<PAGE>
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended January 28, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File Number 1-8207
THE HOME DEPOT, INC.
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
IRS No. 95-3261426
(I.R.S. Employer Identification No.)
2727 Paces Ferry Road, Atlanta, Georgia
(Address of principal executive offices)
30339-4089
(Zip Code)
Registrant's telephone number, including area code: (770) 433-8211
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of Each Exchange
Title of Each Class on Which Registered
Common Stock, $.05 Par Value New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.[__]
The aggregate market value of the Common Stock of the Registrant held by
nonaffiliates of the Registrant on March 22, 1996 was $21,055,978,708. The
aggregate market value was computed by reference to the closing price of the
stock on the New York Stock Exchange on such date. For the purposes of this
response, executive officers and directors are deemed to be the affiliates of
the Registrant and the holding by nonaffiliates was computed as 445,629,179
shares.
The number of shares outstanding of the Registrant's Common Stock as of March
22, 1996 was 477,962,757 shares.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's proxy statement for its Annual Meeting of Stockholders, to be
held May 29, 1996, which will be filed pursuant to Regulation 14A within 120
days of the close of Registrant's fiscal year, is incorporated by reference in
answer to Part III of this report but only to the extent indicated herein. In
addition, pages 14 through 30 and the inside cover page of The Home Depot,
Inc.'s 1995 Annual Report to Stockholders is incorporated by reference in
answer to Items 6, 7 and 8 of Part II and Item 14(a) of Part IV of this
report.
PART I
Item 1. BUSINESS
The Home Depot, Inc. including its subsidiaries ("Home Depot" or
"Company") is the leading retailer in the home improvement industry. It
operates "warehouse style" stores which sell a wide assortment of building
material and home improvement products. At fiscal year end, the Company had
423 stores in 31 states and three Canadian provinces, with an aggregate total
of approximately 44,356,000 square feet of selling space. Such stores average
approximately 105,000 square feet of enclosed space per store, with an
additional 20,000 to 28,000 square feet in the garden center area. The
Company's store support center (corporate office) is located at 2727 Paces
Ferry Road, Atlanta, Georgia 30339-4089, telephone number (770) 433-8211.
Home Depot's operating strategy stresses providing a broad range of
merchandise at competitive prices and utilizing highly knowledgeable, service
oriented personnel and aggressive advertising. The Company regularly checks
competitors' prices to ensure that Home Depot's low "Day-In, Day-Out"
warehouse prices are competitive within each market.
Since a large portion of the Company's customers are individual
homeowners, many of whom may have limited experience in do-it-yourself ("D-I-
Y") projects, management considers its associates' knowledge of products and
home improvement techniques and applications to be very important to its
marketing approach and its ability to maintain customer satisfaction. Many
D-I-Y customers take advantage of "how-to" classes offered in Home Depot
stores.
Another segment of the Company's business activity is the buy-it-
yourself ("B-I-Y") customers. The B-I-Y customer chooses products, makes the
purchase and contracts with others to complete or install the project. For
these customers, Home Depot offers installation services for a variety of
products. Home Depot also devotes significant marketing, advertising and
service efforts toward attracting professional remodelers and commercial
users.
Products
Management estimates that a typical store stocks approximately 40,000
to 50,000 product items, including variations in color and size. Each store
carries a wide selection of high quality and nationally advertised brand name
merchandise. The table below shows the percentage of sales of each major
product group for each of the last three fiscal years. However, these
percentages may not necessarily be representative of the Company's future
product mix due, among other things, to the effects of promotional activities
associated with opening
<PAGE>
additional stores. Also, newly opened stores did not operate through a
complete seasonal product cycle for all periods presented.
<TABLE>
<CAPTION>
Percentage of Sales
----------------------------------
Year Ended Year Ended Year Ended
Jan. 31, Jan. 29, Jan. 28,
1994 1995 1996
---------- ---------- ----------
Product Group
<S> <C> <C> <C>
Building materials, lumber
and floor and wall coverings 34.2% 34.0% 33.9%
Plumbing, heating, lighting and
electrical supplies 27.6 27.9 27.7
Seasonal and
specialty items 14.5 14.5 14.8
Hardware and tools 13.0 13.1 13.2
Paint and other 10.7 10.5 10.4
100.0% 100.0% 100.0%
</TABLE>
The Company sources its merchandise from approximately 5,400 vendors
worldwide, of which no single vendor accounts for as much as 5 percent of
purchases. The Company is not dependent on any single vendor. A substantial
majority of merchandise is purchased directly from manufacturers, thereby
eliminating costs of intermediaries. Management believes that competitive
sources of supply are readily available for substantially all its products.
Marketing and Sales
Management believes a number of the Company's existing stores are
operating at or above their optimum capacity. In order to enhance market
penetration over time, the Company has a strategy of adding new stores near
the edge of the market areas served by existing stores. While such a strategy
may initially have a negative impact on comparable store-for-store sales, the
Company believes this "cannibalization" strategy increases customer
satisfaction and overall market share by reducing delays in shopping,
increasing utilization by existing customers and attracting new customers to
more convenient locations.
Home Depot has continued to introduce or refine a number of
merchandising programs during fiscal 1995. Key among them is the Company's
ongoing commitment to becoming the supplier of first choice to a variety of
professional customers, primarily remodelers, carpenters, plumbers,
electricians and building maintenance professionals. The Company has reacted
to the needs of this group by expanding commercial credit programs, on-site
delivery services, and updating lines of professional products.
The Company's installed sales program is available, with varying
services offered, in all of the Company's stores. There are approximately
3,000 installed sales vendors who, as independent, licensed contractors, are
authorized to provide services to customers. This program targets the B-I-Y
customer, who will purchase an item but either does not have the desire or
ability to install the item.
<PAGE>
During the past year, the Company continued its marketing effort to
support its sponsorship of the 1996 Olympic Games and the U.S. and Canadian
Olympic teams' participation at those games. In fiscal 1995, the Company
continued its program to help pave the Centennial Olympic Park in Atlanta with
engraved bricks, and hired athletes to work in its stores and offices while
they train for the Olympic Games. The Company's partnership with certain key
suppliers in the United States and in Canada is providing significant
financial support for the sponsorship.
The Company is also a sponsor of the 1996 Atlanta Paralympic Games. The
Paralympic Games are an elite competition for athletes with a physical
disability which precludes them from Olympic competition. The Paralympic
Games will leave a legacy of awareness of the talents and achievements of
people with disabilities all over the world.
In fiscal 1995, the Company opened its third and fourth EXPO(R) Design
Center stores. EXPO stores are now located in San Diego, California; Atlanta,
Georgia; Long Island, New York and Dallas, Texas. Unlike traditional Home
Depot stores, EXPO does not sell building materials such as lumber, but
focuses instead on upscale interior design products and increased installation
services. The EXPO stores contain approximately 144,000 square feet of
selling space, including climate controlled garden centers.
During fiscal 1995, the Company opened restaurants in certain stores.
Customers with limited amounts of time to complete their shopping, especially
professional contractors and customers with small children, may be attracted
to the restaurant in the store or spend more time in the store if food is
available. Restaurant operators vary by market.
On February 28, 1994, the Company acquired a 75 percent interest in the
Aikenhead's Home Improvement Warehouse ("Aikenhead's") chain in Canada. This
75 percent interest was purchased from the Molson Companies Limited
("Molson"). Beginning in 2000, the Company has the option to purchase, or
Molson has the option to cause the Company to purchase, the remaining 25
percent of the Canadian operations. The option price is based on the lesser
of fair market value or a value determined by an agreed upon formula, as of
the option exercise date. The Company is the managing partner of this
partnership which operates as The Home Depot Canada.
The Company began its expansion into rural markets with the introduction
of its CrossRoads(TM) stores in 1995. While carrying traditional home
improvement merchandise, such stores carry additional products designed to
cater to the needs of certain rural customers, primarily farmers and ranchers.
Such expanded product offerings include feed and seed, pet supplies, tack,
clothing and automotive supplies. The first CrossRoads store opened in
Quincy, Illinois in July 1995 with the second store opening in Waterloo, Iowa
in September 1995. In December 1995, the Company announced its plan to
integrate the CrossRoads Division into its existing Home Depot Divisions.
Management believes this change will achieve greater cost efficiencies. In
addition, the Company will gain the added benefit of name recognition by using
The Home Depot trade name for these locations. Some merchandise first
introduced in CrossRoads stores is now being offered to customers in
traditional Home Depot stores.
"The Home Depot", "EXPO", the "Homer" advertising symbol and various
private label brand names under which the Company sells certain of its
products are service marks,
<PAGE>
trademarks or trade names of the Company and are considered to be important
assets of the Company.
Information Systems
Each store is equipped with a computerized point of sale system,
electronic bar code scanning system, and a mini-computer. Management believes
these systems provide efficient customer check-out with an approximate 90
percent rate of scannable products, store-based inventory management, rapid
order replenishment, labor planning support, and item movement information.
Faster registers as well as a new check approval system and a new receipt
format have expedited transactions. To better serve the increasing number of
customers applying for credit in fiscal 1995, charge card approval process
time was reduced to less than 30 seconds. Store information is communicated
to the store support centers' computers via a satellite and land-based
communications network. These computers provide corporate financial and
merchandising support systems. The Company operates its own television
network and produces training and informational programs that are transmitted
to stores via the satellite communications network and videotape.
The Company is constantly assessing and upgrading its information
systems to support its growth, reduce and control costs, and enable better
decision-making. The Company continues to see greater efficiency as a result
of its electronic data interchange (EDI) program. Currently, over 400 of the
Company's highest volume vendors are participating in the EDI program. A
paperless system, EDI electronically processes orders from stores to vendors,
alerts the store when the merchandise is to arrive and transmits vendor
invoice data.
In fiscal 1995, the Company continued its use of phone centers to serve
its customers. Experienced associates answering the phone were able to
respond quickly to pricing and merchandise questions and take sales orders
while the associates on the sales floor were not distracted from serving the
in-store customers.
In fiscal 1995, stores were outfitted with Electronic Article
Surveillance ("EAS") detectors that trigger an alarm if a person exits the
store with merchandise affixed with an EAS label that has not been
desensitized at the cash register. The system is proving to be a deterrent to
theft, with many stores reporting reductions in shoplifting offenses.
In fiscal 1995, a group of the Company's associates working in
conjunction with Meredith Publishing Group, the publisher of Better Homes and
Gardens(R) magazine, developed Home Improvement 1-2-3(TM), a book and CD-ROM
providing expert advice on over 250 home improvement projects. The Company
also publishes a magazine entitled Weekend(TM), a quarterly magazine offering
fun and functional home repair, remodeling and decorating projects. All of
these multimedia items are available to customers in all of the Company's
stores as well as in many major book stores and computer stores.
<PAGE>
Employees
As of fiscal year end, The Home Depot employed approximately 80,000
associates, of whom approximately 5,400 were salaried and the remainder were
compensated on an hourly basis. Approximately 80 percent of the Company's
associates are employed on a full-time basis. In order to attract and retain
qualified personnel, the Company seeks to maintain salary and wage levels
above those of its competitors in its market areas. The Company's policy is
to hire and train additional personnel in anticipation of future store
expansion.
The Company has never experienced a strike or any work stoppage, and
management believes that its employee relations are satisfactory. There are
no collective bargaining agreements covering any of the Company's associates.
Competition
The business of the Company is highly competitive, based in part on
price, location of store, customer service and depth of merchandise. In each
of the markets served by the Company, there are several other chains of
building supply houses, lumber yards and home improvement stores. In addition
the Company must compete, with respect to some of its products, with discount
stores, local, regional and national hardware stores, warehouse clubs,
independent building supply stores and, to a lesser extent, other retailers.
Due to the variety of competition faced by the Company, management is
unable to precisely measure the Company's market share in its existing market
areas. Management, however, believes that the Company is an effective and
significant competitor in its markets and has approximately a 12 percent
market share of the overall home improvement industry.
Executive Officers
The following provides information concerning the executive officers
holding positions in the Company and/or its subsidiaries.
BERNARD MARCUS, age 66, has been Chairman of the Board of Directors and
Chief Executive Officer ("CEO") of Home Depot since its inception in 1978; and
is, together with Mr. Arthur M. Blank and Mr. Kenneth G. Langone (a director
of the Company), a co-founder of the Company. Mr. Marcus serves on the Board
of Directors of Wachovia Bank of Georgia, N.A., National Service Industries,
Inc. and the New York Stock Exchange, Inc. Mr. Marcus also serves on the
Board of the newly-formed National Foundation for the Centers for Disease
Control and Prevention and is Chairman of the Board of The Marcus Center,
which provides support services for persons with developmental disabilities
and their families. In addition, he is a member of the Advisory Board and
Board of Directors of the Shepherd Center in Atlanta, Georgia and Vice
President and member of the Board of The City of Hope, a charitable
organization in Duarte, California.
ARTHUR M. BLANK, age 53, has been President, Chief Operating Officer
("COO") and a director of Home Depot since its inception in 1978; and is,
together with Mr. Bernard Marcus and Mr. Kenneth G. Langone, a co-founder of
the Company. Mr. Blank serves on the Board
<PAGE>
of Trustees of North Carolina Outward Bound School, a non-profit corporation;
serves on the Board of Trustees of Emory University; the Board of Councilors
of the Carter Center of Emory University; and the Board of Directors of Cox
Enterprises, Inc. and Post Properties Inc.
RONALD M. BRILL, age 52, has been Executive Vice President and Chief
Administrative Officer ("CAO") of the Company since August 1995. Mr. Brill
joined Home Depot as its Controller in 1978, was elected Treasurer in 1980,
Vice President-Finance in 1981, Senior Vice President and Chief Financial
Officer ("CFO") in 1984, Executive Vice President and CFO in 1993, and elected
as a director in 1987. Mr. Brill serves on the boards of the Atlanta Jewish
Federation and the Atlanta Jewish Community Center; the Board of Directors
of the Atlanta High Museum of Art and Pilchuck Glass School and the Governing
Board of Woodward Academy.
BRUCE W. BERG, age 47, has been President-Southeast Division since 1991.
Mr. Berg joined the Company in 1984 as Vice President-Merchandising (East
Coast) and was promoted to Senior Vice President (East Coast) in 1988.
MARSHALL L. DAY, age 52, was promoted in August 1995 to Senior Vice
President-Chief Financial Officer. Prior to Mr. Day's promotion, he had
served as the Company's Senior Vice President-Finance since March 1993. Mr.
Day joined the Company in 1986 as Controller, was promoted to Vice President-
Controller in 1988 and Vice President-Finance in 1989. Mr. Day serves on the
Board of Directors of Habitat for Humanity in Cobb County.
BILL HAMLIN, age 43, has been Executive Vice President-Merchandising
since April 1994. Mr. Hamlin joined the Company in 1985 as a merchandiser and
was promoted to Vice President-Merchandising (West Coast) in 1988 and
President-Western Division in 1990.
JAMES W. INGLIS, age 52, has been a director of the Company since 1993
and does not intend to stand for re-election in 1996. Mr. Inglis has been
Executive Vice President-Strategic Development since 1994. Mr. Inglis joined
Home Depot in 1983 as a merchandiser and was shortly thereafter promoted to
Senior Merchandiser and then promoted to Vice President-Merchandising (West
Coast) in 1985, and Executive Vice President-Merchandising in 1988. Mr.
Inglis serves as Endowment Chairman for The City of Hope's hardware and home
improvement industry group. Mr. Inglis is currently on a leave of absence for
six months commencing February 1996.
VERNON JOSLYN, age 45, has been President-Northeast Division since
February 1996. Mr. Joslyn joined Home Depot in 1984 as an assistant store
manager, and was promoted to store manager the following year. Mr. Joslyn
subsequently served as District Manager in Phoenix and San Diego. In 1991,
Mr. Joslyn, as District Manager, opened the Boston market and served in that
capacity until 1993 when he was promoted to his previous position of Vice
President-Operations for the Northeast Division.
W. ANDREW McKENNA, age 50, has been President-Midwest Division since
1994. Mr. McKenna joined Home Depot in 1990 as Senior Vice President-
Corporate Information Systems.
<PAGE>
LARRY M. MERCER, age 47, was promoted to Executive Vice President in
February 1996. Prior to Mr. Mercer's promotion, he had served as President-
Northeast Division since 1991. Mr. Mercer joined the Company in 1979 as an
assistant store manager and after serving as a Store Manager was promoted to
Regional Manager of the Central Florida Region in 1983. Mr. Mercer was then
promoted to Vice President-Store Operations (East Coast) in 1987.
HARRY PIERCE, age 37, has been President-Western Division since 1994.
Mr. Pierce joined the Company in 1984 as an assistant store manager and
assumed the position of an associate merchandiser in 1985. After serving
several years as a merchandiser both in Atlanta and in the Northeast, Mr.
Pierce was promoted to Manager-Merchandising Information Systems in 1990. In
1992, Mr. Pierce joined the Company's Western Division as Vice President-
Merchandising.
DENNIS J. RYAN, age 49, has been President of the CrossRoads Division
since January 1995. Mr. Ryan joined the Company in 1985 as a building
materials merchandiser and was promoted to Vice President-Merchandising in
1988. Mr. Ryan was promoted to Senior Vice President-Merchandising in 1992.
BRYANT W. SCOTT, age 40, has been President of the EXPO(R) Design Centers
Division since March 1995. Mr. Scott began his career with Home Depot in 1980
as a store associate. Since then he has served in a variety of positions and
most recently served as Vice President-Merchandising for the Southeast
Division, located in Tampa, Florida.
ANNETTE M. VERSCHUREN, age 39, has been President of The Home Depot
Canada since joining the Company in March 1996. Prior to joining the Company,
Ms. Verschuren had been President of Michaels of Canada Inc. since 1993. From
1989 until 1992, Ms. Verschuren held several positions with Imasco Limited.
In 1992, Ms. Verschuren formed Verschuren Ventures Inc. and remained there
until becoming President of Michaels of Canada Inc. in 1993.
<PAGE>
Item 2. PROPERTIES
The following table indicates the number of the Company's store
locations by state in the United States and by province in Canada as of
January 28, 1996.
<TABLE>
<CAPTION>
Number of Stores
State in State
----- ----------------
<S> <C>
Alabama 5
Arizona 14
California 83
Colorado 4
Connecticut 8
Florida 57
Georgia 23
Idaho 1
Illinis 13
Indiana 1
Iowa 1
Louisiana 7
Maryland 10
Massachusetts 12
Michigan 12
Nevada 3
New Hampshire 3
New Jersey 18
New Mexico 2
New York 22
North Carolina 14
Oklahoma 4
Oregon 5
Pennsylvania 11
Rhode Island 1
South Carolina 5
Tennessee 9
Texas 39
Utah 3
Virginia 6
Washington 8
Subtotal 404
<CAPTION>
Canadian Number of Stores
Provinces in Province
<S> <C>
Ontario 11
British Columbia 4
Alberta 4
Subtotal 19
TOTAL 423
</TABLE>
<PAGE>
At fiscal year end, Home Depot had stores located in 31 states, with 50
percent of the U.S. stores being concentrated in California, Georgia, Texas
and Florida. Although new store openings for fiscal 1995 occurred primarily
in existing markets, the Company continued its geographic expansion by opening
stores in a number of new markets -- Birmingham, Alabama; Denver, Colorado;
Macon, Georgia; Quincy, Illinois; Waterloo, Iowa; Lafayette, Louisiana; Grand
Rapids, Michigan; Saginaw, Michigan; Rochester, New York; Fayetteville, North
Carolina; Hickory, North Carolina and Harrisburg, Pennsylvania.
The Midwest division is expected to be one of the fastest growing
divisions for the next several years. Approximately 17 new stores are
scheduled for 1996, and by the end of 1998, the Company expects approximately
112 stores to be open in that division.
The Home Depot Canada commenced operations in fiscal 1994 with seven
stores previously operated by Aikenhead's. The Home Depot Canada opened an
additional five stores during fiscal 1994 and seven stores during fiscal 1995.
Approximately five additional new stores are planned for a total of 24 by the
end of fiscal 1996.
From the end of fiscal 1990 to the end of fiscal 1995, the Company
increased its store count by an average of approximately 24 percent per year
(from 145 to 423 stores) and increased the total store square footage by an
average of approximately 27 percent per year (from 13,278,000 to 44,356,000
total square feet). Home Depot expects to continue to increase its store
count in both existing and selected new markets on a basis consistent with its
current policy of not exceeding a maximum growth rate of new stores of
approximately 22 percent per year. During fiscal 1995, the Company opened 83
new stores and relocated five existing stores, including the opening of 20
additional stores in the Northeast division, 22 in the Southeast division, 16
in the Midwest division, 16 in the Western division, two in the EXPO division
and seven stores in Canada. During fiscal 1996, the Company anticipates
opening approximately 90 to 95 new stores: with at least 25 in the Southeast,
29 in the Northeast, 14 in the West, 17 in the Midwest, five in Canada, plus
relocations of six existing stores. New stores average approximately 105,000
square feet with an additional 15,000 to 28,000 square feet of outside selling
and storage area.
Of the Company's 423 stores, 71 percent are owned (including those owned
subject to a ground lease) consisting of approximately 31,769,000 square feet
and 29 percent are leased consisting of approximately 12,587,000 square feet.
In recent years, the relative percentage of new stores which are owned has
increased. The Company prefers to own stores because of the greater operating
control and flexibility, generally lower occupancy costs and certain other
economic advantages of owned stores. See "Management's Discussion and
Analysis of Results of Operations and Financial Condition--Liquidity and
Capital Resources."
The Company's executive, corporate staff and accounting offices occupy
approximately 677,000 square feet of leased and owned space in several
locations in Atlanta, Georgia. The Company has acquired additional land in
Atlanta, Georgia and has commenced construction of replacement office
facilities. The new office facilities will be completed in stages generally to
<PAGE>
coincide with the end of various lease terms and space requirements. In
addition, the Company occupies an aggregate of 286,000 square feet, of which
77,600 square feet is owned and 208,000 square feet is leased, for divisional
store support centers located in Atlanta, Georgia; Fullerton, California;
South Plainfield, New Jersey; Schaumburg, Illinois; Tampa, Florida; and
Scarborough, Ontario, Canada.
The Company utilizes 2,493,000 square feet of warehousing and
distribution space of which 188,000 is owned and 2,305,000 is leased. The
Company has commenced construction on an approximate 1.4 million square foot
facility in Savannah, Georgia, for an import distribution facility. Imported
products will be staged in the distribution center pending shipment to the
stores.
Item 3. LEGAL PROCEEDINGS
The Company is a defendant in a consolidated class action lawsuit
(Butler et al. v. Home Depot, Inc. and Frank, et al. v. Home Depot, Inc., Case
Nos. 94-4335SI and 95-2182SI, respectively, pending in U.S. Dist. Ct., N.D.
Cal.) claiming gender discrimination in the Company's Western Division. The
action seeks injunctive and declaratory relief and damages. Discovery is in
its early stages. While the ultimate results of this litigation cannot be
determined, management does not expect that the resolution of this proceeding
will have a material adverse effect on the consolidated financial position or
the results of operations of the Company.
The Company has other litigation arising from the normal course of
business. In management's opinion, this litigation will not materially effect
the Company's consolidated financial position or the results of operations.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year ended January 28, 1996.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Since April 19, 1984, the Common Stock of the Company has been 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.
<PAGE>
<TABLE>
<CAPTION>
Cash
Price Range 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 38.625 45.25 .05
Third Quarter ended October 29, 1995 36.625 44.875 .05
Fourth Quarter ended January 28, 1996 37.125 48.00 .05
Fiscal Year 1996
First Quarter (through March 22, 1996) $44.25 $50.375 $.05
____________________________
</TABLE>
The Company paid its first cash dividend on June 22, 1987, and has since
paid dividends in each quarter. Future dividend policy will depend on the
Company's earnings, capital requirements, financial condition and other
factors considered relevant by the Board of Directors.
Number of Record Holders
The number of record holders of Home Depot's Common Stock as of March
22, 1996 was 66,025 (without including individual participants in nominee
security position listings).
Item 6. SELECTED FINANCIAL DATA
Reference is made to information for the fiscal years 1991-1995 under
the heading "Ten Year Selected Financial and Operating Highlights" contained
in the Company's Annual Report to Stockholders for the fiscal year ended
January 28, 1996, which information is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Reference is made to information under the heading "Management's
Discussion and Analysis of Results of Operations and Financial Condition"
contained in the Company's Annual
<PAGE>
Report to Stockholders for the fiscal year ended January 28, 1996, which
information is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to information under the headings "Consolidated
Statements of Earnings," "Consolidated Balance Sheets," "Consolidated
Statements of Stockholders' Equity," "Consolidated Statements of Cash Flows,"
"Notes to Consolidated Financial Statements" and "Independent Auditors'
Report" contained in the Company's Annual Report to Stockholders for the
fiscal year ended January 28, 1996, which information is incorporated herein
by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 is incorporated by reference from
the information in Registrant's proxy statement (filed or to be filed pursuant
to Regulation 14A) for its Annual Meeting of Stockholders to be held May 29,
1996, except as to biographical information on Executive Officers which is
contained in Item I of this Annual Report on Form 10-K.
Item 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated by reference from
the information in Registrant's proxy statement (filed or to be filed pursuant
to Regulation 14A) for its Annual Meeting of Stockholders to be held May 29,
1996.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is incorporated by reference from
the information in Registrant's proxy statement (filed or to be filed pursuant
to Regulation 14A) for its Annual Meeting of Stockholders to be held May 29,
1996.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is incorporated by reference from
the information in Registrant's proxy statement (filed or to be filed pursuant
to Regulation 14A) for its Annual Meeting of Stockholders to be held May 29,
1996.
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The following financial statements are incorporated by reference from
pages 17 through 30 of the Registrant's Annual Report to Stockholders for the
fiscal year ended January 28, 1996, as provided in Item 8 hereof:
- Consolidated Statements of Earnings for the fiscal years ended
January 28, 1996, January 29, 1995 and January 30, 1994.
- Consolidated Balance Sheets as of January 28, 1996 and January 29,
1995.
- Consolidated Statements of Stockholders' Equity for the fiscal
years ended January 28, 1996, January 29, 1995 and January 30, 1994.
- Consolidated Statements of Cash Flows for the fiscal years ended
January 28, 1996, January 29, 1995 and January 30, 1994.
- Notes to Consolidated Financial Statements.
- Independent Auditors' Report.
2. Financial Statement Schedules
All schedules are omitted as the required information is inapplicable or
the information is presented in the consolidated financial statements or
related notes.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the last quarter of the
fiscal year ended January 28, 1996.
(c) Exhibits
Exhibits marked with an asterisk (*) are hereby incorporated by refer-
ence to exhibits or appendices previously filed by the Registrant as indicated
in brackets following the description of the exhibit.
*3.l Restated Certificate of Incorporation of The Home Depot, Inc., as
amended. [Form 10-K for the fiscal year ended January 29, 1995,
Exhibit 3.1]
<PAGE>
3.2 By-Laws, as amended.
4.1 $800,000,000 Credit Agreement dated as of December 20, 1995 among
The Home Depot, Inc., the Banks Listed Therein and Wachovia Bank
of Georgia, N.A., as Agent (without exhibits).
*10.1 Investment Banking Consulting Contract dated April 17, 1985
between Invemed Associates, Inc. and the Registrant. [Form 10-K
for the fiscal year ended February 2, 1992, Exhibit 10.1]
*10.2 +Corporate Office Management Bonus Plan of the Registrant dated
March 1, 1991. [Form 10-K for the fiscal year ended February 2,
1992, Exhibit 10.2]
*10.3 +Employee Stock Purchase Plan, as amended. [Appendix A to
Registrant's Proxy Statement for the Annual Meeting of
Stockholders held May 31, 1995]
10.4 +Senior Officers' Bonus Pool Plan, as amended.
*10.5 +The Home Depot Employee Stock Ownership Plan and Trust, as
amended. [Form 10-K for the fiscal year ended January 29, 1989,
Exhibit 10.7]
*10.6 +The Home Depot, Inc. 1991 Omnibus Stock Option Plan. [Appendix A
to Registrant's Proxy Statement for the Annual Meeting of
Stockholders held May 22, 1991]
*10.7 +Executive Medical Reimbursement Plan, effective January 1, 1992.
[Form 10-K for the fiscal year ended January 31, 1993, Exhibit
10.7]
*10.8 +The Home Depot ESOP Restoration Plan. [Form 10-K for the fiscal
year ended January 29, 1995, Exhibit 10.8]
11 Computation of Earnings Per Common and Common Equivalent Share.
13 The Registrant's Annual Report to Stockholders for the fiscal year
ended January 28, 1996. Only those portions of said report which
are specifically designated in this Form 10-K as being
incorporated by reference are being electronically filed pursuant
to the Securities Exchange Act of 1934.
21 List of Subsidiaries of the Registrant.
23 Consent of Independent Auditors.
24 Special Powers of Attorney authorizing execution of this Form 10-K
Annual Report have been granted and are filed herewith as follows:
<PAGE>
Power of Attorney from Frank Borman.
Power of Attorney from Johnnetta B. Cole.
Power of Attorney from Berry R. Cox.
Power of Attorney from Milledge A. Hart, III.
Power of Attorney from James W. Inglis.
Power of Attorney from Donald R. Keough.
Power of Attorney from Kenneth G. Langone.
Power of Attorney from M. Faye Wilson.
27 Financial Data Schedule. [Filed electronically with SEC only]
+Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this form pursuant to Item 14(c) of this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant, The Home Depot, Inc., has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Atlanta, and State of Georgia on this 31st day of
March, 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 Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant, The Home Depot, Inc., and in the capacities and on the dates
indicated.
Signature Title Date
/s/ Bernard Marcus Chairman of the Board, Chief March 31, 1996
(Bernard Marcus) Executive Officer and Secretary
(Principal Executive Officer)
/s/ Arthur M. Blank President, Chief Operating March 31, 1996
(Arthur M. Blank) Officer and Director
/s/ Ronald M. Brill Executive Vice President, March 31, 1996
(Ronald M. Brill) Chief Administrative Officer,
Assistant Secretary and Director
*
Director March 31, 1996
(Frank Borman)
<PAGE>
Signature Title Date
*
Director March 31, 1996
(Johnnetta B. Cole)
*
Director March 31, 1996
(Berry R. Cox)
/s/Marshall L. Day Senior Vice President- March 31, 1996
(Marshall L. Day) Chief Financial Officer
(Principal Financial and
Accounting Officer)
*
Director March 31, 1996
(Milledge A. Hart, III)
*
Executive Vice President March 31, 1996
(James W. Inglis) and Director
*
Director March 31, 1996
(Donald R. Keough)
*
Director March 31, 1996
(Kenneth G. Langone)
*
Director March 31, 1996
(M. Faye Wilson)
* The undersigned, by signing his name hereto, does hereby sign this
report on behalf of each of the above-indicated directors of the
Registrant pursuant to powers of attorney, executed on behalf of each
such director.
By: /s/ Bernard Marcus
(Bernard Marcus, Attorney-in-fact)
<PAGE>
EXHIBIT INDEX
3.2 By-laws, as amended.
4.1 $800,000,000 Credit Agreement dated as of December 20, 1995 among The
Home Depot, Inc., the Banks Listed Therein and Wachovia Bank of Georgia,
N.A., as Agent (without exhibits).
10.4 Senior Officers' Bonus Pool Plan, as amended.
11 Computation of Earnings Per Common and Common Equivalent Share.
13 The Registrant's Annual Report to Stockholders for the fiscal year ended
January 28, 1996. Only those portions of said report which are
specifically designated in this Form 10-K as being incorporated by
reference are being electronically filed pursuant to the Securities
Exchange Act of 1934.
21 List of Subsidiaries of the Registrant.
23 Consent of Independent Auditors.
24 Special Powers of Attorney authorizing execution of this Form 10-K
Annual Report have been granted and are filed herewith as follows:
Power of Attorney from Frank Borman.
Power of Attorney from Johnnetta B. Cole.
Power of Attorney from Berry R. Cox.
Power of Attorney from Milledge A. Hart, III.
Power of Attorney from James W. Inglis.
Power of Attorney from Donald R. Keough.
Power of Attorney from Kenneth G. Langone.
Power of Attorney from M. Faye Wilson.
27 Financial Data Schedule. [Filed Electronically with S.E.C. Only]
<PAGE>
THE HOME DEPOT, INC.
BY-LAWS (AMENDED AND RESTATED)
ARTICLE I.
MEETINGS OF STOCKHOLDERS
SECTION 1. The annual meeting of the stockholders of the
Corporation shall be held on the first Tuesday in the month of May in each
year, at the hour of 10 o'clock A.M., or at such other time on such other day
within the months of April, May or June as shall be fixed by the Board of
Directors, for the purpose of electing directors and for the transaction of
such other business as may come before the meeting. If the day fixed for the
annual meeting shall be a legal holiday in the state in which the meeting is
to be held, such meeting shall be a legal holiday in the state in which the
meeting is to be held, such meeting shall be held on the next succeeding
business day. If the election of directors shall not be held on the day
designated herein or determined in the manner provided herein for any annual
meeting of the stockholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
stockholders as soon thereafter as conveniently may be.
SECTION 2. Special meetings of the stockholders may be called at
any time by the Chairman of the Board, the President or the Board of
Directors.
SECTION 3. Written notice of the time and place of every annual
or special meeting of the stockholders shall be given at least ten but not
more than sixty days previous to such meetings by personal delivery to the
stockholder of a copy of such notice or by mailing a copy of such notice
addressed to the stockholder at his post office address as the same shall
appear on the record of stockholders of the Corporation or, if he shall have
filed with the Secretary of the Corporation a written request that notices to
him be mailed to him at some other address, then addressed to him at such
other address; provided, however, that notice of any meeting to take action on
a proposed merger or consolidation of the Corporation or on a proposed sale of
all or substantially all of the assets of the Corporation shall be given at
least twenty but not more than sixty days prior to such meeting. Notice of a
special meeting of the stockholders shall also state the purpose or purposes
for which the meeting is called. Each notice of a special meeting of
stockholders shall indicate that it has been issued by or at the direction of
the person or persons calling the meeting. Notice shall be deemed given when
deposited, postage prepaid, in a United States post office or official
depository. A written waiver of notice signed by the stockholder entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a stockholder at a meeting shall constitute
a waiver of notice of such meeting, except when the stockholder attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called
or convened. Neither the business to be transacted at, nor the purpose of,
any regular or special meeting of the stockholders need be specified in any
written waiver of notice.
<PAGE>
SECTION 4. Every annual meeting of the stockholders shall be held
at such place within or without the State of Delaware as may be determined by
the Board of Directors and stated in the notice of any such meeting, and every
special meeting shall be held at such place within or without the State of
Delaware as may be stated in the notice of such special meeting.
SECTION 5. No business shall be transacted at any special meeting
of the stockholders except that business which related to the purpose or
purposes set forth in the notice of the meeting.
SECTION 6. At each meeting of the stockholders there shall be
present, either in person or by proxy, the holders of a majority of the shares
of the Corporation entitled to vote thereat in order to constitute a quorum.
Any meeting of the stockholders at which a quorum is not present may be
adjourned from time to time to some other time without any new notice other
than an announcement at the meeting by the votes cast in person or by proxy
of the holders of a majority of those shares which are cast on a motion to
adjourn, provided, however, that if any adjournment is for more than thirty
days, notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
SECTION 7. At all meetings of the stockholders, all questions
except as otherwise required by the laws of the State of Delaware shall be
determined by a majority of the votes cast at the meeting of the holders of
shares entitled to vote thereon. Upon all questions, every stockholder of
record shall be entitled at every meeting of stockholders to one vote for
every share of common stock standing in his name on the books of the
Corporation and qualified to vote. Holders of shares of $50 Series A
Preferred Stock and $50 Series B Preferred Stock all have not right to vote
such shares at any meeting of stockholders and shall have no voice in the
management of the Corporation.
SECTION 8. At all meetings of the stockholders, absent stockholders
entitled to vote thereat may vote by a proxy executed in writing by such
stockholder or by the attorney-in-fact thereof. No proxy shall be valid
after the expiration of three years from the date thereof unless otherwise
provided in the proxy. Every proxy shall be revocable at the pleasure of the
person executing it except as otherwise provided by the laws of the State of
Delaware.
SECTION 9. Any action required to be taken or which may be taken at
a meeting of the stockholders may be taken without a meeting, without prior
notice and without a vote if consent in writing, setting forth the action so
taken, shall be signed by the holders of stock having not less than the
minimum number of votes necessary to take such action at a meeting
at which all shares entitled to vote thereon were present and voted. Prompt
notice of the taking of the corporate actions without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing.
<PAGE>
ARTICLE II.
DIRECTORS
SECTION 1. The business and affairs of the Corporation shall be
managed by and under the direction of the Board of Directors. Except as
otherwise provided by law and except as hereinafter otherwise provided for
filling vacancies, the directors of the Corporation shall be elected by the
stockholders entitled to vote at the annual meeting of the stockholders, to
hold office until the expiration of the term for which he is elected and until
his successor has been elected and qualified or until his earlier resignation
or removal.
SECTION 2. An annual meeting of the Board of Directors shall be
held after each annual election of directors. If such election occurs at an
annual meeting of stockholders, the annual meeting of the Board of Directors
shall take place as soon after such written consent is duly filed with the
Corporation as is practicable.
SECTION 3. Special meetings of the Board of Directors shall be
called at any time by the Secretary at the direction of the Chairman of the
Board, the President or a majority of the directors.
SECTION 4. Written notice of each special meeting of the Board of
Directors shall be given to each member thereof specifying the time and place
of the meeting. Notice shall be given by first class mail, telegram,
radiogram, telex or personal service. At least forty-eight hours' notice
must be given by telegram, radiogram, telex or personal service when
less than six days' notice is given. If notice to a director is given by mail,
the notice shall be directed to him at the address designated by him for the
purpose, or, if none is designated, at his last known address, and shall be
deemed given when deposited, postage prepaid, in a post office or official
depository of any nation. If notice to a director is given by telegram,
radiogram or telex, it shall be directed to his last known address and, in the
case of notice by telegram or radiogram, shall be deemed given when received
by the communications carrier. Notice by telex shall be deemed given when
transmitted. A written waiver of notice signed by the director entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a director at a meeting shall constitute
a waiver of notice of such meeting, except when the director attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called
or convened. Neither the business to be transacted at, nor the purpose of,
any regular or special meeting of the directors need be specified in any
written waiver of notice.
SECTION 5. Except for meeting held after an annual meeting of
stockholders, meetings of the Board of Directors shall be held at such place
as may be specified in the notice thereof, or, if no place is specified in
the notice, at such other place or places as the Board of Directors may from
time to time fix thereof.
<PAGE>
SECTION 6. Members of the Board of Directors may participate in a
meeting of the Board by means of conference telephone or similar communications
equipment by means of which all person participating in the meeting can hear
each other. Participation in a meeting pursuant to this section shall
constitute presence in person at such meeting.
SECTION 7. A majority of the total number of directors shall be
necessary to constitute a quorum for the transaction of business and the act of
the majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors. Any regular or special meeting of
the Board at which a quorum is not present may be adjourned from time to time
to some other place or time or both by a majority of the directors present
without any new notice other than an announcement at the meeting.
SECTION 8. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee
to consist of one or more of the directors of the Corporation. The board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
Any such committee, to the extent provided in the resolution of the Board of
Directors and to the extent permitted by law, shall have and may exercise all
the powers and authority of the Board of Directors in the management of the
business and affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority to (i) amend the certificate of
incorporation, (ii) adopt an agreement of merger or consolidation,
(iii) recommend to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, (iv) recommend to
the stockholders a dissolution of the Corporation or a revocation of a
dissolution, or (v) amend the by-laws of the Corporation. Such committee or
committees shall have such name or names as may be determined from time to
time by resolution adopted by the Board.
SECTION 9. Any action required or permitted to be taken at any
meeting of the Board of Directors may be taken without a meeting if all members
of the Board consent thereto in writing and the writing is filed with the
minutes of proceedings of the Board.
SECTION 10. The Board of Directors of the Corporation shall consist
of not less than three nor more than fifteen members, the exact number of
Directors to be determined from time to time by resolution adopted by
affirmative vote of a majority of the entire Board of Directors.
SECTION 11. Directors may receive compensation for services to the
Corporation in their capacities as directors or otherwise in such manner and in
such amounts as may be fixed from time to time by resolution of the Board of
Directors.
<PAGE>
ARTICLE III.
OFFICERS
SECTION 1. The Board of Directors, at the annual meeting thereof,
shall appoint a Chairman of the Board, a President, a Treasurer, and a
Secretary. The Board may at any time appoint one or more Vice Presidents,
Assistant Treasurers and Assistant Secretaries. Each such officer shall
serve from time of his appointment until a successor shall be chosen
and qualified or until his earlier resignation or removal. The compensation of
the officers shall be fixed by the Board.
SECTION 2. The Chairman of the Board shall preside at all
meetings of stockholders and of the Board of Directors. He shall be the chief
executive officer and head of the Corporation and, subject to the Board of
Directors, shall have the general control and management of the business and
affairs of the Corporation. He shall vote any shares of stock or other
voting securities owned by the Corporation. In general, he shall perform all
duties incident to the office of the Chairman of the Board and such other
duties as may from time to time be assigned to him by the Board.
SECTION 3. The President shall be the Chief operating officer of
the Corporation and, subject to the Board of Directors and the Chairman of the
Board, shall have control of the operational aspects of the business and
affairs of the Corporation. He shall see that all orders of the Chairman of
the Board are carried into effect, and shall perform all other duties
necessary to his office or properly required of him by the Board or the
Chairman of the Board.
SECTION 4. During the absence or disability of the President, or
during a vacancy in the office of President, the Vice President with the
greatest seniority shall perform the duties and have the powers of the
President.
SECTION 5. The Secretary shall have custody of the seal of the
Corporation. He shall keep the minutes of the Board of Directors, and of the
stockholders, and shall attend to the giving and serving of all notices of the
Corporation. He shall have charge of the certificate book and such other
books and papers as the Board may direct; and he shall perform such other
duties as may be incidental to his office or as may be assigned to him by
the Board of Directors. He shall also keep or cause to be kept a stock book,
containing the names, alphabetically arranged, of all persons who are
stockholders of the Corporation showing their respective addresses, the number
of shares registered in the name of each, and the dates when they respectively
became the owners of record thereof, and such books shall be open for
inspection as prescribed by the laws of the States of Delaware. During the
absence or disability of the Secretary, or during a vacancy in the office of
Secretary, the Assistant Secretary with the greatest seniority shall perform
the duties and have the powers of the Secretary.
<PAGE>
SECTION 6. The Treasurer shall have the care and custody of the
funds and securities of the Corporation and shall deposit the same in the name
of the Corporation in such banks or banks as the Board of Directors may
determine. The Treasurer shall also have the care and custody of the
Corporation's books of account and he shall be responsible for the general
and cost accounting functions of the Corporation. During the absence or
disability of the Treasurer, or during a vacancy in the office of Treasurer,
the Assistant Treasurer with the greatest seniority shall perform the duties
and have the powers of the Treasurer.
ARTICLE IV.
RESIGNATIONS, REMOVALS, VACANCIES AND
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 1. Any director or officer may resign his office at any
time, such resignation to be made in writing and to take effect from the time
of its receipt by the Corporation, unless some future time be fixed in the
resignation and in that case from that time. The acceptance of a
resignation shall not be required to make it effective. Nothing
herein shall be deemed to affect any contractual rights of the Corporation.
SECTION 2. Any officer may be removed with or without cause at any
time by the Board of Directors. Any employee of the Corporation may be removed
at any time by the Board of Directors or by an officer. The removal of an
officer or employee without cause shall be without prejudice to his contractual
rights, if any. The election or appointment of an officer or employee shall
not of itself create contractual rights. Any director or the entire
Board may be removed, with or without cause, by the holders of a majority of
the shares then entitled to vote at an election of directors.
SECTION 3. Any vacancy or newly created directorship on the Board
of Directors may be filled by a majority vote of the Directors then in office,
or by majority vote of the stockholders.
SECTION 4. Each former, present or future director, officer,
employee or agent of the Corporation, and each person who may serve at the
request of the Corporation as a director, officer, employee or agent of another
Corporation, partnership, joint venture, trust or other enterprise shall be
indemnified by the Corporation in all events, to the fullest extent
and in the manner permitted by the laws of the State of Delaware then in
effect.
<PAGE>
ARTICLE V.
COMMON STOCK
SECTION 1. Certificates for shares of the common stock of the
Corporation shall be numbered and registered on the books of the Corporation in
the order in which they shall be issued and shall be signed by the Chairman
of the Board, the President or a Vice President, and the Secretary or an
Assistant Secretary, or the Treasurer or an Assistant Treasurer and
sealed with the seal of the Corporation.
SECTION 2. Transfers of shares shall be made upon the books of the
Corporation (i) only by the holder thereof in person or by power of attorney
duly executed and filed with the Corporation, (ii) in accordance with the
Shareholders Agreement, and (iii) upon the surrender to the Corporation of the
certificate or certificates for such shares.
ARTICLE VI
PREFERRED STOCK
SECTION 1. Certificates for shares of the $50 Series A Preferred
Stock and the $50 Series B Preferred Stock of the Corporation shall be numbered
and registered on the books of the Corporation in the order in which they shall
be issued and shall be signed by the Chairman of the Board or the President or
a Vice President, and the Secretary or an Assistant Secretary, or the Treasurer
or an Assistant Treasurer and sealed with the seal of the Corporation.
SECTION 2. In accordance with the terms under which such preferred
shares were issued, all of the shares of the $50 Series A Preferred Stock of
the Corporation shall be deemed by the Corporation at its election expressed by
resolution of the Board of Directors but no later than six (6) calendar
months following the close of any fiscal year at which the Net Worth of the
Corporation and any subsidiaries thereof, computed in accordance with
generally accepted accounting principles consistently applied on a consolidated
basis, shall be equal to or exceed Ten Million Dollars ($10,000,000.00), and
subject to there being sufficient surplus to repurchase all of the Common
Shares which the Corporation is obligated to repurchase pursuant to the
Shareholders' Agreement.
SECTION 3. In accordance with the terms under which such preferred
shares were issued, the shares of the $50 Series B Preferred Stock of the
Corporation shall be redeemed by the Corporation at the election of the
holder of such shares; provided, however, that such election may not be
exercised at any time prior to the redemption of the Series A Preferred
Stock.
<PAGE>
ARTICLE VII.
CHECKS, DRAFTS AND NOTES
The Chairman of the Board or the President or any officers designated by
Resolution of the Board of Directors shall sign all checks and drafts necessary
to be drawn and may accept any drafts drawn upon the Corporation in due course
of business. No check or draft shall be endorsed by the Corporation and no
promissory note, bond, debenture or other evidence of indebtedness shall be
made, signed, issued or endorsed by the Corporation unless signed by
the Chairman or the President or any officer designated under powers given by a
resolution of the Board except that any officer may endorse for collection or
deposit only, expressly stating the purpose of such endorsements, checks,
drafts and promissory notes to the order of the Corporation.
ARTICLE VIII.
SEAL
The seal of the Corporation shall be in the custody of the
Secretary. It shall be circular in form and shall have engraved upon it the
name of the Corporation arranged in a circle and the words and figures
"Incorporated 1978 Delaware" across the center of the space enclosed.
ARTICLE IX
BUSINESS COMBINATIONS WITH INTERESTED STOCKHOLDERS
The Corporation shall not be subject to the provisions of Section 203
of the General Corporation Law of the State of Delaware (Business Combination
with Interested Stockholders). This Article IX shall not be amended only by
the affirmative vote of a majority of the Corporation's stockholders entitled
to vote on such matter.
Amended and Restated-2/22/96
<PAGE>
$800,000,000
CREDIT AGREEMENT
dated as of
December 20, 1995
among
THE HOME DEPOT, INC.,
The Banks Listed Herein
and
WACHOVIA BANK OF GEORGIA, N.A.,
as Agent
<PAGE>
TABLE OF CONTENTS
CREDIT AGREEMENT
Page
ARTICLE I
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01. Definitions. . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Accounting Terms and Determinations. . . . . . 15
SECTION 1.03. References . . . . . . . . . . . . . . . . . . 15
SECTION 1.04. Use of Defined Terms . . . . . . . . . . . . . 15
SECTION 1.05. Terminology. . . . . . . . . . . . . . . . . . 15
ARTICLE II
THE CREDITS. . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.01. Commitments to Lend. . . . . . . . . . . . . . 16
SECTION 2.02. Method of Borrowing. . . . . . . . . . . . . . 16
SECTION 2.03. Money Market Loans . . . . . . . . . . . . . . 18
SECTION 2.04. Notes. . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.05. Maturity of Loans. . . . . . . . . . . . . . . 22
SECTION 2.06. Interest Rates . . . . . . . . . . . . . . . . 23
SECTION 2.07. Fees; Calculations . . . . . . . . . . . . . . 23
SECTION 2.08. Optional Termination or Reduction of
Commitments. . . . . . . . . . . . . . . . . . . 25
SECTION 2.09. Termination of Commitments . . . . . . . . . . 25
SECTION 2.10. Optional Prepayments . . . . . . . . . . . . . 25
SECTION 2.11. Mandatory Prepayments. . . . . . . . . . . . . 25
SECTION 2.12. General Provisions as to Payments. . . . . . . 26
SECTION 2.13. Computation of Interest and Fees . . . . . . . 27
<PAGE>
ARTICLE III
CONDITIONS TO BORROWINGS . . . . . . . . . . . . . . . . . . 28
SECTION 3.01. Conditions to First Borrowing. . . . . . . . . 28
SECTION 3.02. Conditions to All Borrowings . . . . . . . . . 29
ARTICLE IV-A
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . 30
SECTION 4.01. Corporate Existence and Power. . . . . . . . . 30
SECTION 4.02. Corporate and Governmental Authorization;
No Contravention . . . . . . . . . . . . . . . . 30
SECTION 4.03. Binding Effect . . . . . . . . . . . . . . . . 30
SECTION 4.04. Financial Information. . . . . . . . . . . . . 30
SECTION 4.05. No Litigation. . . . . . . . . . . . . . . . . 31
SECTION 4.06. Compliance with ERISA. . . . . . . . . . . . . 31
SECTION 4.07. Compliance with Laws; Payment of Taxes . . . . 31
SECTION 4.08. Significant Subsidiaries . . . . . . . . . . . 31
SECTION 4.09. Investment Company Act . . . . . . . . . . . . 32
SECTION 4.10. Public Utility Holding Company Act . . . . . . 32
SECTION 4.11. Ownership of Property; Liens . . . . . . . . . 32
SECTION 4.12. No Default . . . . . . . . . . . . . . . . . . 32
SECTION 4.13. Full Disclosure. . . . . . . . . . . . . . . . 32
SECTION 4.14. Environmental Matters. . . . . . . . . . . . . 32
SECTION 4.15. Capital Stock. . . . . . . . . . . . . . . . . 33
SECTION 4.16. Margin Stock . . . . . . . . . . . . . . . . . 33
SECTION 4.17. Insolvency . . . . . . . . . . . . . . . . . . 34
ARTICLE IV-B
REPRESENTATIONS AND WARRANTIES OF THE BANKS AND THE AGENT. . 34
SECTION 4.18. Agent and Bank Corporate Existence and Power . 34
SECTION 4.19. Agent and Bank Binding Effect. . . . . . . . . 34
<PAGE>
ARTICLE V
COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.01. Information. . . . . . . . . . . . . . . . . . 34
SECTION 5.02. Inspection of Property, Books and Records. . . 36
SECTION 5.03. Ratio of Consolidated Funded Debt to
Consolidated Total Tangible Capital. . . . . . . 36
SECTION 5.04. Negative Pledge. . . . . . . . . . . . . . . . 36
SECTION 5.05. Maintenance of Existence . . . . . . . . . . . 38
SECTION 5.06. Dissolution. . . . . . . . . . . . . . . . . . 38
SECTION 5.07. Consolidations, Mergers and Sales of Assets. . 38
SECTION 5.08. Use of Proceeds. . . . . . . . . . . . . . . . 39
SECTION 5.09. Compliance with Laws; Payment of Taxes . . . . 39
SECTION 5.10. Insurance. . . . . . . . . . . . . . . . . . . 39
SECTION 5.11. Maintenance of Property. . . . . . . . . . . . 39
SECTION 5.12. Environmental Notices. . . . . . . . . . . . . 40
SECTION 5.13. Environmental Matters. . . . . . . . . . . . . 40
SECTION 5.14. Environmental Release. . . . . . . . . . . . . 40
SECTION 5.15. Debt of Subsidiaries . . . . . . . . . . . . . 40
ARTICLE VI
DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.01. Events of Default. . . . . . . . . . . . . . . 40
SECTION 6.02. Notice of Default. . . . . . . . . . . . . . . 43
ARTICLE VII
THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.01. Appointment; Powers and Immunities . . . . . . 43
SECTION 7.02. Reliance by Agent. . . . . . . . . . . . . . . 44
SECTION 7.03. Defaults . . . . . . . . . . . . . . . . . . . 44
SECTION 7.04. Rights of Agent as a Bank. . . . . . . . . . . 45
<PAGE>
SECTION 7.05. Indemnification. . . . . . . . . . . . . . . . 45
SECTION 7.06 CONSEQUENTIAL DAMAGES. . . . . . . . . . . . . 45
SECTION 7.07. Payee of Note Treated as Owner . . . . . . . . 46
SECTION 7.08. Nonreliance on Agent and Other Banks . . . . . 46
SECTION 7.09. Failure to Act . . . . . . . . . . . . . . . . 46
SECTION 7.10. Resignation or Removal of Agent. . . . . . . . 46
ARTICLE VIII
CHANGE IN CIRCUMSTANCES; COMPENSATION. . . . . . . . . . . . 47
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair . . . . . . . . . . . . . . 47
SECTION 8.02. Illegality . . . . . . . . . . . . . . . . . . 47
SECTION 8.03. Increased Cost and Reduced Return. . . . . . . 48
SECTION 8.04. Base Rate Loans Substituted for
Euro-Dollar Loans. . . . . . . . . . . . . . . . 50
SECTION 8.05. Compensation . . . . . . . . . . . . . . . . . 51
ARTICLE IX
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.01. Notices. . . . . . . . . . . . . . . . . . . . 51
SECTION 9.02. No Waivers . . . . . . . . . . . . . . . . . . 51
SECTION 9.03. Expenses; Documentary Taxes. . . . . . . . . . 52
SECTION 9.04. Indemnification. . . . . . . . . . . . . . . . 52
SECTION 9.05. Sharing of Setoffs . . . . . . . . . . . . . . 55
SECTION 9.06. Amendments and Waivers . . . . . . . . . . . . 56
SECTION 9.07. No Margin Stock Collateral . . . . . . . . . . 57
SECTION 9.08. Successors and Assigns . . . . . . . . . . . . 57
SECTION 9.09. Confidentiality. . . . . . . . . . . . . . . . 59
SECTION 9.10. Representation by Banks. . . . . . . . . . . . 60
SECTION 9.11. Obligations Several. . . . . . . . . . . . . . 60
<PAGE>
SECTION 9.12. Georgia Law. . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 9.13. Severability . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 9.14. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 9.15. Interpretation . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 9.16. Consent to Jurisdiction . . . . . . . . . . . . . . . . . . 62
SECTION 9.17. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 62
EXHIBIT A-1 Form of Syndicated Loan Note
EXHIBIT A-2 Form of Money Market Loan Note
EXHIBIT B Form of Opinion of Counsel for the Borrower
EXHIBIT C Form of Opinion of Special Counsel for the Agent
EXHIBIT D Form of Assignment and Acceptance
EXHIBIT E Form of Notice of Borrowing
EXHIBIT F Form of Compliance Certificate
EXHIBIT G Form of Closing Certificate
EXHIBIT H Form of Money Market Quote Request
EXHIBIT I Form of Money Market Quote
Schedule 4.08 Significant Subsidiaries
<PAGE>
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of December 20, 1995 among THE HOME
DEPOT, INC., the BANKS listed on the signature pages hereof and WACHOVIA BANK
OF GEORGIA, N.A., as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The terms as defined in this Section
1.01 shall, for all purposes of this Agreement and any amendment hereto
(except as herein otherwise expressly provided or unless the context otherwise
requires), have the meanings set forth herein:
"Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upwards, if necessary, to the next higher 1/16th of 1%) by dividing (i) the
applicable London Interbank Offered Rate for such Interest Period by (ii) 1.00
minus the Euro-Dollar Reserve Percentage. The Adjusted London Interbank
Offered Rate shall be adjusted automatically on and as of the effective date
of any change in the Euro-Dollar Reserve Percentage.
"Affiliate" means (i) any Person that directly, or indirectly
through one or more intermediaries, controls the Borrower (a "Controlling
Person"), (ii) any Person (other than the Borrower or a Subsidiary) which is
controlled by or is under common control with a Controlling Person, or (iii)
any Person (other than a Subsidiary) of which the Borrower owns, directly or
indirectly, 20% or more of the common stock or equivalent equity interests.
As used herein, the term "control" means possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
a Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agent" means Wachovia Bank of Georgia, N.A., a national banking
association organized under the laws of the United States of America, in its
capacity as agent for the Banks hereunder, and its successors and permitted
assigns in such capacity.
"Agent's Letter Agreement" means that certain letter agreement,
dated as of October 23, 1995 between the Borrower and the Agent relating to
the structure of the Loans, and certain fees from time to time payable by the
Borrower to the Agent, together with all amendments and modifications thereto.
<PAGE>
"Agreement" means this Credit Agreement, together with all
amendments and supplements hereto.
"Applicable Margin" means (i) with respect to Base Rate Loans, 0%;
and (ii) with respect to Euro-Dollar Loans, (w) if the Borrower's ratio of
Consolidated Funded Debt to Consolidated Total Tangible Capital is equal to or
less than 0.25 to 1.0, 0.12%, (x) if the Borrower's ratio of Consolidated
Funded Debt to Consolidated Total Tangible Capital is greater than or equal to
0.26 to 1.0 but equal to or less than 0.35 to 1.0, 0.125%, (y) if the
Borrower's ratio of Consolidated Funded Debt to Consolidated Total Tangible
Capital is greater than or equal to 0.36 to 1.0 but equal to or less than 0.45
to 1.0, 0.15%, and (z) if the Borrower's ratio of Consolidated Funded Debt to
Consolidated Total Tangible Capital is greater than or equal to 0.46 to 1.0,
0.225%. The determination of the Applicable Margin from time to time shall be
made in accordance with Section 2.07(b). The calculation of each ratio under
this definition shall be rounded upward, if necessary, to the next higher
1/100th of 1%.
"Assignee" has the meaning set forth in Section 9.08(c).
"Assignment and Acceptance" means an Assignment and Acceptance
executed in accordance with Section 9.08(c) in the form attached hereto as
Exhibit D.
"Authority" has the meaning set forth in Section 8.02.
"Bank" means each bank listed on the signature pages hereof as
having a Commitment, and its successors and assigns.
"Base Rate" means for any Base Rate Loan for any day, the rate per
annum equal to the higher as of such day of (i) the Prime Rate, and (ii)
one-half of one percent above the Federal Funds Rate. For purposes of
determining the Base Rate for any day, changes in the Prime Rate shall be
effective on the date of each such change.
"Base Rate Loan" means a Loan to be made as a Base Rate Loan
pursuant to the applicable Notice of Borrowing, Section 2.02(f), or Article
VIII, as applicable.
"Borrower" means The Home Depot, Inc., a Delaware corporation, and
its successors and its permitted assigns.
"Borrowing" means a borrowing hereunder consisting of Loans made
to the Borrower at the same time by the Banks pursuant to Article II. A
Borrowing is a Base Rate Borrowing" if such Loans are Base Rate Loans or a
"Euro-Dollar Borrowing" if such Loans are Euro-Dollar Loans. A Borrowing is a
"Syndicated Borrowing" if it is made pursuant to Section 2.01. A Borrowing is
a "Money Market Borrowing" if it is made pursuant to Section 2.03.
<PAGE>
"Capital Stock" means any nonredeemable capital stock of the
Borrower or any Consolidated Subsidiary (to the extent issued to a Person
other than the Borrower), whether common or preferred.
"CERCLA" means the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. Section 9601 et. seq. and its
implementing regulations and amendments.
"CERCLIS" means the Comprehensive Environmental Response
Compensation and Liability Inventory System established pursuant to CERCLA.
"Change in Control" means (i) any Person or two or more Persons
acting in concert shall have acquired beneficial ownership (within the meaning
of Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 40.0% or more of the outstanding shares of the voting
stock of the Borrower; or (ii) as of any date a majority of the Board of
Directors of the Borrower consists of individuals who were not either (A)
directors of the Borrower as of the corresponding date of the previous year,
(B) selected or nominated to become directors by the Board of Directors of the
Borrower of which a majority consisted of individuals described in clause (A),
or (C) selected or nominated to become directors by the Board of Directors of
the Borrower of which a majority consisted of individuals described in clause
(A) and individuals described in clause (B).
"Change of Law" shall have the meaning set forth in Section 8.02.
"Closing Certificate" has the meaning set forth in Section
3.01(e).
"Closing Date" means December 20, 1995.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor Federal tax code.
"Commitment" means, with respect to each Bank, the amount set
forth opposite the name of such Bank on the signature pages hereof, as such
amount may be reduced from time to time pursuant to Sections 2.07 and 2.08.
"Compliance Certificate" has the meaning set forth in Section
5.01(c).
"Consolidated Funded Debt" means at any date the Debt of the
Borrower and its Consolidated Subsidiaries consisting of (i) the types of Debt
described in clauses (i),(ii), (iii) and (iv) of the definition of Debt
contained in this Agreement, (ii) an amount equal to 800.0% of the aggregate
of all obligations under operating leases for the Fiscal Year following the
last
<PAGE>
Fiscal Year for which audited financial statements have been supplied to
the Banks as contained in the Borrower's Annual Report on Form 10K, and (iii)
Guaranties of Debt of other Persons of the types described in clauses (i) and
(ii) above, determined on a consolidated basis as of such date.
"Consolidated Net Worth" means at any time, Stockholders' Equity,
as set forth or reflected on the most recent consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries, prepared in accordance with GAAP.
"Consolidated Operating Profits" means, for any period, the
Operating Profits of the Borrower and its Consolidated Subsidiaries.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which, in accordance with GAAP, would be
consolidated with those of the Borrower in its consolidated financial
statements as of such date.
"Consolidated Tangible Net Worth" means, at any time,
Stockholders' Equity, less the sum of the value, as set forth or reflected on
the most recent consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries, prepared in accordance with GAAP, of:
(A) Any surplus resulting from any write-up of assets
subsequent to January 30, 1994;
(B) All assets which would be treated as intangible assets
for balance sheet presentation purposes under GAAP, including without
limitation goodwill (whether representing the excess of cost over book value
of assets acquired, or otherwise), trademarks, tradenames, copyrights, patents
and technologies, and unamortized debt discount and expense;
(C) To the extent not included in (B) of this definition,
any amount at which shares of Capital Stock of the Borrower appear as an asset
on the balance sheet of the Borrower and its Consolidated Subsidiaries;
(D) Loans or advances to stockholders, directors, officers
or employees; and
(E) To the extent not included in (B) of this definition,
deferred expenses.
<PAGE>
"Consolidated Total Assets" means, at any time, the total assets
of the Borrower and its Consolidated Subsidiaries, determined on a
consolidated basis, as set forth or reflected on the most recent consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries, prepared in
accordance with GAAP.
"Consolidated Total Tangible Capital" means, at any time, the sum
of (i) Consolidated Tangible Net Worth, and (ii) Consolidated Funded Debt.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414 of the Code.
"Debt" of any Person means at any date, without duplication, (i)
all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable arising in the
ordinary course of business, (iv) the capitalized lease obligations of such
Person as lessee under capital leases, (v) all obligations of such Person to
reimburse any bank or other Person in respect of amounts payable under a
banker's acceptance, (vi) all Redeemable Preferred Stock of such Person (in
the event such Person is a corporation), (vii) all obligations of such Person
to reimburse any bank or other Person in respect of amounts that have actually
been paid under a letter of credit or similar instrument, (viii) all Debt of
others secured by a Lien on any asset of such Person, whether or not such Debt
is assumed by such Person (provided, that, for purposes of this clause (viii),
non-recourse Debt in excess of the value of the asset securing such Debt shall
not be counted), and (ix) all Debt of others Guaranteed by such Person.
"Default" means any condition or event which constitutes an Event
of Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Default Rate" means, with respect to any Loan, on any day, the
sum of 2% plus the interest rate (including the Applicable Margin) applicable
to such Loan hereunder.
"Dividends" means for any period the sum of all dividends paid or
declared during such period in respect of any Capital Stock and Redeemable
Preferred Stock (other than dividends paid or payable in the form of
additional Capital Stock).
"Dollars" or "$" means dollars in lawful currency of the United
States of America.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in Georgia are authorized by law to close.
<PAGE>
"Environmental Authority" means any foreign, federal, state, local
or regional government that exercises any form of jurisdiction or authority
under any Environmental Requirement.
"Environmental Authorizations" means all licenses, permits,
orders, approvals, notices, registrations or other legal prerequisites for
conducting the business of the Borrower or any Subsidiary required by any
Environmental Requirement.
"Environmental Judgments and Orders" means all judgments, decrees
or orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent, or written agreements with
an Environmental Authority or other entity arising from or in any way
associated with any Environmental Requirement, whether or not incorporated in
a judgment, decree or order.
"Environmental Liabilities" means any liabilities, whether
accrued, contingent or otherwise, arising from and in any way associated with
any Environmental Requirements.
"Environmental Notices" means notice from any Environmental
Authority or by any other person or entity, of possible or alleged
noncompliance with or liability under any Environmental Requirement, including
without limitation any complaints, citations, demands or requests from any
Environmental Authority or from any other person or entity for correction of
any violation of any Environmental Requirement or any investigations
concerning any violation of any Environmental Requirement.
"Environmental Proceedings" means any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"Environmental Releases" means releases as defined in CERCLA or
under any applicable state or local environmental law or regulation.
"Environmental Requirements" means any legal requirement relating
to health, safety or the environment and applicable to the Borrower, any
Subsidiary or the Properties, including but not limited to any such
requirement under CERCLA or similar state legislation and all federal, state
and local laws, ordinances, regulations, orders, writs, decrees and common
law.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, or any successor law. Any reference to any
provision of ERISA shall also be deemed to be a reference to any successor
provision or provisions thereof.
<PAGE>
"Euro-Dollar Business Day" means any Domestic Business Day on
which dealings in Dollar deposits are carried out in the London interbank
market.
"Euro-Dollar Loan" means a Loan to be made as a Euro-Dollar Loan
pursuant to the applicable Notice of Borrowing.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in respect of "Eurocurrency Liabilities" (or in respect of any
other category of liabilities which includes deposits by reference to which
the interest rate on Euro-Dollar Loans is determined or any category of
extensions of credit or other assets which includes loans by a non-United
States office of any Bank to United States residents). The Adjusted London
Interbank Offered Rate shall be adjusted automatically on and as of the
effective date of any change in the Euro-Dollar Reserve Percentage.
"Event of Default" has the meaning set forth in Section 6.01.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the next higher 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if the day for which
such rate is to be determined is not a Domestic Business Day, the Federal
Funds Rate for such day shall be such rate on such transactions on the next
preceding Domestic Business Day as so published on the next succeeding
Domestic Business Day, and (ii) if such rate is not so published for any day,
the Federal Funds Rate for such day shall be the average rate charged to the
Agent on such day on such transactions, as determined by the Agent.
"Fiscal Quarter" means any fiscal quarter of the Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
"GAAP" means generally accepted accounting principles applied on a
basis consistent with those which, in accordance with Section 1.02, are to be
used in making the calculations for purposes of determining compliance with
the terms of this Agreement.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or
other obligation of any other Person and, without limiting the generality of
the foregoing, any obligation, direct or indirect, contingent or otherwise, of
such Person (i) to secure, purchase or pay (or advance or supply funds
<PAGE>
for the
purchase or payment of) such Debt or other obligation of such other Person
(whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to provide
collateral security, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) to the extent that such an arrangement would
be considered to be a guaranty under GAAP, entered into for the purpose of
assuring in any other manner the obligee of such Debt or other obligation of
the payment thereof or to protect such obligee against loss in respect thereof
(in whole or in part), provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
The term "Guarantee" used as a verb has a corresponding meaning. For purposes
hereof, the amount of any Guarantee shall be deemed to be equal to the lesser
of (i) any stated amount of the guarantee or (ii) the outstanding amount of
the obligation directly or indirectly guaranteed.
"Hazardous Materials" includes, without limitation, (a) solid or
hazardous waste, as defined in the Resource Conservation and Recovery Act of
1980, 42 U.S.C. Section 6901 et seq. and its implementing regulations and
amendments, or in any applicable state or local law or regulation, (b)
"hazardous substance", "pollutant", or "contaminant" as defined in CERCLA, or
in any applicable state or local law or regulation, (c) gasoline, or any other
petroleum product or by-product, including, crude oil or any fraction thereof,
or (d) pesticides, as defined in the Federal Insecticide, Fungicide, and
Rodenticide Act of 1975, or in any applicable state or local law or
regulation, as each such Act, statute or regulation may be amended from time
to time.
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing and ending on
the numerically corresponding day in the first, second, third or sixth month
thereafter, as the Borrower may elect in the applicable Notice of Borrowing;
provided that:
(a) any Interest Period (subject to paragraph (c) below) which
would otherwise end on a day which is not a Euro-Dollar Business Day
shall be extended to the next succeeding Euro-Dollar Business Day unless
such Euro-Dollar Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Euro-Dollar
Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the appropriate subsequent calendar
month) shall, subject to paragraph (c) below, end on the last
Euro-Dollar Business Day of the appropriate subsequent calendar month;
and
<PAGE>
(c) no Interest Period may be selected which begins before the
Termination Date and would otherwise end after the Termination Date.
(2) with respect to each Base Rate Borrowing, the period commencing on the
date of such Borrowing and ending 30 days thereafter; provided that:
(a) any Interest Period (subject to paragraph (b) below) which
would otherwise end on a day which is not a Domestic Business Day shall
be extended to the next succeeding Domestic Business Day; and
(b) no Interest Period which begins before the Termination Date
and would otherwise end after the Termination Date may be selected.
"Investment" means any investment in any other Person, by means of
purchase or acquisition of obligations of or securities issued by such Person,
capital contribution to such Person, loan or advance to such Person, making of
a time deposit with such Person, Guarantee or assumption of any obligation of
such Person.
"Lending Office" means, as to each Bank, its office located at its
address set forth on the signature pages hereof (or identified on the
signature pages hereof as its Lending Office or such other office as such Bank
may hereafter designate as its Lending Office) by notice to the Borrower and
the Agent.
"Lien" means, with respect to any asset, any mortgage, deed to
secure debt, deed of trust, lien, pledge, charge, security interest, security
title, preferential arrangement which has the practical effect of constituting
a security interest or encumbrance, or encumbrance or servitude of any kind in
respect of such asset to secure or assure payment of a Debt or a Guarantee,
whether by consensual agreement or by operation of statute or other law, or by
any agreement, contingent or otherwise, to provide any of the foregoing. For
the purposes of this Agreement, the Borrower or any Subsidiary shall be deemed
to own subject to a Lien any asset which it has acquired or holds subject to
the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset;
exclusive, however, of (i) any liens for taxes or governmental charges either
not yet delinquent or which are being contested in good faith by appropriate
proceedings, (ii) liens not securing Debt which are created by or relating to
any legal proceeding which at the time are being contested in good faith by
appropriate proceedings or (iii) any other statutory or inchoate lien securing
amounts other than Debt which are not delinquent.
"Loan" means a Base Rate Loan, Euro-Dollar Loan, Syndicated Loan
or Money Market Loan, and "Loans" means Base Rate
<PAGE>
Loans, Euro-Dollar Loans,
Syndicated Loans or Money Market Loans, or any or all of them, as the context
shall require.
"Loan Documents" means this Agreement, the Notes, any other
document to which the Borrower is a party evidencing, relating to or securing
the Loans, and any other document or instrument delivered from time to time in
connection with this Agreement, the Notes or the Loans, as such documents and
instruments may be amended or supplemented from time to time.
"London Interbank Offered Rate" applicable to any Euro-Dollar Loan
means for the Interest Period of such Euro-Dollar Loan, the rate per annum
determined on the basis of the offered rate for deposits in Dollars of amounts
equal or comparable to the principal amount of such Euro-Dollar Loan offered
for a term comparable to such Interest Period, which rates appear on the
Reuters Screen LIBO Page as of 11:00 A.M., London time, 2 Euro-Dollar Business
Days prior to the first day of such Interest period, provided that (i) if more
than one such offered rate appears on the Reuters Screen LIBO Page, the
"London Interbank Offered Rate" will be the arithmetic average (rounded
upward, if necessary, to the next higher 1/100th of 1%) of such offered rates;
(ii) if no such offered rates appear on such page, the "London Interbank
Offered Rate" for such Interest Period will be the arithmetic average (rounded
upward, if necessary, to the next higher 1/100th of 1%) of rates quoted by
Morgan Guaranty Trust Company of New York and Bank of America National Trust &
Savings Association, at approximately 10:00 A.M., New York City time, 2 Euro-
Dollar Business Days prior to the first day of such Interest Period, for
deposits in Dollars offered to leading European banks for a period comparable
so such Interest Period in an amount comparable to the principal amount of
such Euro-Dollar Loan.
"Margin Stock" means "margin stock" as defined in Regulations G,
T, U or X.
"Material Adverse Effect" means, with respect to any event, act,
condition or occurrence of whatever nature (including any adverse
determination in any litigation, arbitration, or governmental investigation or
proceeding), whether singly or in conjunction with any other event or events,
act or acts, condition or conditions, occurrence or occurrences, whether or
not related, a material adverse change in, or a material adverse effect upon,
any of (a) the financial condition, operations, business, or properties of the
Borrower and its Consolidated Subsidiaries taken as a whole, (b) the rights
and remedies of the Agent or the Banks under the Loan Documents, or the
ability of the Borrower to perform its obligations under the Loan Documents to
which it is a party, as applicable, or (c) the legality, validity or
enforceability of any Loan Document, which, in the case of clauses (b) and
(c), would reasonably be expected to result in either the Agent or any Bank
not obtaining the practical realization of the significant benefits purported
to be provided thereby; provided, however, that in no event shall
<PAGE>
either the
Borrower's denial of access to the commercial paper market or the consequences
thereof, in and of itself, be deemed to constitute a Material Adverse Effect.
"Money Market Loan Notes" means the promissory notes of the
Borrower, substantially in the form of Exhibit A-2, evidencing the obligation
of the Borrower to repay Money Market Loans, together with all amendments,
consolidations, modifications, renewals and supplements thereto.
"Money Market Loans" means Loans made pursuant to the terms and
conditions set forth in Section 2.03 hereof.
"Money Market Quote" has the meaning specified in Section 2.03.
"Money Market Quote Request" has the meaning specified in Section
2.03.
"Money Market Rate" has the meaning specified in Section 2.03.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"Net Income" means, as applied to any Person for any period, the
aggregate amount of net income of such Person, after taxes, for such period,
as determined in accordance with GAAP.
"Notes" means, individually and collectively, as the context shall
require, each of the Syndicated Loan Notes and Money Market Loan Notes.
"Notice of Borrowing" has the meaning set forth in Section 2.02.
"Operating Profits" means, as applied to any Person for any
period, the operating income of such Person for such period, as determined in
accordance with GAAP.
"Participant" has the meaning set forth in Section 9.08(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Performance Pricing Date" has the meaning set forth in Section
2.07(b).
"Person" means an individual, a corporation, a partnership, an
unincorporated association, a trust or any other entity or organization,
including, but not limited to, a
<PAGE>
government or political subdivision or an
agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by a member of the
Controlled Group for employees of any member of the Controlled Group or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to
which a member of the Controlled Group is then making or accruing an
obligation to make contributions or has within the preceding 5 plan years made
contributions.
"Prime Rate" refers to that interest rate so denominated and set
by Wachovia from time to time as an interest rate basis for borrowings. The
Prime Rate is but one of several interest rate bases used by Wachovia.
Wachovia lends at interest rates above and below the Prime Rate.
"Properties" means all real property owned, leased or otherwise
used or occupied by the Borrower or any Subsidiary, wherever located.
"Redeemable Preferred Stock" of any Person means any preferred
stock issued by such Person (i) required (by the terms of the governing
instruments or at the option of the holder) to be mandatorily redeemed for
cash at any time prior to the Termination Date (by sinking fund or similar
payments or otherwise) or (ii) redeemable at the option of the holder thereof
at any time prior to the Termination Date.
"Refunding Loan" means a new Loan made on the day on which an
outstanding Loan is maturing or a Base Rate Borrowing is being converted to a
Fixed Rate Borrowing, if and to the extent that the proceeds thereof are used
for the purpose of paying such maturing Loan or Loan being converted,
excluding any difference between the amount of such maturing Loan or Loan
being converted and any greater amount being borrowed on such day and actually
either being made available to the Borrower pursuant to Section 2.02(c) or
remitted to the Agent as provided in Section 2.12, in each case as
contemplated in Section 2.02(d).
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation G" means Regulation G of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
<PAGE>
"Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Required Banks" means at any time Banks having at least 66 2/3%
of the aggregate amount of the Commitments or, if the Commitments are no
longer in effect, Banks holding at least 66 2/3% of the aggregate outstanding
principal amount of the sum of (i) Syndicated Loans and (ii) Money Market
Loans.
"Significant Subsidiary" means any Subsidiary with respect to
which, as of the most recently completed Fiscal Quarter, either (i) the
Borrower's and its other Subsidiaries' investments in and advances to the
Subsidiary exceed 10% of Total Assets, or (ii) the Borrower's and its other
Subsidiaries' proportionate share of Total Assets (after intercompany
eliminations) of the Subsidiary exceeds 10% of Total Assets; provided,
however, that if there are two or more Subsidiaries with respect to which, as
of the most recently completed Fiscal Quarter, either (i) the Borrower's and
its other Subsidiaries investments in and advances to each such Subsidiary
exceed 5% and are less than 10% of Total Assets, but the aggregate of such
investments in and advances to such Subsidiaries exceeds 15% of Total Assets,
or (ii) the Borrower's and its other Subsidiaries' proportionate share of
Total Assets (after intercompany eliminations) of each such Subsidiary exceeds
5% and is less than 10% of Total Assets, but the aggregate proportionate share
of Total Assets of such Subsidiaries exceeds 15% of Total Assets, then in
either case, each such Subsidiary shall constitute a Significant Subsidiary.
"Stated Maturity Date" means, with respect to any Money Market
Loan, the Stated Maturity Date therefor specified by the Bank in the
applicable Money Market Quote.
"Stockholders' Equity" means, at any time, the stockholders'
equity of the Borrower and its Consolidated Subsidiaries, as set forth or
reflected on the most recent consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries prepared in accordance with GAAP, but excluding
any Redeemable Preferred Stock of the Borrower or any of its Consolidated
Subsidiaries. Stockholders' Equity generally would include, but not be
limited to (i) the par or stated value of all
<PAGE>
outstanding Capital Stock, (ii)
capital surplus, (iii) retained earnings, and (iv) various deductions such as
(A) purchases of treasury stock, (B) valuation allowances, (C) receivables due
from an employee stock ownership plan, (D) employee stock ownership plan debt
guarantees, and (E) translation adjustments for foreign currency transactions.
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect
a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the Borrower.
"Syndicated Loans" means Base Rate Loans or Euro-Dollar Loans made
pursuant to the terms and conditions set forth in Section 2.01.
"Syndicated Loan Notes" means the promissory notes of the
Borrower, substantially in the form of Exhibit A-1, evidencing the obligation
of the Borrower to repay Syndicated Loans, together with all amendments,
consolidations, modifications, renewals and supplements thereto.
"Termination Date" means December 19, 2000.
"Third Parties" means all lessees, sublessees, licensees and other
users of the Properties, excluding those users of the Properties in the
ordinary course of the Borrower's business and on a temporary basis.
"Transferee" has the meaning set forth in Section 9.08(d).
"Total Assets" means the total assets of the Borrower and its
Consolidated Subsidiaries, determined as of the most recently completed Fiscal
Quarter in accordance with GAAP.
"Unfunded Vested Liabilities" means, with respect to any Plan at
any time, the amount (if any) by which (i) the present value of all vested
nonforfeitable benefits under such Plan exceeds (ii) the fair market value of
all Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan, but only to the extent that such excess
represents a potential liability of a member of the Controlled Group to the
PBGC or the Plan under Title IV of ERISA.
"Unused Commitment" means at any date, with respect to any Bank,
an amount equal to its Commitment less the aggregate outstanding principal
amount of its Syndicated Loans.
"Wachovia" means Wachovia Bank of Georgia, N.A., a national
banking association, and its successors.
<PAGE>
"Wholly Owned Subsidiary" means any Subsidiary all of the shares
of capital stock or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by the
Borrower.
SECTION 1.02. Accounting Terms and Determinations. Unless
otherwise specified herein, all terms of an accounting character used herein
shall be interpreted, all accounting determinations hereunder shall be made,
and all financial statements required to be delivered hereunder shall be
prepared, in accordance with GAAP, applied on a basis consistent (except for
changes concurred in by the Borrower's independent public accountants or
otherwise required by a change in GAAP) with the most recent audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries delivered to the Banks unless with respect to any such change
concurred in by the Borrower's independent public accountants or required by
GAAP, in determining compliance with any of the provisions of this Agreement
or any of the other Loan Documents: (i) the Borrower shall have objected to
determining such compliance on such basis at the time of delivery of such
financial statements, or (ii) the Required Banks shall so object in writing
within 30 days after the delivery of such financial statements, in either of
which events such calculations shall be made on a basis consistent with those
used in the preparation of the latest financial statements as to which such
objection shall not have been made (which, if objection is made in respect of
the first financial statements delivered under Section 5.01 hereof, shall mean
the financial statements referred to in Section 4.04).
SECTION 1.03. References. Unless otherwise indicated, references
in this Agreement to "Articles", "Exhibits", "Schedules", "Sections" and other
Subdivisions are references to articles, exhibits, schedules, sections and
other subdivisions hereof.
SECTION 1.04. Use of Defined Terms. All terms defined in this
Agreement shall have the same defined meanings when used in any of the other
Loan Documents, unless otherwise defined therein or unless the context shall
require otherwise.
SECTION 1.05. Terminology. All personal pronouns used in this
Agreement, whether used in the masculine, feminine or neuter gender, shall
include all other genders; the singular shall include the plural, and the
plural shall include the singular. Titles of Articles and Sections in this
Agreement are for convenience only, and neither limit nor amplify the
provisions of this Agreement.
<PAGE>
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. Each Bank severally agrees, on
the terms and conditions set forth herein, to make Syndicated Loans to the
Borrower from time to time before the Termination Date; provided that, (i)
immediately after each such Syndicated Loan is made, the aggregate principal
amount of Syndicated Loans by such Bank shall not exceed the amount of its
Commitment, and (ii) the aggregate amount of all Syndicated Loans and Money
Market Loans outstanding shall not exceed the aggregate of all of the
Commitments. Each (A) Base Rate Borrowing under this Section 2.01 shall be in
an aggregate principal amount of $5,000,000 or any larger multiple of $500,000
and (B) Euro-Dollar Borrowing shall be in an aggregate principal amount of
$5,000,000 or any larger multiple of $500,000 (except that any such Syndicated
Borrowings may be in the aggregate amount of the Unused Commitments) and shall
be made from the several Banks ratably in proportion to their respective
Commitments. Any Bank's Money Market Loans shall not reduce such Bank's
Commitment, or be included in calculating its Unused Commitment, for purposes
of future Borrowings under this Section 2.01. Within the foregoing limits,
the Borrower may borrow under this Section 2.01, repay or, to the extent
permitted by Section 2.10, prepay Syndicated Loans and reborrow under this
Section 2.01 at any time before the Termination Date.
SECTION 2.02. Method of Borrowing. (a) The Borrower shall give
the Agent notice (a "Notice of Borrowing"), which shall be substantially in
the form of Exhibit E, on the same day (or prior thereto) for a Base Rate
Borrowing, and at least 3 Euro-Dollar Business Days' prior to each Euro-Dollar
Borrowing (all notices being effective on the day delivered so long as the
Agent shall have received same prior to 12:00 P.M. (noon), Atlanta, Georgia
time) specifying:
(i) the date of such Borrowing, which shall be a
Domestic Business Day in the case of a Base Rate Borrowing or a
Euro-Dollar Business Day in the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Syndicated Loans comprising such
Borrowing are to be Base Rate Loans or Euro-Dollar Loans, and
(iv) in the case of a Euro-Dollar Borrowing, the
duration of the Interest Period applicable thereto, subject to the
provisions of the definition of Interest Period.
<PAGE>
(b) Upon receipt of a Notice of Borrowing, the Agent shall
promptly notify each Bank of the contents thereof and of such Bank's ratable
share of such Borrowing and such Notice of Borrowing shall not thereafter be
revocable by the Borrower.
(c) Not later than 2:00 P.M. (Atlanta, Georgia time) on the
date of each Syndicated Borrowing, each Bank shall (except as provided in
paragraph (d) of this Section) make available its ratable share of such
Syndicated Borrowing, in Federal or other funds immediately available in
Atlanta, Georgia, to the Agent at its address referred to in Section 9.01.
Unless any applicable condition specified in Article III has not been
satisfied or waived, the Agent will make the funds so received from the Banks
available to the Borrower at the Agent's aforesaid address not later than 4:30
P.M. (Atlanta, Georgia time) on the date of any relevant Syndicated Borrowing.
Unless the Agent receives notice from a Bank, at the Agent's address referred
to in or specified pursuant to Section 9.01, (i) in the case of a Base Rate
Borrowing, no later than 2:30 P.M. (Atlanta, Georgia time) on the same day as
such Base Rate Borrowing and (ii) in the case of any other type of Syndicated
Borrowing, no later than 4:00 P.M. (Atlanta, Georgia time) on the Domestic
Business Day before the date of a Syndicated Borrowing stating that such Bank
will not make a Loan in connection with such Syndicated Borrowing, the Agent
shall, in relation to the Banks, be entitled to assume that such Bank will
make a Loan in connection with such Syndicated Borrowing and, in reliance on
such assumption, the Agent may (but shall not be obligated to) make available
such Bank's ratable share of such Syndicated Borrowing to the Borrower for the
account of such Bank. If the Agent makes any such Bank's ratable share of a
Borrowing available to the Borrower, the Agent shall promptly notify (which
notice may be telephonic) the Borrower of the identity of the Bank for whom
such funds were advanced and the amount of such advance. The Agent shall
promptly notify (which notice may be telephonic) the Borrower of the details
of any notice received from any Bank stating that any such Bank does not
intend to make its ratable share of funds available in connection with any
relevant Borrowing. If the Agent makes such Bank's ratable share available to
the Borrower and such Bank does not in fact make its ratable share of such
Syndicated Borrowing available on such date, the Agent shall be entitled to
recover such Bank's ratable share from such Bank or the Borrower (and for such
purpose shall be entitled to charge such amount to any account of the Borrower
maintained with the Agent upon prior notice to the Borrower), together with
interest thereon for each day during the period from the date of such
Syndicated Borrowing until such sum shall be paid in full at a rate per annum
equal to the rate at which the Agent reasonably and in good faith determines
that it obtained (or could have obtained) overnight Federal funds to cover
such amount for each such day during such period, provided that any such
payment by the Borrower of such Bank's ratable share and interest thereon
shall be without prejudice to any rights that the Borrower may have against
such Bank. If the Agent does not exercise its
<PAGE>
option to advance funds for the
account of such Bank, it shall forthwith notify the Borrower of such decision.
(d) If any Bank makes a new Syndicated Loan hereunder on a
day on which the Borrower is to repay all or any part of an outstanding
Syndicated Loan from such Bank, such Bank shall apply the proceeds of its new
Syndicated Loan to make such repayment as a Refunding Loan and only an amount
equal to the difference (if any) between the amount being borrowed and the
amount of such Refunding Loan shall be made available by such Bank to the
Agent as provided in paragraph (c) of this Section, or remitted by the
Borrower to the Agent as provided in Section 2.12, as the case may be.
(e) Notwithstanding anything to the contrary contained in
this Agreement, including, without limitation Section 2.01 and Section 2.03,
no Euro-Dollar Borrowing or Money Market Borrowing may be made if there shall
have occurred a Default or an Event of Default, which Default or Event of
Default shall not have been cured or waived.
(f) In the event that a Notice of Borrowing fails to
specify whether the Syndicated Loans comprising such Syndicated Borrowing are
to be Base Rate Loans or Euro-Dollar Loans, such Syndicated Loans shall be
made as Base Rate Loans. If the Borrower is otherwise entitled under this
Agreement to repay any Syndicated Loans maturing at the end of an Interest
Period applicable thereto with the proceeds of a new Syndicated Borrowing, and
the Borrower fails to repay such Syndicated Loans using its own moneys and
fails to give a Notice of Borrowing in connection with such new Syndicated
Borrowing, a new Syndicated Borrowing shall be deemed to be made on the date
such Syndicated Loans mature in an amount equal to the principal amount of the
Syndicated Loans so maturing, and the Syndicated Loans comprising such new
Syndicated Borrowing shall be Base Rate Loans.
(g) Notwithstanding anything to the contrary contained
herein, including, without limitation Section 2.01 and Section 2.03, there
shall not be more than 10 Euro-Dollar Loans and/or Money Market Loans
outstanding at any given time.
SECTION 2.03. Money Market Loans. (a) In addition to making
Syndicated Borrowings, the Borrower may, as set forth in this Section 2.03,
request the Banks to make offers to make Money Market Borrowings available to
the Borrower. The Banks may, but shall have no obligation to, make such
offers and the Borrower may, but shall have no obligation to, accept any such
offers in the manner set forth in this Section 2.03, provided that:
(i) there may be no more than 10 Euro-Dollar Loans and/or
Money Market Loans outstanding at any given time; and
(ii) the aggregate principal amount of all Money Market
Loans, together with the aggregate principal amount
<PAGE>
of all Syndicated
Loans, at any one time outstanding shall not exceed the aggregate amount
of the Commitments of all of the Banks at such time.
(b) When the Borrower wishes to request offers to make
Money Market Loans, it shall give the Agent (which shall promptly notify the
Banks) notice substantially in the form of Exhibit H hereto (a "Money Market
Quote Request") so as to be received no later than 12:00 P.M. (noon) (Atlanta,
Georgia time) at least 1 Euro-Dollar Business Days prior to the date of the
Money Market Borrowing proposed therein (or such other time and date as the
Borrower and the Agent, with the consent of the Required Banks, may agree),
specifying:
(i) the proposed date of such Money Market Borrowing, which
shall be a Euro-Dollar Business Day (the "Borrowing Date");
(ii) the maturity date (or dates) (each a "Stated Maturity
Date") for repayment of each Money Market Loan to be made as part of
such Money Market Borrowing (which Stated Maturity Date shall be that
date occurring either 7 days, 14 days, 30 days, or any other amount of
days greater than 30 days but not greater than 180 days from the date of
such Money Market Borrowing); provided, that the Stated Maturity Date
for any Money Market Loan may not extend beyond the Termination Date (as
in effect on the date of such Money Market Quote Request); and
(iii) the aggregate amount of principal to be received by the
Borrower as a result of such Money Market Borrowing, which shall be at
least $1,000,000 (and in larger integral multiples of $500,000) but
shall not cause the limits specified in Section 2.03(a) to be violated.
The Borrower may request offers to make Money Market Loans having up to 3
different Stated Maturity Dates in a single Money Market Quote Request;
provided, that the request for each separate Stated Maturity Date shall be
deemed to be a separate Money Market Quote Request for a separate Money Market
Borrowing. Except as otherwise provided in the preceding sentence, after the
first Money Market Quote Request has been given hereunder, no Money Market
Quote Request shall be given until at least 5 Domestic Business Days after all
prior Money Market Quote Requests have been fully processed by the Agent, the
Banks and the Borrower pursuant to this Section 2.03.
(c) (i) Each Bank may, but shall have no obligation to,
submit a response containing an offer to make a Money Market Loan
substantially in the form of Exhibit I hereto (a "Money Market Quote")
in response to any Money Market Quote Request; provided, that, if the
Borrower's request under Section 2.03(b) specified more than 1 Stated
Maturity Date, such Bank may, but shall have no obligation to, make a
<PAGE>
single submission containing a separate offer for each such Stated
Maturity Date and each such separate offer shall be deemed to be a
separate Money Market Quote. Each Money Market Quote must be submitted
to the Agent not later than 10:30 A.M. (Atlanta, Georgia time) on the
Borrowing Date; provided that any Money Market Quote submitted by
Wachovia may be submitted, and may only be submitted, if Wachovia
notifies the Borrower of the terms of the offer contained therein not
later than 10:15 A.M. (Atlanta, Georgia time) on the Borrowing Date (or
15 minutes prior to the time that the other Banks must have submitted
their respective Money Market Quotes). Subject to Section 6.01, any
Money Market Quote so made shall be irrevocable except with the written
consent of the Agent given on the instructions of the Borrower.
(ii) Each Money Market Quote shall specify:
(A) the proposed Borrowing Date and the Stated
Maturity Date therefor;
(B) the principal amounts of the Money Market Loan
which the quoting Bank is willing to make for the applicable
Money Market Quote, which principal amounts (x) may be greater
than or less than the Commitment of the quoting Bank, (y) shall
be at least $1,000,000 or a larger integral multiple of
$500,000, and (z) may not exceed the principal amount of the
Money Market Borrowing for which offers were requested;
(C) the rate of interest per annum (rounded upwards,
if necessary, to the nearest 1/100th of 1%) offered for each
such Money Market Loan, (such amounts being hereinafter
referred to as the "Money Market Rate"); and
(D) the identity of the quoting Bank.
Unless otherwise agreed by the Agent and the Borrower, no Money Market
Quote shall contain qualifying, conditional or similar language or
propose terms other than or in addition to those set forth in the
applicable Money Market Quote Request (other than setting forth the
maximum principal amounts of the Money Market Loan which the quoting
Bank is willing to make for the applicable Interest Period) and, in
particular, no Money Market Quote may be conditioned upon acceptance by
the Borrower of all (or some specified minimum) of the principal amount
of the Money Market Loan for which such Money Market Quote is being
made.
(d) The Agent shall as promptly as practicable after the
Money Market Quote is submitted (but in any event not later than 11:30 A.M.
(Atlanta, Georgia time)) on the Borrowing
[DATE]
Date, notify the Borrower of the
terms (i) of any Money Market Quote submitted by a Bank that is in accordance
with Section 2.03(c) and (ii) of any Money Market Quote that amends, modifies
or is otherwise inconsistent with a previous Money Market Quote submitted by
such Bank with respect to the same Money Market Quote Request. Any such
subsequent Money Market Quote shall be disregarded by the Agent unless such
subsequent Money Market Quote is submitted solely to correct a manifest error
in such former Money Market Quote. The Agent's notice to the Borrower shall
specify (A) the principal amounts of the Money Market Borrowing for which
offers have been received and (B) the respective principal amounts and Money
Market Rates so offered by each Bank (identifying the Bank that made each
Money Market Quote).
(e) Not later than 12:30 P.M. (noon) (Atlanta, Georgia
time) on the Borrowing Date, the Borrower shall notify the Agent of its
acceptance or nonacceptance of the offers so notified to it pursuant to
Section 2.03(d) and the Agent shall promptly notify each affected Bank. In
the case of acceptance, such notice shall specify the aggregate principal
amount of offers (for each Stated Maturity Date) that are accepted. The
Borrower may accept any Money Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the related
Money Market Quote Request;
(ii) the aggregate principal amount of each Money Market
Loan comprising a Money Market Borrowing shall be at least $1,000,000
(and in larger multiples of $500,000) but shall not cause the limits
specified in Section 2.03(a) to be violated;
(iii) acceptance of offers may only be made in ascending
order of Money Market Rates; and
(iv) the Borrower may not accept any offer where the Agent
has advised the Borrower that such offer fails to comply with Section
2.03(c)(ii) or otherwise fails to comply with the requirements of this
Agreement (including without limitation, Section 2.03(a)).
If offers are made by 2 or more Banks with the same Money Market Rates for a
greater aggregate principal amount than the amount in respect of which offers
are accepted for the related Stated Maturity Date, the principal amount of
Money Market Loans in respect of which such offers are accepted shall be
allocated by the Borrower among such Banks as nearly as possible in proportion
to the aggregate principal amount of such offers. Determinations by the
Borrower of the amounts of Money Market Loans shall be conclusive in the
absence of manifest error.
<PAGE>
(f) Any Bank whose offer to make any Money Market Loan has
been accepted shall, not later than 1:30 P.M. (Atlanta, Georgia time) on the
Borrowing Date, make the appropriate amount of such Money Market Loan
available to the Agent at its address referred to in Section 9.01 in
immediately available funds. The amount so received by the Agent shall,
subject to the terms and conditions of this Agreement, be made available to
the Borrower on such date by depositing the same, in immediately available
funds, not later than 4:30 P.M. (Atlanta, Georgia time), in an account of such
Borrower maintained with Wachovia.
SECTION 2.04. Notes. (a) The Syndicated Loans of each Bank
shall be evidenced by a single Syndicated Loan Note payable to the order of
such Bank for the account of its Lending Office in an amount equal to the
original principal amount of such Bank's Commitment.
(b) The Money Market Loans made by any Bank to the Borrower
shall be evidenced by a single Money Market Loan Note payable to the order of
such Bank for the account of its Lending Office in an amount equal to the
original principal amount of the aggregate Commitments.
(c) Upon receipt of each Bank's Notes pursuant to Section
3.01, the Agent shall deliver such Notes to such Bank. Each Bank shall
record, and prior to any transfer of its Notes shall endorse on the schedules
forming a part thereof appropriate notations to evidence, the date, amount and
maturity of, and effective interest rate for, each Loan made by it, the date
and amount of each payment of principal made by the Borrower with respect
thereto, and such schedules of each such Bank's Notes shall constitute
rebuttable presumptive evidence of the respective principal amounts owing and
unpaid on such Bank's Notes; provided, that the failure of any Bank to make
any such recordation or endorsement shall not affect the obligation of the
Borrower hereunder or under the Notes or the ability of any Bank to assign its
Notes. Each Bank is hereby irrevocably authorized by the Borrower so to
endorse its Notes and to attach to and make a part of any Note a continuation
of any such schedule as and when required. In order to verify the Loans
outstanding from time to time, at the request of the Borrower, the Agent shall
furnish the Borrower with its records of transactions under this Agreement, in
reasonable detail.
SECTION 2.05. Maturity of Loans. (a) Each Syndicated Loan
included in any Syndicated Borrowing shall mature, and the principal amount
thereof shall be due and payable, on the last day of the Interest Period
applicable to such Borrowing.
(b) Each Money Market Loan included in any Money Market
Borrowing shall mature, and the principal amount thereof shall be due and
payable upon the Stated Maturity Date therefor.
<PAGE>
(c) Notwithstanding the foregoing, the outstanding
principal amount of the Loans, if any, together with all accrued but unpaid
interest thereon, if any, shall be due and payable on the Termination Date.
SECTION 2.06. Interest Rates. (a) Each Base Rate Loan shall
bear interest on the outstanding principal amount thereof, for each day from
the date such Loan is made until it becomes due, at a rate per annum equal to
the Base Rate for such date plus the Applicable Margin. Such interest shall
be payable for each Interest Period on the last day thereof.
(b) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period applicable
thereto, at a rate per annum equal to the sum of the Applicable Margin plus
the applicable Adjusted London Interbank Offered Rate for such Interest
Period. Such interest shall be payable for each Interest Period on the last
day thereof and, if such Interest Period is longer than 90 days, at intervals
of 90 days after the first day thereof.
(c) Each Money Market Loan shall bear interest on the
outstanding principal amount thereof, for each day from the date such Money
Market Loan is made until it becomes due, at a rate per annum equal to the
applicable Money Market Rate set forth in the relevant Money Market Quote.
Such interest shall be payable on the Stated Maturity Date thereof, and, if
the Stated Maturity Date occurs more than 90 days after the date of the
relevant Money Market Loan, at intervals of 90 days after the first day
thereof.
(d) In the event of default in payment of any principal on
the Loans, interest on the overdue principal amount (and, to the extent
permitted by applicable law, all accrued interest thereon) shall automatically
and without notice bear interest at the Default Rate.
SECTION 2.07. Fees; Calculations. (a) The Borrower shall pay
to the Agent for the ratable account of each Bank a facility fee (the
"Facility Fee") on the maximum amount of the aggregate Commitments in effect
for any relevant period, irrespective of usage, as follows: (i) if the
Borrower's ratio of Consolidated Funded Debt to Consolidated Total Tangible
Capital is equal to or less than 0.25 to 1.0, 0.060%, (ii) if the Borrower's
ratio of Consolidated Funded Debt to Consolidated Total Tangible Capital is
greater than or equal to 0.26 to 1.0 but less than or equal to 0.35 to 1.0,
0.065%, (iii) if the Borrower's ratio of Consolidated Funded Debt to
Consolidated Total Tangible Capital is greater than or equal to 0.36 to 1.0
but less than or equal to 0.45 to 1.0, 0.075%, and (iv) if the Borrower's
ratio of Consolidated Funded Debt to Consolidated Total Tangible Capital is
greater than or equal to 0.46 to 1.0, 0.095%. The Facility Fee shall accrue
at all times from and including the Closing Date to but excluding the
Termination Date
<PAGE>
and shall be payable, in arrears, on each March 31, June 30,
September 30 and December 31 and on the Termination Date. The calculation of
each ratio under this Section shall be rounded upward, if necessary, to the
next higher 1/100th of 1%.
(b) In determining the amounts to be paid by the Borrower
pursuant to Sections 2.06(b)and 2.07(a), the Borrower and the Banks shall
refer to the Borrower's most recent financial statements delivered to the
Banks pursuant to Section 5.01(a) (together with the Compliance Certificate
delivered in connection therewith, the "Audited Statements") and Section
5.01(b) (together with the Compliance Certificate delivered in connection
therewith, the "Unaudited Statements"); provided, that, should any relevant
Audited Statements or Unaudited Statements be delivered on a date later than a
Performance Pricing Determination Date, any necessary changes in the
Applicable Margin and fees to be paid shall not be effective, except to the
extent hereinafter provided to the contrary within this Section 2.07(b), until
the next succeeding Performance Pricing Determination Date (as such term is
hereinafter defined); provided, further, that, should the Audited Statements
reflect a ratio of Consolidated Funded Debt to Consolidated Total Tangible
Capital other than the ratio of Consolidated Funded Debt to Consolidated Total
Tangible Capital determined by the Unaudited Statements for the third Fiscal
Quarter, then (i) should the Audited Statements reveal that the Borrower
should have paid interest and fees at a higher rate for the period from the
last Performance Pricing Determination Date to the next Performance Pricing
Determination Date then the Borrower shall immediately pay to the Banks such
amounts as are necessary to cause the Banks to have received the appropriate
return, and (ii) should the Audited Statements reveal that the Borrower should
have paid interest and fees at a lower rate for the period from the last
Performance Pricing Determination Date to the next Performance Pricing
Determination Date, then, so long as no Default shall be in existence, the
Banks shall promptly pay to the Borrower such amounts as are necessary to
cause the Banks to have received the appropriate return. For purposes hereof,
"Performance Pricing Determination Date" shall mean each date that occurs 45
days after the end of each of the first 3 Fiscal Quarters, and 90 days after
the end of the last Fiscal Quarter, of the Borrower. All determinations
hereunder shall be made by the Agent unless the Required Banks shall object to
any such determination. Notwithstanding the foregoing, for purposes of
determining the amounts to be paid by the Borrower pursuant to Sections
2.06(b) and 2.07(a) until the Performance Pricing Determination Date which
occurs on or about April 30, 1996, the ratio of Consolidated Funded Debt to
Consolidated Total Tangible Capital shall conclusively be presumed to be
greater than 0.25 to 1.0 but less than 0.35 to 1.0.
(c) The Borrower shall pay to the Agent, for the account
and sole benefit of the Agent, such fees and other
<PAGE>
amounts at such times as
set forth in the Agent's Letter Agreement.
SECTION 2.08. Optional Termination or Reduction of Commitments.
The Borrower may, upon at least 3 Domestic Business Days' notice to the Agent
(which notice the Agent shall promptly forward to the Banks), terminate at any
time, or proportionately reduce the Unused Commitments from time to time by an
aggregate amount of at least $5,000,000, or any larger multiple of $1,000,000.
If the Commitments are terminated in their entirety, all accrued fees (as
provided under Section 2.07) shall be due and payable on the effective date of
such termination.
SECTION 2.09. Termination of Commitments. The Commitments
shall terminate on (i) the Termination Date or (ii) upon any earlier date
specified in any notice of termination sent by the Agent (acting at the
direction of the Required Banks) to the Borrower following a Change in
Control, and upon any such termination, the Loans (together with accrued
interest thereon and fees payable with respect thereto) then outstanding shall
be due and payable on such date.
SECTION 2.10. Optional Prepayments. (a) The Borrower may, upon
at least 1 Domestic Business Day's notice to the Agent (which notice the Agent
shall promptly forward to the Banks) and payment to the Agent, for the ratable
benefit of the Banks, of any amounts required by Section 8.05, prepay any Base
Rate Borrowing (to the extent not precluded by Section 2.10(b)) in whole or in
part at any time, in a minimum amount of at least $5,000,000, or any larger
multiple of $500,000, by paying the principal amount to be prepaid together
with accrued interest thereon to the date of prepayment. Each such optional
prepayment shall be applied to prepay ratably the Loans of the several Banks
included in such relevant Borrowing.
(b) Subject to any and all payments required pursuant to
the provisions of Article VIII hereof, the Borrower may prepay all or any
portion of the principal amount of any Money Market Loan or Euro-Dollar Loan
prior to the end of the relevant Stated Maturity Date or Interest Period,
respectively, applicable to such Loan.
(c) Upon receipt of a notice of prepayment pursuant to this
Section 2.10, the Agent shall promptly notify each Bank of the contents
thereof and of such Bank's ratable share of such prepayment and such notice
shall not thereafter be revocable by the Borrower.
SECTION 2.11. Mandatory Prepayments. On each date on which the
Commitments are reduced pursuant to Section 2.08, the Borrower shall repay or
prepay such principal amount of the outstanding Loans (together with interest
accrued thereon), as may be necessary so that after such payment the aggregate
unpaid
<PAGE>
principal amount of the Loans does not exceed the amount of the
aggregate Commitments as then reduced.
SECTION 2.12. General Provisions as to Payments. (a) The
Borrower shall make each payment of principal of, and interest on, the Loans
and of fees hereunder, not later than 1:00 P.M. (Atlanta, Georgia time) on
the date when due, without offset, in Federal or other funds immediately
available in Atlanta, Georgia, to the Agent at its address referred to in
Section 9.01. The Agent will promptly distribute to each Bank (and, following
the occurrence and during the continuance of an Event of Default, for
application by such Bank against amounts owing to such Bank by the Borrower in
such order as such Bank shall elect) its ratable share of each such payment
received by the Agent for the account of the Banks; provided, that, should the
Agent actually receive any relevant payment from the Borrower prior to 1:00
P.M. (Atlanta, Georgia time) on the date when due, the Agent shall initiate
the distribution process (by wire or otherwise) to such Bank of each such
Bank's ratable portion of any payment received by the Agent prior to 5:00 P.M.
(Atlanta, Georgia time).
(b) Whenever any payment of principal of, or interest on,
the Base Rate Loans or Money Market Loans shall be due on a day which is not a
Domestic Business Day, the date for payment thereof shall be extended to the
next succeeding Domestic Business Day. Whenever any payment of principal of
or interest on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to
the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case the date for payment
thereof shall be the next preceding Euro-Dollar Business Day.
(c) All payments of principal, interest and fees and all
other amounts to be made by the Borrower pursuant to this Agreement with
respect to any Loan or fee relating thereto shall be paid without deduction
for, and free from, any tax, imposts, levies, duties, deductions, or
withholdings of any nature now or at anytime hereafter imposed by any
governmental authority or by any taxing authority thereof or therein excluding
in the case of each Bank, taxes imposed on or measured by its net income, and
franchise taxes imposed on it, by the jurisdiction under the laws of which
such Bank (as the case may be) is organized or any political subdivision
thereof and, in the case of each Bank, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction of such Bank's applicable
Lending Office or any political subdivision thereof (all such non-excluded
taxes, imposts, levies, duties, deductions or withholdings of any nature being
"Taxes"). In the event that the Borrower is required by applicable law to
make any such withholding or deduction of Taxes with respect to any Loan or
fee or other amount, the Borrower shall pay such deduction or withholding to
the applicable taxing authority, shall promptly furnish to any Bank in respect
of which
<PAGE>
such deduction or withholding is made all receipts and other
documents evidencing such payment and shall pay to such Bank additional
amounts as may be necessary in order that the amount received by such Bank
after the required withholding or other payment shall equal the amount such
Bank would have received had no such withholding or other payment been made.
If no withholding or deduction of Taxes are payable in respect to any Loan or
fee relating thereto, the Borrower shall furnish any, at such Bank's request,
a certificate from each applicable taxing authority or an opinion of counsel
acceptable to such, in either case stating that such payments are exempt from
or not subject to withholding or deduction of Taxes. If the Borrower fails to
provide such original or certified copy of a receipt evidencing payment of
Taxes or certificate(s) or opinion of counsel of exemption, the Borrower
hereby agrees to compensate such Bank for, and indemnify them with respect to,
the tax consequences of the Borrower's failure to provide evidence of tax
payments or tax exemption.
Each Bank agrees, as soon as practicable after request by it of
a request by the Borrower to do so, to file all appropriate forms and take
other appropriate action to obtain a certificate or other appropriate document
from the appropriate governmental authority in the jurisdiction imposing the
relevant taxes, establishing that it is entitled to receive payments of
principal and interest under this Agreement and the Notes without deduction
and free from withholding of any Taxes imposed by such jurisdiction; provided,
that, if it is unable, for any reason, to establish such exemption, or to file
such forms and, in any event, during such period of time as such request for
exemption is pending, the Borrower shall nonetheless remain obligated under
the terms of the immediately preceding paragraph.
In the event any Bank receives a refund of any Taxes paid by
the Borrower pursuant to this Section 2.12(c), it will pay to the Borrower the
amount of such refund promptly upon receipt thereof; provided, however, if at
any time thereafter it is required to return such refund, the Borrower shall
promptly repay to it the amount of such refund.
Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower and the
Banks contained in this Section 2.12(c) shall be applicable with respect to
any Participant, Assignee or other Transferee, and any calculations required
by such provisions (i) shall be made based upon the circumstances of such
Participant, Assignee or other Transferee, and (ii) constitute a continuing
agreement and shall survive the termination of this Agreement and the payment
in full or cancellation of the Notes.
SECTION 2.13. Computation of Interest and Fees. Interest on
the Loans shall be computed on the basis of a year of 365/366 days, as to Base
Rate Loans, and 360 days, as to Euro-
<PAGE>
Dollar Loans and Money Market Loans, in
each case for the actual number of days elapsed, calculated as to each
Interest Period or Stated Maturity Date, as applicable, from and including the
first day thereof to but excluding the last day thereof. Facility Fees and
any other fees payable hereunder from time to time shall be computed on the
basis of a year of 360 days and paid for the actual number of days elapsed
(including the first day but excluding the last day).
ARTICLE III
CONDITIONS TO BORROWINGS
SECTION 3.01. Conditions to First Borrowing. The obligation of
each Bank to make a Syndicated Loan on the occasion of the first Syndicated
Borrowing is subject to the satisfaction of the conditions set forth in
Section 3.02 and receipt by the Agent of the following:
(a) from each of the parties hereto of a duly executed
counterpart of this Agreement signed by such party;
(b) a duly executed (i) Syndicated Loan Note and (ii) Money
Market Loan Note for the account of each Bank complying with the
provisions of Section 2.04;
(c) an opinion letter (together with any opinions of local
counsel relied on therein) of Lawrence K. Menter, general counsel to the
Borrower, substantially in the form of Exhibit B, dated as of the
Closing Date, and covering such additional matters relating to the
transactions contemplated hereby as the Agent or any Bank may reasonably
request;
(d) an opinion of Jones, Day, Reavis & Pogue, special
counsel for the Agent, dated as of the Closing Date, substantially in
the form of Exhibit C and covering such additional matters relating to
the transactions contemplated hereby as the Agent may reasonably
request;
(e) a certificate (the "Closing Certificate") substantially
in the form of Exhibit G), dated as of the Closing Date, signed by a
principal financial officer of the Borrower, to the effect that (i) no
Default has occurred and is continuing on the date of the first
Borrowing and (ii) the representations and warranties of the Borrower
contained in Article IV are true on and as of the date of the first
Borrowing hereunder;
(f) all documents which the Agent or any Bank may
reasonably request relating to the existence of the Borrower, the
corporate authority for and the validity of this Agreement, the Notes,
and the other Loan Documents and
<PAGE>
any other matters relevant hereto, or
thereto, all in form and substance reasonably satisfactory to the Agent,
including, without limitation, a certificate of incumbency of the
Borrower, signed by the Secretary or an Assistant Secretary of the
Borrower, certifying as to the names, true signatures and incumbency of
the officer or officers, respectively, of the Borrower authorized to
execute and deliver the Loan Documents, and certified copies of the
following items, for the Borrower: (i) Certificate/Articles of
Incorporation, (ii) Bylaws, (iii) a certificate of the Secretary of
State of the state of incorporation as to the good standing of each as a
corporation in that state, and (iv) the action taken by the Board of
Directors authorizing the execution, delivery and performance of this
Agreement, the Notes, and the other Loan Documents;
(g) a Notice of Borrowing;
(h) evidence reasonably satisfactory to the Agent that the
Borrower has in force and effect insurance satisfying the requirements
of Section 5.10;
(i) letter agreement whereby the Borrower's Credit
Agreement dated as of November 2, 1994 with certain of the Banks is
terminated; and
(j) such other certificates or documents as the Agent or
any Bank may reasonably request.
SECTION 3.02. Conditions to All Borrowings. The obligation of
each Bank to make a Syndicated Loan on the occasion of each Syndicated
Borrowing, other than a Borrowing which consists solely of a Refunding Loan,
is subject to the satisfaction of the following conditions:
(a) receipt by the Agent of a Notice of Borrowing;
(b) the fact that, immediately before and after giving
effect to such Borrowing, no Default shall have occurred and be
continuing;
(c) the fact that the representations and warranties of the
Borrower contained in Article IV of this Agreement shall be true on and
as of the date of such Borrowing; and
(d) the fact that, immediately after such Borrowing, the
aggregate outstanding principal amount of the Syndicated Loans of each
Bank will not exceed the amount of its Commitment.
Each Borrowing (both Syndicated and Money Market) hereunder, other than a
Borrowing which consists solely of a Refunding Loan, shall be deemed to be a
representation and warranty by the
<PAGE>
Borrower on the date of such Borrowing as
to the truth and accuracy of the facts specified in paragraphs (b), (c) and
(d) of this Section, except to the extent they relate to a particular date
only.
ARTICLE IV-A
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, is duly qualified to transact
business in every jurisdiction where the failure to so qualify would
reasonably be expected to have or cause a Material Adverse Effect, and has all
corporate powers and all governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted, except where the
failure to possess any such licenses, authorizations, consents, or approvals
would not reasonably be expected to have or cause a Material Adverse Effect.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of
this Agreement, the Notes and the other Loan Documents (i) are within the
Borrower's corporate powers, (ii) have been duly authorized by all necessary
corporate action, (iii) require no action by or in respect of or filing with,
any governmental body, agency or official, (iv) do not contravene, or
constitute a default under, any provision of applicable law or regulation or
of the certificate of incorporation or by-laws of the Borrower or of any
material agreement, judgment, injunction, order, decree or other instrument
binding upon the Borrower or any of its Significant Subsidiaries, and (v) do
not result in the creation or imposition of any Lien on any asset of the
Borrower or any of its Significant Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement constitutes a
valid and binding agreement of the Borrower enforceable in accordance with its
terms, and the Notes and the other Loan Documents, when executed and delivered
in accordance with this Agreement, will constitute valid and binding
obligations of the Borrower enforceable in accordance with their respective
terms, provided that the enforceability hereof and thereof is subject in each
case to general principles of equity and to bankruptcy, insolvency and similar
laws affecting the enforcement of creditors' rights generally.
SECTION 4.04. Financial Information. (a) The consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of January
30, 1995 and the related consolidated
<PAGE>
statements of income, stockholders'
equity and cash flows for the Fiscal Year then ended, reported on by KPMG Peat
Marwick, copies of which have been delivered to each of the Banks, and the
unaudited consolidated financial statements of the Borrower for the interim
period ended July 31, 1995, copies of which have been delivered to each of the
Banks, fairly present, in conformity with GAAP, the consolidated financial
position of the Borrower and its Consolidated Subsidiaries as of such dates
and their consolidated results of operations and cash flows for such periods
stated, except, in the case of interim periods, as to the absence of footnotes
and to normal year-end audit adjustments.
(b) Since January 30, 1995, there has been no event, act,
condition or occurrence having a Material Adverse Effect.
SECTION 4.05. No Litigation. There is no action, suit or
proceeding pending, or to the knowledge of the Borrower threatened, against or
affecting the Borrower or any of its Subsidiaries before any court or
arbitrator or any governmental body, agency or official which would reasonably
be expected to have or cause a Material Adverse Effect.
SECTION 4.06. Compliance with ERISA. (a) The Borrower and each
member of the Controlled Group have fulfilled their obligations under the
minimum funding standards of ERISA and the Code with respect to each Plan and
are in compliance in all material respects with the presently applicable
provisions of ERISA and the Code, and have not incurred any liability to the
PBGC or a Plan under Title IV of ERISA.
(b) Neither the Borrower nor to the best of Borrower's
knowledge and belief any member of the Controlled Group is or ever has been
obligated to contribute to any Multiemployer Plan.
SECTION 4.07. Compliance with Laws; Payment of Taxes. The
Borrower and its Subsidiaries are in compliance with all applicable laws,
regulations and similar requirements of governmental authorities, except where
(i) such compliance is being contested in good faith through appropriate
proceedings or (ii) the failure to be in compliance would not reasonably be
expected to have or cause a Material Adverse Effect. There have been filed on
behalf of the Borrower and its Subsidiaries all Federal, state and local
income, excise, property and other tax returns which are required to be filed
by them and all taxes shown due and owing by such returns have been paid. The
charges, accruals and reserves on the books of the Borrower and its
Subsidiaries in respect of taxes or other governmental charges are, in the
opinion of the Borrower, adequate. United States federal income tax returns
of the Borrower and its Subsidiaries have been examined and closed through the
Fiscal Year ended February 3, 1991.
<PAGE>
SECTION 4.08. Significant Subsidiaries. Each of the Borrower's
Significant Subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation, is duly
qualified to transact business in every jurisdiction where the failure to
qualify would reasonably be expected to have or cause a Material Adverse
Effect, and has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business
substantially as now conducted, except where the failure to possess any such
licenses, authorizations, consents or approvals would not reasonably be
expected to have or cause a Material Adverse Effect. The Borrower has no
Significant Subsidiaries except for those Significant Subsidiaries listed on
Schedule 4.08 (as supplemented in writing from time to time by the Borrower),
which accurately sets forth each such Subsidiary's complete name and
jurisdiction of incorporation.
SECTION 4.09. Investment Company Act. Neither the Borrower nor
any of its Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
SECTION 4.10. Public Utility Holding Company Act. Neither the
Borrower nor any of its Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or
of a "subsidiary company" of a "holding company", as such terms are defined in
the Public Utility Holding Company Act of 1935, as amended.
SECTION 4.11. Ownership of Property; Liens. Each of the
Borrower and its Significant Subsidiaries has title to its properties
sufficient for the conduct of its business, and none of such property is
subject to any Lien except as permitted in Section 5.04.
SECTION 4.12. No Default. Neither the Borrower nor any of its
Consolidated Subsidiaries is in default under or with respect to any
agreement, instrument or undertaking to which it is a party or by which it or
any of its property is bound which could reasonably be expected to have or
cause a Material Adverse Effect. No Default or Event of Default has occurred
and is continuing.
SECTION 4.13. Full Disclosure. All written information
heretofore furnished by the Borrower to the Agent or any Bank for purposes of
or in connection with this Agreement or any transaction contemplated hereby
is, and all such information hereafter furnished by the Borrower to the Agent
or any Bank will be, true and correct in all material respects or based on
what the Borrower in good faith believes to be reasonable estimates on the
date as of which such information is stated or certified.
SECTION 4.14. Environmental Matters. (a) Neither the Borrower
nor any Subsidiary is subject to any Environmental
<PAGE>
Liability which could have
or cause a Material Adverse Effect and neither the Borrower nor any Subsidiary
has been designated as a potentially responsible party under CERCLA or under
any state statute similar to CERCLA. None of the Properties has been
identified on any current or proposed (i) National Priorities List under 40
C.F.R. Section 300, (ii) CERCLIS list or (iii) any list arising from a state
statute similar to CERCLA.
(b) No Hazardous Materials have been or are being used,
produced, manufactured, processed, treated, recycled, generated, stored,
disposed of, managed or otherwise handled at, or shipped or transported to or
from the Properties or are otherwise present at, on, in or under the
Properties, or, to the best of the knowledge of the Borrower, at or from any
adjacent site or facility, except for Hazardous Materials, such as cleaning
solvents, pesticides and other materials used, produced, manufactured,
processed, treated, recycled, generated, stored, disposed of, managed, or
otherwise handled in minimal amounts in the ordinary course of business in
compliance with all applicable Environmental Requirements.
(c) The Borrower, and each of its Subsidiaries and
Affiliates, (i) has procured all Environmental Authorizations necessary for
the conduct of its business, and (ii) is in compliance with all Environmental
Requirements in connection with the operation of the Properties and the
Borrower's, and each of its Subsidiary's and Affiliate's, respective
businesses, in each case set forth in either of clause (i) or (ii) where the
failure to procure or non-compliance with which would reasonably be expected
to have or cause a Material Adverse Effect.
SECTION 4.15. Capital Stock. All Capital Stock, debentures,
bonds, notes and all other securities of the Borrower and its Subsidiaries
presently issued and outstanding are validly and properly issued in accordance
with all applicable laws, including, but not limited to, the "Blue Sky" laws
of all applicable states and the federal securities laws, except where the
failure to have complied with such laws would not reasonably be expected to
have or cause a Material Adverse Effect. The issued shares of Capital Stock
of the Borrower's Wholly Owned Subsidiaries which are Significant Subsidiaries
are owned by the Borrower free and clear of any Lien or adverse claim. At
least a majority of the issued shares of capital stock of each of the
Borrower's other Significant Subsidiaries (other than Wholly Owned
Subsidiaries which are Significant Subsidiaries) is owned by the Borrower free
and clear of any Lien or adverse claim.
SECTION 4.16. Margin Stock. Neither the Borrower nor any of
its Subsidiaries is engaged principally, or as one of its important
activities, in the business of purchasing or carrying any Margin Stock, and no
part of the proceeds of any Loan will be used for any purpose, including,
without limitation, to purchase or carry any Margin Stock or to extend credit
to others for the purpose of purchasing or carrying any Margin Stock, which
<PAGE>
violates, or which is inconsistent with, the provisions of Regulation U or
Regulation X.
SECTION 4.17. Insolvency. After giving effect to the execution
and delivery of the Loan Documents and the making of the Loans under this
Agreement, the Borrower will not be "insolvent," within the meaning of such
term as used in O.C.G.A. Section 18-2-22 or as defined in Section 101 of
Title 11 of the United States Code or Section 2 of the Uniform Fraudulent
Transfer Act, or any other applicable state law pertaining to fraudulent
transfers, as each may be amended from time to time, or be unable to pay its
debts generally as such debts become due, or have an unreasonably small capital
to engage in any business or transaction, whether current or contemplated.
ARTICLE IV-B
REPRESENTATIONS AND WARRANTIES OF THE BANKS AND THE AGENT
The Agent and each Bank severally represents and warrants on
behalf of itself, but not on behalf of any other Person, that:
SECTION 4.18. Agent and Bank Corporate Existence and Power. It
is, respectively, a banking association or corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has all corporate powers and all material governmental
licenses, authorizations and approvals required to perform its obligations
hereunder.
SECTION 4.19. Agent and Bank Binding Effect. This Agreement
constitutes a valid and binding agreement of it enforceable against it in
accordance with its terms, provided that the enforceability hereof is subject
in each case to general principles of equity and to bankruptcy, insolvency and
similar laws affecting the enforcement of creditors' rights generally.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any
Commitment hereunder or any amount payable hereunder or under any Note remains
unpaid:
SECTION 5.01. Information. The Borrower will deliver to the
Agent:
(a) as soon as available and in any event within 90 days
after the end of each Fiscal Year, a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such Fiscal
Year and the
<PAGE>
related consolidated statements of income, stockholders'
equity and cash flows for such Fiscal Year, setting forth in each case
in comparative form the figures for the previous fiscal year, all
certified by KPMG Peat Marwick or other independent public accountants
of nationally recognized standing, with such certification to be free of
material exceptions and qualifications not reasonably acceptable to the
Required Banks, except as permitted by Section 1.02;
(b) as soon as available and in any event within 45 days
after the end of each of the first 3 Fiscal Quarters of each Fiscal
Year, a consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such Fiscal Quarter and the related
statement of income and statement of cash flows for such Fiscal Quarter
and for the portion of the Fiscal Year ended at the end of such Fiscal
Quarter, setting forth in each case in comparative form the figures for
the corresponding Fiscal Quarter (Fiscal Year only in the case of
balance sheets) and the corresponding portion of the previous Fiscal
Year, all certified (subject to the absence of footnotes and to normal
year-end audit adjustments) as to fairness of presentation, GAAP and
consistency by the chief financial officer or the chief accounting
officer of the Borrower;
(c) simultaneously with the delivery of each set of
financial statements referred to in paragraphs (a) and (b) above, a
certificate, substantially in the form of Exhibit F (a "Compliance
Certificate"), of the chief financial officer or the chief accounting
officer of the Borrower (i) setting forth in reasonable detail the
calculations required to establish whether the Borrower was in
compliance with the requirements of Sections 5.03 and 5.15 on the date
of such financial statements and (ii) stating whether any Default exists
on the date of such certificate and, if any Default then exists, setting
forth the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto;
(d) within 5 Domestic Business Days after any of the chief
executive, chief financial, chief operating, chief legal or chief
accounting officer of the Borrower becomes aware of the occurrence of
any Default, a certificate of the chief financial officer or the chief
accounting officer of the Borrower setting forth the details thereof and
the action which the Borrower is taking or proposes to take with respect
thereto;
(e) promptly upon the mailing thereof to the stockholders
of the Borrower generally, copies of all financial statements, reports
and proxy statements so mailed;
<PAGE>
(f) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and annual,
quarterly or monthly reports which the Borrower shall have filed with
the Securities and Exchange Commission;
(g) if and when any member of the Controlled Group (i)
gives or is required to give notice to the PBGC of any "reportable
event" (as defined in Section 4043 of ERISA) with respect to any Plan
which might constitute grounds for a termination of such Plan under
Title IV of ERISA, or knows that the plan administrator of any Plan has
given or is required to give notice of any such reportable event, a copy
of the notice of such reportable event given or required to be given to
the PBGC; (ii) receives notice of complete or partial withdrawal
liability under Title IV of ERISA, a copy of such notice; or (iii)
receives notice from the PBGC under Title IV of ERISA of an intent to
terminate or appoint a trustee to administer any Plan, a copy of such
notice; and
(h) from time to time such additional information regarding
the financial position or business of the Borrower and its Subsidiaries
as the Agent, at the request of any Bank, may reasonably request.
SECTION 5.02. Inspection of Property, Books and Records. The
Borrower will (i) keep, and cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries in conformity with
GAAP shall be made of all dealings and transactions in relation to its
business and activities; and (ii) permit, and cause each Subsidiary to permit,
representatives of the Agent at the Banks' expense prior to the occurrence of
a Default and at the Borrower's expense after the occurrence of a Default to
visit and inspect any of their respective properties, to examine and make
abstracts from any of their respective books and records and to discuss their
respective affairs, finances and accounts with their respective officers,
employees and independent public accountants. The Borrower agrees to
cooperate and assist in such visits and inspections, in each case at such
reasonable times and as often as may reasonably be requested.
SECTION 5.03. Ratio of Consolidated Funded Debt to Consolidated
Total Tangible Capital. The ratio of Consolidated Funded Debt to Consolidated
Total Tangible Capital will not exceed 0.60 to 1.00, calculated at the end of
each Fiscal Quarter.
SECTION 5.04. Negative Pledge. Neither the Borrower nor any
Consolidated Subsidiary will create, assume or suffer to exist any Lien on any
asset now owned or hereafter acquired by it, except:
<PAGE>
(a) Liens existing on the date of this Agreement securing
Debt outstanding on the date of this Agreement in an aggregate principal
amount with respect to Debt for borrowed money and capital leases not
exceeding $99,036,000;
(b) any Lien existing on any asset of any (i) corporation
or partnership at the time such corporation or such partnership becomes
a Consolidated Subsidiary, or (ii) Subsidiary at the time it becomes a
Significant Subsidiary, and in either case not created in contemplation
of such event;
(c) any Lien on any asset securing Debt incurred or assumed
for the purpose of financing all or any part of the cost of acquiring or
constructing such asset, provided that such Lien attaches to such asset
concurrently with or within 18 months after the acquisition or
completion of construction thereof;
(d) any Lien on any asset of any corporation existing at
the time such corporation is merged or consolidated with or into the
Borrower or a Consolidated Subsidiary and not created in contemplation
of such event;
(e) any Lien existing on any asset prior to the acquisition
thereof by the Borrower or a Consolidated Subsidiary and not created in
contemplation of such acquisition;
(f) Liens securing Debt owing by any Subsidiary to the
Borrower;
(g) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt secured by any Lien permitted by any of
the foregoing paragraphs of this Section, provided that (i) such Debt is
not secured by any additional assets, and (ii) the amount of such Debt
secured by any such Lien is not increased;
(h) Liens incidental to the conduct of its business or the
ownership of its assets which (i) do not secure Debt (other than Debt
arising from operating leases which become capital leases as required by
GAAP) and (ii) do not in the aggregate materially detract from the value
of its assets or materially impair the use thereof in the operation of
its business;
(i) any Lien on Margin Stock; and
(j) Liens not otherwise permitted by the foregoing
paragraphs of this Section securing Debt (other than indebtedness
represented by the Notes) in an aggregate principal amount at any time
outstanding not to exceed 20% of Consolidated Tangible Net Worth.
<PAGE>
Provided Liens permitted by the foregoing paragraphs (a) through (j) shall at
no time secure Debt in an aggregate amount greater than 25% of Consolidated
Tangible Net Worth.
SECTION 5.05. Maintenance of Existence. The Borrower shall,
and shall cause each Subsidiary to, maintain its corporate existence and carry
on its business in substantially the same manner and in substantially the same
fields as such business is now carried on and maintained, except as permitted
by Section 5.07; provided, however, that (i) any Subsidiary may be
reincorporated under the laws of another state, and (ii) so long as no Event
of Default shall be in existence or be caused thereby, nothing in this
Agreement shall prevent the abandonment or termination of the existence,
rights and franchises, or the change in the business of any Subsidiary which
is not a Significant Subsidiary, if, in the opinion of the Board of Directors
of the Borrower, such abandonment, termination or change is in the best
interest of the Borrower and not disadvantageous in any material respect to
the Banks.
SECTION 5.06. Dissolution. Neither the Borrower nor any of its
Significant Subsidiaries shall suffer or permit dissolution or liquidation
either in whole or in part (except as permitted by Section 5.05) or redeem or
retire any shares of its own stock or that of any Significant Subsidiary,
except through corporate reorganization to the extent permitted by Section
5.07.
SECTION 5.07. Consolidations, Mergers and Sales of Assets. The
Borrower will not, nor will it permit any Significant Subsidiary to,
consolidate with or merge into, or sell, lease or otherwise transfer all or
any substantial part of its assets to, any other Person; provided that (i) the
Borrower may consolidate with or merge into another Person if (A) such Person
is a solvent corporation organized under the laws of the United States of
America or one of its states, (B) the Borrower is the corporation surviving
such merger or consolidation and (C) immediately after giving effect to such
merger or consolidation, no Event of Default shall have occurred and be
continuing, (ii) Subsidiaries may consolidate with or merge into one another
or into any other Person if, in the case of a merger or consolidation
involving a Significant Subsidiary, (A) such other Person is a solvent
corporation organized under the laws of the United States of America or one of
its states, (B) the Person surviving such merger or consolidation is a Wholly
Owned Subsidiary and (C) immediately after giving effect to such merger or
consolidation no Event of Default shall have occurred and be continuing,
(iii) the Borrower and its Subsidiaries may sell, lease or otherwise transfer
assets among themselves, and (iv) the foregoing limitation on the sale, lease
or other transfer of assets shall not prohibit, during any Fiscal Quarter, a
transfer of assets (in a single transaction or in a series of related
transactions) unless the aggregate assets to be so transferred, when combined
with all other assets transferred during such Fiscal Quarter and the
immediately preceding 3 Fiscal Quarters,
<PAGE>
either (A) constituted more than 10%
of Consolidated Total Assets at the end of such Fiscal Quarter or
(B) contributed more than 10% to Consolidated Operating Profits during such
Fiscal Quarter and the 3 Fiscal Quarters immediately preceding such Fiscal
Quarter.
SECTION 5.08. Use of Proceeds. No portion of the proceeds of
the Loans will be used by the Borrower or any Subsidiary (i) to fund any
tender offer for, or other acquisition of, stock of any other Person with a
view towards obtaining control of such other Person at a time when the board
of directors thereof shall not have approved such acquisition of control, (ii)
for the purpose of purchasing or carrying any Margin Stock, or (iii) for any
purpose which would result in the violation of any applicable law or
regulation the effect of which would reasonably be expected to have or cause a
Material Adverse Effect.
SECTION 5.09. Compliance with Laws; Payment of Taxes. The
Borrower will, and will cause each of its Subsidiaries and each member of the
Controlled Group to, comply with applicable laws (including but not limited to
ERISA), regulations and similar requirements of governmental authorities
(including but not limited to PBGC), except where the necessity of such
compliance is being contested in good faith through appropriate proceedings or
where the failure to so comply would not reasonably be expected to have or
cause a Material Adverse Effect. The Borrower will, and will cause each of
its Subsidiaries to, pay promptly when due all taxes, assessments,
governmental charges, claims for labor, supplies, rent and other obligations
which, if unpaid, would become a lien against the property of the Borrower or
any Subsidiary, except (i) liabilities being contested in good faith and
against which, if requested by the Agent, the Borrower will set up reserves in
accordance with GAAP or (ii) where the failure to so pay would not reasonably
be expected to have or cause a Material Adverse Effect.
SECTION 5.10. Insurance. The Borrower will maintain, and will
cause each of its Subsidiaries to maintain (either in the name of the Borrower
or in such Subsidiary's own name), with financially sound and reputable
insurance companies, insurance on all its property in substantially such
amounts and against substantially such risks as are usually insured against in
the same general area by companies of established repute and of similar size
and financial strength engaged in the same or similar business.
SECTION 5.11. Maintenance of Property. The Borrower shall, and
shall cause each Significant Subsidiary to, maintain to the extent
commercially reasonable all of its properties and assets in good condition,
repair and working order, ordinary wear and tear excepted.
<PAGE>
SECTION 5.12. Environmental Notices. The Borrower shall
furnish to the Banks and the Agent prompt written notice of all Environmental
Liabilities, pending, threatened or anticipated Environmental Proceedings,
Environmental Notices, Environmental Judgments and Orders, and Environmental
Releases at, on, in, under or in any way affecting the Properties or any
adjacent property, and all facts, events, or conditions that could lead to any
of the foregoing; provided, that, no such notification will be required,
unless any of the foregoing facts, events or conditions would reasonably be
expected to have or cause a Material Adverse Effect.
SECTION 5.13. Environmental Matters. The Borrower and its
Subsidiaries will not use, produce, manufacture, process, treat, recycle,
generate, store, dispose of, manage at, the Properties, or otherwise handle,
or ship or transport to or from the Properties any Hazardous Materials except
for Hazardous Materials used, produced, manufactured, processed, treated,
recycled, generated, stored, disposed, managed, or otherwise handled in the
ordinary course of business in compliance in all material respects with
applicable Environmental Requirements, and will take commercially reasonable
steps to prohibit any Third Party from doing any of the acts prohibited by the
foregoing.
SECTION 5.14. Environmental Release. The Borrower agrees that
upon obtaining knowledge of the occurrence of an Environmental Release at or
on any of the Properties it will act promptly to investigate the extent of,
and to take appropriate remedial action to eliminate, such Environmental
Release, whether or not ordered or otherwise directed to do so by any
Environmental Authority.
SECTION 5.15. Debt of Subsidiaries. The Borrower shall not
permit any Subsidiary to incur any Debt except for (i) Debt owing to the
Borrower or another Subsidiary and (ii) other Debt which shall not exceed in
the aggregate for all Subsidiaries an amount in excess of 20% of Consolidated
Net Worth.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the
following events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal
of any Loan or shall fail to pay any interest on any Loan within 5
Domestic Business Days after such interest shall become due, or shall
fail to pay any fee or other amount payable hereunder within 5 Domestic
Business Days after such fee or other amount becomes due; or
<PAGE>
(b) the Borrower shall fail to observe or perform any
covenant contained in Sections 5.02(ii), 5.03 to 5.08, inclusive, or
Section 5.15; or
(c) the Borrower shall fail to observe or perform any
covenant or agreement contained or incorporated by reference in this
Agreement (other than those covered by paragraph (a) or (b) above) and
such failure shall not have been cured within 30 days after the earlier
to occur of (i) written notice thereof has been given to the Borrower by
the Agent at the request of any Bank or (ii) any of the chief executive,
chief financial, chief operating, chief legal or chief accounting
officer of the Borrower otherwise becomes aware of any such failure; or
(d) any representation, warranty, certification or
statement made by the Borrower in Article IV of this Agreement or in any
certificate, financial statement or other document delivered pursuant to
this Agreement shall prove to have been incorrect or misleading in any
material respect when made (or deemed made); or
(e) the Borrower or any Significant Subsidiary shall fail
to make any payment in respect of Debt (exclusive of Debt owing between
and among the Borrower and its Subsidiaries) outstanding in an aggregate
amount in excess of $50,000,000 (other than the Notes) when due or
within any applicable grace period; or
(f) any event or condition shall occur which results in the
acceleration of the maturity of Debt for money borrowed outstanding in
an aggregate amount in excess of $50,000,000 of the Borrower or any
Significant Subsidiary (including, without limitation, any required
mandatory prepayment or "put" of such Debt to the Borrower or any
Significant Subsidiary) or enables the holders of such Debt or
commitment or any Person acting on such holders' behalf to accelerate
the maturity thereof or terminate any such commitment (including,
without limitation, any required mandatory prepayment or "put" of such
Debt to the Borrower or any Significant Subsidiary); or
(g) the Borrower or any Significant Subsidiary shall
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property, or shall consent to any such relief or to the appointment of
or taking possession by any such official in an involuntary case or
other proceeding commenced against it, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay
its debts as they
<PAGE>
become due, or shall take any corporate action to
authorize any of the foregoing; or
(h) an involuntary case or other proceeding shall be
commenced against the Borrower or any Significant Subsidiary seeking
liquidation, reorganization or other relief with respect to it or its
debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial
part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 90 days; or an
order for relief shall be entered against the Borrower or any
Significant Subsidiary under the federal bankruptcy laws as now or
hereafter in effect; or
(i) one or more judgments or orders for the payment of
money in an aggregate amount in excess of $25,000,000 shall be rendered
against the Borrower or any Significant Subsidiary and such judgment or
order shall continue unsatisfied and unstayed for a period of 60 days;
or
(j) one or more federal tax liens securing an aggregate
amount in excess of $25,000,000 shall be filed against the Borrower or
any Significant Subsidiary under Section 6323 of the Code or a lien of
the PBGC shall be filed against the Borrower or any Subsidiary under
Section 4068 of ERISA and in either case such lien shall remain
undischarged for a period of 25 days after the date of filing;
(k) the Borrower or any member of the Controlled Group
shall fail to pay when due any material amount which it shall have
become liable to pay to the PBGC or to a Plan under Title IV of ERISA;
or notice of intent to terminate a Plan or Plans shall be filed under
Title IV of ERISA by the Borrower, any member of the Controlled Group,
any plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate or to
cause a trustee to be appointed to administer any such Plan or Plans or
a proceeding shall be instituted by a fiduciary of any such Plan or
Plans to enforce Section 515 or 4219(c)(5) of ERISA and such proceeding
shall not have been dismissed within 30 days thereafter; or a condition
shall exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any such Plan or Plans must be terminated;
then, and in every such event, the Agent shall (i) if requested by the
Required Banks, by notice to the Borrower terminate the Commitments and
they shall thereupon terminate, and (ii) if requested by the Required
Banks, by notice to the Borrower declare the Notes (together with
accrued interest thereon)
<PAGE>
to be, and the Notes shall thereupon become,
immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower
together with interest at the Default Rate accruing on the principal
amount thereof from and after the date of such Event of Default;
provided that if any Event of Default specified in paragraph (g) or (h)
above occurs with respect to the Borrower, without any notice to the
Borrower or any other act by the Agent or the Banks, the Commitments
shall thereupon terminate and the Notes (together with accrued interest
thereon) shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby
waived by the Borrower together with interest thereon at the Default
Rate accruing on the principal amount thereof from and after the date of
such Event of Default. Notwithstanding the foregoing, the Agent shall
have available to it all other remedies at law or equity, and shall
exercise any one or all of them at the request of the Required Banks.
SECTION 6.02. Notice of Default. The Agent shall give notice
to the Borrower of any Default under Section 6.01(c) promptly upon being
requested to do so by any Bank and shall thereupon notify all the Banks
thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment; Powers and Immunities. Each Bank
hereby irrevocably appoints and authorizes the Agent to act as its agent
hereunder and under the other Loan Documents with such powers as are
specifically delegated to the Agent by the terms hereof and thereof, together
with such other powers as are reasonably incidental thereto. The Agent: (a)
shall have no duties or responsibilities except as expressly set forth in this
Agreement and the other Loan Documents, and shall not by reason of this
Agreement or any other Loan Document be a trustee for any Bank; (b) shall not
be responsible to the Banks for any recitals, statements, representations or
warranties contained in this Agreement or any other Loan Document, or in any
certificate or other document referred to or provided for in, or received by
any Bank under, this Agreement or any other Loan Document, or for the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document or any other document referred to or
provided for herein or therein or for any failure by the Borrower to perform
any of its obligations hereunder or thereunder; (c) shall not be required to
initiate or conduct any litigation or collection proceedings hereunder or
under any other Loan Document except to the extent requested by the Required
Banks, and then only on terms and conditions satisfactory to the Agent, and
(d) shall not be responsible for any action taken or omitted to be taken by it
hereunder or under
<PAGE>
any other Loan Document or any other document or instrument
referred to or provided for herein or therein or in connection herewith or
therewith, except for its own gross negligence or wilful misconduct. The
Agent may employ agents and attorneys-in-fact and shall not be responsible for
the negligence or misconduct of any such agents or attorneys-in-fact selected
by it with reasonable care. The provisions of this Article VII are solely for
the benefit of the Agent and the Banks, and the Borrower shall not have any
rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement and under the other
Loan Documents, the Agent shall act solely as agent of the Banks and does not
assume and shall not be deemed to have assumed any obligation towards or
relationship of agency or trust with or for the Borrower. The duties of the
Agent shall be ministerial and administrative in nature, and the Agent shall
not have by reason of this Agreement or any other Loan Document a fiduciary
relationship in respect of any Bank.
SECTION 7.02. Reliance by Agent. The Agent shall be entitled
to rely upon any certification, notice or other communication (including any
thereof by telephone, telefax, telegram or cable) believed by it to be genuine
and correct and to have been signed or sent by or on behalf of the proper
Person or Persons, and upon advice and statements of legal counsel,
independent accountants or other experts selected by the Agent. As to any
matters not expressly provided for by this Agreement or any other Loan
Document, the Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder and thereunder in accordance with
instructions signed by the Required Banks, and such instructions of the
Required Banks in any action taken or failure to act pursuant thereto shall be
binding on all of the Banks.
SECTION 7.03. Defaults. The Agent shall not be deemed to have
knowledge of the occurrence of a Default or an Event of Default (other than
the nonpayment of principal of or interest on the Loans) unless the Agent has
received notice from a Bank or the Borrower specifying such Default or Event
of Default and stating that such notice is a "Notice of Default". In the
event that the Agent receives such a notice of the occurrence of a Default or
an Event of Default, the Agent shall give prompt notice thereof to the Banks.
The Agent shall give each Bank prompt notice of each nonpayment of principal
of or interest on the Loans whether or not it has received any notice of the
occurrence of such nonpayment. The Agent shall (subject to Section 9.06) take
such action hereunder with respect to such Default or Event of Default as
shall be directed by the Required Banks, provided that, unless and until the
Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Banks.
<PAGE>
SECTION 7.04. Rights of Agent as a Bank. With respect to the
Loans made by it, Wachovia in its capacity as a Bank hereunder shall have the
same rights and powers hereunder as any other Bank and may exercise the same
as though it were not acting as the Agent, and the term "Bank" or "Banks"
shall, unless the context otherwise indicates, include Wachovia in its
individual capacity. The Agent may (without having to account therefor to any
Bank) accept deposits from, lend money to and generally engage in any kind of
banking, trust or other business with the Borrower (and any of its Affiliates)
as if it were not acting as the Agent, and the Agent may accept fees and other
consideration from the Borrower (in addition to any agency fees and
arrangement fees heretofore agreed to between the Borrower and the Agent) for
services in connection with this Agreement or any other Loan Document or
otherwise without having to account for the same to the Banks.
SECTION 7.05. Indemnification. Each Bank severally agrees to
indemnify the Agent, to the extent the Agent shall not have been reimbursed by
the Borrower, ratably in accordance with its Commitment, for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including, without limitation, counsel fees and
disbursements) or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in any way relating to
or arising out of this Agreement or any other Loan Document or any other
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (excluding legal fees, to the extent excluded
from the indemnification provisions of Section 9.04 pursuant to Section
9.04(b)(v) and, unless an Event of Default has occurred and is continuing, the
normal administrative costs and expenses incident to the performance of its
agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or any such other documents; provided, however that no Bank shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or wilful misconduct of the Agent. If any indemnity furnished to
the Agent for any purpose shall, in the opinion of the Agent, be insufficient
or become impaired, the Agent may call for additional indemnity and cease, or
not commence, to do the acts indemnified against until such additional
indemnity is furnished.
SECTION 7.06 CONSEQUENTIAL DAMAGES. THE AGENT SHALL NOT BE
RESPONSIBLE OR LIABLE TO ANY BANK, THE BORROWER OR ANY OTHER PERSON OR ENTITY
FOR ANY PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A
RESULT OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. THE BORROWER SHALL NOT BE RESPONSIBLE OR
LIABLE TO THE AGENT, ANY BANK OR ANY OTHER PERSON OR ENTITY FOR ANY PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
<PAGE>
SECTION 7.07. Payee of Note Treated as Owner. The Agent may
deem and treat the payee of any Note as the owner thereof for all purposes
hereof unless and until a written notice of the assignment or transfer thereof
shall have been filed with the Agent and the provisions of Section 9.08(c)
have been satisfied. Any requests, authority or consent of any Person who at
the time of making such request or giving such authority or consent is the
holder of any Note shall be conclusive and binding on any subsequent holder,
transferee or assignee of that Note or of any Note or Notes issued in exchange
therefor or replacement thereof.
SECTION 7.08. Nonreliance on Agent and Other Banks. Each Bank
agrees that it has, independently and without reliance on the Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and decision to
enter into this Agreement and that it will, independently and without reliance
upon the Agent or any other Bank, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own analysis
and decisions in taking or not taking action under this Agreement or any of
the other Loan Documents. The Agent shall not be required to keep itself
informed as to the performance or observance by the Borrower of this Agreement
or any of the other Loan Documents or any other document referred to or
provided for herein or therein or to inspect the properties or books of the
Borrower or any other Person. Except for notices, reports and other documents
and information expressly required to be furnished to the Banks by the Agent
hereunder or under the other Loan Documents, the Agent shall not have any duty
or responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of the Borrower or any
other Person (or any of their Affiliates) which may come into the possession
of the Agent.
SECTION 7.09. Failure to Act. Except for action expressly
required of the Agent hereunder or under the other Loan Documents, the Agent
shall in all cases be fully justified in failing or refusing to act hereunder
and thereunder unless it shall receive further assurances to its satisfaction
by the Banks of their indemnification obligations under Section 7.05 against
any and all liability and expense which may be incurred by the Agent by reason
of taking, continuing to take, or failing to take any such action.
SECTION 7.10. Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent
may resign at any time by giving notice thereof to the Banks and the Borrower
and the Agent may be removed at any time with or without cause by the Required
Banks. Upon any such resignation or removal, the Required Banks shall have
the right to appoint a successor Agent; provided, that, so long as no Event of
Default shall have occurred and then be continuing, the Borrower shall have
the right to consent to any
<PAGE>
successor Agent (which consent (x) in the case of
any Bank being appointed successor Agent, shall not be unreasonably withheld,
and (y) in the case of the appointment of any other Person as successor Agent,
may be withheld in the discretion of the Borrower). If no successor Agent
shall have been so appointed by the Required Banks and shall have accepted
such appointment within 30 days after the retiring Agent's notice of
resignation or the Required Banks' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Banks, appoint a successor Agent. Any
successor Agent shall be a bank which has a combined capital and surplus of at
least $500,000,000. Upon the acceptance of any appointment as Agent hereunder
by a successor Agent, such successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation or removal
hereunder as Agent, the provisions of this Article VII shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken
by it while it was acting as the Agent hereunder.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 8.01. Basis for Determining Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period:
(a) the Agent reasonably and in good faith determines that
deposits in Dollars (in the applicable amounts) are not being offered in
the relevant market for such Interest Period, or
(b) the Required Banks advise the Agent that the London
Interbank Offered Rate, as reasonably determined by the Agent, will not
adequately and fairly reflect the cost to such Banks of funding
Euro-Dollar Loans for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the Banks,
whereupon until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist, the obligations of the Banks to make
Euro-Dollar Loans shall be suspended. After the Agent has provided notice to
the Borrower in connection with this Section 8.01, unless the Borrower
notifies the Agent on or before the date of any such relevant Euro-Dollar
Borrowing for which a Notice of Borrowing has previously been given that it
elects not to borrow on such date, such Borrowing shall instead be made as a
Base Rate Borrowing.
SECTION 8.02. Illegality. If, after the date hereof, the
adoption of any applicable law, rule or regulation, or any
<PAGE>
change in any
applicable law, rule or regulation, or any change in the official
interpretation or official administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation
or administration thereof (any such agency being referred to as an "Authority"
and any such event being referred to as a "Change of Law"), or compliance by
any Bank (or its Lending Office) with any request or directive (whether or not
having the force of law) of any Authority shall make it unlawful or impossible
for any Bank (or its Lending Office) to make, maintain or fund its Euro-Dollar
Loans and such Bank shall so notify the Agent, the Agent shall forthwith give
notice thereof to the other Banks and the Borrower, whereupon until such Bank
notifies the Borrower and the Agent that the circumstances giving rise to such
suspension no longer exist, the obligation of such Bank to make Euro-Dollar
Loans shall be suspended. Before giving any notice to the Agent pursuant to
this Section, such Bank shall designate a different Lending Office if such
designation will avoid the need for giving such notice and will not, in the
reasonable judgment of such Bank, be otherwise materially disadvantageous to
such Bank. If by reason of any such Change of Law any such Bank may not
lawfully continue to maintain and fund any of its outstanding Euro-Dollar
Loans to maturity and shall so specify in such notice, the Borrower shall
immediately prepay in full the then outstanding principal amount of each
Euro-Dollar Loan of such Bank, together with accrued interest thereon.
Concurrently with prepaying each such Euro-Dollar Loan, the Borrower shall
borrow a Base Rate Loan in an equal principal amount from such Bank (on which
interest and principal shall be payable contemporaneously with the related
Euro-Dollar Loans of the other Banks), and such Bank shall make such a Base
Rate Loan.
SECTION 8.03. Increased Cost and Reduced Return. (a) If after
the date hereof, a Change of Law or compliance by any Bank (or its Lending
Office) with any official request or directive (whether or not having the
force of law) of any Authority:
(i) shall subject any Bank (or its Lending Office) to any
tax, duty or other charge on its Euro-Dollar Loans or Money Market
Loans, its Syndicated Loan Notes (insofar as they evidence Euro-Dollar
Loans) or Money Market Loan Notes, or its obligation to make Euro-Dollar
Loans or Money Market Loans, or shall change the basis of taxation of
payments to any Bank (or its Lending Office) of the principal of or
interest on its Euro-Dollar Loans or Money Market Loans or any other
amounts due under this Agreement in respect of its Loans or its
obligation to make Euro-Dollar Loans or Money Market Loans (except for
changes in the rate of tax on the overall net income or gross receipts
of such Bank or its Lending Office imposed by the jurisdiction in which
such Bank's principal executive office or Lending Office is located); or
<PAGE>
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without limitation,
any such requirement imposed by the Board of Governors of the Federal
Reserve System, but excluding with respect to any Euro-Dollar Loan any
such requirement included in an applicable Euro-Dollar Reserve
Percentage) against assets of, deposits with or for the account of, or
credit extended by, any Bank (or its Lending Office); or
(iii) shall impose on any Bank (or its Lending Office) or on
the United States market or the London interbank market any other
condition affecting its Euro-Dollar or Money Market Loans, Notes, or its
obligation to make Euro-Dollar or Money Market Loans;
and the result of any of the foregoing is to increase the cost to such Bank
(or its Lending Office) of making or maintaining any Loan, or to reduce the
amount of any sum received or receivable by such Bank (or its Lending Office)
under this Agreement or under its Notes with respect thereto, by an amount
reasonably determined by such Bank to be material, then, within 15 days after
demand by such Bank (with a copy to the Agent), the Borrower shall pay to such
Bank such additional amount or amounts as will compensate such Bank for such
increased cost or reduction; provided that no such amount may be claimed by
any Bank which is attributable to periods prior to the date which is sixty
(60) days preceding the date on which the officer of the Bank having primary
responsibility for asset liability management shall have obtained actual
knowledge of such demand. At any time within ninety (90) days after payment
by Borrower of any material amount to any Bank pursuant to paragraph (a) or
(b) of this Section, so long as no Event of Default shall be in existence,
Borrower may require by written notice to that Bank that (i) it assign its pro
rata share of the Commitment to another Bank or to a bank or other financial
institution selected by Borrower and reasonably acceptable to the Agent which
is willing to accept such assignment or (ii) it surrender its pro rata share
of the Commitment and terminate its rights and obligations as a Bank
hereunder, concurrently with a reduction by Borrower of the Commitment by an
amount equal to the pro rata share of the Commitment held by that Bank.
(b) If any Bank shall have determined that after the date
hereof the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the official
interpretation or official administration thereof, or compliance by any Bank
(or its Lending Office) or any Person controlling such Bank with any request
or directive regarding capital adequacy (whether or not having the force of
law) of any Authority, has or would have the effect of reducing the rate of
return on such Bank's or such controlling Person's capital as a consequence of
its obligations hereunder to a level below that which such Bank or such
controlling Person
<PAGE>
could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's or such controlling Person's
policies with respect to capital adequacy) by an amount reasonably determined
by such Bank or such controlling Person to be material, then from time to
time, within 15 days after demand by such Bank or such controlling Person, the
Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank or such controlling Person for such reduction; provided
that no such amount may be claimed by any Bank which is attributable to
periods prior to the date which is sixty (60) days preceding the date on which
the officer of the Bank having primary responsibility for asset liability
management shall have obtained actual knowledge of such demand.
(c) Each Bank will promptly notify the Borrower and the
Agent of any event of which its officer having primary responsibility for
asset liability management has knowledge, which occurs or is expected to occur
after the date hereof, which will entitle such Bank to compensation pursuant
to this Section and will designate a different Lending Office if such
designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the reasonable judgment of such Bank, be
otherwise materially disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth in reasonable
detail the additional amount or amounts to be paid to it hereunder shall
constitute rebuttable presumptive evidence of the amounts to be paid in the
absence of manifest error. In determining such amount, such Bank may use any
reasonable averaging and attribution methods.
(d) The provisions of this Section 8.03(i) shall be
applicable with respect to any Participant, Assignee or other Transferee, and
any calculations required by such provisions shall be made based upon the
circumstances of such Participant, Assignee or other Transferee and (ii) shall
constitute a continuing agreement and shall survive the termination of this
Agreement and the payment in full or cancellation of the Notes.
SECTION 8.04. Base Rate Loans Substituted for Euro-Dollar
Loans. If (i) the obligation of any Bank to make or maintain Euro-Dollar
Loans has been suspended pursuant to Section 8.02 or (ii) any Bank has
demanded compensation under Section 8.03, and the Borrower shall, by at least
5 Euro-Dollar Business Days' prior notice to such Bank through the Agent, have
elected that the provisions of this Section shall apply to such Bank, then,
unless and until such Bank notifies the Borrower that the circumstances giving
rise to such suspension or demand for compensation no longer apply:
(a) all Loans which would otherwise be made by such Bank as
Euro-Dollar Loans shall be made instead as Base Rate Loans (in all cases
interest and principal on such Loans shall be payable contemporaneously
with the related Euro-Dollar Loans of the other Banks), and
<PAGE>
(b) after each of its Euro-Dollar Loans has been repaid,
all payments of principal which would otherwise be applied to repay such
Euro-Dollar Loans shall be applied to repay its Base Rate Loans instead.
SECTION 8.05. Compensation. Upon the request of any Bank,
delivered to the Borrower and the Agent, the Borrower shall pay to such Bank
such amount or amounts as shall compensate such Bank for any loss, cost or
expense incurred by such Bank as a result of:
(a) any payment or prepayment (pursuant to Section 8.02 or
otherwise) of a Euro-Dollar Loan or Money Market Loan on a date other than the
last day of an Interest Period for such Loan; or
(b) any failure by the Borrower to borrow (other than due
to a refusal by the Agent or any of the Banks to fund under Section 2.02(c)
notwithstanding satisfaction of the conditions set forth in Section 3.02), a
Euro-Dollar Loan on the date for the Euro-Dollar Borrowing of which such
Euro-Dollar Loan is a part specified in the applicable Notice of Borrowing
delivered pursuant to Section 2.02.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank
wire, telecopier or similar writing) and shall be given to such party at its
address or telecopier number set forth on the signature pages hereof or such
other address or telecopier number as such party may hereafter specify for the
purpose by notice to each other party. Each such notice, request or other
communication shall be effective (i) if given by telecopier, when such
telecopy is transmitted to the telecopier number specified in this Section and
the appropriate confirmation is received, (ii) if given by mail, 72 hours
after such communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid or (iii) if given by any other means, when
delivered at the address specified in this Section; provided that notices to
the Agent under Article II or Article VIII shall not be effective until
received.
SECTION 9.02. No Waivers. No failure or delay by the Agent or
any Bank in exercising any right, power or privilege hereunder or under any
Note or other Loan Document shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights
and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
<PAGE>
SECTION 9.03. Expenses; Documentary Taxes. The Borrower shall
pay (i) all reasonable out-of-pocket expenses of the Agent, including fees and
disbursements of special counsel for the Banks and the Agent, in connection
with (A) subject to the provisions of the Agent's Letter Agreement, the
preparation of this Agreement and the other Loan Documents, and (B) any waiver
or consent hereunder or thereunder or any amendment hereof or thereof or any
Default or alleged Default hereunder or thereunder and (ii) if a Default
occurs, all reasonable out-of-pocket expenses reasonably incurred by the Agent
and the Banks, including reasonable fees and disbursements of counsel, in
connection with such Default and collection and other enforcement proceedings
resulting therefrom, including out-of-pocket expenses incurred in enforcing
this Agreement and the other Loan Documents. The Borrower shall indemnify the
Agent and each Bank against any transfer taxes, documentary taxes, assessments
or charges made by any Authority by reason of the execution and delivery of
this Agreement or the other Loan Documents.
SECTION 9.04. Indemnification. (a) Subject to the provisions
of paragraph (c) below, the Borrower shall indemnify the Agent, the Banks and
each affiliate thereof and their respective directors, officers, employees and
agents (each an "Indemnitee") from, and hold each of them harmless against,
any and all losses, liabilities or damages to which any of them may become
subject, insofar as such losses, liabilities or damages arise out of or result
from
(i) any actions, suits, proceedings (including any
investigations or inquiries, actual or threatened) or
claims by third parties against or involving any
Indemnitee related to the actual or proposed use by the
Borrower of the proceeds of any extension of credit by
any Bank hereunder (collectively, "Claims" and
individually, a "Claim"), or
(ii) breach by the Borrower of this Agreement or any other
Loan Document, or
(iii) any actions taken by the Agent or any of the Banks to
enforce this Agreement or any of the other Loan
Documents against Borrower at a time when an Event of
Default shall have occurred and then be continuing,
and the Borrower shall reimburse the Agent and each Bank, and each Affiliate
thereof and their respective directors, officers, employees and agents, upon
demand for the reasonable out-of-pocket expenses (including, without
limitation, reasonable legal fees) reasonably incurred in connection with any
such Claim, breach or action.
<PAGE>
(b) In no event shall the indemnity provided for in Section
9.04(a) extend to any Claim or disbursement of any Indemnitee resulting from,
pertaining to or arising in any manner out of, or in any manner relating to
any Claim or disbursement which (i) is the subject matter of another indemnity
provision (for which the Borrower is the indemnitor) of this Agreement, (ii)
the willful misconduct or gross negligence of such Indemnitee, (iii) any
breach by such Indemnitee of its representations or obligations under any Loan
Document, (iv) the violation by such Indemnitee of any law, rule or regulation
binding upon such Indemnitee (including without limitation any law, rule or
regulation governing the operation of national banks), (v) legal fees of
Jones, Day, Reavis & Pogue related to the negotiation or preparation of the
Loan Documents delivered on or about the Closing Date to the extent in excess
of those amounts set forth in the Agent's Letter Agreement, (vi) any costs,
fees or expenses arising out of the acquisition or transfer by such Indemnitee
of any interest in the Notes or the Loan Documents except any such transfer
(x) in connection with the exercise of remedies hereunder in accordance with
the terms of Section 6.01 hereof after the occurrence of an Event of Default
or (y) occurring at the direction of the Borrower, (vii) is one with respect
to which any Indemnitee has a right to participate in a proceeding with
respect to such Claim, if such Indemnitee refuses to implead, to the extent
reasonable and practicable, any party whom Borrower believes is ultimately
responsible with respect to such Claims or to assert, to the extent reasonable
and practicable, any cross-claims Borrower deems appropriate where it is not
possible for Borrower to assert such rights itself or (viii) the economic
assumptions underlying any Indemnitee's entry into the transactions
contemplated by or related to this Agreement proving to be incorrect, thereby
reducing the expected economic return to such Indemnitee, except to the extent
such assumptions were based on representations of the Borrower herein or
financial information provided by the Borrower pursuant hereto or because the
Borrower's exercise of any of its rights hereunder in accordance with the
terms of this Agreement decreases the expected economic return to such
Indemnitee.
The following shall apply to all claims for indemnity under this Section
9.04:
(A) If any Indemnitee has actual knowledge of any Claim
hereby indemnified against it shall give prompt written notice
thereof to the Borrower; provided, however, that the failure of
an Indemnitee to give such notice shall not relieve Borrower of
its obligations hereunder, unless such failure prejudices the
Borrower's ability to contest such claim in any material
respect. Any payment made by Borrower to an Indemnitee
pursuant to this Section 9.04 shall not be deemed to be a
waiver or release of any right or remedy (including any remedy
of damages) the Borrower
<PAGE>
may have against such Indemnitee if,
as a result of the failure by an Indemnitee to give the
Borrower notice in accordance with the preceding sentence,
Borrower is prejudiced in any material respect in the exercise
of its rights to contest the Claims indemnified against
pursuant to this Section 9.04.
(B) Each Claim against an Indemnitee by a third party
shall, if reasonably requested by the Borrower, be contested by
the Indemnitee in good faith by appropriate proceedings,
provided that Borrower shall indemnify such Indemnitee in full
in respect of any reasonable out-of-pocket fees, costs or
expenses reasonably and actually incurred by such Indemnitee in
conducting such contest (such costs, if requested by the
Indemnitee, to be funded by the Borrower concurrently with such
contest) and the amount of any interest or penalties which are
required to be paid as a direct result of contesting such
Claim. The Borrower shall be entitled to assume responsibility
for and control of the defense of any Claim in respect of which
any Indemnitee makes or intends to make a claim against the
Borrower for indemnity pursuant to this Section 9.04, provided
that (i) the legal counsel retained by Borrower for such
purpose is reasonably acceptable to the Agent and (ii) the
Borrower pursues such contest diligently and in good faith and,
upon the reasonable request of the Agent, provides the Agent
with reasonable details of the status of the contest and copies
of legal briefs, court filings and, subject to applicable
considerations of legal privilege, counsel's memoranda relevant
to such contest. In the event that (1) an Event of Default
shall have occurred and be continuing or (2) the Borrower fails
to comply with the foregoing requirements in any material
respect, the applicable Indemnitee may, if such Event of
Default or failure, as the case may be, continues after such
Indemnitee has given the Borrower a reasonable opportunity,
taking into account existing circumstances, to effect the
applicable level of compliance, reassume responsibility for and
control of the relevant contest, which, in such circumstances,
such Indemnitee agrees to pursue diligently and in good faith.
To the extent the Borrower is entitled to defend any claim
hereunder, the Indemnitee shall cooperate in good faith with
Borrower and may participate in the defense thereof at such
Indemnitee's sole cost and expense.
(C) Each Indemnitee shall supply the Borrower with such
information as Borrower shall reasonably request to defend or
participate in any proceeding permitted by this Section 9.04;
provided, however, that any
<PAGE>
such information which is
proprietary or confidential need be furnished only under such
arrangements designed to preserve to confidentiality or
proprietary nature of the information as shall be reasonable
under the circumstances.
(D) No Indemnitee shall enter into a settlement or other
compromise or consent to a judgment with respect to any Claim
without the prior written consent of the Borrower (which
consent shall not be unreasonably withheld or delayed); unless
such Indemnitee waives its rights in writing with respect to
such Claims under this Section 9.04. The entering into of any
such settlement or compromise or consent without the Borrower's
prior written consent (unless the withholding of such consent
by Borrower requested by such Indemnitee shall have been
unreasonable) shall constitute a waiver by such Indemnitee of
its rights of indemnification hereunder in respect of such
matter.
(E) In the event the Borrower shall be obligated to
indemnify any Indemnitee pursuant to this Section 9.04,
Borrower shall be subrogated to the rights of such Indemnitee
in respect of the matter as to which the indemnity was paid and
may pursue the same at Borrower's expense. If any Indemnitee
shall obtain a recovery of all or any part of any amount which
the Borrower shall have paid to such Indemnitee or for which
the Borrower shall have reimbursed such Indemnitee pursuant to
this Section 9.04, any Indemnitee shall promptly pay or cause
to be paid to the Borrower an amount equal to such recovery
together with any interest (other than interest for the period,
if any, after such Claims were paid by such Indemnitee until
such Claims were paid or reimbursed by the Borrower) received
by such Indemnitee on account of such payment or reimbursement.
(c) The indemnities contained in this Section 9.04 shall expire
and be of no further force or effect with respect to any Claim notice of which
shall not have been given to Borrower in writing (referring expressly to this
Section 9.04) on or prior to the second anniversary of the repayment in full
of the Loan and the termination of the Commitment.
SECTION 9.05. Sharing of Setoffs. Each Bank agrees that if
it shall, by exercising any right of setoff or counterclaim or otherwise,
receive payment of a proportion of the aggregate amount of principal and
interest owing with respect to the Note held by it which is greater than the
proportion received by any other Bank in respect of the aggregate amount of
all principal and interest owing with respect to the Note held by
<PAGE>
such other
Bank, the Bank receiving such proportionately greater payment shall purchase
such participations in the Notes held by the other Banks owing to such other
Banks, and such other adjustments shall be made, as may be required so that
all such payments of principal and interest with respect to the Notes held by
the Banks owing to such other Banks shall be shared by the Banks pro rata;
provided that (i) nothing in this Section shall impair the right of any Bank
to exercise any right of setoff or counterclaim it may have and to apply the
amount subject to such exercise to the payment of indebtedness of the Borrower
other than its indebtedness under the Notes, and (ii) if all or any portion
of such payment received by the purchasing Bank is thereafter recovered from
such purchasing Bank, such purchase from each other Bank shall be rescinded
and such other Bank shall repay to the purchasing Bank the purchase price of
such participation to the extent of such recovery together with an amount
equal to such other Bank's ratable share (according to the proportion of (x)
the amount of such other Bank's required repayment to (y) the total amount so
recovered from the purchasing Bank) of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount so recovered.
The Borrower agrees, to the fullest extent it may effectively do so under
applicable law, that any holder of a participation in a Note, whether or not
acquired pursuant to the foregoing arrangements, may exercise rights of setoff
or counterclaim and other rights with respect to such participation as fully
as if such holder of a participation were a direct creditor of the Borrower in
the amount of such participation.
SECTION 9.06. Amendments and Waivers. (a) Any provision of
this Agreement, the Notes or any other Loan Documents may be amended or waived
if, but only if, such amendment or waiver is in writing and is signed by the
Borrower and the Required Banks (and, if the rights or duties of the Agent are
affected thereby, by the Agent); provided that, no such amendment or waiver
shall, unless signed by all Banks, (i) change the Commitment of any Bank or
subject any Bank to any additional obligation, (ii) change the principal of or
rate of interest on any Loan or any fees hereunder, (iii) change the date
fixed for any payment of principal of or interest on any Loan or any fees
hereunder, (iv) change the amount of principal, interest or fees due on any
date fixed for the payment thereof, (v) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Notes, or the
percentage of Banks, which shall be required for the Banks or any of them to
take any action under this Section or any other provision of this Agreement,
(vi) change the manner of application of any payments made under this
Agreement or the Notes, (vii) release or substitute all or any substantial
part of the collateral (if any) held as security for the Loans, or (viii)
release any Guarantee given to support payment of the Loans.
(b) The Borrower will not solicit, request or negotiate for
or with respect to any proposed waiver or amendment
<PAGE>
of any of the provisions
of this Agreement unless each Bank shall be informed thereof by the Borrower
and shall be afforded an opportunity of considering the same and shall be
supplied by the Borrower with sufficient information to enable it to make an
informed decision with respect thereto. Executed or true and correct copies
of any waiver or consent effected pursuant to the provisions of this Agreement
shall be delivered by the Borrower to each Bank forthwith following the date
on which the same shall have been executed and delivered by the requisite
percentage of Banks. The Borrower will not, directly or indirectly, pay or
cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, to any Bank (in its capacity as such)
as consideration for or as an inducement to the entering into by such Bank of
any waiver or amendment of any of the terms and provisions of this Agreement
unless such remuneration is concurrently paid, on the same terms, ratably to
all such Banks.
SECTION 9.07. No Margin Stock Collateral. Each of the Banks
represents to the Agent and each of the other Banks that it in good faith is
not, directly or indirectly (by negative pledge or otherwise), relying upon
any Margin Stock as collateral in the extension or maintenance of the credit
provided for in this Agreement.
SECTION 9.08. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns; provided that the Borrower
may not assign or otherwise transfer any of its rights under this Agreement,
except as permitted under Section 5.07.
(b) Any Bank may at any time sell to one or more Persons
(each a "Participant") participating interests in any Loan owing to such Bank,
any Note held by such Bank, any Commitment hereunder or any other interest of
such Bank hereunder. In the event of any such sale by a Bank of a
participating interest to a Participant, such Bank's obligations under this
Agreement shall remain unchanged, such Bank shall remain solely responsible
for the performance thereof, such Bank shall remain the holder of any such
Note for all purposes under this Agreement, and (x) the Borrower and the Agent
shall continue to deal solely and directly with such Bank in connection with
such Bank's rights and obligations under this Agreement, and (y) such
Participant shall have no right to contact the Borrower directly, or to
inspect its books and records or places of business, or to receive any
information (financial or otherwise) directly from the Borrower. In no event
shall a Bank that sells a participation be obligated to the Participant to
take or refrain from taking any action hereunder except that such Bank may
agree that it will not (except as provided below), without the consent of the
Participant, agree to (i) the change of any date fixed for the payment of
principal of or interest on the related loan or loans, (ii) the change of the
amount of any
<PAGE>
principal, interest or fees due on any date fixed for the
payment thereof with respect to the related loan or loans, (iii) the change of
the principal of the related loan or loans, (iv) any change in the rate at
which either interest is payable thereon or (if the Participant is entitled to
any part thereof) fee is payable hereunder from the rate at which the
Participant is entitled to receive interest or fee (as the case may be) in
respect of such participation, (v) the release or substitution of all or any
substantial part of the collateral (if any) held as security for the Loans, or
(vi) the release of any Guarantee given to support payment of the Loans. Each
Bank selling a participating interest in any Loan, Note, Commitment or other
interest under this Agreement (other than any Money Market Loan or Note)shall,
within 10 Domestic Business Days of such sale, provide the Borrower and the
Agent with written notification stating that such sale has occurred and
identifying the Participant and the interest purchased by such Participant.
The Borrower agrees that each Participant shall be entitled to the benefits of
Article VIII with respect to its participation in Loans outstanding from time
to time.
(c) Any Bank may at any time assign to one or more banks or
financial institutions (each an "Assignee") all, or, in the case of its
Syndicated Loans and Commitments, a proportionate part of all, of its
Syndicated Loans and Commitments, of its rights and obligations under this
Agreement, the Notes and the other Loan Documents, and such Assignee shall
assume all such rights and obligations, pursuant to an Assignment and
Acceptance, executed by such Assignee, such transferor Bank and the Agent
(and, in the case of an Assignee that is not then a Bank, by the Borrower);
provided that (i) no interest may be sold by a Bank pursuant to this paragraph
(c) unless the Assignee shall agree to assume ratably equivalent portions of
the transferor Bank's Commitment, (ii) the amount of the Commitment being
assigned (determined as of the effective date of the assignment) shall be
equal to $15,000,000 (or any larger multiple of $5,000,000 or any lesser
amount up to such Bank's Commitment), (iii) if no Event of Default is in
existence, no interest may be sold by a Bank pursuant to this paragraph (c) to
any Assignee that is not then a Bank or an Affiliate thereof without the
consent of the Borrower and the Agent, which consent shall not be unreasonably
withheld, and (iv) a Bank may not have more than two Assignees that are not
then Banks at any one time. Upon (A) execution of the Assignment and
Acceptance by such transferor Bank, such Assignee, the Agent and (if
applicable) the Borrower, (B) delivery of an executed copy of the Assignment
and Acceptance to the Borrower and the Agent, (C) payment by such Assignee to
such transferor Bank of an amount equal to the purchase price agreed between
such transferor Bank and such Assignee, and (D) payment of a processing and
recordation fee of $3,500 to the Agent, such Assignee shall for all purposes
be a Bank party to this Agreement and shall have all the rights and
obligations of a Bank under this Agreement to the same extent as if it were an
original party hereto with a Commitment as set forth in such instrument of
<PAGE>
assumption, and the transferor Bank shall be released from its obligations
hereunder to a corresponding extent, and no further consent or action by the
Borrower, the Banks or the Agent shall be required. Upon the consummation of
any transfer to an Assignee pursuant to this paragraph (c), the transferor
Bank, the Agent and the Borrower shall make appropriate arrangements so that,
if required, a new Note is issued to such Assignee.
(d) Subject to the provisions of Section 9.09, the Borrower
authorizes each Bank to disclose to any Participant, Assignee or other
transferee (each a "Transferee") and any prospective Transferee any and all
financial information in such Bank's possession concerning the Borrower which
has been delivered to such Bank by the Borrower pursuant to this Agreement or
which has been delivered to such Bank by the Borrower in connection with such
Bank's credit evaluation prior to entering into this Agreement.
(e) No Transferee shall be entitled to receive any greater
payment under Section 8.03 than the transferor Bank would have been entitled
to receive with respect to the rights transferred, unless such transfer is
made with the Borrower's prior written consent or by reason of the provisions
of Section 8.02 or 8.03 requiring such Bank to designate a different Lending
Office under certain circumstances or at a time when the circumstances giving
rise to such greater payment did not exist.
(f) Anything in this Section 9.08 to the contrary
notwithstanding, any Bank may assign and pledge all or any portion of the
Loans and/or obligations owing to it to any Federal Reserve Bank or the United
States Treasury as collateral security pursuant to Regulation A of the Board
of Governors of the Federal Reserve System and any Operating Circular issued
by such Federal Reserve Bank, provided that any payment in respect of such
assigned Loans and/or obligations made by the Borrower to the assigning and/or
pledging Bank in accordance with the terms of this Agreement shall satisfy the
Borrower's obligations hereunder in respect of such assigned Loans and/or
obligations to the extent of such payment. No such assignment shall release
the assigning and/or pledging Bank from its obligations hereunder.
SECTION 9.09. Confidentiality. Each Bank agrees to exercise
commercially reasonable efforts to keep any information delivered or made
available by the Borrower to it which is clearly indicated or stated to be
confidential information (or when the circumstances under which such
information is delivered or when the content thereof would cause a reasonable
person to believe that such information is confidential), confidential from
anyone other than persons employed or retained by such Bank who are or are
expected to become engaged in evaluating, approving, structuring or
administering the Loans or the Loan Documents (such Persons to likewise be
under similar obligations of confidentiality with respect to such
information); provided, however that nothing herein shall prevent any Bank
from
<PAGE>
disclosing such information (i) to any other Bank, (ii) upon the order of
any court or administrative agency, (iii) upon the request or demand of any
regulatory agency or authority having jurisdiction over such Bank, (iv) which
has been publicly disclosed, (v) to the extent reasonably required in
connection with any litigation to which the Agent, any Bank or their
respective Affiliates may be a party, (vi) to the extent reasonably required
in connection with the exercise of any remedy hereunder, (vii) to such Bank's
legal counsel, independent auditors and to such Bank's Affiliates, and (viii)
to any actual or proposed Participant, Assignee or other Transferee of all or
part of its rights hereunder which has agreed in writing to be bound by the
provisions of this Section 9.09; provided, that, should disclosure of any such
confidential information be required by virtue of clause (ii) or (v) of the
immediately preceding sentence, any relevant Bank shall (unless prohibited by
law) promptly notify the Borrower of same so as to allow the Borrower to seek
a protective order or to take any other appropriate action; provided, further,
that, no Bank shall be required to delay compliance with any directive to
disclose beyond the last date such delay is legally permissible any such
information so as to allow the Borrower to effect any such action.
SECTION 9.10. Representation by Banks. Each Bank hereby
represents that it is a commercial lender or financial institution which makes
Loans in the ordinary course of its business and that it will make its Loans
hereunder for its own account in the ordinary course of such business;
provided, however that, subject to Section 9.08, the disposition of the Note
or Notes held by that Bank shall at all times be within its exclusive control.
SECTION 9.11. Obligations Several. The obligations of each
Bank hereunder are several, and no Bank shall be responsible for the
obligations or commitment of any other Bank hereunder. Nothing contained in
this Agreement and no action taken by the Banks pursuant hereto shall be
deemed to constitute the Banks to be a partnership, an association, a joint
venture or any other kind of entity. The amounts payable at any time
hereunder to each Bank shall be a separate and independent debt, and each Bank
shall be entitled to protect and enforce its rights arising out of this
Agreement or any other Loan Document and it shall not be necessary for any
other Bank to be joined as an additional party in any proceeding for such
purpose.
SECTION 9.12. Georgia Law. This Agreement and each Note shall
be construed in accordance with and governed by the law of the State of
Georgia.
SECTION 9.13. Severability. In case any one or more of the
provisions contained in this Agreement, the Notes or any of the other Loan
Documents should be invalid, illegal or unenforceable in any respect, the
validity, legality and
<PAGE>
enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby and
shall be enforced to the greatest extent permitted by law.
SECTION 9.14. Interest. In no event shall the amount of
interest, and all charges, amounts or fees contracted for, charged or
collected pursuant to this Agreement, the Notes or the other Loan Documents
and deemed to be interest under applicable law (collectively, "Interest")
exceed the highest rate of interest allowed by applicable law (the "Maximum
Rate"), and in the event any such payment is inadvertently received by any
Bank, then the excess sum (the "Excess") shall be credited as a payment of
principal, unless the Borrower shall notify such Bank in writing that it
elects to have the Excess returned forthwith. It is the express intent hereof
that the Borrower not pay and the Banks not receive, directly or indirectly in
any manner whatsoever, interest in excess of that which may legally be paid by
the Borrower under applicable law. The right to accelerate maturity of any of
the Loans does not include the right to accelerate any interest that has not
otherwise accrued on the date of such acceleration, and the Agent and the
Banks do not intend to collect any unearned interest in the event of any such
acceleration. All monies paid to the Agent or the Banks hereunder or under
any of the Notes or the other Loan Documents, whether at maturity or by
prepayment, shall be subject to rebate of unearned interest as and to the
extent required by applicable law. By the execution of this Agreement, the
Borrower covenants that (i) the credit or return of any Excess shall
constitute the acceptance by the Borrower of such Excess, and (ii) the
Borrower shall not seek or pursue any other remedy, legal or equitable ,
against the Agent or any Bank, based in whole or in part upon contracting for
charging or receiving any Interest in excess of the Maximum Rate. For the
purpose of determining whether or not any Excess has been contracted for,
charged or received by the Agent or any Bank, all interest at any time
contracted for, charged or received from the Borrower in connection with this
Agreement, the Notes or any of the other Loan Documents shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread in
equal parts throughout the full term of the Commitments. The Borrower, the
Agent and each Bank shall, to the maximum extent permitted under applicable
law, (i) characterize any non-principal payment as an expense, fee or premium
rather than as Interest and (ii) exclude voluntary prepayments and the effects
thereof. The provisions of this Section shall be deemed to be incorporated
into each Note and each of the other Loan Documents (whether or not any
provision of this Section is referred to therein). All such Loan Documents
and communications relating to any Interest owed by the Borrower and all
figures set forth therein shall, for the sole purpose of computing the extent
of obligations hereunder and under the Notes and the other Loan Documents be
automatically recomputed by the Borrower, and by any court considering the
same, to give effect to the adjustments or credits required by this Section.
<PAGE>
SECTION 9.15. Interpretation. No provision of this Agreement
or any of the other Loan Documents shall be construed against or interpreted
to the disadvantage of any party hereto by any court or other governmental or
judicial authority by reason of such party having or being deemed to have
structured or dictated such provision. The obligations of good faith and fair
dealing shall be imposed upon each party to this Agreement.
SECTION 9.16. Consent to Jurisdiction. The Borrower (a)
submits to the nonexclusive personal jurisdiction in the State of Georgia, the
courts thereof and the United States District Courts sitting therein, for the
enforcement of this Agreement, the Notes and the other Loan Documents, (b)
waives any and all personal rights under the law of any jurisdiction to object
on any basis (including, without limitation, inconvenience of forum) to
jurisdiction or venue within the State of Georgia for the purpose of
litigation to enforce this Agreement, the Notes or the other Loan Documents,
and (c) agrees that service of process may be made upon it in the manner
prescribed in Section 9.01 for the giving of notice to the Borrower. Nothing
herein contained, however, shall prevent the Agent from bringing any action or
exercising any rights against any security and against the Borrower
personally, and against any assets of the Borrower, within any other state or
jurisdiction.
SECTION 9.17. Counterparts. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, under seal, by their respective authorized
officers as of the day and year first above written.
THE HOME DEPOT, INC. (SEAL)
By: /s/ Marshall L. Day
Title: Senior Vice President
The Home Depot, Inc.
2455 Paces Ferry Road
12th Floor
Atlanta, Georgia 30339-4024
Attention: Chief Financial Officer
Telecopier number: (770) 384-4522
Confirmation number: (770) 384-2700
<PAGE>
COMMITMENTS WACHOVIA BANK OF GEORGIA, N.A.,
as Agent and as a Bank (SEAL)
$100,000,000.00
By: /s/ John T. Seeds
Title: Vice President
Lending Office
Wachovia Bank of Georgia, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: John T. Seeds
Telecopier number: (404) 332-5016
Confirmation number: (404) 332-6558
<PAGE>
$45,000,000.00 SUNTRUST BANK, ATLANTA (SEAL)
By: /s/
Title: Vice President
By: /s/
Title: Banking Officer
Lending Office
SunTrust Bank, Atlanta
25 Park Place - MC 127
Atlanta, Georgia 30303
Attention: J. Christopher Deisley
Telecopier number: (404) 588-8833
Confirmation number: (404) 588-8684
<PAGE>
$75,000,000.00 FIRST UNION NATIONAL BANK
OF GEORGIA (SEAL)
By: /s/ Mayla Thom
Title: Vice President
Lending Office
First Union National Bank
of Georgia
999 Peachtree Street, N.E.
6th Floor
Atlanta, Georgia 30309
Attention: Mayla M. Thom
Telecopier number: (404) 225-4255
Confirmation number: (404) 225-4066
<PAGE>
$95,000,000.00 BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION (SEAL)
By: /s/
Title: Senior Vice President
Lending Office
Bank of America National
Trust & Savings Association
1230 Peachtree Street, N.E.
Suite 3800
Atlanta, Georgia 30309
Attention: Michelle W. Kacergis
Telecopier number: (404) 249-6938
Confirmation number: (404) 249-6906
<PAGE>
$100,000,000.00 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK (SEAL)
By: /s/ Carl J. Mehldau, Jr.
Title: Associate
Lending Office
Morgan Guaranty Trust Company
of New York
60 Wall Street
New York, NY 10260
Attention: Mr. David T. Ellis
Telecopier number: (212) 648-5014
Confirmation number: (212) 648-7638
<PAGE>
$60,000,000.00 TORONTO DOMINION (TEXAS), INC.
(SEAL)
By: /s/ Diane Bailey
Title: Vice President
Lending Office
31 West 52nd Street
New York, New York 10019
Attention: Randall C. Bingham
Telecopier number:
Confirmation number: (212) 468-0550
<PAGE>
$95,000,000.00 DEUTSCHE BANK AG (SEAL)
By: /s/ Hans-Josef Thiele
Title: Vice President
Lending Office
31 West 52nd Street
New York, New York 10019
Attention: David H. Kahn
Telecopier number: (212) 474-7936
Confirmation number: (212) 474-8211
<PAGE>
$75,000,000.00 NATIONSBANK OF GEORGIA, N.A. (SEAL)
By: /s/
Title: Senior Vice President
Lending Office
600 Peachtree Street, N.E.
21st Floor
Atlanta, Georgia 30308
Attention: Kathryn W. Robinson
Telecopier number: (404) 607-6467
Confirmation number: (404) 607-5887
<PAGE>
$25,000,000.00 CREDIT SUISSE (SEAL)
By: /s/ William P. Murray
Title: Member of Senior Management
By: /s/ Kristinn R. Kristinsson
Title: Associate
Lending Office
12 East 49th Street
New York, New York 10017
Attention: Hazel Leslie
Telecopier number: (212) 238-5245
Confirmation number: (212) 238-5218
With Copies to:
191 Peachtree Street, N.E.
Suite 3500
Atlanta, Georgia 30303
Attention: Michel Odermatt
Telecopier number: (404) 577-9029
Confirmation number: (404) 577-6100
<PAGE>
$45,000,000.00 THE BANK OF NEW YORK (SEAL)
By: /s/
Title: Vice President
Lending Office
One Wall Street
8th Floor
New York, New York 10286
Attention: Paula M. DiPonzio
Telecopier number: (212) 635-1483
Confirmation number: (212) 635-7867
<PAGE>
$60,000,000.00 UNION BANK OF SWITZERLAND (SEAL)
By: /s/
Title: Vice President
Lending Office
299 Park Avenue
New York, New York 10171
Attention: Robert Casey
Telecopier number: (212) 821-3383
Confirmation number: (212) 821-3329
<PAGE>
$25,000,000.00 THE FIRST NATIONAL BANK OF CHICAGO
(SEAL)
By: /s/
Title: CBO
Lending Office
One First National Plaza
Chicago, Illinois 60670
Attention: Paul E. Rigby
Telecopier number: (312) 732-8587
Confirmation number: (312) 732-6132
TOTAL COMMITMENTS:
$800,000,000
<PAGE>
The Home Depot, Inc.
Senior Officers' Bonus Pool Plan
(SOBP)
I. Purpose
The Home Depot, Inc. Senior Officers' Bonus Pool Plan (the "Plan") which,
subject to approval by the Company's stockholders, shall be effective as of
January 29,1996. The Plan is designed to provide a total cash compensation
package for the Chief Executive Officer ("CEO") and President ("COO") of The
Home Depot, Inc. (the "Company"), that is consistent with the Company's
philosophy of "pay for performance". Payments pursuant to this Plan are
intended to qualify under Section 162(m)(4)(c) of the Internal Revenue Code of
1986, as amended, as excluded from the term "applicable employee remuneration".
1. Administration
The Plan shall be administered by the Compensation Committee of the Board of
Directors (the "Committee"). The Committee shall be composed of not less than
three (3) Disinterested Persons (as defined by Section 162(m)), each of whom
shall be appointed by and serve at the pleasure of the Board of Directors.
The Committee shall have full discretionary authority in all matters relating to
the discharge of its responsibilities and the exercise of its authority under
the Plan. It is the intent of the Plan that the decisions of the Committee and
its action with respect to the Plan shall be final, binding and conclusive.
2. Eligibility
The Plan is designed exclusively for the CEO and COO. No other members of
Senior Management are eligible to participate in the Plan.
3. Funding and Allocation of Bonus
The Plan allows the CEO and COO collectively to earn a bonus equal to ten per-
cent (10%) of the Company's net earnings in excess of a threshold amount, which
threshold amount will be automatically established each year at the prior year's
net earnings (the "Earnings
<PAGE>
Threshold"). For fiscal years 1996, 1997, 1998, 1999
and 2000, the maximum amount awardable under the Plan in any one year is Four
Million Dollars ($4,000,000). Monies payable from the Plan are to be shared by
the CEO and COO at the ratio of fifty percent (50%) each.
4. Deferral Elections
The Committee may, at its option, establish procedures pursuant to which the
participants are permitted to defer the receipt of bonuses payable hereunder.
5. Plan Term
The Plan term is five (5) years to include the fiscal years 1996, 1997, 1998,
1999 and 2000.
6. Plan Amendment or Termination
The Board of Directors may discontinue the Plan at any time and may, from time
to time, amend or revise the terms of the Plan as permitted by applicable
statutes; provided, however, that no such discontinuance, amendment or revision
shall materially adversely affect any right or obligation with respect to any
award theretofore made.
<PAGE>
<TABLE>
<CAPTION>
THE HOME DEPOT, INC.
Computation of Primary and Fully Diluted Earnings
Per Common and Common Equivalent Share
(In thousands, except per share amounts Fiscal Year Ended
---------------------------------------
1-28-96 1-29-95 1-30-94
<S> <C> <C> <C>
Primary
- -------
Net earnings applicable to common and
common equivalent shares $731,523 $604,501 $457,401
Tax affected interest expense,
net of interest capitalized attributable
to convertible subordinated notes 2,415 22,580
-------- --------
$733,938 $627,081
======== ========
Shares:
Weighted average number of common and
common equivalent shares assuming
average market price for period 477,977 455,173 453,037
======== ========
Additional shares assuming conversion
of the notes 20,774
--------
475,947
========
Primary earnings
per common and common equivalent share $1.54 $1.32 $1.01
===== ===== =====
Fully Diluted
- -------------
Net earnings applicable to common and
common equivalent shares $731,523 $604,501 $457,401
Tax effected interest expense attributable
to convertible subordinated notes 2,415 22,580 18,981
-------- -------- --------
$733,938 $627,081 $476,382
======== ======== ========
Shares:
Weighted average number of common and
common equivalent shares at the ending
market price 478,192 455,717 453,037
========
Additional shares assuming conversion
of the notes 20,774 20,774
-------- --------
476,491 473,811
======== ========
Fully diluted earnings per common &
common equivalent share $1.54 $1.32 $1.01
===== ===== =====
(1) Common equivalent shares represent shares granted under three stock
option plans and an employee stock purchase plan. All periods have been
adjusted to reflect the four-for-three stock split up effected in the form of
a dividend in April 1993.
(2) The Company's 4-1/2% Convertible Subordinated Notes, issued in 1992,
were common stock equivalents prior to the conversion in March, 1995. For
fiscal year 1994, the 4-1/2% Notes were dilutive and are assumed to be converted
as of the beginning of the accounting period for purposes of calculating primary
earnings per share. In fiscal year 1993, the 4-1/2% Notes were dilutive but had
no impact on earnings per share and therefore were excluded from the
computation of primary earnings per share.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Ten Year Selected Financial and Operating Highlights
The Home Depot, Inc. and Subsidiaries
Amounts in thousands, except where noted
5 Year Annual 10 Year Annual
Compound Compound
Growth Rate Growth Rate 1995 1994 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Earnings Data
Net sales 32.3% 36.3% $15,470,358 $12,476,697 $9,238,763 $7,148,436 $5,136,674
Net sales increase - % - - 24.0 35.0 29.2 39.2 34.6
Earnings before taxes 35.7 58.9 1,195,303 979,751 736,871 575,973 396,120
Net earnings 35.0 56.6 731,523 604,501 457,401 362,863 249,150
Net earnings increase - % - - 21.0 32.2 26.1 45.6 52.5
Net earnings per share ($) 27.9 48.3 1.54 1.32 1.01 .82 .60
Net earnings per share
increase - % - - 16.7 30.5 23.2 36.7 33.3
Weighted average number
of shares 5.7 6.5 477,977 475,947 453,037 444,989 415,997
Gross margin - % to sales - - 27.7 27.9 27.7 27.6 28.1
Store selling and
operating - % to sales - - 18.0 17.8 17.6 17.4 18.1
Pre-opening - % to sales - - .4 .4 .4 .4 .3
General and
administrative- %to sales - - 1.7 1.8 2.0 2.1 2.3
Net interest (expense)
income - % to sales - - (.1) (.1) .3 .4 .3
Earnings before taxes
- % to sales - - 7.7 7.8 8.0 8.1 7.7
Net earnings - % to sales - - 4.7 4.8 5.0 5.1 4.8
- ----------------------------------------------------------------------------------------------------------------------------
Balance Sheet Data and Financial Ratios
Total assets 35.0% 34.5% $ 7,354,033 $ 5,778,041 $4,700,889 $3,931,790 $2,510,292
Working capital 33.1 30.0 1,255,487 918,724 993,963 807,028 623,937
Mdse. inventories 33.8 30.5 2,180,318 1,749,312 1,293,477 939,824 662,257
Net property and equipment 38.4 39.4 4,461,024 3,397,237 2,370,904 1,607,984 1,254,774
Long-term debt 6.3 13.7 720,080 983,369 874,048 843,672 270,575
Stockholders' equity 48.8 49.6 4,987,766 3,442,223 2,814,100 2,304,081 1,691,212
Book value per share ($) 40.2 40.4 10.45 7.59 6.26 5.20 4.01
Long-term debt to
equity - % - - 14.4 28.6 31.1 36.6 16.0
Current ratio - - 1.89:1 1.76:1 2.02:1 2.07:1 2.17:1
Inventory turnover - - 5.5x 5.7x 5.9x 6.3x 6.1x
Return on average equity - % - - 17.4 19.3 17.9 18.1 18.5
- ----------------------------------------------------------------------------------------------------------------------------
Statement of Cash Flows Data
Depreciation and
amortization 39.4% 42.6% $ 181,205 $ 129,609 $ 89,839 $ 69,536 $ 52,283
Capital expenditures 26.7 29.4 1,308,375 1,220,180 900,452 437,278 432,198
Cash dividends per share ($) - - .19 .15 .11 .08 .05
- ----------------------------------------------------------------------------------------------------------------------------
Customer and Store Data
Number of states 20.9% 16.0% 31 28 23 19 15
Number of Canadian provinces - - 3 3 - - -
Number of stores 23.9 23.8 423 340 264 214 174
Square footage at year-end 27.3 27.2 44,356 35,133 26,383 20,897 16,480
Change in square footage - % - - 26.3 33.2 26.3 26.8 24.1
Average square footage
per store - - 105 103 100 98 95
Number of customer
transactions 26.9 31.8 370,317 302,181 236,101 189,493 146,221
Average sale per
transaction ($) 4.2 3.3 41.78 41.29 39.13 37.72 35.13
Number of employees 30.3 31.1 80,800 67,300 50,600 38,900 28,000
- ----------------------------------------------------------------------------------------------------------------------------
Other Data
Average total company
weekly sales 32.8% 36.3% $ 297,507 $ 239,936 $ 177,669 $ 137,470 $ 98,782
Weighted average weekly
sales per operating store 6.8 8.7 787 802 764 724 633
Comparable store sales
increase - % (2) - - 3 8 7 15 11
Weighted average sales
per square foot ($) (2) 3.9 5.7 390 404 398 387 348
Net advertising
expense - % to sales - - .5 .5 .5 .5 .7
(1) Fiscal year 1990 consisted of 53 weeks, all other years reported consisted of 52 weeks.
(2) Adjusted to reflect the first 52 weeks of the 53-week fiscal year in 1990.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Management's Discussion and Analysis of
Results of Operations and Financial Condition
THE HOME DEPOT, INC. AND SUBSIDIARIES
The data below reflect selected sales data, the percentage relationship
between sales and major categories in the Consolidated Statement of
Earnings and the percentage change in the dollar amounts of each of the items.
Percentage
Increase (Decrease)
of Dollar Amounts
Fiscal Year(1) ------------------------
-------------- 1995 1994
1995 1994 1993 vs. 1994 vs. 1993
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Selected Consolidated Statements of
Earnings Data
Net Sales 100.0% 100.0% 100.0% 24.0% 35.0%
- -----------------------------------------------------------------------------------------------------------------
Gross Profit 27.7 27.9 27.7 23.0 36.5
- -----------------------------------------------------------------------------------------------------------------
Operating Expenses:
Selling and Store Operating 18.0 17.8 17.6 25.6 36.4
Pre-Opening 0.4 0.4 0.4 2.0 39.4
General and Administrative 1.7 1.8 2.0 16.9 24.6
- -----------------------------------------------------------------------------------------------------------------
Total Operating Expenses 20.1 20.0 20.0 24.3 35.3
- -----------------------------------------------------------------------------------------------------------------
Operating Income 7.6 7.9 7.7 19.5 39.7
Interest Income (Expense):
Interest and Investment Income 0.1 0.2 0.6 (31.3) (53.2)
Interest Expense - (0.3) (0.3) (88.5) 17.0
- -----------------------------------------------------------------------------------------------------------------
Interest, Net 0.1 (0.1) 0.3 (307.7) (124.7)
- -----------------------------------------------------------------------------------------------------------------
Earnings Before Income Taxes 7.7 7.8 8.0 22.0 33.0
Income Taxes 3.0 3.0 3.0 23.6 34.3
- -----------------------------------------------------------------------------------------------------------------
Net Earnings 4.7% 4.8% 5.0% 21.0% 32.2%
- -----------------------------------------------------------------------------------------------------------------
Selected Consolidated Sales Data
Number of Transactions 370,317,000 302,181,000 236,101,000 22.5% 28.0%
Average Amount of Sale
Per Transaction $ 41.78 $ 41.29 $ 39.13 1.2 5.5
Weighted Average Weekly Sales
Per Operating Store $787,000 $802,000 $764,000 (1.9) 5.0
Weighted Average Sales
Per Square Foot $ 390.32 $ 404.04 $ 398.18 (3.4) 1.5
- -----------------------------------------------------------------------------------------------------------------
(1)Fiscal years 1995, 1994 and 1993 refer to the fiscal years ended January 28, 1996, January 29, 1995 and
January 30, 1994, respectively.
<PAGE>
Results Of Operations
For an understanding of the significant factors that influenced the Company's
performance during the past three fiscal years, the following discussion
should be read in conjunction with the consolidated financial statements
appearing elsewhere in this annual report.
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.
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 job 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.
<PAGE>
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
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.
The Company plans to open approximately 90 to 95 new stores and relocate six
existing stores during fiscal 1996. It is anticipated that approximately 80%
of these locations will be owned and the balance will be leased. The Company
also plans to open approximately 123 stores, including relocations, in fiscal
1997. Although some of these locations may be newly leased, it is expected
that most will be obtained during fiscal 1996 through the purchase of
pre-existing leasehold interests, the acquisition of land parcels and the
construction or purchase of buildings. While the cost of new stores to be
constructed and owned by the Company varies widely, principally due to land
costs, new store costs are currently estimated to average approximately
$12,900,000 per location. In addition, the Company may purchase leasehold
interests at varying amounts depending on the value of such properties. The
cost to remodel and fixture stores to be leased is expected to average
approximately $3,000,000 per store. In addition, each new store will require
approximately $3,200,000 to finance inventories, net of vendor financing.
During fiscal 1995, the Company expanded its commercial paper program up to
a maximum of $800,000,000 of which $620,000,000 was outstanding as of
January 28, 1996. In connection with the program, the Company has a back-up
credit facility with a consortium of banks for up to $800,000,000. The
facility expires in December 2000. The facility contains various restrictive
covenants, none of which is expected to impact the Company's liquidity or
capital resources.
As of January 28, 1996, the Company had $108,025,000 in cash and cash
equivalents and short-term investments as well as $25,436,000 in long-term
investments. Management believes that its current cash position, the proceeds
from short-term and long-term investments, internally generated funds, its
commercial paper program, 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 Pronouncements
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 had been applied.
The Company plans to adopt SFAS 123 in fiscal year 1996 on a pro forma
disclosure basis.
In March 1995, Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of" (SFAS 121) was issued. SFAS 121 establishes accounting
standards for the impairment of long-lived assets, certain identifiable
intangibles and goodwill related to those assets to be held and used, or to
be disposed of. The Company does not believe the adoption of SFAS 121 in
fiscal year 1996 will have a significant impact on the Company's financial
condition or results of operations.
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.
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Consolidated Statements of Earnings
THE HOME DEPOT, INC. AND SUBSIDIARIES
AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA
Fiscal Year Ended
-------------------------------------------
January 28, January 29, January 30,
1996 1995 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $15,470,358 $12,476,697 $9,238,763
Cost of Merchandise Sold 11,184,772 8,991,204 6,685,384
- ----------------------------------------------------------------------------------------------------
Gross Profit 4,285,586 3,485,493 2,553,379
- ----------------------------------------------------------------------------------------------------
Operating Expenses:
Selling and Store Operating 2,783,926 2,216,540 1,624,920
Pre-Opening 52,342 51,307 36,816
General and Administrative 269,464 230,456 184,954
- ----------------------------------------------------------------------------------------------------
Total Operating Expenses 3,105,732 2,498,303 1,846,690
- ----------------------------------------------------------------------------------------------------
Operating Income 1,179,854 987,190 706,689
- ----------------------------------------------------------------------------------------------------
Interest Income (Expense):
Interest and Investment Income 19,597 28,510 60,896
Interest Expense (note 2) (4,148) (35,949) (30,714)
- ----------------------------------------------------------------------------------------------------
Interest, Net 15,449 (7,439) 30,182
- ----------------------------------------------------------------------------------------------------
Earnings Before Income Taxes 1,195,303 979,751 736,871
Income Taxes (note 3) 463,780 375,250 279,470
- ----------------------------------------------------------------------------------------------------
Net Earnings $ 731,523 $ 604,501 $ 457,401
- ----------------------------------------------------------------------------------------------------
Earnings Per Common and Common Equivalent Share $ 1.54 $ 1.32 $ 1.01
- ----------------------------------------------------------------------------------------------------
Weighted Average Number of Common
and Common Equivalent Shares 477,977 475,947 453,037
- ----------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets
THE HOME DEPOT, INC. AND SUBSIDIARIES
AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA
January 28, January 29,
1996 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets:
Cash and Cash Equivalents $ 53,269 $ 1,154
Short-Term Investments, including current
maturities of long-term investments (note 7) 54,756 56,712
Receivables, Net 325,384 272,225
Merchandise Inventories 2,180,318 1,749,312
Other Current Assets 58,242 53,560
- -----------------------------------------------------------------------------------------------------
Total Current Assets 2,671,969 2,132,963
- -----------------------------------------------------------------------------------------------------
Property and Equipment, at cost:
Land 1,510,619 1,167,063
Buildings 1,885,742 1,311,806
Furniture, Fixtures and Equipment 857,082 634,173
Leasehold Improvements 314,933 273,015
Construction in Progress 308,365 289,157
Capital Leases (notes 2 and 5) 92,154 72,054
- -----------------------------------------------------------------------------------------------------
4,968,895 3,747,268
Less Accumulated Depreciation and Amortization 507,871 350,031
- -----------------------------------------------------------------------------------------------------
Net Property and Equipment 4,461,024 3,397,237
Long-Term Investments (note 7) 25,436 98,022
Notes Receivable 54,715 32,528
Cost in Excess of the Fair Value of Net Assets Acquired,
net of accumulated amortization of $10,536 at
January 28, 1996 and $8,064 at January 29, 1995 87,238 88,513
Other 53,651 28,778
- -----------------------------------------------------------------------------------------------------
$7,354,033 $5,778,041
- -----------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts Payable $ 824,808 $ 681,291
Accrued Salaries and Related Expenses 198,208 192,151
Sales Taxes Payable 113,066 101,011
Other Accrued Expenses 242,859 208,377
Income Taxes Payable 35,214 8,717
Current Installments of Long-Term Debt (notes 2, 5 and 6) 2,327 22,692
- -----------------------------------------------------------------------------------------------------
Total Current Liabilities 1,416,482 1,214,239
- -----------------------------------------------------------------------------------------------------
Long-Term Debt, excluding current
installments (notes 2, 5 and 6) 720,080 983,369
Other Long-Term Liabilities 115,917 67,953
Deferred Income Taxes (note 3) 37,225 19,258
Minority Interest (note 9) 76,563 50,999
Stockholders' Equity (notes 2 and 4):
Common Stock, par value $0.05. Authorized: 1,000,000,000
shares; issued and outstanding -
477,106,000 shares at January 28, 1996 and 453,365,000
shares at January 29, 1995 23,855 22,668
Paid-in Capital 2,407,815 1,526,463
Retained Earnings 2,579,059 1,937,284
Cumulative Translation Adjustments (6,131) (10,887)
Unrealized Loss on Investments, Net (47) (1,495)
- -----------------------------------------------------------------------------------------------------
5,004,551 3,474,033
Less: Notes Receivable From ESOP (note 6) 16,539 31,810
Shares Held in Employee Benefit Trust 246 -
- -----------------------------------------------------------------------------------------------------
Total Stockholders' Equity 4,987,766 3,442,223
- -----------------------------------------------------------------------------------------------------
Commitments and Contingencies (notes 5, 8 and 9)
$7,354,033 $5,778,041
- -----------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Stockholders' Equity
THE HOME DEPOT, INC. AND SUBSIDIARIES
FISCAL YEARS ENDED JANUARY 28, 1996, JANUARY 29, 1995 AND JANUARY 30, 1994
AMOUNTS IN THOUSANDS, EXCEPT PERSHARE DATA
Cumula- Unreal-
tive ized Shares
Transla- Loss on Held in Total
Common Stock tion Invest- Notes Employee Stock-
------------- Paid-in Retained Adjust- ments, Receivable Benefit holders
Shares Amount Capital Earnings ments Net from ESOP Trust Equity
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 31, 1993 443,585 $22,179 $1,339,821 $ 993,517 $ - $ - $(51,436) $ - $2,304,081
Shares Sold Under Employee Stock
Purchase and Option Plans,
Net of Retirements (note 4) 5,779 289 76,500 - - - - - 76,789
Tax Effect of Sale of Option Shares
by Employees - - 19,708 - - - - - 19,708
Cumulative Translation Adjustments - - - - (121) - - - (121)
Repayments of Notes Receivable
from ESOP (note 6) - - - - - - 6,585 - 6,585
Net Earnings - - - 457,401 - - - - 457,401
Cash Dividends ($.11 per share) - - - (50,343) - - - - (50,343)
- ---------------------------------------------------------------------------------------------------------------------------------
Balance, January 30, 1994 449,364 $22,468 $1,436,029 $1,400,575 $ (121) $ - $(44,851) $ - $2,814,100
- ---------------------------------------------------------------------------------------------------------------------------------
Shares Sold Under Employee Stock
Purchase and Option Plans,
Net of Retirements (note 4) 4,001 200 77,720 - - - - - 77,920
Tax Effect of Sale of Option Shares
by Employees - - 12,709 - - - - - 12,709
Cumulative Translation Adjustments - - - - (10,766) - - - (10,766)
Repayments of Notes Receivable
from ESOP (note 6) - - - - - - 13,041 - 13,041
Conversion of 4H% Convertible
Subordinated Notes, Net (note 2) - - 5 - - - - - 5
Unrealized Loss on Investments,
Net (note 7) - - - - - (1,495) - - (1,495)
Net Earnings - - - 604,501 - - - - 604,501
Cash Dividends ($.15 per share) - - - (67,792) - - - - (67,792)
- ---------------------------------------------------------------------------------------------------------------------------------
Balance, January 29, 1995 453,365 $22,668 $1,526,463 $1,937,284 $(10,887) $(1,495) $(31,810) $ - $3,442,223
- ---------------------------------------------------------------------------------------------------------------------------------
Shares Sold Under Employee Stock
Purchase and Option Plans,
Net of Retirements (note 4) 2,967 148 68,310 - - - - - 68,458
Tax Effect of Sale of Option Shares
by Employees - - 9,728 - - - - - 9,728
Cumulative Translation Adjustments - - - - 4,756 - - - 4,756
Repayments of Notes Receivable
from ESOP (note 6) - - - - - - 15,271 - 15,271
Conversion of 4H% Convertible
Subordinated Notes,
Net (note 2) 20,774 1,039 803,314 - - - - - 804,353
Unrealized Gain on Investments, Net - - - - - 1,448 - - 1,448
Shares Purchased by
Employee Benefit Trust - - - - - - - (246) (246)
Net Earnings - - - 731,523 - - - - 731,523
Cash Dividends ($.19 per share) - - - (89,748) - - - - (89,748)
- ---------------------------------------------------------------------------------------------------------------------------------
Balance, January 28, 1996 477,106 $23,855 $2,407,815 $2,579,059 $(6,131) $ (47) $(16,539) $(246) $4,987,766
- ---------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
THE HOME DEPOT, INC. AND SUBSIDIARIES
AMOUNTS IN THOUSANDS
Fiscal Year Ended
-------------------------------------------
January 28, January 29, January 30,
1996 1995 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Provided From Operations:
Net Earnings $ 731,523 $ 604,501 $ 457,401
Reconciliation of Net Earnings to Net Cash
Provided by Operations:
Depreciation and Amortization 181,205 129,609 89,839
Deferred Income Tax Expense (Benefit) 17,976 (2,468) 12,578
Increase in Receivables, Net (69,907) (69,023) (36,658)
Increase in Merchandise Inventories (429,270) (405,197) (353,653)
Increase in Accounts Payable and Accrued Expenses 215,633 280,056 200,977
Increase (Decrease) in Income Taxes Payable 36,159 (11,126) 36,143
Other 29,661 (10,870) (10,120)
- ---------------------------------------------------------------------------------------------------
Net Cash Provided by Operations 712,980 515,482 396,507
- ---------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities:
Capital Expenditures, Net of $30,271, $31,183
and $36,294 of non-cash capital expenditures
in fiscal 1995, 1994 and 1993, respectively (1,278,104) (1,100,654) (864,158)
Acquisition of Canadian Partnership Interest - (161,548) -
Proceeds from Sales of Property and Equipment 29,357 49,718 35,070
Sales and Maturities of Short-Term Investments, Net 56,856 96,007 14,903
Purchase of Long-Term Investments - (94,442) (840,361)
Proceeds from Maturities of Long-Term Investments 6,288 50,251 269,988
Proceeds from Sale of Long-Term Investments 13,566 403,738 929,598
Advances Secured by Real Estate, Net (4,955) 2,650 5,681
Net Cash Used in Investing Activities (1,176,992) (754,280) (449,279)
Cash Flows From Financing Activities:
Proceeds from Commercial Paper 520,000 100,000 -
Repayments of Notes Receivable from ESOP 15,271 13,041 6,585
Principal Repayments of Long-Term Debt (22,817) (2,175) (2,006)
Proceeds from Sale of Common Stock, Net 68,458 77,926 76,789
Cash Dividends Paid to Stockholders (89,748) (67,792) (50,343)
Minority Interest Contributions to Partnership 24,577 19,031 -
- ---------------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 515,741 140,031 31,025
- ---------------------------------------------------------------------------------------------------
Effect of Exchange Rate Changes on Cash 386 (76) -
Increase (Decrease) in Cash and Cash Equivalents 52,115 (98,843) (21,747)
Cash and Cash Equivalents at Beginning of Year 1,154 99,997 121,744
- ---------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 53,269 $ 1,154 $ 99,997
- ---------------------------------------------------------------------------------------------------
Supplemental Disclosure of Cash Payments Made For:
Interest (net of interest capitalized) $ 21,685 $ 30,537 $ 28,778
Income Taxes $ 407,643 $ 393,915 $ 228,968
- ---------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements
THE HOME DEPOT, INC. AND SUBSIDIARIES
NOTE One Summary of Significant Accounting Policies
The Home Depot operates full-service, warehouse-style stores averaging
approximately 105,000 square feet in size. The stores stock approximately
40,000 to 50,000 different kinds of building materials, home improvement
supplies and lawn and garden products which are sold primarily to
do-it-yourselfers, but also to home improvement, construction, and building
maintenance professionals. At the end of fiscal 1995, The Home Depot operated
404 stores in 31 states in the United States and 19 stores in three Canadian
provinces. Included in the Company's Consolidated Balance Sheet at January 28,
1996 are $293,971,000 of net assets of the Canadian operations.
Fiscal Year - The Company's fiscal year is a 52- or 53-week period ending on
the Sunday nearest to January 31. Fiscal years 1995, 1994 and 1993, which
ended January 28, 1996, January 29, 1995 and January 30, 1994 respectively,
consisted of 52 weeks.
Basis of Presentation - The consolidated financial statements include the
accounts of the Company, its wholly-owned subsidiaries and majority owned
partnership. All significant intercompany transactions have been eliminated in
consolidation.
Cash Equivalents - The Company considers all highly liquid investments
purchased with a maturity of three months or less to be cash equivalents. The
Company's cash and cash equivalents are primarily cash equivalents carried at
fair market value and consist of preferred stocks, commercial paper, money
market funds and U.S. government agency securities.
Investments - Effective January 31, 1994, the Company adopted Statement of
Financial Accounting Standards No. 115 (SFAS No. 115) "Accounting for Certain
Investments in Debt & Equity Securities" which was effective for fiscal years
beginning after December 15, 1993. The Company classifies its investments into
one of three categories: trading, held to maturity, or available for sale.
Trading securities, which are bought and held primarily for the purpose of
selling them in the near term, are recorded at fair value with gains and
losses included in earnings. Held to maturity securities, which are securities
that the Company has the ability and the intent to hold until maturity, are
recorded at amortized cost and adjusted for amortization or accretion of
premiums or discounts. The Company's short-term and long-term investments,
consisting primarily of debt securities, have been designated as being held
available for sale, and accordingly, are reported at fair value. Unrealized
gains and losses on securities classified as available for sale are reported
as a separate component of stockholders' equity until realized. The cost of
investments sold is determined using the specific identification method.
Estimated market values of investments are based on quoted market prices on
the last business day of the fiscal year. A decline in the market value of any
available for sale or held to maturity security below cost that is deemed
other than temporary is charged to earnings resulting in the establishment of
a new cost basis for the security.
In fiscal year 1993, the Company valued its short-term investments, consisting
of primarily debt securities, at amortized cost which approximated market.
Certain long-term investments designated as available for sale were recorded
at lower of amortized cost or market. The Company's remaining investments
classified as held to maturity were valued at amortized cost.
Merchandise Inventories - Inventories are stated at the lower of cost
(first-in, first-out) or market, as determined by the retail inventory method.
Income Taxes - The Company provides for Federal and state income taxes
currently payable as well as for those deferred because of timing differences
between reporting income and expenses for financial statement purposes and
income and expenses for tax purposes. Targeted jobs tax credits were recorded
as a reduction of income taxes.
Effective February 1, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 109 (SFAS 109), "Accounting for Income
Taxes" and reported the cumulative effect of that change in the method of
accounting for income taxes in the consolidated statement of earnings for the
first fiscal quarter of 1993, which ended
<PAGE>
May 2, 1993. SFAS 109 requires an
asset and liability approach in accounting for income taxes and, therefore,
required a change from the deferred method the Company previously used. Under
the asset and liability method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. Under SFAS 109, the effect on deferred tax assets and liabilities of
a change in tax rates is recognized as income or expense in the period that
includes the enactment date.
Depreciation and Amortization - The Company's buildings, furniture, fixtures
and equipment are depreciated using the straight-line method over the
estimated useful lives of the assets. Improvements to leased premises are
amortized on the straight-line method over the life of the lease or the useful
life of the improvement, whichever is shorter. The Company's property and
equipment is depreciated using the following estimated useful lives:
<TABLE>
<CAPTION>
Life
- ---------------------------------------------------
<S> <C>
Buildings 10-45 years
Furniture, fixtures and equipment 5-20 years
Leasehold improvements 8-30 years
</TABLE>
The cost in excess of the fair value of net assets acquired is being amortized
on a straight-line basis over 40 years. The cost of purchased software and
associated consulting fees is amortized on a straight-line basis over periods
ranging from three to five years.
Notes Receivable - Notes receivable which are issued to real estate developers
in connection with development and construction of stores and underlying real
estate are recorded at cost, less an allowance for impaired notes receivable
when necessary.
Store Pre-Opening Costs - Non-capital expenditures associated with opening new
stores are charged to expense as incurred.
Store Closing Costs - When a store is relocated or closed, estimated
unrecoverable costs are charged to expense. Such costs include the estimated
loss on sale of land and building, the book value of abandoned fixtures,
equipment, leasehold improvements and a provision for the present value of
future lease obligations, less estimated sub-rental income.
Earnings Per Common and Common Equivalent Share - Earnings per common and
common equivalent share are based on the weighted average number of shares and
equivalent shares outstanding. Common equivalent shares used in the
calculation of earnings per share represent options to purchase shares granted
under the Company's employee stock option and stock purchase plans.
The Company's 41/2% Convertible Subordinated Notes (the "41/2% Notes"), issued
in 1992, were common stock equivalents prior to their conversion in March
1995. For the 1995 and 1994 fiscal years the Notes were dilutive and are
assumed to be converted as of the beginning of the accounting periods for
purposes of calculating earnings per share. Earnings per share is calculated
by dividing net earnings, adjusted for tax-effected net interest and issue
costs on the Notes, by weighted average common and common equivalent shares.
The weighted average number of common and common equivalent shares include
shares issuable under the Company's stock plans and the 20,774,000 shares
issued upon conversion of the Notes. In fiscal year 1993, the 41/2% Notes were
dilutive but had no impact on earnings per share.
Cost in Excess of the Fair Value of Net Assets Acquired - Goodwill, which
represents the excess of purchase price over fair value of net assets
acquired, is amortized on a straight-line basis over a 40 year period. The
Company assesses the recoverability of this intangible asset by determining
whether the amortization of the goodwill balance over its remaining useful
life can be recovered through undiscounted future operating cash flows of the
acquired operation. The amount of goodwill impairment, if any, is measured
based on projected discounted future operating cash flows using a discount
rate reflecting the Company's average cost of funds.
<PAGE>
Employee Stock Ownership Plan - For all shares purchased by the Employee Stock
Ownership Plan (ESOP) prior to December 31, 1992, the Company's contributions
to the ESOP are determined based on the ESOP's cost of the shares released to
the employees. For shares purchased after December 31, 1992, the Company's
contributions to the ESOP will be determined based on the fair value of the
shares released to the employees as of the release date.
Foreign Currency Translation - The local currency has been used as the
functional currency in Canada. The assets and liabilities denominated in
foreign currency are translated into U.S. dollars at the current rate of
exchange existing at year-end and revenues and expenses are translated at the
average monthly exchange rates. The translation gains and losses are included
as a separate component of stockholders' equity. Transaction gains and losses
included in income are not material.
Use of Estimates - Management of the Company has made a number of estimates
and assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting principles. Actual
results could differ from these estimates.
Reclassifications - Certain balances in prior fiscal years have been
reclassified to conform with the presentation adopted in the current fiscal
year.
NOTE Two Long-Term Debt
<TABLE>
<CAPTION>
The Company's long-term debt consists of the following (in thousands):
January 28, 1996 January 29, 1995
- ----------------------------------------------------------------------------------------
<S> <C> <C>
4-1/2% Convertible Subordinated Notes,
converted into shares of common stock
of the Company at a conversion price
of $38.75 per share during March 1995. $ - $ 804,985
Commercial Paper, with a weighted average
interest rate of 5.67% at January 28, 1996
and 5.9% at January 29, 1995. 620,000 100,000
Capital Lease obligations payable in varying
installments through January 31, 2018
(see note 5). 82,513 63,225
7.95% Unsecured Note, repaid on September 1,
1995, incurred in connection with the
establishment of a leveraged Employee Stock
Ownership Plan and Trust (see note 6). - 20,000
Variable Rate Industrial Revenue Bonds, secured
by letters of credit or land, interest
rates averaging 3.7% during fiscal 1995,
payable in varying installments through 1999,
$3,000 payable on December 1, 2010 and
$5,200 payable on September 1, 2011. 9,367 9,966
Installment Notes Payable, interest imputed at
rates between 8.0% and 11.5%, payable in
varying installments through 2014. 10,089 7,419
Other 438 466
- ----------------------------------------------------------------------------------------
Total long-term debt 722,407 1,006,061
Less current installments 2,327 22,692
- ----------------------------------------------------------------------------------------
Long-term debt, excluding current installments $720,080 $ 983,369
- ----------------------------------------------------------------------------------------
</TABLE>
During fiscal 1995, holders of the Company's 4H% Notes converted a total
principal amount of $804,985,000 into 20,774,000 shares of the Company's
common stock. As a result of this transaction, the total principal amount
converted, net of unamortized expenses of the original debt issue, was
credited to common stock at par and additional paid-in capital in the amount
of $804,353,000. All of the 4H% Notes were redeemed for shares.
<PAGE>
In January 1995, the Company established a $300,000,000 Commercial Paper
program supported by a back-up credit facility with a maximum aggregate
principal amount outstanding of $300,000,000. In December 1995, the Company
amended the Commercial Paper program and the back-up credit facility to
increase the maximum amount available to $800,000,000. The back-up credit
facility expires December 20, 2000. The Commercial Paper borrowings are
classified as long-term as it is the Company's intention to refinance them on
a long-term basis. Covenants related to the back-up credit facility place
limitations on total Company indebtedness, subsidiary indebtedness and on
liens. As of January 28, 1996, the Company was in compliance with all
restrictive covenants.
The restrictive covenants related to letter of credit agreements securing the
industrial revenue bonds are no more restrictive than those referenced or
described above.
Interest expense in the accompanying consolidated statements of earnings is
net of interest capitalized of $20,767,000 in fiscal 1995, $17,559,000 in
fiscal 1994 and $13,912,000 in fiscal 1993.
Maturities of long-term debt are $2,327,000 for fiscal 1996, $1,698,000 for
fiscal 1997, $5,030,000 for fiscal 1998, $6,116,000 for fiscal 1999 and
$621,848,000 for fiscal 2000.
The estimated fair value of commercial paper borrowings approximate their
carrying value. The estimated fair value of all other long-term borrowings was
approximately $129,340,000 as compared to its carrying value of $102,407,000.
These fair values were estimated using a discounted cash flow analysis based
on the Company's incremental borrowing rate for similar liabilities.
NOTE Three Income Taxes
As discussed in Note 1, the Company adopted SFAS 109 as of February 1, 1993.
The cumulative effect of this change in accounting for income taxes, which
resulted in a tax benefit of $2,130,000, was determined as of February 1,
1993, and has been reflected in the consolidated statement of earnings for the
fiscal year ended January 30, 1994.
The provision for income taxes from operations consists of the following (in
thousands):
<TABLE>
<CAPTION>
Fiscal Year Ended
---------------------------------------------------------
January 28, 1996 January 29, 1995 January 30, 1994
<S> <C> <C> <C>
Current:
Federal $391,111 $330,232 $236,888
State 54,693 47,486 32,134
- -----------------------------------------------------------------------------
445,804 377,718 269,022
- -----------------------------------------------------------------------------
Deferred:
Federal 15,021 (1,875) 10,212
State 2,955 (593) 2,366
- -----------------------------------------------------------------------------
17,976 (2,468) 12,578
- -----------------------------------------------------------------------------
Total $463,780 $375,250 $281,600
- -----------------------------------------------------------------------------
</TABLE>
The Company's combined Federal and state effective tax rate from operations
for fiscal years 1995, 1994 and 1993, net of offsets generated by targeted
jobs tax credits, were approximately 38.8%, 38.3% and 38.2%, respectively. The
1995, 1994 and 1993 fiscal year effective tax rates include the effect of the
corporate Federal tax rate increase from 34% to 35% enacted into law during
the Company's 1993 fiscal year. A reconciliation of income tax expense from
operations at the Federal statutory rate of 35% to actual tax expense from
operations for the applicable fiscal years follows (in thousands):
<TABLE>
<CAPTION>
Fiscal Year Ended
---------------------------------------------------------
January 28, 1996 January 29, 1995 January 30, 1994
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Income taxes at
Federal statutory
rate $418,356 $342,913 $257,905
State income taxes,
net of Federal income
tax benefit 37,471 30,480 22,425
Other, net 7,953 1,857 1,270
- -----------------------------------------------------------------------------
Total $463,780 $375,250 $281,600
- -----------------------------------------------------------------------------
</TABLE>
<PAGE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities as of January
28, 1996 and January 29, 1995 are as follows (in thousands):
<TABLE>
<CAPTION>
Fiscal Year Ended
----------------------------------------
January 28, 1996 January 29, 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Deferred Tax Assets:
Accrued self-insurance liabilities $ 54,489 $ 40,906
Other accrued liabilities 36,359 28,061
- ---------------------------------------------------------------------------------
Net deferred tax assets 90,848 68,967
- ---------------------------------------------------------------------------------
Deferred Tax Liabilities:
Accelerated depreciation (110,342) (77,061)
Other (17,731) (11,164)
- ---------------------------------------------------------------------------------
Total gross deferred liabilities (128,073) (88,225)
Net deferred tax liability $ (37,225) $(19,258)
- ---------------------------------------------------------------------------------
</TABLE>
<PAGE>
No valuation allowance was recorded against the deferred tax assets at January
28, 1996, January 29, 1995 or January 30, 1994. The Company's management
believes the existing net deductible temporary differences comprising the
total gross deferred tax assets will reverse during periods in which the
Company generates net taxable income.
NOTE Four Employee Stock Plans
The Company has stock option plans that provide for the granting of incentive
and non-qualified options to purchase the Company's common stock to selected
key associates, officers and directors.
Under the Employee Incentive Stock Option Plan of 1981, options for 43,362,139
shares, net of cancellations (of which 42,726,972 had been exercised), have
been granted at $.16 to $18.83 per share as of January 28, 1996. Such options
may be exercised at the rate of 25% per year commencing with the first
anniversary date of the grant and expire after five years. The Plan expired on
June 1, 1991 and the shares available for grant were carried over to the 1991
Omnibus Stock Option Plan.
Under the Non-Qualified Stock Option Plan of 1984, options for 679,124 shares,
net of cancellations (of which 597,409 had been exercised), have been granted
at $1.53 to $9.86 per share as of January 28, 1996. Such options may be
exercised at varying rates commencing on the first anniversary date of the
grant and expire on the tenth anniversary date of the grant. The Plan expired
on June 1, 1991 and the shares available for grant were carried over to the
1991 Omnibus Stock Option Plan.
The provisions of the 1991 Omnibus Stock Option Plan, which became effective
June 1, 1991, authorize a maximum number of shares available for grant equal
to the cumulative number of shares available the previous year plus one
percent of the number of shares of common stock issued and outstanding at the
beginning of each fiscal year the plan is in effect. Under the 1991 Omnibus
Stock Option Plan, options for 10,070,801 shares, net of cancellations (of
which 798,149 had been exercised), have been granted at $24.50 to $48.94 per
share. As of January 28, 1996, the maximum number of shares available under
this plan for future grants was 38,399,223.
The following summarizes shares outstanding under the plans at January 28,
1996, January 29, 1995, and January 30, 1994 and changes during the fiscal
years then ended (in thousands of shares):
<PAGE>
<TABLE>
<CAPTION>
Number Average
of Shares Option Price
- ---------------------------------------------------------------------------------
<C> <C> <C>
Outstanding at January 31, 1993 12,455 $14.89
Granted 1,831 44.51
Exercised (4,307) 7.42
Cancelled (332) 24.92
- ---------------------------------------------------------------------------------
Outstanding at January 30, 1994 9,647 23.50
Granted 1,981 39.29
Exercised (2,631) 10.66
Cancelled (306) 35.35
- ---------------------------------------------------------------------------------
Outstanding at January 29, 1995 8,691 30.57
Granted 7,208 40.37
Exercised (1,921) 15.73
Cancelled (3,988) 43.43
- ---------------------------------------------------------------------------------
Outstanding at January 28, 1996 9,990 $35.37
- ---------------------------------------------------------------------------------
Exercisable 3,206 $31.22
- ---------------------------------------------------------------------------------
</TABLE>
In addition, the Company had 6,287,906 shares available for future grants
under the Employee Stock Purchase Plan at January 28, 1996. This plan enables
the Company to grant substantially all full-time associates options to
purchase up to 22,137,500 shares of common stock, of which 15,849,594 shares
have been exercised from inception of the plan, at a price equal to 85% of the
stock's fair market value at the date of grant. Shares purchased may not
exceed the lesser of 20% of the associate's annual compensation, as defined,
or $25,000 of common stock at its fair market value (determined at the time
such option is granted) for any one calendar year. Associates pay for the
shares ratably over a period of one year (the purchase period) through payroll
deductions, and cannot exercise their option to purchase any of the shares
until the conclusion of the purchase period. In the event an associate elects
not to exercise such options, the full amount withheld is refundable. During
fiscal 1995, options for 1,087,554 shares were exercised at an average price
of $36.88 per share. At January 28, 1996, 885,053 options were outstanding,
net of cancellations, at an average price of $34.03 per share.
NOTE Five Leases
The Company leases certain retail locations, office space, warehouse and
distribution space, equipment and vehicles. While the majority of the leases
are operating leases, certain retail locations are leased under capital
leases. As leases expire, it can be expected that in the normal course of
business, leases will be renewed or replaced.
During 1995, the Company entered into two operating lease agreements in which
the Company will lease an import distribution facility, including its related
equipment, and an office building for store support associates. The initial
lease terms are five and seven years, respectively, with five five-year
renewal options for the distribution facility and one five-year renewal option
for the office building.
Both leases provide for substantial residual value guarantees and include
purchase options at the higher of the cost or fair market value for the assets
under the import distribution facility lease and at cost for the office
building. The maximum amount of the residual value guarantees relative to the
assets under these leases is projected to be $128,420,000. Once the leased
assets are placed into service, the Company will estimate its liability under
the residual value guarantees and will record additional rent expense on a
straight-line basis over the remaining lease terms.
Total rent expense, net of minor sublease income for the fiscal years ended
January 28, 1996, January 29, 1995 and January 30, 1994 amounted to
$199,710,000, $164,381,000 and $137,252,000, respectively. Real estate taxes,
insurance, maintenance and operating expenses applicable to the leased
property are obligations of the Company under the
<PAGE>
building leases. Certain of
the store leases provide for contingent rentals based on percentages of sales
in excess of specified minimums. Contingent rentals for fiscal years ended
January 28, 1996, January 29, 1995 and January 30, 1994 were approximately
$9,068,000, $9,744,000 and $8,370,000, respectively.
The approximate future minimum lease payments under capital and operating
leases at January 28, 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
Fiscal Year Capital Leases Operating Leases
- ------------------------------------------------------------------------
<S> <C> <C>
1996 $ 13,246 $ 219,334
1997 13,246 220,023
1998 13,252 203,188
1999 13,320 192,166
2000 13,637 176,894
Thereafter 200,368 2,216,857
- ------------------------------------------------------------------------
267,069 $3,228,462
----------
Less: Imputed interest (184,556)
- ----------------------------------------------------
Net present value of capital
lease obligations 82,513
- ----------------------------------------------------
Less: Current installments (993)
- ----------------------------------------------------
Long-term, excluding current
installments $ 81,520
- ----------------------------------------------------
</TABLE>
On the Consolidated Balance Sheet the short-term and long-term obligations for
capital leases are included in Current Installments of Long-term Debt and
Long-term Debt, respectively. The assets under capital lease recorded at
January 28, 1996 and January 29, 1995, net of amortization, in Net Property
and Equipment amounted to $85,987,000 and $68,647,000, respectively.
NOTE Six Employee Stock Ownership Plan and Trust
During fiscal 1988, the Company established a leveraged Employee Stock
Ownership Plan and Trust (ESOP) covering substantially all full-time
associates. At January 28, 1996, the ESOP held a total of 7,197,042 shares of
the Company's common stock in trust for plan participants. The ESOP purchased
the shares in the open market with the proceeds of loans obtained from the
Company during fiscal 1992, 1990 and 1989 totaling $81,442,000. Of that
amount, the Company borrowed $20,000,000 during 1988 in a private placement
(see note 2), which in turn was loaned to the ESOP for the purpose of
purchasing the shares. The additional $61,442,000 loaned to the ESOP was
funded by cash from operations of the Company. Loans totaling $16,539,000 to
the ESOP are due and payable to the Company in varying amounts from 1996
through 2001.
The Company's Board of Directors authorized loans to the ESOP up to
$90,000,000. The Company may advance funds to the ESOP so that the ESOP may
purchase up to an additional $8,558,000 of the Company's common stock on the
open market at prices the ESOP deems desirable.
The Company's common stock purchased by the ESOP is held in a "suspense
account" as collateral for amounts loaned by the Company. The Company makes
annual contributions to the ESOP at the discretion of its Board of Directors
which the plan trustee is required to use to make loan interest and principal
payments to the Company. When the Company commits to make contributions to the
ESOP, a portion of the common stock is released from the "suspense account"
and allocated to participating associates. As of January 28, 1996, 5,471,885
shares had been allocated to participating employees, 809,048 shares were
committed to be released, and 916,109 shares were held in suspense by the
trustee. Any dividends on unallocated shares are used to service the ESOP's
debt, to pay expenses of the ESOP, to purchase additional shares of the
Company's common stock or to purchase other investments. The unpaid portion of
the ESOP's obligation to the Company is recorded as a reduction of
stockholders' equity. The Company's contributions to the ESOP were
$14,000,000, $12,500,000 and $6,000,000 for the fiscal years 1995, 1994 and
1993, respectively.
<PAGE>
The Company adopted a non-qualified ESOP Restoration Plan in fiscal 1994. The
primary purpose of the plan is to provide certain associates deferred
compensation that they would have received under the ESOP if not for the
maximum compensation limits under the Internal Revenue Code of 1986, as
amended. The Company has established a "rabbi trust" to fund the benefits
under the ESOP Restoration Plan. Compensation expensed for fiscal years 1995
and 1994 related to this plan was not material. Funds provided to the trust
are primarily used to purchase shares of the Company's common stock on the
open market.
NOTE Seven Investments
The Company's investments are all classified as available for sale and
consisted of the following at January 28, 1996 and January 29, 1995 (in
thousands):
<TABLE>
<CAPTION>
January 28, 1996 January 29, 1995
-------------------------------------------------------------------------------------------------------------
Gross Gross Gross Gross
Amortized unrealized unrealized Fair Amortized unrealized unrealized Fair
cost gains losses value cost gains losses value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Tax-exempt
notes and bonds $56,138 $14 $ 20 $56,132 $ 95,079 $ - $1,431 $ 93,648
U.S. Treasury
securities 229 - - 229 - - - -
U.S. government
agency securities - - - - 13,000 - 296 12,704
Corporate
obligations 13,901 - 70 13,831 13,900 - 139 13,761
Preferred stock 10,000 - - 10,000 14,998 - 301 14,697
Corporate asset-
backed securities - - - - 6,415 - 127 6,288
Other - - - - 13,636 - - 13,636
- ---------------------------------------------------------------------------------------------------------------------------------
80,268 14 90 80,192 157,028 - 2,294 154,734
- ---------------------------------------------------------------------------------------------------------------------------------
Short-term,
including current
maturities of
long-term
investments 54,751 7 2 54,756 57,345 - 633 56,712
Long-term
investments 25,517 7 88 25,436 99,683 - 1,661 98,022
- ---------------------------------------------------------------------------------------------------------------------------------
Total $80,268 $14 $90 $80,192 $157,028 $ - $2,294 $154,734
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Proceeds from sales of investments available for sale during the year ended
January 28, 1996 were $30,721,000. Gross gains of $790,000 and gross losses of
$69,000 were realized on those sales. Proceeds from sales of investments
available for sale for the year ended January 29, 1995 were $526,696,000.
Gross gains of $1,638,000 and gross losses of $1,251,000 were realized on
fiscal year 1994 sales.
Maturities of investment securities classified as available for sale were as
follows at January 28, 1996 and January 29, 1995 (in thousands):
<TABLE>
<CAPTION>
January 28, 1996 January 29, 1995
--------------------------------------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Due within one year $54,751 $54,756 $ 52,842 $ 52,323
Due after one year
through five years 25,517 25,436 99,683 98,022
Mortgage-backed securities
not due at a single date - - 4,503 4,389
- ----------------------------------------------------------------------------------------
$80,268 $80,192 $157,028 $154,734
- ----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
NOTE Eight Commitments and Contingencies
At January 28, 1996, the Company was contingently liable for approximately
$108,215,000 under outstanding letters of credit issued in connection with
purchase commitments.
The Company is a defendant in a class action lawsuit claiming gender
discrimination in the Company's Western Division. The action seeks injunctive
and declaratory relief and damages. Discovery is in its early stages. While
the ultimate results of this litigation cannot be determined, management does
not expect that the resolution of this proceeding will have a material adverse
effect on the consolidated financial position or results of operations of the
Company.
The Company has other litigation arising from the normal course of business.
In management's opinion, this litigation will not materially effect the
Company's consolidated financial position or results of operations.
NOTE Nine Acquisition of Interest in Canadian Company
Effective February 28, 1994, the Company entered into a partnership and, as a
result, acquired 75 percent of Aikenhead's Home Improvement Warehouse which
was operating seven warehouse-style home improvement stores in Toronto, London
and Kitchener, Ontario, Canada. Subsequent to the acquisition, the partnership
has opened 12 additional stores which include two stores each in Edmonton and
Calgary, Alberta, four stores in Toronto, Ontario, and four stores in
Vancouver, British Columbia. At any time after the sixth anniversary of the
purchase, the Company has the option to purchase, or the other partner has the
right to cause the Company to purchase, the remaining 25 percent of the
Canadian company. The option price is based on the lesser of fair market value
or a value to be determined by an agreed-upon formula as of the option
exercise date.
The purchase price paid for the 75 percent interest in the Canadian company
was approximately $161,548,000 in cash and was accounted for by the purchase
method of accounting. Accordingly, results of the partnership's operation have
been included with those of the Company from the date of acquisition. The
excess purchase price over the estimated fair value of the net assets as of
the acquisition date of $67,626,000 has been recorded as goodwill and is being
amortized over 40 years.
NOTE Ten Quarterly Financial Data, Unaudited
The following is a summary of the unaudited quarterly results of operations
for the fiscal years ended January 28, 1996 and January 29, 1995 (in
thousands, except per share data):
<TABLE>
<CAPTION>
Percent Net earnings
increase in per common
comparable Gross Net and common
Net sales store sales profit earnings equivalent share
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fiscal year ended
January 28, 1996:
First Quarter $ 3,568,962 5% $ 997,521 $157,765 $0.34
Second Quarter 4,151,722 4% 1,123,046 212,887 0.45
Third Quarter 3,997,790 1% 1,076,557 175,473 0.37
Fourth Quarter 3,751,884 1% 1,088,462 185,398 0.39
- --------------------------------------------------------------------------------------------------------
$ 15,470,358 3% $ 4,285,586 $731,523 $1.54
- --------------------------------------------------------------------------------------------------------
Fiscal year ended
January 29, 1995:
First Quarter $ 2,872,129 7% $ 808,757 $139,734 $0.31
Second Quarter 3,287,036 6% 895,817 178,014 0.39
Third Quarter 3,240,050 9% 880,568 140,774 0.31
Fourth Quarter 3,077,482 8% 900,351 145,979 0.32
- --------------------------------------------------------------------------------------------------------
$ 12,476,697 8% $ 3,485,493 $604,501 $1.32
- --------------------------------------------------------------------------------------------------------
</TABLE>
Independent Auditors' Report
The Board of Directors and Stockholders
The Home Depot, Inc.:
We have audited the accompanying consolidated balance sheets of The Home
Depot, Inc. and subsidiaries as of
January 28, 1996 and January 29, 1995, and the related consolidated statements
of earnings, stockholders' equity, and cash flows for each of the years in the
three-year period ended January 28, 1996. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The Home
Depot, Inc. and subsidiaries as of January 28, 1996 and January 29, 1995, and
the results of their operations and their cash flows for each of the years in
the three-year period ended January 28, 1996 in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Atlanta, Georgia
March 8, 1996
<PAGE>
List of Subsidiaries of the Registrant
State or
Jurisdiction of
Name of Subsidiary Incorporation d/b/a
Home Depot International, Inc. Delaware
Home Depot U.S.A., Inc. Delaware The Home Depot
Homer III, Inc. Delaware
Certain subsidiaries were omitted pursuant to Section 601(21)(ii) of Regulation
S-K under the Securities Exchange Act of 1934.
<PAGE>
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
The Home Depot, Inc.:
We consent to incorporation by reference in the Registration Statements (No.'s
33-46476, 33-22531, 33-22299, 33-58807 and 333-01385) on Form S-8 of The Home
Depot, Inc. of our report dated March 8, 1996, relating to the consolidated
balance sheets of The Home Depot, Inc. and subsidiaries as of January 28, 1996
and January 29, 1995, and the related consolidated statements of earnings,
stockholders' equity, and cash flows for each of the years in the three-year
period ended January 28, 1996, which reports are included or incorporated by
reference in the January 28, 1996 Annual Report on Form 10-K of The Home
Depot, Inc.
/s/ KPMG Peat Marwick LLP
KPMG PEAT MARWICK LLP
Atlanta, Georgia
March 27, 1996
<PAGE>
POWER OF ATTORNEY
STATE OF NEW MEXICO
COUNTY OF DONA ANA
KNOW ALL MEN BY THESE PRESENTS, that I, Frank Borman, a director of The Home
Depot, Inc., a Delaware corporation, do constitute and appoint Bernard Marcus
and Ronald M. Brill, jointly and severally, my true and lawful attorneys-in-
fact, each with full power of substitution, for me in any and all capacities,
to sign, pursuant to the requirements of the Securities Exchange Act of 1934,
the Annual Report of the Corporation on Form 10-K for the fiscal year of the
Corporation ended January 28, 1996, and to file the same 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, and to sign on my behalf and in my stead, in any and
all capacities, any amendments to said Annual Report, incorporating such
changes as any of the said attorneys-in-fact deems appropriate,
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 21 day of March,
1996.
/s/ Frank Borman
Frank Borman
ACKNOWLEDGEMENT
BEFORE me this 21 day of March, 1996, came Frank Borman, personally known to
me, who in my presence did sign and seal the above and foregoing Power of
Attorney and acknowledged the same as his true act and deed.
/s/ Patricia M. Frietze
NOTARY PUBLIC
State of New Mexico
My Commission Expires: 11/22/99
[NOTARIAL SEAL]
<PAGE>
POWER OF ATTORNEY
STATE OF GEORGIA
COUNTY OF FULTON
KNOW ALL MEN BY THESE PRESENTS, that I, Johnnetta B. Cole, a director of The
Home Depot, Inc., a Delaware corporation, do constitute and appoint Bernard
Marcus and Ronald M. Brill, jointly and severally, my true and lawful
attorneys-in-fact, each with full power of substitution, for me in any and all
capacities, to sign, pursuant to the requirements of the Securities Exchange
Act of 1934, the Annual Report of the Corporation on Form 10-K for the fiscal
year of the Corporation ended January 28, 1996, and to file the same 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, and to sign on my behalf and in my stead, in any and
all capacities, any amendments to said Annual Report, incorporating such
changes as any of the said attorneys-in-fact deems appropriate,
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 21 day of March,
1996.
/s/ Johnnetta B. Cole
Johnnetta B. Cole
ACKNOWLEDGEMENT
BEFORE me this 21 day of March, 1996, came Johnnetta B. Cole, personally known
to me, who in my presence did sign and seal the above and foregoing Power of
Attorney and acknowledged the same as her true act and deed.
/s/ Edna D. Owens
NOTARY PUBLIC
State of Georgia
My Commission Expires: July 30, 1999
[NOTARIAL SEAL]
<PAGE>
POWER OF ATTORNEY
STATE OF TEXAS
COUNTY OF DALLAS
KNOW ALL MEN BY THESE PRESENTS, that I, Berry R. Cox, a director of The
Home Depot, Inc., a Delaware corporation, do constitute and appoint Bernard
Marcus and Ronald M. Brill, jointly and severally, my true and lawful
attorneys-in-fact, each with full power of substitution, for me in any and all
capacities, to sign, pursuant to the requirements of the Securities Exchange
Act of 1934, the Annual Report of the Corporation on Form 10-K for the fiscal
year of the Corporation ended January 28, 1996, and to file the same 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, and to sign on my behalf and in my stead, in any and
all capacities, any amendments to said Annual Report, incorporating such
changes as any of the said attorneys-in-fact deems appropriate,
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 22 day March,
1996.
/s/ Berry R. Cox
Berry R. Cox
ACKNOWLEDGEMENT
BEFORE me this 22 day of March, 1996, came Berry R. Cox, personally known to
me, who in my presence did sign and seal the above and foregoing Power of
Attorney and acknowledged the same as his true act and deed.
/s/ Cindy Lou Wolf
NOTARY PUBLIC
State of Texas
My Commission Expires: 8/24/96
[NOTARIAL SEAL]
<PAGE>
POWER OF ATTORNEY
STATE OF TEXAS
COUNTY OF DALLAS
KNOW ALL MEN BY THESE PRESENTS, that I, Milledge A. Hart, III, a director of
The Home Depot, Inc., a Delaware corporation, do constitute and appoint Bernard
Marcus and Ronald M. Brill, jointly and severally, my true and lawful
attorneys-in-fact, each with full power of substitution, for me in any and all
capacities, to sign, pursuant to the requirements of the Securities Exchange
Act of 1934, the Annual Report of the Corporation on Form 10-K for the fiscal
year of the Corporation ended January 28, 1996, and to file the same 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, and to sign on my behalf and in my stead, in any and
all capacities, any amendments to said Annual Report, incorporating such
changes as any of the said attorneys-in-fact deems appropriate,
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 21 day of March,
1996.
/s/ Milledge A. Hart, III
Milledge A. Hart, III
ACKNOWLEDGEMENT
BEFORE me this 21 day of March, 1996, came Milledge A. Hart, III, personally
known to me, who in my presence did sign and seal the above and foregoing Power
of Attorney and acknowledged the same as his true act and deed.
/s/ Kathie Presas
NOTARY PUBLIC
State of Texas
My Commission Expires: 2/7/2000
[NOTARIAL SEAL]
<PAGE>
POWER OF ATTORNEY
STATE OF GEORGIA
COUNTY OF COBB
KNOW ALL MEN BY THESE PRESENTS, that I, James W. Inglis, a director of The
Home Depot, Inc., a Delaware corporation, do constitute and appoint Bernard
Marcus and Ronald M. Brill, jointly and severally, my true and lawful
attorneys-in-fact, each with full power of substitution, for me in any and all
capacities, to sign, pursuant to the requirements of the Securities Exchange
Act of 1934, the Annual Report of the Corporation on Form 10-K for the fiscal
year of the Corporation ended January 28, 1996, and to file the same 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, and to sign on my behalf and in my stead, in any and
all capacities, any amendments to said Annual Report, incorporating such
changes as any of the said attorneys-in-fact deems appropriate,
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 21 day of March,
1996.
/s/ James W. Inglis
James W. Inglis
ACKNOWLEDGEMENT
BEFORE me this 21st day of March, 1996, came James W. Inglis, personally known
to me, who in my presence did sign and seal the above and foregoing Power of
Attorney and acknowledged the same as his true act and deed.
/s/ Margie Bidwell
NOTARY PUBLIC
State of Georgia
My Commission Expires: August 14, 1998
[NOTARIAL SEAL]
<PAGE>
POWER OF ATTORNEY
STATE OF GEORGIA
COUNTY OF COBB
KNOW ALL MEN BY THESE PRESENTS, that I, Donald R. Keough, a director of The
Home Depot, Inc., a Delaware corporation, do constitute and appoint Bernard
Marcus and Ronald M. Brill, jointly and severally, my true and lawful
attorneys-in-fact, each with full power of substitution, for me in any and all
capacities, to sign, pursuant to the requirements of the Securities Exchange
Act of 1934, the Annual Report of the Corporation on Form 10-K for the fiscal
year of the Corporation ended January 28, 1996, and to file the same 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, and to sign on my behalf and in my stead, in any and
all capacities, any amendments to said Annual Report, incorporating such
changes as any of the said attorneys-in-fact deems appropriate,
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 March,
1996.
/s/ Donald R. Keough
Donald R. Keough
ACKNOWLEDGEMENT
BEFORE me this 21st day of March, 1996, came Donald R. Keough, personally
known to me, who in my presence did sign and seal the above and foregoing Power
of Attorney and acknowledged the same as his true act and deed.
/s/ Mary Beth Meeder
NOTARY PUBLIC
State of Georgia
My Commission Expires: January 11, 2000
[NOTARIAL SEAL]
<PAGE>
POWER OF ATTORNEY
STATE OF NEW YORK
COUNTY OF BRONX
KNOW ALL MEN BY THESE PRESENTS, that I, Kenneth G. Langone, a director of The
Home Depot, Inc., a Delaware corporation, do constitute and appoint Bernard
Marcus and Ronald M. Brill, jointly and severally, my true and lawful
attorneys-in-fact, each with full power of substitution, for me in any and all
capacities, to sign, pursuant to the requirements of the Securities Exchange
Act of 1934, the Annual Report of the Corporation on Form 10-K for the fiscal
year of the Corporation ended January 28, 1996, and to file the same 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, and to sign on my behalf and in my stead, in any and
all capacities, any amendments to said Annual Report, incorporating such
changes as any of the said attorneys-in-fact deems appropriate,
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 21 day of March,
1996.
/s/ Kenneth G. Langone
Kenneth G. Langone
ACKNOWLEDGEMENT
BEFORE me this 21st day of March, 1996, came Kenneth G. Langone, personally
known to me, who in my presence did sign and seal the above and foregoing Power
of Attorney and acknowledged the same as his true act and deed.
/s/ Marcia Kucher
NOTARY PUBLIC
State of New York
My Commission Expires: 9/30/96
[NOTARIAL SEAL]
<PAGE>
POWER OF ATTORNEY
STATE OF GEORGIA
COUNTY OF COBB
KNOW ALL MEN BY THESE PRESENTS, that I, M. Faye Wilson, a director of The
Home Depot, Inc., a Delaware corporation, do constitute and appoint Bernard
Marcus and Ronald M. Brill, jointly and severally, my true and lawful
attorneys-in-fact, each with full power of substitution, for me in any and all
capacities, to sign, pursuant to the requirements of the Securities Exchange
Act of 1934, the Annual Report of the Corporation on Form 10-K for the fiscal
year of the Corporation ended January 28, 1996, and to file the same 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, and to sign on my behalf and in my stead, in any and
all capacities, any amendments to said Annual Report, incorporating such
changes as any of the said attorneys-in-fact deems appropriate,
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 26th day of March,
1996.
/s/ M. Faye Wilson
M. Faye Wilson
ACKNOWLEDGEMENT
BEFORE me this 26 day of March, 1996, came M. Faye Wilson, personally known to
me, who in my presence did sign and seal the above and foregoing Power of
Attorney and acknowledged the same as her true act and deed.
Margie Bidwell
NOTARY PUBLIC
State of Georgia
My Commission Expires: August 14, 1998
[NOTARIAL SEAL]
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-28-1996
<PERIOD-END> JAN-28-1996
<CASH> 53,269
<SECURITIES> 54,756
<RECEIVABLES> 325,384
<ALLOWANCES> 0
<INVENTORY> 2,180,318
<CURRENT-ASSETS> 2,671,969
<PP&E> 4,968,895
<DEPRECIATION> 507,871
<TOTAL-ASSETS> 7,354,033
<CURRENT-LIABILITIES> 1,416,482
<BONDS> 720,080
<COMMON> 23,855
0
0
<OTHER-SE> 4,963,911
<TOTAL-LIABILITY-AND-EQUITY> 7,354,033
<SALES> 15,470,358
<TOTAL-REVENUES> 15,470,358
<CGS> 11,184,772
<TOTAL-COSTS> 11,184,772
<OTHER-EXPENSES> 3,105,732
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (15,449)
<INCOME-PRETAX> 1,195,303
<INCOME-TAX> 463,780
<INCOME-CONTINUING> 731,523
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 731,523
<EPS-PRIMARY> 1.54
<EPS-DILUTED> 1.54
</TABLE>
