) of this Section has been
made, exceeds 12.5% of the product of the current market price per share
(determined as provided in paragraph (8) of this Section) of the Common Stock
on the Expiration Time times the number of shares of Common Stock outstanding
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(including any tendered shares) on the Expiration Time, the conversion price
shall be reduced so that the same shall equal the price determined by
multiplying the conversion price in effect immediately prior to the Expiration
Time by a fraction of which the numerator shall be (i) the product of the
current market price per share (determined as provided in paragraph (8) of this
Section) of the Common Stock on the Expiration Time times the number of shares
of Common Stock outstanding (including any tendered shares) on the Expiration
Time minus (ii) the fair market value (determined as aforesaid) of the
aggregate consideration payable to stockholders based on the acceptance (up to
any maximum specified in the terms of the tender offer) of all shares validly
tendered and not withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the "Purchased Shares")
and the denominator shall be the product of (i) such current market price per
share on the Expiration Time times (ii) such number of outstanding shares on
the Expiration Time less the number of Purchased Shares, such reduction to
become effective immediately prior to the opening of business on the day
following the Expiration Time.
(7) The reclassification of Common Stock into securities including
other than Common Stock (other than any reclassification upon a consolidation
or merger to which Section 1211 applies) shall be deemed to involve (a) a
distribution of such securities other than Common Stock to all holders of
Common Stock (and the effective date of such reclassification shall be deemed
to be "the Reference Date" within the meaning of paragraph (4) of this
Section), and (b) a subdivision or combination, as the case may be, of the
number of shares of Common Stock outstanding immediately prior to such
reclassification into the number of shares of Common Stock outstanding
immediately thereafter (and the effective date of such reclassification shall
be deemed to be "the day upon which such subdivision becomes effective" or "the
day upon which such combination becomes effective", as the case may be, and
"the day upon which such subdivision or combination becomes effective" within
the meaning of paragraph (3) of this Section). Rights or warrants issued by
the Company to all holders of its Common Stock entitling the holders thereof to
subscribe for or purchase shares of Common Stock, which rights or warrants (i)
are deemed to be transferred with such shares of Common Stock, (ii) are not
exercisable and (iii) are also issued in respect of future issuances of Common
Stock, in each case in clauses (i) through (iii) until the occurrence of a
specified event or events ("Trigger Event"), shall for purposes of this Section
1204 not be deemed issued until the occurrence of the earliest Trigger Event.
(8) For the purpose of any computation under this paragraph and
paragraphs (2), (4) and (5) of this Section, the current market price per share
of Common Stock on any date shall be deemed to be the average of the daily
Closing Prices for the 5 consecutive Trading Days selected by the Company
commencing not more than 20 Trading Days before, and ending not later than, the
date in question provided, however, that (i) if the "ex" date for any event
(other than the issuance or distribution requiring such computation) that
requires an adjustment to the conversion price pursuant to paragraph (1), (2),
(3), (4), (5) or (6) above occurs on or after the 20th Trading Day prior to the
day in question and prior to the "ex" date for the issuance or distribution
requiring such computation, the Closing Price for each Trading Day prior to the
"ex" date for such other event shall be adjusted by multiplying such Closing
Price by the same fraction by which the conversion price is so
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required to be adjusted as a result of such other event, (ii) if the "ex" date
for any event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the conversion price pursuant to
paragraph (1), (2), (3), (4), (5) or (6) above occurs on or after the "ex" date
for the issuance or distribution requiring such computation and on or prior to
the day in question, the Closing Price for each Trading Day on and after the
"ex" date for such other event shall be adjusted by multiplying such Closing
Price by the reciprocal of the fraction by which the conversion price is so
required to be adjusted as a result of such other event, and (iii) if the "ex"
date for the issuance or distribution requiring such computation is on or prior
to the day in question, after taking into account any adjustment required
pursuant to clause (ii) of this proviso, the Closing Price for each Trading Day
on or after such "ex" date shall be adjusted by adding thereto the amount of
any cash and the fair market value on the day in question (as determined by the
Board of Directors in a manner consistent with any determination of such value
for purposes of paragraph (4) or (5) of this Section, whose determination shall
be conclusive and described in a Board Resolution) of the evidences of
indebtedness, shares of capital stock or assets being distributed applicable to
one share of Common Stock as of the close of business on the day before such
"ex" date. For the purpose of any computation under paragraph (6) of this
Section, the current market price per share of Common Stock on any date shall
be deemed to be the average of the daily Closing Prices for the 5 consecutive
Trading Days selected by the Company commencing on or after the latest (the
"Commencement Date") of (i) the date 20 Trading Days before the date in
question, (ii) the date of commencement of the tender offer requiring such
computation and (iii) the date of the last amendment, if any, of such tender
offer involving a change in the maximum number of shares for which tenders are
sought or a change in the consideration offered, and ending not later than the
Expiration Time of such tender offer; provided, however, that if the "ex" date
for any event (other than the tender offer requiring such computation) that
requires an adjustment to the conversion price pursuant to paragraph (1), (2),
(3), (4), (5) or (6) above occurs on or after the Commencement Date and prior
to the Expiration Time for the tender offer requiring such computation, the
Closing Price for each Trading Day prior to the "ex" date, for such other event
shall be adjusted by multiplying such Closing Price by the same fraction by
which the conversion price is so required to be adjusted as a result of such
other event. For purposes of this paragraph, the term "ex" date, (i) when used
with respect to any issuance or distribution, means the first date on which the
Common Stock trades regular way on the relevant exchange or in the relevant
market from which the Closing Price was obtained without the right to receive
such issuance or distribution, (ii) when used with respect to any subdivision
or combination of shares of Common Stock, means the first date on which the
Common Stock trades regular way on such exchange or in such market after the
time at which such subdivision or combination becomes effective, and (iii) when
used with respect to any tender offer means the first date on which the Common
Stock trades regular way on such exchange or in such market after the
Expiration Time of such tender offer.
(9) The Company may make such reductions in the conversion price, in
addition to those required by paragraphs (1), (2), (3), (4), (5) and (6) of
this Section, as it considers to be advisable in order that any event treated
for Federal income tax purposes as a dividend of stock or stock rights shall
not be taxable to the recipients.
(10) No adjustment in the conversion price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
conversion price; provided, however, that any adjustments which by reason of
this paragraph (10) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.
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(11) Notwithstanding any other provision of this Section 1204, no
adjustment to the conversion price shall reduce the conversion price below the
then par value per share of the Common Stock, and any such purported adjustment
shall instead reduce the conversion price to such par value. The Company
hereby covenants not to take any action (i) to increase the par value per share
of the Common Stock or (ii) that would or does result in any adjustment in the
conversion price that, if made without giving effect to the previous sentence,
would cause the conversion price to be less than the then par value per share
of the Common Stock; provided, that the covenant in this sentence shall be
suspended if within 10 days of determining in good faith that such action would
result in such adjustment (but not later than the Business Day following the
effectiveness of such adjustment), the Company gives a notice under Section
1103 and effects the redemption referred to in such notice on the Redemption
Date referred to therein, but shall be retroactively reinstated if such notice
or redemption does not occur.
Section 1205. Notice of Adjustments of Conversion Price.
Whenever the conversion price is adjusted as herein provided:
(a) the Company shall compute the adjusted conversion price
in accordance with Section 1204 and shall prepare a certificate signed
by the Treasurer of the Company setting forth the adjusted conversion
price and showing in reasonable detail the facts upon which such
adjustment is based, and such certificate shall forthwith be filed
(with a copy to the Trustee) at each office or agency maintained for
the purpose of conversion of Securities pursuant to Section 1002; and
(b) a notice stating that the conversion price has been
adjusted and setting forth the adjusted conversion price shall
forthwith be required, and as soon as practicable after it is
required, such notice shall be mailed by the Company to all Holders at
their last addresses as they shall appear in the Security Register.
Section 1206. Notice of Certain Corporate Action.
In case:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable (i) otherwise than
exclusively in cash or (ii) exclusively in cash in an amount that
would require a conversion price adjustment pursuant to paragraph (5)
of Section 1204; or
(b) the Company shall authorize the granting to the holders
of its Common Stock of rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any other rights
(excluding employee stock options); or
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(c) of any reclassification of the Common Stock of the
Company (other than a subdivision or combination of its outstanding
shares of Common Stock), or of any consolidation or merger to which
the Company is a party and for which approval of any stockholders of
the Company is required, or of the sale or transfer of all or
substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
(e) the Company or any Subsidiary of the Company shall
commence a tender offer for all or a portion of the Company's
outstanding shares of Common Stock (or shall amend any such tender
offer);
then the Company shall cause to be filed at each office or agency maintained
for the purpose of conversion of Securities pursuant to Section 1002, and shall
cause to be mailed to all Holders at their last addresses as they shall appear
in the Security Register, at least 20 days (or 10 days in any case specified in
clause (a), (b) or (e) above) prior to the applicable record, effective or
expiration date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution or
granting of rights or warrants, or, if a record is not to be taken, the date as
of which the holders of Common Stock of record to be entitled to such dividend,
distribution, rights or warrants are to be determined, or (y) the date on which
such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled
to exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up, or (z) the date on which such tender
offer commenced, the date on which such tender offer is scheduled to expire
unless extended, the consideration offered and the other material terms thereof
(or the material terms of any amendment thereto).
Section 1207. Company to Reserve Common Stock.
The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of Securities, the full number of shares of
Common Stock then issuable upon the conversion of all outstanding Securities.
Section 1208. Taxes on Conversions.
The Company will pay any and all taxes that may be payable in respect
of the issue or delivery of shares of Common Stock on conversion of Securities
pursuant hereto. The Company shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that of the Holder of
the Security or Securities to be converted, and no such issue or delivery shall
be made unless and until the Person
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requesting such issue has paid to the Company the amount of any such tax, or
has established to the satisfaction of the Company that such tax has been paid.
Section 1209. Covenant as to Common Stock.
The Company covenants that all shares of Common Stock which may be
issued upon conversion of Securities will upon issue be fully paid and
non-assessable and, except as provided in Section 1208, the Company will pay
all taxes, liens and charges with respect to the issue thereof.
Section 1210. Cancellation of Converted Securities.
All Securities delivered for conversion shall be delivered to the
Trustee to be canceled by or at the direction of the Trustee, which shall
dispose of the same as provided in Section 309.
Section 1211. Provisions in Case of Consolidation, Merger or Sale of Assets.
In case of any consolidation of the Company with, or merger of the
Company into, any other Person, any merger of another Person into the Company
(other than a merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock of the Company)
or any sale or transfer of all or substantially all of the assets of the
Company, the Person formed by such consolidation or resulting from such merger
or which acquires such assets, as the case may be, shall execute and deliver to
the Trustee a supplemental indenture providing that the Holder of each Security
then outstanding and such Person shall have the right thereafter, during the
period such Security shall be convertible as specified in Section 1201, to
convert such Security only into the kind and amount of securities, cash and
other property receivable, if any, upon such consolidation, merger, sale or
transfer by a holder of the number of shares of Common Stock of the Company
into which such Security might have been converted immediately prior to such
consolidation, merger, sale or transfer, assuming such holder of Common Stock
of the Company (i) is not a Person with which the Company consolidated or into
which the Company merged or which merged into the Company or to which such sale
or transfer was made, as the case may be ("constituent Person"), or an
Affiliate of a constituent Person and (ii) failed to exercise his rights of
election, if any, as to the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer (provided
that if the kind or amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer is not the same for each
share of Common Stock of the Company held immediately prior to such
consolidation, merger, sale or transfer by other than a constituent Person or
an Affiliate thereof and in respect of which such rights of election shall not
have been exercised ("non-electing share"), then for the purpose of this
Section the kind and amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer by each non-electing share
shall be deemed to be the kind and amount so receivable per share by a
plurality of the non-electing shares). Such supplemental indenture shall
provide for adjustments which, for events subsequent to the effective date of
such supplemental indenture, shall be as nearly equivalent as may be
practicable to the adjustments
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provided for in this Article. The above provisions of this Section shall
similarly apply to successive consolidations, mergers, sales or transfers.
ARTICLE THIRTEEN
SUBORDINATION OF SECURITIES
Section 1301. Agreements to Subordinate by Company.
The Company, for itself, its successors and assigns, covenants and
agrees, and each Holder of Securities, by his acceptance thereof, likewise
covenants and agrees, that payment by the Company of the principal of and
premium, if any, and interest on each and all of the Securities, and payment in
respect of any repurchase of the Securities pursuant to Section 1401, is hereby
expressly subordinated, to the extent and in the manner hereinafter set forth,
in right of payment to the prior payment in full of all Senior Indebtedness of
the Company.
Section 1302. Distribution on Dissolution, Liquidation and Reorganization;
Subrogation.
Upon any distribution of assets of the Company upon any dissolution,
winding up, liquidation or reorganization of the Company, whether in
bankruptcy, insolvency, reorganization or receivership proceedings or upon an
assignment for the benefit of creditors or any other marshalling of the assets
and liabilities of the Company or otherwise (subject to the power of a court of
competent jurisdiction to make other equitable provision reflecting the rights
conferred in this Indenture upon the Senior Indebtedness of the Company, and
the holders thereof, with respect to the Securities and the holders thereof, by
a lawful plan of reorganization under applicable bankruptcy law),
(a) the holders of all Senior Indebtedness of the Company
shall be entitled to receive payment in full of the principal thereof,
premium, if any, and the interest due thereon before the Holders of
the Securities are entitled to receive any payment upon the principal
of or premium, if any, or interest on indebtedness evidenced by the
Securities; and
(b) any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, to
which the Holders of the Securities or the Trustee would be entitled
except for the provisions of this Article Thirteen shall be paid by
the liquidating trustee or agent or other person making such payment
or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the holders of Senior
Indebtedness of the Company or its representative or representatives
or to the trustee or trustees under any indenture under which any
instruments evidencing any of such Senior Indebtedness of the Company
may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of the principal of, premium, if any, and
interest on the Senior Indebtedness of the Company held or represented
by each, to the extent necessary to make payment in full of all Senior
Indebtedness of the Company remaining unpaid, after
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giving effect to any concurrent payment or distribution to the holders
of such Senior Indebtedness of the Company; and
(c) in the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, shall be received
by the Holders of the Securities or by the Trustee before all Senior
Indebtedness of the Company is paid in full, such payment or
distribution shall be paid over to the holders of such Senior
Indebtedness of the Company or its representative or representatives
or to the trustee or trustees under any indenture under which any
instruments evidencing any of such Senior Indebtedness of the Company
may have been issued, ratably as aforesaid, for application to the
payment of all Senior Indebtedness of the Company remaining unpaid
until all such Senior Indebtedness of the Company shall have been paid
in full, after giving effect to any concurrent payment or distribution
to the holders of such Senior Indebtedness of the Company.
Subject to the payment in full of all Senior Indebtedness of the
Company the Holders of the Securities shall be subrogated to the rights of the
holders of Senior Indebtedness of the Company to receive payments or
distributions of cash, property or securities of the Company applicable to
Senior Indebtedness of the Company until the principal of, premium, if any, and
interest on the Securities shall be paid in full and no such payments or
distributions to the Holders of the Securities of cash, property or securities
otherwise distributable to the Senior Indebtedness of the Company shall, as
between the Company, its creditors other than the holders of Senior
Indebtedness of the Company and the Holders of the Securities be deemed to be a
payment by the Company to or on account of the Securities. It is understood
that the provisions of this Article Thirteen are and are intended solely for
the purpose of defining the relative rights of the Holders of the Securities,
on the one hand, and the holders of Senior Indebtedness of the Company, on the
other hand. Nothing contained in this Article Thirteen or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Indebtedness of the
Company and the Holders of the Securities, the obligations of the Company,
which are unconditional and absolute, to pay to the Holders of the Securities
the principal of, premium, if any, and interest on the Securities as and when
the same shall become due and payable in accordance with their terms, or to
affect the relative rights of the Holders of the Securities and creditors of
the Company other than the holders of Senior Indebtedness of the Company nor
shall anything herein or in the Securities prevent the Trustee or the Holder of
any Security from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article Thirteen of the holders of Senior Indebtedness of the Company in
respect of cash, property or securities of the Company received upon the
exercise of any such remedy. Upon any payment or distribution of assets of the
Company referred to in this Article Thirteen, the Trustee, subject to the
provisions of Section 601, shall be entitled to rely upon a certificate of the
liquidating trustee or agent or other person making any distribution to the
Trustee for the purpose of ascertaining the persons entitled to participate in
such distribution, the holders of Senior Indebtedness of the Company and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article Thirteen.
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The Trustee, however, shall not be deemed to owe any fiduciary duty to
the holders of Senior Indebtedness of the Company. The Trustee shall not be
liable to any such holder if it shall pay over or distribute to or on behalf of
Holders of Securities or the Company moneys or assets to which any holder of
Senior Indebtedness of the Company shall be entitled by virtue of this Article
Thirteen.
If the Trustee or any Holder of Securities does not file a proper
claim or proof of debt in the form required in any proceeding referred to above
prior to 30 days before the expiration of the time to file such claim in such
proceeding, then the holder of any Senior Indebtedness of the Company is hereby
authorized, and has the right, to file an appropriate claim or claims for or on
behalf of such Holder of Securities.
Section 1303. No Payment in Event of Default on Senior Indebtedness.
No payment by the Company on account of principal, premium, if
any, or interest on the Securities, and no payment in respect of the Redemption
Price or a repurchase of the Securities pursuant to Section 1401 shall be made
unless full payment of amounts then due for principal, premium, if any, and
interest on Senior Indebtedness of the Company has been made or duly provided
for in money or money's worth, other than a payment under Article Eleven if, at
the time of mailing of notice of redemption pursuant to Section 1105 relating
to such payment, there is no event of default on or under Senior Indebtedness
of the Company known to the Trustee.
Section 1304. Payments Permitted.
Nothing contained in this Indenture or in any of the Securities shall
(a) affect the obligation of the Company to make, or prevent the Company from
making, at any time except as provided in Sections 1302 and 1303, payments of
principal of, premium, if any, or interest on the Securities, or (b) prevent
the application by the Trustee of any moneys deposited with it hereunder to the
payment of or on account of the principal of, premium, if any, or interest on
the Securities, unless the Trustee shall have received at its Corporate Trust
Office written notice of any event prohibiting the making
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of such payment more than two Business Days prior to the date fixed for such
payment except as provided in Section 1303 with respect to payments under
Article Eleven.
Section 1305. Authorization to Trustee to Effect Subordination.
Each Holder of Securities by his acceptance thereof authorizes and
directs the Trustee in his behalf to take such action as may be necessary or
appropriate to effectuate the subordination as provided in this Article
Thirteen and appoints the Trustee his attorney-in-fact for any and all such
purposes.
Section 1306. Notices to Trustee.
Notwithstanding the provisions of this Article or any other provisions
of this Indenture, neither the Trustee nor any Paying Agent (other than the
Company) shall be charged with knowledge of the existence of any Senior
Indebtedness of the Company or of any event which would prohibit the making of
any payment of moneys to or by the Trustee or such Paying Agent, unless and
until the Trustee or such Paying Agent shall have received (in the case of the
Trustee, at its Corporate Trust Office) written notice thereof from the Company
or from the holder of any Senior Indebtedness of the Company or from the
trustee for any such holder, together with proof satisfactory to the Trustee of
such holding of Senior Indebtedness of the Company or of the authority of such
trustee; provided, however, that if at least two Business Days prior to the
date upon which by the terms hereof any such moneys may become payable for any
purpose (including, without limitation, the payment of either the principal of,
premium, if any, or interest on any Security) the Trustee shall not have
received with respect to any such moneys the notice provided for in this
Section 1306, then, anything herein contained to the contrary notwithstanding,
the Trustee shall have the full power and authority to receive such moneys and
to apply the same to the purpose for which they were received, and shall not be
affected by any notice to the contrary, which may be received by it on or after
such two Business Days prior to such date. The Trustee shall be entitled to
rely on the delivery to it of a written notice by a person representing himself
to be a holder of Senior Indebtedness of the Company (or a trustee on behalf of
such holder) to establish that such a notice has been given by a holder of
Senior Indebtedness of the Company or a trustee on behalf of any such holder.
In the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any person as a holder of Senior
Indebtedness of the Company to participate in any payment or distribution
pursuant to this Article Fourteen, the Trustee may request such person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness of the Company held by such person, the extent to which
such person is entitled to participate in such payment or distribution and any
other facts pertinent to the rights of such person under this Article Fourteen
and, if such evidence is not furnished, the Trustee may defer any payment to
such person pending judicial determination as to the right of such person to
receive such payment.
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Section 1307. Trustee as Holder of Senior Indebtedness of Company.
The Trustee shall be entitled to all the rights set forth in this
Article Thirteen in respect of any Senior Indebtedness of the Company at any
time held by it to the same extent as any other holder of Senior Indebtedness
of the Company and nothing in Section 613 or elsewhere in this Indenture shall
be construed to deprive the Trustee of any of its rights as such holder.
Section 1308. Modification of Terms of Senior Indebtedness of Company.
Any renewal or extension of the time of payment of any Senior
Indebtedness of the Company or the exercise by the holders of Senior
Indebtedness of the Company of any of their rights under any instrument
creating or evidencing Senior Indebtedness of the Company, including without
limitation the waiver of default thereunder, may be made or done all without
notice to or assent from the Holders of the Securities or the Trustee.
No compromise, alteration, amendment, modification, extension, renewal
or other change of, or waiver, consent or other action in respect of, any
liability or obligation under or in respect of, or of any of the terms,
covenants or conditions of any indenture or other instrument under which any
Senior Indebtedness of the Company is outstanding or of such Senior
Indebtedness of the Company, whether or not such release is in accordance with
the provisions of any applicable document, shall in any way alter or affect any
of the provisions of this Article Thirteen or of the Securities relating to the
subordination thereof.
ARTICLE FOURTEEN
RIGHT TO REQUIRE REPURCHASE
Section 1401. Right to Require Repurchase.
In the event that there shall occur a Repurchase Event (as defined in
Section 1406), then each Holder shall have the right, at such Holder's option
to require the Company to purchase, and upon the exercise of such right, the
Company shall, subject to the provisions of Section 1303, purchase, all or any
part of such Holder's Securities on the date (the "Repurchase Date") that is 75
days after the date the Company gives notice of the Repurchase Event as
contemplated in Section 1402(a) at a price (the "Repurchase Price") equal to
100% of the principal amount thereof, together with accrued and unpaid interest
to the Repurchase Date. Such right to require the repurchase of Securities
shall not continue after a discharge of the Company from its obligations with
respect to the Securities in accordance with Article Four.
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Section 1402. Notice; Method of Exercising Repurchase Right.
(a) On or before the 15th day after the Repurchase Event, the
Company or, at the request of the Company, the Trustee (in the name and at the
expense of the Company) shall give notice of the occurrence of the Repurchase
Event and of the repurchase right set forth herein arising as a result thereof
by first-class mail, postage prepaid, to each Holder of the Securities at such
Holder's address appearing in the Security Register. The Company shall also
deliver a copy of such notice of a repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(1) the Repurchase Date,
(2) the date by which the repurchase right must be exercised,
(3) the Repurchase Price, and
(4) the instructions a Holder must follow to exercise a
repurchase right.
No failure of the Company to give the foregoing notice shall limit any
Holder's right to exercise a repurchase right. The Trustee shall have no
affirmative obligation to determine if there shall have occurred a Repurchase
Event.
(b) To exercise a repurchase right, a Holder shall deliver to the
Company (or an agent designated by the Company for such purpose in the notice
referred to in (a) above) and to the Trustee on or before the close of business
on the Business Day next preceding the Repurchase Date (i) written notice of
the Holder's exercise of such right, which notice shall set forth the name of
the Holder, the principal amount of the Security or Securities (or portion of a
Security) to be repurchased, and a statement that an election to exercise the
repurchase right is being made thereby, and (ii) the Security or Securities
with respect to which the repurchase right is being exercised, duly endorsed
for transfer to the Company. Such written notice shall be irrevocable. If the
Repurchase Date falls between any Regular Record Date and the next succeeding
Interest Payment Date, Securities to be repurchased must be accompanied by
payment from the Holder of an amount equal to the interest thereon which the
registered Holder thereof is to receive on such Interest Payment Date.
(c) In the event a repurchase right shall be exercised in
accordance with the terms hereof, the Company shall on the Repurchase Date pay
or cause to be paid in cash to the Holder thereof the Repurchase Price of the
Security or Securities as to which the repurchase right had been exercised.
74
<PAGE> 83
Section 1403. Deposit of Repurchase Price.
Prior to the Repurchase Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Repurchase Price of the Securities which are to be
repurchased on the Repurchase Date.
Section 1404. Securities Not Repurchased on Repurchase Date.
If any Security surrendered for repurchase shall not be so repurchased
on the Repurchase Date, the principal shall, until paid, bear interest to the
extent permitted by applicable law from the Repurchase Date at a rate per annum
borne by such Security.
Section 1405. Securities Repurchased in Part.
Any Security which is to be repurchased only in part shall be
surrendered at any office or agency of the Company designated for that purpose
pursuant to Section 1002 (with, if the Company or the Trustee so requires, due
endorsement by, or written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities, of any authorized denomination as
requested by such Holder, in aggregate principal amount equal to and in
exchange for the unrepurchased portion of the principal of the Security so
surrendered.
Section 1406. Certain Definitions.
For purposes of this Article:
(a) "Acquiring Person" means any person or group (as defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, and the
rules and regulations promulgated thereunder as in effect on the date
of this Indenture (the "Exchange Act")) which, together with all
affiliates and associates (as defined in Rule 12b-2 under the Exchange
Act) becomes the owner or beneficial owner of shares of the Company
having more than 50% of the total number of votes that may be cast for
the election of directors of the Company.
(b) "Change in Control" means any event by which an Acquiring
Person has become such (other than by way of a merger or consolidation
effected in accordance with Article Nine hereof if within 7 days after
the occurrence of such merger or consolidation, no Person which may
have become an Acquiring Person continues to be an Acquiring Person).
(c) A "Repurchase Event" shall have occurred if (i) a Change
in Control occurs on or prior to the Maturity of the Securities and
(ii) on any date which occurs during the period commencing 90 days
prior to the public disclosure of an intent to effect such Change in
75
<PAGE> 84
Control and ending 90 days after the occurrence of such Change in
Control, the rating of the Securities is withdrawn or downgraded to
lower than BBB- by Standard & Poor's Corporation ("S&P") or withdrawn
or downgraded to lower than Baa3 by Moody's Investors Service, Inc.
("Moody's"), and if such withdrawal or downgrading occurs prior to
such public disclosure, the rating remains withdrawn by S&P or Moody's
respectively, on the date of such public disclosure or the rating
assigned to the Securities by S&P or Moody's on the date of such
public disclosure remains lower than BBB- or lower than Baa3,
respectively.
* * * * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
76
<PAGE> 85
In Witness Whereof, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
THE HOME DEPOT, INC.
By
------------------------------------
Name:
Title:
Attest:
- ----------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By
------------------------------------
Name:
Title:
Attest:
- ----------------------------------
Name:
Title:
77
<PAGE> 86
State of Georgia }
County of Cobb } ss.:
On the ____ day of October, 1996, before me personally came
____________, to me known, who, being by me duly sworn, did depose and say that
he is _______________ of The Home Depot, Inc., one of the corporations
described in and which executed the foregoing instrument; that he knows the
seals of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Boards of Directors
of said corporations, and that he signed his name thereto by like authority.
-----------------------------
State of Illinois }
County of Cook } ss.:
On the ____ day of October, 1996, before me personally came
__________________, to me known, who, being by me duly sworn, did depose and
say that he is a ____________ of The First National Bank of Chicago, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
-----------------------------
78
<PAGE> 1
EXHIBIT 5.1
[Letterhead of King & Spalding]
September 24, 1996
The Home Depot, Inc.
2727 Paces Ferry Road
Atlanta, Georgia 30339-4089
Re: Registration of ___% Convertible
Subordinated Notes Due 2001
Ladies and Gentlemen:
We have acted as counsel for The Home Depot, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933 (the "Act"), and the rules and regulations
of the Securities and Exchange Commission (the "Commission") thereunder, of
$920,000,000 of ____% Convertible Subordinated Notes Due 2001 of the Company
(the "Securities"), to be issued pursuant to an Indenture to be entered into
between the Company and The First National Bank of Chicago, as Trustee (the
"Indenture"), said Securities being convertible into the Company's Common
Stock, $.05 par value (the "Common Stock").
In so acting, we have examined and relied upon the accuracy of
original, certified, conformed or photographic copies of such records,
agreements, certificates and other documents as we have deemed necessary or
appropriate to enable us to render the opinions set forth below. In all such
examinations, we have assumed the genuineness of signatures on original
documents and the conformity to such original documents of all copies submitted
to us as certified, conformed or photographic copies and, as to certificates
of public officials, we have assumed the same to have been properly given and
to be accurate.
Based on the foregoing, we are of the opinion that:
(i) upon the authorization, execution and delivery of the
Indenture, the Indenture will constitute the valid and
binding obligation of the Company enforceable against the
Company in accordance with its terms;
(ii) the Securities, when duly authorized by the Company, executed
on behalf of the Company, authenticated by the Trustee under
the Indenture and delivered in accordance with the Indenture,
will be validly issued, will constitute valid and binding
obligations of the Company enforceable against the Company in
accordance with their terms and
<PAGE> 2
The Home Depot, Inc.
September 24, 1996
Page 2
- --------------
will be entitled to the benefits of the Indenture in
accordance with their terms and the terms of the Indenture; and
(iii) the shares of Common Stock of the Company when issued upon
conversion of the Securities in accordance with the Indenture
will be validly issued and fully paid and nonassessable.
The opinions set forth above are subject, as to enforcement, to the
effect of bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the rights and remedies of creditors generally and to general
principles of equity whether applied by a court of law or equity.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption
"Validity of Notes" in the Prospectus that forms a part thereof.
Very truly yours,
/s/ King & Spalding
-----------------------
KING & SPALDING
<PAGE> 1
EXHIBIT 12.1
THE HOME DEPOT, INC.
CALCULATION OF THE FIXED CHARGE COVERAGE RATIO
FISCAL YEARS 1991 THROUGH 1995 AND SIX MONTHS ENDED SECOND QUARTER 1995 AND 1996
(Dollars in Thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
SECOND QUARTER SECOND QUARTER
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- ---------- ---------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Income.............. $249,150 $362,863 $457,401 $ 604,501 $ 731,523 $370,652 $465,193
Add Back:
Income Taxes............ 146,970 213,110 279,470 375,250 463,780 231,060 299,930
Minority Interest....... (381) (30) (332) 3,651
1/3 Portion of Rent.... 29,250 36,859 45,751 54,794 66,570 32,976 36,271
Net Interest............ 12,348 41,010 30,714 35,949 4,148 3,454 2,734
-------- -------- ---------- ---------- -------- -------- --------
188,568 290,979 355,935 465,612 534,468 267,158 342,586
Earnings Before Income
Taxes, Leased Interest
and Interest Expense
Net of Interest Cap... $437,718 $653,842 $813,336 $1,070,113 $1,265,991 $637,810 $807,779
======== ======== ========== ========== ======== ======== ========
Fixed Charges:
Net Interest.......... 12,348 41,010 30,714 35,949 4,148 3,454 2,734
Interest Cap.......... 11,676 7,549 13,912 17,559 20,767 8,805 12,188
-------- -------- ---------- ---------- -------- -------- --------
Gross Interest Expense
(A)................... 24,024 48,559 44,626 53,508 24,915 12,259 14,922
Rent Expense............ 87,750 110,577 137,252 164,381 199,710 98,927 108,812
@ 1/3 Deemed Interest
(B)................. 29,250 36,859 45,751 54,794 66,570 32,976 36,271
-------- -------- ---------- ---------- -------- -------- --------
Total Fixed Charges (A +
B).................... $ 53,274 $ 85,418 $ 90,377 $ 108,302 $ 91,485 $ 45,235 $ 51,193
======== ======== ========== ========== ======== ======== ========
Ratio of Earnings to
Fixed Charges......... 8.216 7.655 8.999 9.881 13.838 14.100 15.779
======== ======== ========== ========== ======== ======== ========
</TABLE>
<PAGE> 1
EXHIBIT 23.2
[KPMG PEAT MARWICK LLP LETTERHEAD]
The Board of Directors
The Home Depot, Inc.
We consent to the use of our reports incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG PEAT MARWICK LLP
Atlanta, Georgia
September 24, 1996
<PAGE> 1
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Frank Borman, a director of The Home
Depot, Inc., a Delaware corporation (the "Company"), do constitute and
appoint Bernard Marcus and Ronald M. Brill, jointly and severally, or any one
of them, my true and lawful attorneys-in-fact, each with full power of
substitution, for me in any and all capacities, to (i) sign, pursuant to the
requirements of the Securities Act of 1933, the Registration Statement on Form
S-3 for The Home Depot, Inc., and to file the same on or about September 24,
1996, with the Securities and Exchange Commission, together with all exhibits
thereto and other documents in connection therewith, including such as are
incorporated therein by reference, (ii) to sign on my behalf and in my stead,
in any and all capacities, any amendments or supplements to said Registration
Statement (including any related registration statement filed pursuant to Rule
462(b) of the Securities Act of 1933), incorporating such changes as any of the
said attorneys-in-fact deems appropriate, in the matter of the proposed 1996
public offering by the Company of its Convertible Subordinated Notes, and (iii)
to sign on my behalf and in my name and stead any other document deemed
necessary or appropriate by any of them in connection with such offering,
hereby ratifying and confirming all that each of said attorneys-in-fact deems
appropriate, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 23rd day of
September, 1996.
/s/ Frank Borman
----------------------------
Frank Borman
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Johnnetta B. Cole, a director of The
Home Depot, Inc., a Delaware corporation (the "Company"), do constitute and
appoint Bernard Marcus and Ronald M. Brill, jointly and severally, or any one
of them, my true and lawful attorneys-in-fact, each with full power of
substitution, for me in any and all capacities, to (i) sign, pursuant to the
requirements of the Securities Act of 1933, the Registration Statement on Form
S-3 for The Home Depot, Inc., and to file the same on or about September 24,
1996, with the Securities and Exchange Commission, together with all exhibits
thereto and other documents in connection therewith, including such as are
incorporated therein by reference, (ii) to sign on my behalf and in my
stead, in any and all capacities, any amendments or supplements to said
Registration Statement (including any related registration statement filed
pursuant to Rule 462(b) of the Securities Act of 1933), incorporating such
changes as any of the said attorneys-in-fact deems appropriate, in the matter
of the proposed 1996 public offering by the Company of its Convertible
Subordinated Notes, and (iii) to sign on my behalf and in my name and stead any
other document deemed necessary or appropriate by any of them in connection
with such offering, hereby ratifying and confirming all that each of said
attorneys-in-fact deems appropriate, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 23rd day of
September, 1996.
/s/ Johnnetta B. Cole
----------------------------------
Johnnetta B. Cole
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Berry R. Cox, a director of The Home
Depot, Inc., a Delaware corporation (the "Company), do constitute and appoint
Bernard Marcus and Ronald M. Brill, jointly and severally, or any one of them,
my true and lawful attorneys-in-fact, each with full power of substitution, for
me in any and all capacities, to (i) sign, pursuant to the requirements of the
Securities Act of 1933, the Registration Statement on Form S-3 for The Home
Depot, Inc., and to file the same on or about September 24, 1996, with the
Securities and Exchange Commission, together with all exhibits thereto and
other documents in connection therewith, including such as are incorporated
therein by reference, (ii) to sign on my behalf and in my stead, in any and all
capacities, any amendments or supplements to said Registration Statement
(including any related registration statement filed pursuant to Rule 462(b) of
the Securities Act of 1933), incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the proposed 1996 public
offering by the Company of its Convertible Subordinated Notes, and (iii) to
sign on my behalf and in my name and stead any other document deemed necessary
or appropriate by any of them in connection with such offering, hereby
ratifying and confirming all that each of said attorneys-in-fact deems
appropriate, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 23rd day of
September, 1996.
/s/ Berry R. Cox
---------------------------
Berry R. Cox
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Milledge A. Hart, III, a director of
The Home Depot, Inc., a Delaware corporation (the "Company"), do constitute and
appoint Bernard Marcus and Ronald M. Brill, jointly and severally, or any one
of them, my true and lawful attorneys-in-fact, each with full power of
substitution, for me in any and all capacities, to (i) sign, pursuant to the
requirements of the Securities Act of 1933, the Registration Statement on Form
S-3 for The Home Depot, Inc., and to file the same on or about September 24,
1996, with the Securities and Exchange Commission, together with all exhibits
thereto and other documents in connection therewith, including such as are
incorporated therein by reference, (ii) to sign on my behalf and in my
stead, in any and all capacities, any amendments or supplements to said
Registration Statement (including any related registration statement filed
pursuant to Rule 462(b) of the Securities Act of 1933), incorporating such
changes as any of the said attorneys-in-fact deems appropriate, in the matter
of the proposed 1996 public offering by the Company of its Convertible
Subordinated Notes, and (iii) to sign on my behalf and in my name and stead any
other document deemed necessary or appropriate by any of them in connection
with such offering, hereby ratifying and confirming all that each of said
attorneys-in-fact deems appropriate, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 24th day of
September, 1996.
/s/ Milledge A. Hart, III
----------------------------------
Milledge A. Hart, III
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, John L. Clendenin, a director of The
Home Depot, Inc., a Delaware corporation (the "Company"), do constitute and
appoint Bernard Marcus and Ronald M. Brill, jointly and severally, or any one
of them, my true and lawful attorneys-in-fact, each with full power of
substitution, for me in any and all capacities, to (i) sign, pursuant to the
requirements of the Securities Act of 1933, the Registration Statement on Form
S-3 for The Home Depot, Inc., and to file the same on or about September 24,
1996, with the Securities and Exchange Commission, together with all exhibits
thereto and other documents in connection therewith, including such as are
incorporated therein by reference, (ii) to sign on my behalf and in my
stead, in any and all capacities, any amendments or supplements to said
Registration Statement (including any related registration statement filed
pursuant to Rule 462(b) of the Securities Act of 1933), incorporating such
changes as any of the said attorneys-in-fact deems appropriate, in the matter
of the proposed 1996 public offering by the Company of its Convertible
Subordinated Notes, and (iii) to sign on my behalf and in my name and stead any
other document deemed necessary or appropriate by any of them in connection
with such offering, hereby ratifying and confirming all that each of said
attorneys-in-fact deems appropriate, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 21st day
of September, 1996.
/s/ John L. Clendenin
-------------------------------
John L. Clendenin
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Donald R. Keough, a director of The
Home Depot, Inc., a Delaware corporation (the "Company"), do constitute and
appoint Bernard Marcus and Ronald M. Brill, jointly and severally, or any one
of them, my true and lawful attorneys-in-fact, each with full power of
substitution, for me in any and all capacities, to (i) sign, pursuant to the
requirements of the Securities Act of 1933, the Registration Statement on Form
S-3 for The Home Depot, Inc., and to file the same on or about September 24,
1996, with the Securities and Exchange Commission, together with all exhibits
thereto and other documents in connection therewith, including such as
are incorporated therein by reference, (ii) to sign on my behalf and in my
stead, in any and all capacities, any amendments or supplements to said
Registration Statement (including any related registration statement filed
pursuant to Rule 462(b) of the Securities Act of 1933), incorporating such
changes as any of the said attorneys-in-fact deems appropriate, in the matter
of the proposed 1996 public offering by the Company of its Convertible
Subordinated Notes, and (iii) to sign on my behalf and in my name and stead any
other document deemed necessary or appropriate by any of them in connection
with such offering, hereby ratifying and confirming all that each of said
attorneys-in-fact deems appropriate, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 24th day
of September, 1996.
/s/ Donald R. Keough
-----------------------------------
Donald R. Keough
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Kenneth G. Langone, a director of The
Home Depot, Inc., a Delaware corporation (the "Company"), do constitute and
appoint Bernard Marcus and Ronald M. Brill, jointly and severally, or any one
of them, my true and lawful attorneys-in-fact, each with full power of
substitution, for me in any and all capacities, to (i) sign, pursuant to the
requirements of the Securities Act of 1933, the Registration Statement on Form
S-3 for The Home Depot, Inc., and to file the same on or about September 24,
1996, with the Securities and Exchange Commission, together with all exhibits
thereto and other documents in connection therewith, including such as are
incorporated therein by reference, (ii) to sign on my behalf and in my
stead, in any and all capacities, any amendments or supplements to said
Registration Statement (including any related registration statement filed
pursuant to Rule 462(b) of the Securities Act of 1933), incorporating such
changes as any of the said attorneys-in-fact deems appropriate, in the matter
of the proposed 1996 public offering by the Company of its Convertible
Subordinated Notes, and (iii) to sign on my behalf and in my name and stead any
other document deemed necessary or appropriate by any of them in connection
with such offering, hereby ratifying and confirming all that each of said
attorneys-in-fact deems appropriate, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 22nd day
of September, 1996.
/s/ Kenneth G. Langone
-------------------------------
Kenneth G. Langone
<PAGE> 8
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, M. Faye Wilson, a director of The Home
Depot, Inc., a Delaware corporation (the "Company"), do constitute and appoint
Bernard Marcus and Ronald M. Brill, jointly and severally, or any one of them,
my true and lawful attorneys-in-fact, each with full power of substitution, for
me in any and all capacities, to (i) sign, pursuant to the requirements of the
Securities Act of 1933, the Registration Statement on Form S-3 for The Home
Depot, Inc., and to file the same on or about September 24, 1996, with the
Securities and Exchange Commission, together with all exhibits thereto and
other documents in connection therewith, including such as are incorporated
therein by reference, (ii) to sign on my behalf and in my stead, in any and all
capacities, any amendments or supplements to said Registration Statement
(including any related registration statement filed pursuant to Rule 462(b) of
the Securities Act of 1933), incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the proposed 1996 public
offering by the Company of its Convertible Subordinated Notes, and (iii) to
sign on my behalf and in my name and stead any other document deemed necessary
or appropriate by any of them in connection with such offering, hereby
ratifying and confirming all that each of said attorneys-in-fact deems
appropriate, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 23rd day
of September, 1996.
/s/ M. Faye Wilson
-----------------------------
M. Faye Wilson
<PAGE> 1
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(B)(2) _____
---------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
A NATIONAL BANKING ASSOCIATION 36-0899825
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
THE FIRST NATIONAL BANK OF CHICAGO
ONE FIRST NATIONAL PLAZA, SUITE 0286
CHICAGO, ILLINOIS 60670-0286
ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
-----------------------------------
THE HOME DEPOT, INC.
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-3261426
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
2727 PACES FERRY ROAD
ATLANTA, GEORGIA 30339-4089
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
% CONVERTIBLE SUBORDINATED NOTES DUE 2001
(TITLE OF INDENTURE SECURITIES)
<PAGE> 2
ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING
INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR
SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation,
Washington, D.C., The Board of Governors of
the Federal Reserve System, Washington D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE
CORPORATE TRUST POWERS.
The trustee is authorized to exercise corporate
trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR
IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH
SUCH AFFILIATION.
No such affiliation exists with the trustee.
ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A
PART OF THIS STATEMENT OF ELIGIBILITY.
1. A copy of the articles of association of the
trustee now in effect.*
2. A copy of the certificates of authority of the
trustee to commence business.*
3. A copy of the authorization of the trustee to
exercise corporate trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by
Section 321(b) of the Act.
2
<PAGE> 3
7. A copy of the latest report of condition of the
trustee published pursuant to law or the
requirements of its supervising or examining
authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, The First National Bank of Chicago, a national
banking association organized and existing under the laws of the
United States of America, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto
duly authorized, all in the City of Chicago and State of Illinois, on
the 19th day of September, 1996.
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
BY /S/ RICHARD D. MANELLA
RICHARD D. MANELLA
VICE PRESIDENT
* EXHIBIT 1, 2, AND 3 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS BEARING
IDENTICAL NUMBERS IN ITEM 12 OF THE FORM T-1 OF THE FIRST NATIONAL BANK OF
CHICAGO, FILED AS EXHIBIT 26 TO THE REGISTRATION STATEMENT ON FORM S-3 OF THE
CIT GROUP HOLDINGS, INC., FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
FEBRUARY 16, 1993 (REGISTRATION NO. 33- 58418). EXHIBIT 4 IS HEREIN
INCORPORATED BY REFERENCE TO THE FORM T-1 OF THE FIRST NATIONAL BANK OF
CHICAGO, FILED AS EXHIBIT 25.2 TO THE REGISTRATION STATEMENT ON FORM S-3 OF
JOHN DEERE CAPITAL CORPORATION, FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ON AUGUST 21, 1996 (REGISTRATION NO. 333-10561).
3
<PAGE> 4
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED BY
SECTION 321(b) OF THE ACT
September 19, 1996
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between The Home Depot,
Inc. and The First National Bank of Chicago, the undersigned, in accordance
with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby
consents that the reports of examinations of the undersigned, made by Federal
or State authorities authorized to make such examinations, may be furnished by
such authorities to the Securities and Exchange Commission upon its request
therefor.
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
BY: /S/ RICHARD D. MANELLA
RICHARD D. MANELLA
VICE PRESIDENT
4
<PAGE> 5
EXHIBIT 7
<TABLE>
<S> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/96 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
C400 <-
DOLLAR AMOUNTS IN ------------ -----
THOUSANDS RCFD BIL MIL THOU
--------- ---- ------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule
RC-A):
a. Noninterest-bearing balances and currency and coin(1) . . . . . . . 0081 3,572,641 1.a.
b. Interest-bearing balances(2) . . . . . . . . . . . . . . . . . . . . 0071 6,958,367 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A) . . . . . 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D) . . . . 1773 1,448,974 2.b.
3. Federal funds sold and securities purchased under agreements to
resell in domestic offices of the bank and its Edge and Agreement
subsidiaries, and in IBFs:
a. Federal Funds sold . . . . . . . . . . . . . . . . . . . . . . . . . 0276 5,020,878 3.a.
b. Securities purchased under agreements to resell . . . . . . . . . . 0277 918,688 3.b.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule
RC-C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 2122 19,125,160 4.a.
b. LESS: Allowance for loan and lease losses . . . . . . . . . . . . . RCFD 3123 379,232 4.b.
c. LESS: Allocated transfer risk reserve. . . . . . . . . . . . . . . . RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c) . . . . . . . . . . . . . . . . 2125 18,745,928 4.d.
5. Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . 3545 9,599,172 5.
6. Premises and fixed assets (including capitalized leases) . . . . . . . 2145 623,289 6.
7. Other real estate owned (from Schedule RC-M) . . . . . . . . . . . . . 2150 8,927 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M) . . . . . . . . . . . . . . . . . . . . 2130 57,280 8.
9. Customers' liability to this bank on acceptances outstanding . . . . . 2155 632,259 9.
10. Intangible assets (from Schedule RC-M). . . . . . . . . . . . . . . . . 2143 156,715 10.
11. Other assets (from Schedule RC-F) . . . . . . . . . . . . . . . . . . . 2160 1,592,088 11.
12. Total assets (sum of items 1 through 11) . . . . . . . . . . . . . . . 2170 49,335,206 12.
</TABLE>
__________________
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
5
<PAGE> 6
<TABLE>
<S> <C> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/96 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN
Thousands BIL MIL THOU
---------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1) . . . . . . . . . . . . . . RCON 2200 16,878,870 13.a.
(1) Noninterest-bearing(1) . . . . . . . . . . . . . . . RCON 6631 7,855,880 13.a.(1)
(2) Interest-bearing . . . . . . . . . . . . . . . . . . RCON 6636 9,022,990 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II) . . . . . . . . . . . RCFN 2200 12,677,057 13.b.
(1) Noninterest bearing . . . . . . . . . . . . . . . . RCFN 6631 766,936 13.b.(1)
(2) Interest-bearing . . . . . . . . . . . . . . . . . . RCFN 6636 11,910,121 13.b.(2)
14. Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of
its Edge and Agreement subsidiaries, and in IBFs:
a. Federal funds purchased . . . . . . . . . . . . . . . . RCFD 0278 1,318,968 14.a.
b. Securities sold under agreements to repurchase . . . . . RCFD 0279 1,197,589 14.b.
15. a. Demand notes issued to the U.S. Treasury . . . . . . . . RCON 2840 104,546 15.a.
b. Trading Liabilities . . . . . . . . . . . . . . . . . . RCFD 3548 6,431,784 15.b.
16. Other borrowed money:
a. With original maturity of one year or less . . . . . . . RCFD 2332 4,437,636 16.a.
b. With original maturity of more than one year. . . . . . RCFD 2333 75,308 16.b.
17. Mortgage indebtedness and obligations under capitalized
leases . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 2910 283,041 17.
18. Bank's liability on acceptance executed and outstanding . . RCFD 29206 32,259 18.
19. Subordinated notes and debentures . . . . . . . . . . . . . RCFD 3200 1,275,000 19.
20. Other liabilities (from Schedule RC-G). . . . . . . . . . . RCFD 2930 892,947 20.
21. Total liabilities (sum of items 13 through 20). . . . . . . RCFD 29484 6,205,005 21.
22. Limited-Life preferred stock and related surplus. . . . . . RCFD 3282 0 22.
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus . . . . . . . RCFD 3838 0 23.
24. Common stock . . . . . . . . . . . . . . . . . . . . . . . RCFD 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock). . RCFD 3839 2,349,164 25.
26. a. Undivided profits and capital reserves . . . . . . . . . RCFD 3632 584,878 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities . . . . . . . . . . . . . . . . . . . . . . . RCFD 8434 (3,951) 26.b.
27. Cumulative foreign currency translation adjustments . . . . RCFD 3284 (748) 27.
28. Total equity capital (sum of items 23 through 27) . . . . . RCFD 3210 3,130,201 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28) . . . . . . . . . . . RCFD 3300 49,335,206 29.
</TABLE>
Memorandum
To be reported only with the March Report of Condition.
<TABLE>
<S> <C> <C>
1. Indicate in the box at the right the number of the statement below that best describes the most
comprehensive level of auditing work performed for the bank by independent external Number
auditors as of any date during 1995 . . . . . . . . . . . . . . . . . . . . . . . . RCFD 6724 / N/A / M.1.
</TABLE>
<TABLE>
<S> <C>
1 = Independent audit of the bank conducted in accordance 4. = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by
submits a report on the consolidated holding company external auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation
3 = Directors' examination of the bank conducted in work)
accordance with generally accepted auditing standards 8 = No external audit work
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
___________________
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
6
