HOME DEPOT INC, S-4/A, 1997-02-13

HOME DEPOT INC
S-4/A, 1997-02-13
LUMBER & OTHER BUILDING MATERIALS DEALERS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 13, 1997

REGISTRATION NO. 333-20437
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------

AMENDMENT NO. 2

FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------

THE HOME DEPOT, INC.
(Exact name of registrant as specified in its charter)
---------------------

<TABLE>
<S> <C> <C>
DELAWARE 5211 95-3261426
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>

2727 PACES FERRY ROAD
ATLANTA, GEORGIA 30339-4089
(770) 433-8211
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------------

MARSHALL L. DAY
SENIOR VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
THE HOME DEPOT, INC.
2727 PACES FERRY ROAD
ATLANTA, GEORGIA 30339-4089
(770) 433-8211
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

---------------------

COPIES TO:

<TABLE>
<S> <C> <C>
MICHAEL J. EGAN III LAWRENCE K. MENTER SCOTT N. WOLFE
KING & SPALDING THE HOME DEPOT, INC. LATHAM & WATKINS
191 PEACHTREE STREET 2727 PACES FERRY ROAD 701 "B" STREET, SUITE 2100
ATLANTA, GEORGIA 30303 ATLANTA, GEORGIA 30339-4089 SAN DIEGO, CALIFORNIA 92101
(404) 572-4600 (770) 433-8211 (619) 696-7419
</TABLE>

---------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable following the effectiveness of this Registration Statement.

If any securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]

---------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2

THE HOME DEPOT, INC.

CROSS REFERENCE TABLE

LOCATION IN PROXY STATEMENT/PROSPECTUS OF INFORMATION
REQUIRED BY ITEMS OF FORM S-4

<TABLE>
<CAPTION>
ITEM NUMBER AND CAPTION IN FORM S-4 LOCATION IN PROXY STATEMENT/PROSPECTUS
----------------------------------- --------------------------------------
<C> <S> <C>
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus................ Outside Front Cover of Proxy
Statement/Prospectus; Facing Page of the
Registration Statement
2. Inside Front and Outside Back Cover Pages of
Prospectus.................................... Available Information; Incorporation of Certain
Documents by Reference; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed Charges
and Other Information......................... Summary
4. Terms of the Transaction........................ Summary; The Mergers; Structure of the Mergers
5. Pro Forma Financial Information................. Not Applicable
6. Material Contacts With the Company Being
Acquired...................................... Summary; The Mergers
7. Additional Information Required For Reoffering
by Persons and Parties Deemed to be
Underwriters.................................. Not Applicable
8. Interests of Named Experts and Counsel.......... Not Applicable
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................... Not Applicable
10. Information With Respect to S-3 Registrants..... Summary; Business of Home Depot
11. Incorporation of Certain Information by
Reference..................................... Incorporation of Certain Documents by Reference
12. Information With Respect to S-2 or S-3
Registrants................................... Not Applicable
13. Incorporation of Certain Information by
Reference..................................... Not Applicable
14. Information With Respect to Registrants Other
Than S-3 or S-2 Registrants................... Not Applicable
15. Information With Respect to S-3 Companies....... Not Applicable
16. Information With Respect to S-2 or S-3
Companies..................................... Not Applicable
17. Information With Respect to Companies Other Than
S-2 or S-3 Companies.......................... Summary; Selected Financial Information of
Maintenance Warehouse; Management's
Discussion and Analysis of Financial
Condition and Results of Operations of
Maintenance Warehouse; Business of
Maintenance Warehouse; Ownership of
Maintenance Warehouse Common Stock; Business
of Affiliated Companies; Ownership of
Partnership Interests; Index to Financial
Statements of Maintenance Warehouse
</TABLE>
<PAGE> 3

<TABLE>
<CAPTION>
ITEM NUMBER AND CAPTION IN FORM S-4 LOCATION IN PROXY STATEMENT/PROSPECTUS
----------------------------------- --------------------------------------
<C> <S> <C>
Information if Proxies, Consents or
18. Authorizations Are to be Solicited............ Summary; The Mergers; Structure of the Mergers;
Ownership of Maintenance Warehouse Common
Stock; The Maintenance Warehouse Proxy
Solicitation Process; Ownership of
Partnership Interests; The Affiliated
Companies Consent Solicitation Process;
Shareholder Proposals
19. Information if Proxies, Consents or
Authorizations Are Not to be Solicited, or in
an Exchange Offer............................. Not Applicable
</TABLE>
<PAGE> 4

[MAINTENANCE WAREHOUSE LOGO]
MAINTENANCE WAREHOUSE/AMERICA CORP.
5505 MOREHOUSE DRIVE, #300
SAN DIEGO, CALIFORNIA 92121

February 13, 1997

Dear Shareholder:

You are cordially invited to attend a Special Meeting (the "Special
Meeting") of the shareholders of Maintenance Warehouse/America Corp.
("Maintenance Warehouse") to be held on Friday, March 14, 1997 at 10:00 a.m.,
local time, at the offices of Seltzer Caplan Wilkins & McMahon, 750 "B" Street,
Suite 2100, San Diego, California 92101.

At the Special Meeting, you will be asked to consider and vote upon a
proposal to approve the Merger Agreement (the "Principal Merger Agreement") by
and among Maintenance Warehouse, The Home Depot, Inc., a Delaware corporation
("Home Depot"), Home Depot Sub, Inc. ("Sub"), a Texas corporation and a wholly
owned subsidiary of Home Depot, and the shareholders of Maintenance Warehouse.
This Principal Merger Agreement provides for the merger of Sub with and into
Maintenance Warehouse (the "Principal Merger"). If the Principal Merger is
consummated, each outstanding share of Maintenance Warehouse Common Stock will
be converted into the right to receive such number of shares of Home Depot
Common Stock as has a value equal to the Conversion Amount. The "Conversion
Amount" will be determined by dividing $245,433,514 by the number of shares of
Maintenance Warehouse Common Stock issued and outstanding immediately prior to
the closing of the Principal Merger (the "Outstanding Share Amount"). For
purposes of this calculation, each share of Home Depot Common Stock shall be
valued at the arithmetic average of the closing price per share of Home Depot
Common Stock as reported on a consolidated basis on the New York Stock Exchange
for each of the ten consecutive trading days ending immediately prior to the
closing of the Principal Merger (the "Average Closing Price"); provided however,
that if the preceding clause results in (i) an Average Closing Price less than
$47.00, then the Average Closing Price shall equal $47.00 and (ii) an Average
Closing Price greater than $55.00, then the Average Closing Price shall equal
$55.00. Any fractional shares of Home Depot Common Stock that would result from
such calculation will be converted into the cash value of such fraction based on
the Average Closing Price. It is expected that each Maintenance Warehouse
shareholder will receive, depending on the Average Closing Price, between
446.242 and 522.199 shares of Home Depot Common Stock (or cash for fractional
shares) in exchange for each share of Maintenance Warehouse Common Stock owned
by such shareholder. As a result of the Principal Merger, Maintenance Warehouse
will become a wholly owned subsidiary of Home Depot.

The Principal Merger Agreement has been approved and adopted by the Boards
of Directors of Maintenance Warehouse and Home Depot. Consummation of the
Principal Merger is conditioned upon the approval, among other things, of
Maintenance Warehouse shareholders holding at least 97% of the outstanding
shares of Maintenance Warehouse Common Stock.

THE BOARD OF DIRECTORS OF MAINTENANCE WAREHOUSE HAS DETERMINED THAT THE
PRINCIPAL MERGER IS IN THE BEST INTERESTS OF MAINTENANCE WAREHOUSE AND ITS
SHAREHOLDERS, HAS APPROVED THE PRINCIPAL MERGER, HAS APPROVED AND ADOPTED THE
PRINCIPAL MERGER AGREEMENT AND RECOMMENDS THAT THE MAINTENANCE WAREHOUSE
SHAREHOLDERS VOTE FOR THE PROPOSAL TO APPROVE THE PRINCIPAL MERGER AGREEMENT.

Although each of the shareholders of Maintenance Warehouse executed the
Principal Merger Agreement, the shareholders are not legally bound to vote their
shares of Maintenance Warehouse Common Stock to approve the Principal Merger
Agreement. Each shareholder should decide whether to vote to approve the
Principal Merger Agreement based on the information contained in the
accompanying Proxy Statement/Prospectus.
<PAGE> 5

Details of the background and reasons for the proposed Principal Merger
appear and are explained in the accompanying Proxy Statement/Prospectus.
Additional information regarding Maintenance Warehouse and Home Depot also is
set forth in the Proxy Statement/Prospectus and, with respect to Home Depot,
incorporated therein by reference to other documents.

It is important that your shares be represented at the Special Meeting
either in person or by proxy. A proxy card for Maintenance Warehouse Common
Stock has been enclosed. Whether or not you plan to attend the Special Meeting,
please complete, sign, and date the enclosed proxy card and a return it in the
enclosed postage paid envelope. If you plan to attend the Special Meeting, you
may vote in person if you wish, even if you have previously returned your proxy
card. Your prompt cooperation will be greatly appreciated.

Sincerely,

/s/ RONALD L. NEELEY

--------------------------------------
Ronald L. Neeley
Chief Executive Officer

2
<PAGE> 6

MWAC ONE, A CALIFORNIA LIMITED PARTNERSHIP
86 WAREHOUSE II, A CALIFORNIA LIMITED PARTNERSHIP
86 WAREHOUSE III, A CALIFORNIA LIMITED PARTNERSHIP
DFW WAREHOUSE FOUR LIMITED PARTNERSHIP, A CALIFORNIA LIMITED PARTNERSHIP
DENVER WAREHOUSE FIVE, A CALIFORNIA LIMITED PARTNERSHIP
FONTANA WAREHOUSE SIX, A CALIFORNIA LIMITED PARTNERSHIP
ATL WAREHOUSE SEVEN, A CALIFORNIA LIMITED PARTNERSHIP
RICHMOND WAREHOUSE EIGHT, A CALIFORNIA LIMITED PARTNERSHIP
ST. LOUIS WAREHOUSE NINE, A CALIFORNIA LIMITED PARTNERSHIP

February 13, 1997

Dear Affiliated Partner:

This Consent Solicitation Statement/Prospectus is being furnished to the
holders of limited partnership interests (collectively, the "Affiliated
Partners") in the California limited partnerships listed at Annex F of this
Consent Solicitation/Prospectus (collectively, the "Affiliated Companies") in
connection with the proposed merger (the "Affiliated Merger") of each of the
Affiliated Companies with and into The Home Depot, Inc. ("Home Depot"), a
Delaware corporation, or a wholly owned subsidiary thereof.

On January 16, 1997, MWAC Real Estate, Inc., a California corporation and
the general partner of each of the Affiliated Companies, executed an Affiliated
Merger Agreement (the "Affiliated Merger Agreement") by and between the
Affiliated Companies and Home Depot, which provides for the merger of the
Affiliated Companies with and into Home Depot or a wholly owned subsidiary of
Home Depot. On or about March 10, 1997, you will receive a form of consent which
you will be asked to execute in order to consent to and approve the Affiliated
Merger. If the Affiliated Merger is consummated, each percentage of partnership
interest in the Affiliated Companies will be converted into the right to receive
such number of shares of Home Depot Common Stock as has a value equal to the
amount indicated beside the name of such entity on Schedule A to the Affiliated
Merger Agreement (totalling $1,425,592, in the aggregate), divided by one
hundred (100). For the purposes of this calculation, each share of Home Depot
Common Stock shall be valued at the arithmetic average of the closing price per
share of Home Depot Common Stock as reported on a consolidated basis on the New
York Stock Exchange for each of the ten consecutive trading days ending
immediately prior to the closing of the Affiliated Merger (the "Average Closing
Price"); provided however, that if the preceding clause results in (i) an
Average Closing Price less than $47.00, then the Average Closing Price shall
equal $47.00 and (ii) an Average Closing Price greater than $55.00, then the
Average Closing Price shall equal $55.00. Any fractional shares of Home Depot
Common Stock that would result from such calculation will be converted into the
cash value of such fraction based on the Average Closing Price. It is expected
that the Affiliated Partners will receive, in the aggregate and depending on the
Average Closing Price, between 25,919 and 30,331 shares of Home Depot Common
Stock.

The Affiliated Merger Agreement has been approved and adopted by the Board
of Directors of Home Depot and is subject to the approval of the partners of the
Affiliated Companies.

THE GENERAL PARTNER OF EACH OF THE AFFILIATED COMPANIES HAS DETERMINED THAT
THE AFFILIATED MERGER IS IN THE BEST INTERESTS OF THE AFFILIATED COMPANIES AND
THE AFFILIATED PARTNERS, HAS APPROVED AND ADOPTED THE AFFILIATED MERGER
AGREEMENT AND RECOMMENDS THAT THE AFFILIATED PARTNERS VOTE FOR THE PROPOSAL TO
APPROVE THE AFFILIATED MERGER AGREEMENT.
<PAGE> 7

Details of the background and reasons for the proposed Affiliated Merger
appear and are explained in the accompanying Consent Solicitation
Statement/Prospectus. Additional information regarding the Affiliated Companies
and Home Depot is set forth in the Consent Solicitation Statement/Prospectus
and, with respect to Home Depot, incorporated therein by reference to other
documents.

Sincerely,

/s/ RONALD L. NEELEY

--------------------------------------
Ronald L. Neeley
President, MWAC Real Estate, Inc.

2
<PAGE> 8

MAINTENANCE WAREHOUSE/AMERICA CORP.
---------------------

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 14, 1997

Notice is hereby given that a Special Meeting of Shareholders of
Maintenance Warehouse/America Corp. ("Maintenance Warehouse") will be held on
Friday, March 14, 1997, at 10:00 a.m., local time, at the offices of Seltzer
Caplan Wilkins & McMahon, 750 "B" Street, Suite 2100, San Diego, California
92101, for the following purposes:

(1) To consider and vote upon a proposal to approve the Merger
Agreement (the "Principal Merger Agreement") dated as of January 16, 1997,
by and among Maintenance Warehouse, The Home Depot, Inc. ("Home Depot"),
Home Depot Sub, Inc., a wholly owned subsidiary of Home Depot ("Sub") and
the shareholders of Maintenance Warehouse (the "Maintenance Warehouse
Shareholders"), pursuant to which (i) Sub would be merged with and into
Maintenance Warehouse (the "Principal Merger") and (ii) each outstanding
share of Maintenance Warehouse Common Stock would be converted into the
right to receive such number of shares of Home Depot Common Stock as has a
value equal to the Conversion Amount. The "Conversion Amount" will be
determined by dividing $245,433,514 by the number of shares of Maintenance
Warehouse Common Stock issued and outstanding immediately prior to the
Effective Time (the "Outstanding Share Amount"). For purposes of this
calculation, each share of Home Depot Common Stock shall be valued at the
arithmetic average of the closing price per share of Home Depot Common
Stock as reported on a consolidated basis on the New York Stock Exchange,
for each of the ten consecutive trading days ending immediately prior to
the Effective Time (the "Average Closing Price"); provided however, that if
the preceding clause results in (i) an Average Closing Price less than
$47.00, then the Average Closing Price shall equal $47.00 and (ii) an
Average Closing Price greater than $55.00, then the Average Closing Price
shall equal $55.00. Any fractional shares of Home Depot Common Stock that
would result from such calculation will be converted into the cash value of
such fraction based on the Average Closing Price. It is expected that each
Maintenance Warehouse Shareholder will receive, depending on the Average
Closing Price, between 446.242 and 522.199 shares of Home Depot Common
Stock (or cash for fractional shares) in exchange for each share of
Maintenance Warehouse Common Stock owned by such shareholder.

(2) To transact such other business as may properly come before the
meeting or any adjournment thereof.

Holders of shares of Maintenance Warehouse Common Stock have the right to
dissent from the Principal Merger and receive payment for the statutory "fair
value" of their shares upon compliance with the provisions of the Texas Business
Corporation Act regarding appraisal rights, a copy of which is attached as Annex
D to the accompanying Proxy Statement/Prospectus and is summarized therein under
the caption "The Principal Merger -- Appraisal Rights."

The Board of Directors has fixed the close of business on January 15, 1997,
as the record date for the determination of shareholders entitled to receive
notice of and to vote at the Special Meeting and at any adjournment thereof.
From January 15, 1997 until the Special Meeting, a list of shareholders entitled
to vote at the Special Meeting will be available at the offices of Maintenance
Warehouse for examination during normal business hours by any Maintenance
Warehouse Shareholder.

Your attention is directed to the Proxy Statement/Prospectus submitted with
this Notice.

By order of the Board of Directors

/s/ JON S. GILBERT

--------------------------------------
Secretary
February 13, 1997

PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL
MEETING. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF
YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE> 9

MAINTENANCE WAREHOUSE/AMERICA CORP.

PROXY STATEMENT

---------------------

CERTAIN AFFILIATED COMPANIES

CONSENT SOLICITATION STATEMENT

---------------------

THE HOME DEPOT, INC.

PROSPECTUS
SHARES OF COMMON STOCK

This Proxy Statement/Prospectus is being furnished to the Maintenance
Warehouse Shareholders in connection with the solicitation of proxies on behalf
of the Board of Directors of Maintenance Warehouse for a Special Meeting. At the
Special Meeting, the Maintenance Warehouse Shareholders will be asked to
consider and vote on a proposal to approve and adopt the Principal Merger
Agreement pursuant to which Sub will be merged with and into Maintenance
Warehouse and Maintenance Warehouse will become a wholly owned subsidiary of
Home Depot. If the Principal Merger is consummated, each outstanding share of
Maintenance Warehouse Common Stock (other than treasury shares or shares held by
Maintenance Warehouse Shareholders who perfect their appraisal rights under
Texas law) will be converted into such number of shares of Home Depot Common
Stock as has a value equal to the Conversion Amount. The "Conversion Amount"
will be determined by dividing $245,433,514 by the Outstanding Share Amount. For
purposes of this calculation, each share of Home Depot Common Stock shall be
valued at the Average Closing Price; provided, however, that if the preceding
clause results in (i) an Average Closing Price less than $47.00, then the
Average Closing Price shall equal $47.00 and (ii) an Average Closing Price
greater than $55.00, then the Average Closing Price shall equal $55.00. Any
fractional shares of Home Depot Common Stock that would result from such
calculation will be converted into the cash value of such fraction based on the
Average Closing Price. It is expected that each Maintenance Warehouse
Shareholder will receive, depending on the Average Closing Price, between
446.242 and 522.199 shares of Home Depot Common Stock (or cash for fractional
shares) in exchange for each share of Maintenance Warehouse Common Stock owned
by such shareholder. Consummation of the Principal Merger is conditioned upon,
among other things, the approval of the Principal Merger Agreement by the
holders of at least 97% of the outstanding shares of Maintenance Warehouse
Common Stock. Your vote is important. Whether or not you intend to be present at
the Special Meeting, please complete, sign, date, and return the accompanying
proxy in the enclosed envelope. If you choose to attend the Special Meeting, you
may revoke your proxy and personally cast your votes.
(cover continued on following page)

THE SHARES OF HOME DEPOT COMMON STOCK TO BE ISSUED IN THE MERGERS HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

---------------------

THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS FEBRUARY 13, 1997.
<PAGE> 10

This Proxy Statement/Prospectus also constitutes a consent solicitation to
the limited partners (the "Affiliated Partners") of certain California limited
partnerships (the "Affiliated Companies") in connection with the solicitation of
consents on behalf of the General Partner of the Affiliated Companies. The
Affiliated Partners will be asked to consider and consent to a proposal to
approve and adopt the Affiliated Merger Agreement, dated as of January 16, 1997,
by and among Home Depot and the Affiliated Companies (the "Affiliated Merger
Agreement"), pursuant to which the Affiliated Companies will be merged with and
into Home Depot or a wholly owned subsidiary of Home Depot (the "Affiliated
Merger"). If the Affiliated Merger is consummated, each percentage of
partnership interest in the Affiliated Companies (the "Partnership Interests")
(other than Partnership Interests held by Affiliated Partners who perfect their
appraisal rights under California law) will be converted into the right to
receive such number of shares of Home Depot Common Stock as has a value equal to
the amount indicated beside the name of such entity on Schedule A to the
Affiliated Merger Agreement (totalling $1,425,592, in the aggregate), divided by
one hundred (100). For purposes of this calculation, each share of Home Depot
Common Stock shall be valued at the Average Closing Price. Any fractional shares
of Home Depot Common Stock that would result from such calculation will be
aggregated with the fractional shares to be received by such Affiliated Partner
in the Principal Merger and such fractional shares will be converted into the
right to receive the cash value of such fraction based on the Average Closing
Price. It is expected that the Affiliated Partners will receive, in the
aggregate and depending on the Average Closing Price, between 25,919 and 30,331
shares of Home Depot Common Stock. Consummation of the Affiliated Merger is
conditioned upon, among other things, the unanimous written consent of the
Affiliated Partners. On or about March 10, 1997, you will receive a form of
consent which you will be asked to execute in order to consent to and approve
the Affiliated Merger.

This Proxy Statement/Prospectus also constitutes a prospectus of Home Depot
relating to the issuance of shares of Home Depot Common Stock to Maintenance
Warehouse Shareholders and the Affiliated Partners pursuant to the terms of the
Principal Merger and the Affiliated Merger (together referred to herein as the
"Mergers"). Home Depot has filed a Registration Statement on Form S-4 (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with the Securities and Exchange Commission (the
"Commission") covering the shares of Home Depot Common Stock to be issued in
connection with the Mergers.

No person has been authorized to give any information or to make any
representation other than as contained herein in connection with the offer of
Home Depot Common Stock to be issued in connection with the Mergers, and, if
given or made, such information or representation must not be relied upon as
having been authorized by Home Depot, Maintenance Warehouse, the Affiliated
Companies, or any other person. This Proxy Statement/Prospectus does not
constitute an offer to sell or a solicitation of an offer to purchase Home Depot
Common Stock in any jurisdiction in which such offer or solicitation is not
authorized or in which the person making such offer or solicitation is not
qualified to do so or to any person to whom it would be unlawful. Neither the
delivery of this Proxy Statement/Prospectus nor any distribution of such Home
Depot Common Stock shall, under any circumstances, create any implication that
the information contained herein is correct as of any time subsequent to the
date hereof.

THIS PROXY STATEMENT/PROSPECTUS IS FIRST BEING MAILED TO THE MAINTENANCE
WAREHOUSE SHAREHOLDERS AND THE AFFILIATED PARTNERS ON FEBRUARY 13, 1997.

i
<PAGE> 11

AVAILABLE INFORMATION

Home Depot is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed with the
Commission by Home Depot can be inspected and copied at the office of the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, or at
its Regional Offices located at 7 World Trade Center, Suite 1300, New York, New
York 10048, and 500 West Madison Street, Suite 1400, Chicago, Illinois, 60661,
and copies of such materials can be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission also maintains a web site on the Internet that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission and that is
located at http://www.sec.gov. In addition, Home Depot Common Stock is listed on
the New York Stock Exchange and similar information concerning Home Depot can be
inspected and copied at the New York Stock Exchange, 20 Broad Street, New York,
New York 10005.

Home Depot has filed with the Commission the Registration Statement under
the Securities Act. This Proxy Statement/Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information relating to Home Depot and the shares of Home Depot Common
Stock offered hereby, reference is hereby made to the Registration Statement,
including the exhibits and schedules thereto, which may be inspected without
charge at the office of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and copies of which may be obtained from the Commission at
prescribed rates. Statements contained in this Proxy Statement/Prospectus as to
the contents of any contract or other document referred to are not necessarily
complete and in each instance reference is made to the copy of such contract or
document filed as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents previously filed with the Commission by Home Depot
are incorporated by reference into this Proxy Statement/Prospectus:

(i) Home Depot's Annual Report on Form 10-K for the fiscal year ended
January 28, 1996;

(ii) Home Depot's Annual Report to Stockholders for the fiscal year
ended January 28, 1996;

(iii) Home Depot's Quarterly Reports on Form 10-Q for the quarters
ended April 28, 1996, July 28, 1996 (as amended), and October 27, 1996,
respectively;

(iv) Home Depot's Registration Statement on Form S-3 with respect to
the issuance of 3 1/4% Convertible Subordinated Notes, due 2001, filed on
September 24, 1996, as amended on September 26, 1996;

(v) Home Depot's Proxy Statement for the Annual Meeting of
Stockholders held on May 29, 1996; and

(vi) The description of Home Depot Common Stock contained in its
Registration Statement on Form 8-A, filed with the Commission.

In addition, all documents filed by Home Depot pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Proxy
Statement/Prospectus and prior to the date of the consummation of the Mergers
shall be deemed to be incorporated by reference into this Proxy Statement/
Prospectus and to be a part hereof from the date of filing of such documents.
Any statements contained in a document incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Proxy
Statement/Prospectus to the extent that a statement contained herein (or in any
other subsequently filed document which also is incorporated by reference
herein) modifies or supersedes such statement. Any

ii
<PAGE> 12

statement so modified or superseded shall not be deemed to constitute a part of
this Proxy Statement/ Prospectus except as so modified or superseded.

THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF THESE DOCUMENTS (OTHER
THAN EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS) ARE AVAILABLE WITHOUT CHARGE,
UPON WRITTEN OR ORAL REQUEST, FROM LAWRENCE K. MENTER, SENIOR CORPORATE COUNSEL
AND ASSISTANT SECRETARY, THE HOME DEPOT, INC., 2727 PACES FERRY ROAD, ATLANTA,
GEORGIA 30339-4089, TELEPHONE (770) 433-8211. IN ORDER TO ENSURE TIMELY DELIVERY
OF THE DOCUMENTS, ANY SUCH REQUEST SHOULD BE MADE BY FEBRUARY 27, 1997.

iii
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TABLE OF CONTENTS

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PAGE
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<S> <C>
Proxy Statement/Prospectus.................................. i
Available Information....................................... ii
Incorporation of Certain Documents by Reference............. ii
Summary..................................................... 1
The Parties............................................... 1
General Information....................................... 1
The Maintenance Warehouse Proxy Solicitation Process...... 2
Special Meeting........................................ 2
Record Date and Shares Entitled to Vote................ 2
Vote Required; Security Ownership of Management........ 2
The Affiliated Companies Consent Solicitation Process..... 3
Date and Purpose....................................... 3
Record Date............................................ 3
Vote Required; Security Ownership of Management........ 3
The Mergers............................................... 3
Background of the Mergers.............................. 3
Structure of the Mergers............................... 3
Reasons for the Mergers................................ 4
Terms of the Principal Merger Agreement and the
Affiliated Merger Agreement........................... 4
Effective Time of the Mergers and Exchange of Shares... 7
Recommendation of the Maintenance Warehouse Board of
Directors............................................. 8
Recommendation of Affiliated Companies' General
Partner............................................... 8
Interests of Certain Persons in the Mergers............ 8
Accounting Treatment................................... 9
Certain Federal Income Tax Consequences................ 9
Resale of Home Depot Common Stock...................... 10
Appraisal Rights....................................... 10
Markets and Market Prices................................... 11
Comparative Per Share Information........................... 12
Selected Consolidated Financial Data........................ 13
Selected Combined Historical Financial Data................. 14
General Information......................................... 15
The Maintenance Warehouse Proxy Solicitation Process........ 15
Special Meeting........................................... 15
Record Date and Shares Entitled to Vote................... 15
Vote Required; Security Ownership of Management........... 15
The Affiliated Companies Consent Solicitation Process....... 16
Date and Purpose.......................................... 16
Record Date............................................... 16
Vote Required; Security Ownership of Management........... 16
The Mergers................................................. 17
Background of the Mergers................................. 17
Structure of the Mergers.................................. 17
Reasons for the Mergers................................... 17
Terms of the Principal Merger Agreement and the Affiliated
Merger Agreement....................................... 18
Effective Time of the Merger and Exchange of Shares....... 20
Recommendation of the Maintenance Warehouse Board of
Directors.............................................. 21
Recommendation of Affiliated Companies' General Partner... 21
</TABLE>

iv
<PAGE> 14

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Interests of Certain Persons in the Mergers............... 21
Accounting Treatment...................................... 22
Certain Federal Income Tax Consequences................... 22
Resale of Home Depot Common Stock......................... 24
Appraisal Rights.......................................... 24
Comparison of Rights of Holders of Maintenance Warehouse
Common Stock and Home Depot Common Stock............... 30
Comparison of Rights of Affiliated Partners and Holders of
Home Depot Common Stock................................ 34
Business of Home Depot...................................... 37
General................................................... 37
Management's Discussion and Analysis of Financial Condition
and Results of Operations of Maintenance Warehouse........ 38
Results of Operations..................................... 38
Liquidity and Capital Resources........................... 39
Business of Maintenance Warehouse........................... 40
Overview and History...................................... 40
Industry.................................................. 40
Operating Strategy........................................ 40
Growth Strategy........................................... 41
Products & Merchandising.................................. 41
The Maintenance Warehouse Catalog......................... 41
Operations................................................ 41
Competition............................................... 42
Real Estate/Facilities.................................... 42
Employees................................................. 42
Maintenance Warehouse Principal Shareholders................ 43
Business of Affiliated Companies............................ 45
Ownership of Partnership Interests.......................... 46
Experts..................................................... 48
Legal Matters............................................... 48
Stockholder Proposals....................................... 48
Maintenance Warehouse Index to Combined Financial
Statements................................................ F-1
Annex A: Principal Merger Agreement......................... A-1
Annex B: Affiliated Merger Agreement........................ B-1
Annex C: Form of Escrow Agreement........................... C-1
Annex D: Text of Articles 5.11, 5.12 and 5.13 of the Texas
Business Corporation Act........................... D-1
Annex E: Text of Sections 15679.1 through 15679.14 of the
California Revised Limited Partnership Act................ E-1
Annex F: List of the Affiliated Companies................... F-1
</TABLE>

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<PAGE> 15

SUMMARY

The following is a summary of certain information contained, or
incorporated by reference, elsewhere in this Proxy Statement/Prospectus. This
summary is not intended to be complete and is qualified in its entirety by
reference to, and should be read in conjunction with, the detailed information
and financial statements appearing elsewhere, or incorporated by reference, in
this Proxy Statement/Prospectus.

THE PARTIES

HOME DEPOT

Home Depot is the leading retailer in the home improvement industry and
ranks among the 10 largest retailers in the United States based on net sales
volume. As of October 27, 1996, Home Depot operated 474 full-service,
warehouse-style stores in 35 states in the United States (450 stores) and three
provinces in Canada (24 stores). In addition, Home Depot operated five Expo(R)
design centers in the United States. As of October 27, 1996, aggregate selling
space for all Home Depot locations approximated 50 million square feet. Home
Depot's stores average approximately 105,200 square feet of indoor selling
space, with an additional 20,000 to 28,000 square feet of outside garden center
area. Home Depot's business strategy is to offer the broadest assortment of
high-quality merchandise at low "Day-In, Day-Out" warehouse prices through
highly-trained and knowledgeable customer service associates. Home Depot employs
approximately 100,000 associates.

Home Depot is incorporated under the laws of the State of Delaware. Home
Depot Common Stock is listed on the New York Stock Exchange under the symbol
"HD." Unless the context otherwise requires, references to Home Depot include
The Home Depot, Inc. and its subsidiaries. Home Depot's corporate offices are
located at 2727 Paces Ferry Road, Atlanta, Georgia 30339-4089, telephone number
(770) 433-8211.

MAINTENANCE WAREHOUSE

Maintenance Warehouse is a leading direct-mail business-to-business
marketer of maintenance, repair and operations products to the U.S. building and
facilities management market. Maintenance Warehouse offers a broad selection of
major brand name and generic products to meet its customers' plumbing, hardware,
lighting, appliance, electrical, tools, HVAC, paint supply, janitorial,
communications, and other maintenance and repair needs. Maintenance Warehouse
products are used in virtually all segments of facilities management including
the multi-family housing, lodging, commercial building, health care facility,
industrial plant, institutional (such as military installations, government
buildings and correctional facilities) and educational facility markets.

Maintenance Warehouse is a Subchapter S corporation incorporated under the
laws of the State of Texas. There is no trading market for the shares of
Maintenance Warehouse Common Stock. Maintenance Warehouse's corporate offices
are located at 5505 Morehouse Drive, #300, San Diego, California 92121,
telephone number (619) 552-6200.

THE AFFILIATED COMPANIES

The nine California limited partnerships listed on Annex F hereto which
constitute the "Affiliated Companies" own, operate and lease warehouses which
serve as distribution centers that are used primarily in connection with the
direct-mail business of Maintenance Warehouse.

GENERAL INFORMATION

This Proxy Statement/Prospectus is being furnished to (i) the Maintenance
Warehouse Shareholders in connection with the solicitation of proxies by the
Board of Directors of Maintenance Warehouse for approval of the Principal Merger
Agreement and (ii) the Affiliated Partners in connection with the solicitation
of the consents of the Affiliated Partners for approval of the Affiliated Merger
Agreement (the Affiliated Merger
1
<PAGE> 16

and the Principal Merger are hereinafter referred to as the "Mergers"). The
Maintenance Warehouse Shareholders will be asked to consider and vote on a
proposal to approve and adopt the Principal Merger Agreement; the Affiliated
Partners will be asked to consider and consent to a proposal to approve and
adopt the Affiliated Merger Agreement.

If the Principal Merger is consummated, each outstanding share of
Maintenance Warehouse Common Stock (other than treasury shares and shares held
by shareholders of Maintenance Warehouse who perfect their appraisal rights
under Texas law) will be converted into the right to receive such number of
shares of Home Depot Common Stock as has a value equal to the Conversion Amount
(as defined in "The Mergers -- Terms of the Principal Merger Agreement and the
Affiliated Merger Agreement -- Conversation Amount"), plus cash for any
fractional shares of Home Depot Common Stock after such conversion. It is
expected that each Maintenance Warehouse Shareholder will receive, depending on
the Average Closing Price, between 446.242 and 522.199 shares of Home Depot
Common Stock (or cash for fractional shares) in exchange for each share of
Maintenance Warehouse Common Stock owned by such shareholder.

If the Affiliated Merger is consummated, each percentage of partnership
interest (a "Partnership Interest") in the Affiliated Companies (other than
Partnership Interests held by Affiliated Partners who perfect their appraisal
rights under California law) will be converted into the right to receive such
number of shares of Home Depot Common Stock as has a value equal to the amount
indicated beside the name of such entity on Schedule A to the Affiliated Merger
Agreement (totalling $1,425,592, in the aggregate), divided by one hundred
(100), plus cash for any fractional shares of Home Depot Common Stock after such
conversion. It is expected that the Affiliated Partners will receive, in the
aggregate and depending on the Average Closing Price, between 25,919 and 30,331
shares of Home Depot Common Stock.

This Proxy Statement/Prospectus also constitutes the Prospectus of Home
Depot with respect to the shares of Home Depot Common Stock to be issued in the
Mergers. Information in this Proxy Statement/ Prospectus with respect to Home
Depot has been supplied by Home Depot. The information with respect to
Maintenance Warehouse and the Affiliated Companies has been supplied by
Maintenance Warehouse and the Affiliated Companies, respectively.

THE MAINTENANCE WAREHOUSE PROXY SOLICITATION PROCESS

SPECIAL MEETING

This Proxy Statement/Prospectus is being furnished in connection with the
solicitation by the Board of Directors of Maintenance Warehouse of proxies to be
voted at the Special Meeting of Maintenance Warehouse Shareholders to be held on
Friday, March 14, 1997 at 10:00 a.m., local time, at the offices of Seltzer
Caplan Wilkins & McMahon, 750 "B" Street, Suite 2100, San Diego, California
92101. The holders of Maintenance Warehouse Common Stock will be asked to
consider and vote on a proposal to approve and adopt the Principal Merger
Agreement. A copy of the Principal Merger Agreement is attached hereto as Annex
A and is incorporated herein by this reference.

RECORD DATE AND SHARES ENTITLED TO VOTE

Only holders of record of shares of Maintenance Warehouse Common Stock at
the close of business on January 15, 1997 (the "Record Date") are entitled to
vote at the Special Meeting. As of such date, there were 10,000 shares of
Maintenance Warehouse Common Stock issued and outstanding held by 11 holders of
record. Maintenance Warehouse Shareholders who wish to vote at the Special
Meeting must either execute and return a proxy in accordance with the procedures
set forth herein and in the accompanying proxy or attend the Special Meeting in
person.

VOTE REQUIRED; SECURITY OWNERSHIP OF MANAGEMENT

Under Texas law and Maintenance Warehouse's Articles of Incorporation, the
affirmative vote of a majority of the issued and outstanding shares of
Maintenance Warehouse Common Stock entitled to vote is
2
<PAGE> 17

required to approve the Principal Merger Agreement. However, under the terms of
the Principal Merger Agreement, Home Depot has the right to refuse to consummate
the Principal Merger Agreement if it is not approved by the vote of holders of
at least 97% of the outstanding shares of Maintenance Warehouse Common Stock. As
of the Record Date, the executive officers and directors of Maintenance
Warehouse beneficially owned an aggregate of 7,600 shares of Maintenance
Warehouse Common Stock, or approximately 76% of the shares of Maintenance
Warehouse Common Stock then outstanding. Approval of the Principal Merger
Agreement by the stockholders of Home Depot is not required.

Although each of the shareholders of Maintenance Warehouse executed the
Principal Merger Agreement, the shareholders are not legally bound to vote their
shares of Maintenance Warehouse Common Stock to approve the Principal Merger
Agreement. Each shareholder should decide whether to vote to approve
the Principal Merger Agreement based on the information contained in the
accompanying Proxy Statement/Prospectus.

THE AFFILIATED COMPANIES CONSENT SOLICITATION PROCESS

DATE AND PURPOSE

This Proxy Statement/Prospectus is also being furnished in connection with
the solicitation of consents of the Affiliated Partners to the Affiliated
Merger. On or about March 10, 1997, the Affiliated Partners will receive a form
of consent to the Affiliated Merger. The Affiliated Partners will be asked to
consider and consent to a proposal to approve and adopt the Affiliated Merger
Agreement. A copy of the Affiliated Merger Agreement is attached hereto as Annex
B and is incorporated herein by this reference.

RECORD DATE

Only holders of record of Partnership Interests in the Affiliated Companies
as of the close of business on the Record Date are entitled to consent to the
Affiliated Merger.

VOTE REQUIRED; SECURITY OWNERSHIP OF MANAGEMENT

The written consent of each Affiliated Partner is necessary to approve the
Affiliated Merger Agreement. As of the Record Date, the General Partner of the
Affiliated Companies beneficially owned a percentage interest in each Affiliated
Company ranging from 4.6% to 10.02%. Approval of the Affiliated Merger Agreement
by the stockholders of Home Depot is not required. See -- "Ownership of
Partnership Interests."

THE MERGERS

BACKGROUND OF THE MERGERS

In August 1996, the Board of Directors of Maintenance Warehouse retained
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") to serve as its
financial advisor in connection with the exploration of strategic alternatives
including the potential sale of Maintenance Warehouse and the Affiliated
Companies. In November 1996, at the direction of the Board of Directors of
Maintenance Warehouse, DLJ conducted an auction to solicit bids from parties who
were interested in acquiring the business of Maintenance Warehouse and the
Affiliated Companies. On December 18, 1996, the Board of Directors accepted the
bid of Home Depot. A definitive Principal Merger Agreement and a definitive
Affiliated Merger Agreement were executed on January 16, 1997. Prior to the
auction process and the execution of the Principal Merger Agreement and the
Affiliated Merger Agreement, there was no material relationship between Home
Depot and Maintenance Warehouse or any of the Affiliated Companies.

STRUCTURE OF THE MERGERS

pursuant to the Principal Merger Agreement, becoming a wholly owned subsidiary
of Home Depot, with all the shares of Maintenance Warehouse being converted into
Home Depot Common Stock as a result of the Principal Merger. In a simultaneous
transaction, each of the Affiliated Companies will merge with and into Home
Depot or a wholly owned subsidiary of Home Depot pursuant to the Affiliated
Merger Agreement, with all of the Partnership Interests being converted into
Home Depot Common Stock as a consequence of the Affiliated Merger. The
Affiliated Merger is to be effective immediately following the Principal Merger.

REASONS FOR THE MERGERS

Maintenance Warehouse. In approving and adopting the Principal Merger
Agreement and formulating its recommendation that the Maintenance Warehouse
Shareholders approve the Principal Merger Agreement and consummation of the
Principal Merger, the Maintenance Warehouse Board of Directors considered a
number of factors, including, without limitation, the following: (i) the
privately-held status of Maintenance Warehouse; (ii) the quality of, and risks
associated with, Home Depot Common Stock to be received by Maintenance Warehouse
Shareholders in the Principal Merger; (iii) the terms of the Principal Merger
Agreement; (iv) the expectation that the Principal Merger will be treated as a
tax-free reorganization for federal income tax purposes so that generally no
gain or loss will be recognized by Maintenance Warehouse Shareholders in
connection with the exchange of Maintenance Warehouse Common Stock for Home
Depot Common Stock in the Principal Merger; and (v) certain business reasons for
the Principal Merger as set forth below as Home Depot's reasons for pursuing the
Principal Merger.

Affiliated Companies. In approving and adopting the Affiliated Merger
Agreement and formulating its recommendation that the Affiliated Partners of the
Affiliated Companies approve the Affiliated Merger Agreement and the
consummation of the Affiliated Merger, the General Partner of the Affiliated
Companies considered a number of factors, including, without limitation the
following: (i) the privately-held status of Maintenance Warehouse and the
Affiliated Companies; (ii) the impending Principal Merger and approved Principal
Merger Agreement between Home Depot and Maintenance Warehouse; (iii) the primary
use of the properties and business operations of the Affiliated Companies in
connection with the business of Maintenance Warehouse; and (iv) Home Depot's
desire to acquire the properties and business operations of the Affiliated
Companies in addition to acquiring Maintenance Warehouse.

THE GENERAL PARTNER OF THE AFFILIATED COMPANIES HAS DETERMINED THAT THE
AFFILIATED MERGER IS IN THE BEST INTERESTS OF THE AFFILIATED PARTNERS AND
RECOMMENDS THAT THE AFFILIATED PARTNERS GIVE THEIR WRITTEN CONSENT FOR THE
APPROVAL OF THE AFFILIATED MERGER AGREEMENT.

Home Depot. In approving the Mergers and the transactions contemplated
thereby, the Board of Directors of Home Depot considered, among other things (i)
the opportunity to develop new lines of business and (ii) the Home Depot
strategic plan.

TERMS OF THE PRINCIPAL MERGER AGREEMENT AND THE AFFILIATED MERGER AGREEMENT

Depot intends to assign its rights under the Affiliated Merger Agreement to
Maintenance Warehouse. Thereafter, at the Affiliated Effective Time (as
hereinafter defined), the Affiliated Companies will be merged with and into
Maintenance Warehouse in accordance with applicable law. Maintenance Warehouse
will also be the surviving corporation of the Affiliated Merger. As a result of
the Affiliated Merger, the separate existence of the Affiliated Companies will
cease.

Conversion Amount. Each share of Maintenance Warehouse Common Stock issued
and outstanding at the time of the Principal Merger (other than treasury shares
and shares held by Maintenance Warehouse Shareholders who perfect their
appraisal rights under the TBCA) will be converted into the right to receive
that number of shares of Home Depot Common Stock as has a value equal to the
Conversion Amount. The "Conversion Amount" will be determined by dividing
$245,433,514 by the number of shares of Maintenance Warehouse Common Stock
issued and outstanding immediately prior to the Effective Time (the "Outstanding
Share Amount"). Each percentage of partnership interest in the Affiliated
Companies will be converted into the right to receive such number of shares of
Home Depot Common Stock as has a value equal to the amount indicated beside the
name of such entity on Schedule A to the Affiliated Merger Agreement (totalling
$1,425,592, in the aggregate), divided by one hundred (100). For purposes of
these calculations, each share of Home Depot Common Stock shall be valued at the
arithmetic average of the closing price per share of Home Depot Common Stock as
reported on a consolidated basis on the New York Stock Exchange for each of the
ten consecutive trading days ending immediately prior to the Effective Time (the
"Average Closing Price"); provided however, that if the preceding clause results
in (i) an Average Closing Price less than $47.00, then the Average Closing Price
shall equal $47.00 and (ii) an Average Closing Price greater than $55.00, then
the Average Closing Price shall equal $55.00. Any fractional shares of Home
Depot Common Stock that would result from such calculation will be converted
into the cash value of such fraction based on the Average Closing Price. It is
expected that each Maintenance Warehouse Shareholder will receive, depending on
the Average Closing Price, between 446.242 and 522.199 shares of Home Depot
Common Stock (or cash for fractional shares) in exchange for each share of
Maintenance Warehouse Common Stock owned by such shareholder. It is expected
that the Affiliated Partners will receive, in the aggregate and depending on the
Average Closing Price, between 25,919 and 30,331 shares of Home Depot Common
Stock. Beginning on March 10, 1997, Maintenance Warehouse Shareholders and
Affiliated Partners may call 1-800-233-6166 and ask for Mr. Ron Turk in order to
receive an estimate of the number of shares of Home Depot Common Stock to be
issued in exchange for each share of Maintenance Warehouse Common Stock and each
percentage of partnership interest in the Affiliated Companies. See "The
Mergers -- Terms of the Principal Merger Agreement and the Affiliated Merger
Agreement -- Conversion Amount." The Conversion Amount was determined in arms'
length negotiations between representatives of Home Depot, Maintenance Warehouse
and the Affiliated Companies. See "The Mergers -- Background of the Mergers."

Post-Closing Adjustment. The Conversion Amount is subject to adjustment
following the Effective Time based on the shareholders' equity of Maintenance
Warehouse and the Affiliated Companies, as of the Effective Time. As promptly as
practicable after the Effective Time, but in any case not later than 90 days
thereafter, Home Depot shall cause to be prepared and delivered to the
Maintenance Warehouse Shareholders a combined balance sheet of Maintenance
Warehouse and the Affiliated Companies prepared in accordance with the
guidelines set forth in Section 2.5 of the Principal Merger Agreement (the
"Closing Balance Sheet"). The Maintenance Warehouse Shareholders will have the
right to dispute the Closing Balance Sheet under the procedures set forth in
Sections 2.5 and 2.6 of the Principal Merger Agreement.

and (ii) in the case of a Deficit Amount, each Maintenance Warehouse Shareholder
shall surrender to Home Depot for cancellation without consideration the number
of excess shares of Home Depot Common Stock (and cash for any fractional share)
that was issued to such shareholder at the Principal Effective Time based on the
adjusted Conversion Amount. Each share of Home Depot Common Stock shall be
valued at the Average Closing Price for purposes of such adjustments and
calculations.

Indemnification Obligations. The Maintenance Warehouse Shareholders will
be responsible for certain post-closing indemnifications relating to
representations, warranties and covenants made by Maintenance Warehouse and the
Maintenance Warehouse Shareholders to Home Depot in the Mergers. In order to
secure such obligations, the Maintenance Warehouse Shareholders will be
required, at the Principal Effective Time, to place into escrow for a period of
one year following the Principal Effective Time a number of shares of Home Depot
Common Stock equal to $10,000,000 divided by the Average Closing Price. In the
event that Home Depot suffers losses ("Home Depot Losses") arising out of or
relating to any of the Maintenance Warehouse or Maintenance Warehouse
Shareholder actions set forth in Section 9.1 of the Principal Merger Agreement
(attached hereto as Annex A), the Maintenance Warehouse Shareholders will
generally be liable for such Home Depot Losses to the extent that the losses
exceed, in the aggregate, $1,000,000 (the "Shareholder Basket Amount").
Maintenance Warehouse Shareholders will generally not be liable for any amount
of Home Depot Losses that exceed, in the aggregate, $25,000,000 (the
"Shareholder Maximum Indemnity"). The indemnification obligations of Maintenance
Warehouse Shareholders generally will end one year after the Effective Time. See
"The Mergers -- Terms of the Principal Merger Agreement and the Affiliated
Merger Agreement -- Indemnification Obligations." A copy of the proposed Escrow
Agreement is attached hereto as Annex C.

Conditions to the Mergers. In addition to the approval of the Principal
Merger Agreement by the holders of at least 97% of the shares of outstanding
Maintenance Warehouse Common Stock, the unanimous approval of the Affiliated
Merger Agreement by the Affiliated Partners and certain customary conditions,
consummation of the Mergers is subject to the satisfaction or waiver of, among
others, the following conditions: (i) that Home Depot shall have been advised in
writing by KPMG Peat Marwick LLP ("KPMG") that, in accordance with generally
accepted accounting principles, the Mergers qualify to be treated as a pooling
of interests for accounting purposes, and Home Depot and Maintenance Warehouse
shall have been advised in writing as of the Effective Time by Deloitte & Touche
LLP ("D&T") that, after considering the facts, circumstances, assumptions and
representations of Maintenance Warehouse and the Affiliated Companies, they
believe that Maintenance Warehouse and the Affiliated Companies would meet the
criteria for a pooling of interests in accordance with generally accepted
accounting principles in connection with the Mergers; (ii) that shareholders
holding not more than three percent of the outstanding shares of Maintenance
Warehouse Common Stock shall have elected to exercise appraisal rights under the
TBCA; (iii) that the Registration Statement covering the shares of Home Depot
Common Stock into which shares of Maintenance Warehouse Common Stock and the
Partnership Interests will be converted in the Mergers shall be effective; (iv)
the applicable waiting period shall have expired under the Hart-Scott-Rodino Act
of 1976, as amended (the "HSR Act"); (v) that the certificate of merger relating
to the Affiliated Merger shall have been executed by each of the Affiliated
Companies and delivered to Home Depot for filing; (vi) the Affiliated Partners
shall have executed and delivered to Home Depot their unanimous written consents
to the Affiliated Merger; and (vii) that each Maintenance Warehouse Shareholder
and Affiliated Partner shall have paid in full all amounts of any kind owed by
such shareholder or partner to Maintenance Warehouse and each Affiliated
Company. See "The Mergers -- Terms of the Principal Merger Agreement and the
Affiliated Merger Agreement -- Conditions to the Mergers."

Amendment. Each of the Principal Merger Agreement and the Affiliated
Merger Agreement may be amended by mutual agreement of the parties thereto. Any
amendment to the Principal Merger Agreement or the Affiliated Merger Agreement
must be in writing and signed by the parties thereto.

has given notice to the other party of its intent to terminate the Principal
Merger Agreement; provided that if such noncompliance or nonperformance cannot
reasonably be cured within such ten-day period despite good faith efforts, such
party shall not be permitted to terminate the Principal Merger Agreement unless
such noncompliance or nonperformance has not been cured or eliminated within
thirty (30) days of such notice; (iii) by Home Depot if, on or prior to the
twenty-fifth (25th) business day following the delivery of this Proxy
Statement/Prospectus to the Maintenance Warehouse Shareholders and the
Affiliated Partners, the holders of more than three percent of the outstanding
shares of Maintenance Warehouse Common Stock shall have elected to exercise
appraisal rights under the TBCA or if any of the Affiliated Partners shall have
failed to consent to the Affiliated Merger; and (iv) by Maintenance Warehouse or
by Home Depot if the Effective Time has not occurred by May 31, 1997. The
Affiliated Merger Agreement shall terminate upon termination of the Principal
Merger Agreement.

Absence of Walk Away Rights. In the event that the price per share of Home
Depot Common Stock falls below $47.00 per share prior to the Effective Time, the
Maintenance Warehouse Shareholders and the Affiliated Partners will not have any
additional rights to terminate the Principal Merger Agreement and the Affiliated
Merger Agreement, respectively. In addition, Maintenance Warehouse has agreed
that if, on or prior to the twenty-fifth (25th) business day following the
delivery of this Proxy Statement/Prospectus to the Maintenance Warehouse
Shareholders and the Affiliated Partners, either the holders of 97% or more of
the outstanding shares of Maintenance Warehouse Common Stock have failed to vote
in favor of the Principal Merger or the holders of more than three percent of
the outstanding shares of Maintenance Warehouse Common Stock shall have elected
to exercise appraisal rights under the TBCA or any Affiliated Partner shall have
failed to consent to the Affiliated Merger, then Home Depot shall have the right
to terminate the Principal Merger Agreement and the Affiliated Merger Agreement
and Maintenance Warehouse shall be obligated to pay Home Depot $10 million to
reimburse and compensate Home Depot for its expense, time and effort in
connection with the matters contemplated by the Principal Merger Agreement and
the Affiliated Merger Agreement.

Fees and Expenses. Home Depot will pay its own fees, costs and expenses
incurred in connection with the Principal Merger Agreement and the Affiliated
Merger Agreement and the transactions contemplated thereby. Maintenance
Warehouse and the Maintenance Warehouse Shareholders will pay their own
respective fees, costs and expenses incurred in connection with the Principal
Merger Agreement and the transactions contemplated thereby or such fees, costs
and expenses will be accrued as liabilities on the Closing Balance Sheet. In
addition, Maintenance Warehouse has agreed that, if the Principal Merger
Agreement is terminated pursuant to the provision in the Principal Merger
Agreement described in clause (iii) of the preceding paragraph, then Maintenance
Warehouse shall pay Home Depot $10 million to reimburse and compensate Home
Depot for its expense, time and effort in connection with the matters
contemplated by the Principal Merger Agreement and the Affiliated Merger
Agreement. The Affiliated Companies and the Affiliated Partners will pay their
respective fees, costs and expenses incurred in connection with the Affiliated
Merger Agreement and the transactions contemplated thereby.

EFFECTIVE TIME OF THE MERGERS AND EXCHANGE OF SHARES

Effective Time of the Mergers. The Principal Merger will become effective
upon the filing of the certificate of merger relating thereto with the Secretary
of State of the State of Texas or at such later time as is specified in the
certificate of merger (the "Principal Effective Time"). The Affiliated Merger
will become effective upon the filing of the certificates of merger with the
Secretary of States of the States of Texas and the State of California or at
such later time as is specified in the certificate of merger (the "Affiliated
Effective Time"). The "Effective Time" shall occur upon the last to occur of the
Principal Effective Time and the Affiliated Effective Time. Each of the
Principal Merger Agreement and the Affiliated Merger Agreement provides that the
parties thereto will cause such certificates of merger to be filed as soon as
practicable after all of the conditions to the consummation of the Mergers have
been satisfied or waived. See "The Mergers -- Effective Time of Mergers."

stock certificates for certificates evidencing the shares of Home Depot Common
Stock they will be entitled to receive as a result of the Mergers. SHAREHOLDERS
OF MAINTENANCE WAREHOUSE SHOULD NOT SUBMIT THEIR STOCK CERTIFICATES FOR EXCHANGE
UNTIL INSTRUCTIONS AND THE LETTER OF TRANSMITTAL ARE RECEIVED. See "The
Mergers -- Terms of the Principal Merger Agreement and the Affiliated Merger
Agreement -- Exchange of Maintenance Warehouse Stock Certificates."

Exchange of Partnership Interests. Prior to the Effective Time,
instructions and a letter of transmittal will be furnished to all Affiliated
Partners for use in exchanging their Partnership Interests for certificates
evidencing the shares of Home Depot Common Stock they will be entitled to
receive as a result of the Affiliated Merger. See "The Mergers -- Terms of the
Affiliated Merger Agreement and the Principal Merger Agreement -- Exchange of
Partnership Interests."

RECOMMENDATION OF THE MAINTENANCE WAREHOUSE BOARD OF DIRECTORS

RECOMMENDATION OF AFFILIATED COMPANIES' GENERAL PARTNER

INTERESTS OF CERTAIN PERSONS IN THE MERGERS

In considering the Mergers, holders of Maintenance Warehouse Common Stock
and the Affiliated Partners should be aware that certain executive officers and
directors of Maintenance Warehouse have certain interests that may present them
with potential conflicts of interest with respect to the Merger. See "The
Mergers -- Interests of Certain Persons in the Mergers."

Ownership of Maintenance Warehouse Common Stock. As of the date of this
Proxy Statement/ Prospectus, executive officers and directors of Maintenance
Warehouse beneficially own or control an aggregate of 7,600 shares of
Maintenance Warehouse Common Stock. If the Merger had occurred on February 12,
1997, the last trading day before the date of this Proxy Statement/Prospectus
(the "Last Trading Date"), the Conversion Amount (based on the number of shares
of Maintenance Warehouse Common Stock outstanding on the Last Trading Date)
would have been $24,543.35 and executive officers and directors of Maintenance
Warehouse would have been entitled to receive in the Merger an aggregate of
3,661,928 shares of Home Depot Common Stock having an aggregate market value of
approximately $188,589,292 based on the closing price per share of Home Depot
Common Stock reported on a consolidated basis on the New York Stock Exchange on
the Last Trading Date. See "Ownership of Maintenance Warehouse Common Stock."

8
<PAGE> 23

Ownership of Affiliated Companies. As of the date of this Proxy
Statement/Prospectus, the General Partner of the Affiliated Companies
beneficially owns or controls Partnership Interests in the Affiliated Companies
as stated below:

<TABLE>
<CAPTION>
PERCENTAGE
PARTNERSHIP
AFFILIATED COMPANY INTEREST
------------------ -----------
<S> <C>
MWAC One.................................................... 5.00%
86 Warehouse II............................................. 4.60%
86 Warehouse III............................................ 5.00%
DFW Warehouse Four Limited Partnership...................... 5.00%
Denver Warehouse Five....................................... 10.02%
Fontana Warehouse Six....................................... 10.02%
ATL Warehouse Seven......................................... 10.02%
Richmond Warehouse Eight.................................... 10.02%
St. Louis Warehouse Nine.................................... 10.00%
</TABLE>

If the Affiliated Merger had occurred on the Last Trading Date, the General
Partner of the Affiliated Companies would have been entitled to receive in the
Affiliated Merger an aggregate of 2,611 shares of Home Depot Common Stock having
an aggregate market value of approximately $134,467 based on the closing price
per share of Home Depot Common Stock reported on a consolidated basis on the New
York Stock Exchange on the Last Trading Date. See "Ownership of Partnership
Interests."

ACCOUNTING TREATMENT

The Mergers are expected to qualify as a pooling of interests for
accounting purposes. The obligation of Home Depot to consummate the Mergers is
conditioned upon the receipt of an opinion from KPMG to the effect that, in
accordance with generally accepted accounting principles, the Mergers qualify to
be treated as a pooling of interests for accounting purposes, and Home Depot and
Maintenance Warehouse shall have been advised in writing as of the Effective
Time by D&T that after considering the facts, circumstances, assumptions and
representations of Maintenance Warehouse and the Affiliated Companies, they
believe that Maintenance Warehouse and the Affiliated Companies would meet the
criteria for a pooling of interests in accordance with generally accepted
accounting principles in connection with the Mergers. Home Depot and Maintenance
Warehouse have agreed that neither they nor any of their respective subsidiaries
or affiliates will take or fail to take certain actions that would jeopardize
the treatment of the Mergers as a pooling of interests for accounting purposes.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

Home Depot and Maintenance Warehouse expect the Principal Merger to
constitute a tax-free reorganization for federal income tax purposes so that no
gain or loss will be recognized by the Maintenance Warehouse Shareholders,
except with respect to any cash (i) received in lieu of fractional shares or
(ii) paid to Shareholders who exercise appraisal rights. At the Effective Time,
Home Depot has received an opinion of King & Spalding, counsel to Home Depot, to
the effect that, subject to the assumptions, qualifications and limitations set
forth therein, the Principal Merger will qualify as a tax-free reorganization
for federal income tax purposes under the Internal Revenue Code of 1986, as
amended (the "Code").

With respect to the Affiliated Merger, each Affiliated Company will
recognize gain or loss equal to the difference between (i) the sum of the
liabilities of the Affiliated Company transferred to Home Depot plus the value
of the Home Depot Common Stock received by the Affiliated Partners of such
Affiliated Company, and (ii) the tax basis of the assets transferred by such
Affiliated Company to Home Depot in the Affiliated Merger. All or part of any
such gain or loss could be ordinary in character, and such gain or loss of each
Affiliated Company will be allocated to the Affiliated Partners of such
Affiliated Company in accordance with the terms of the Affiliated Company's
partnership agreement and the applicable provisions of the Code and Treasury
Regulations. See "The Mergers -- Certain Federal Income Tax Consequences."
9
<PAGE> 24

RESALE OF HOME DEPOT COMMON STOCK

Shares of Home Depot Common Stock to be issued to shareholders of
Maintenance Warehouse in connection with the Merger will be freely transferrable
under the Securities Act, except for shares issued to any person or entity who,
at the time of the Mergers, may be deemed an "affiliate" of Maintenance
Warehouse within the meaning of Rule 145 under the Securities Act. In general,
affiliates of Maintenance Warehouse include its executive officers and directors
and any other person or entity who controls, is controlled by or is under common
control with Maintenance Warehouse. Rule 145, among other things, imposes
certain restrictions upon the resale of securities received by affiliates in
connection with certain reclassifications, mergers, consolidations or asset
transfers. These restrictions will consist of volume and manner of sale
restrictions on the resale of shares of Home Depot Common Stock issued to such
persons and entities. In addition, each of the Maintenance Warehouse
Shareholders has agreed under Section 8.6 of the Principal Merger Agreement that
(in order that the Mergers shall qualify to be treated as a pooling of interests
for accounting purposes) such shareholder will not offer to sell, transfer or
otherwise dispose of any shares of Home Depot Common Stock received in the
Mergers until such time as financial results covering at least thirty (30) days
of combined operations of Home Depot, Maintenance Warehouse and the Affiliated
Companies shall have been published within the meaning of Section 201.01 of the
Commission's Codification of Financial Reporting Policies. Home Depot may place
legends on certificates representing shares of Home Depot Common Stock that are
issued to Maintenance Warehouse Shareholders and the Affiliated Partners in the
Principal Merger to restrict such transfers.

APPRAISAL RIGHTS

Holders of Maintenance Warehouse Common Stock. Holders of Maintenance
Warehouse Common Stock are entitled to appraisal rights and, if the Principal
Merger is consummated, to receive payment in cash for the statutory "fair value"
of their shares (excluding any element of value arising from the accomplishment
or expectation of the Principal Merger), upon compliance with the provisions of
Articles 5.11, 5.12 and 5.13 of the TBCA. In order to perfect these rights, a
shareholder must not vote in favor of the Principal Merger and must deliver to
Maintenance Warehouse a written demand for appraisal of such shareholder's
shares prior to the Principal Merger. The refusal to vote in favor of the
Principal Merger will not constitute such a demand. Failure to follow any of
these or other applicable procedures may result in the loss of statutory
appraisal rights. Holders of Home Depot Common Stock are not entitled to
appraisal rights in connection with the Principal Merger. Home Depot has the
right to refuse to consummate the Principal Merger Agreement if the holders of
three percent or more of the outstanding shares of Maintenance Warehouse Common
Stock exercise appraisal rights. See "The Principal Merger -- Appraisal Rights"
and Annex D, which sets forth the full text of Articles 5.11, 5.12 and 5.13 of
the TBCA relating to appraisal rights.

Holders of Partnership Interests in the Affiliated Companies. Holders of
Partnership Interests in the Affiliated Companies are entitled to appraisal
rights and, if the Affiliated Merger is consummated, to receive payment in cash
for the statutory "fair market value" of their partnership interests (excluding
any element of value arising from the accomplishment or expectation of the
merger), upon compliance with the provisions of Article 7.6 of the CRLPA. In
order to perfect these rights, an Affiliated Partner must not consent to the
Affiliated Merger and must deliver to the applicable Affiliated Company a
written demand for appraisal of such Partnership Interest prior to the
Affiliated Merger. The refusal to consent to the Affiliated Merger will not
constitute such a demand. Failure to follow any of these or other applicable
procedures may result in the loss of statutory appraisal rights. Consummation of
the Affiliated Merger is subject to the unanimous written consent of the
Affiliated Partners. See "The Affiliated Merger -- Appraisal Rights" and Annex
E, which sets forth the full text of Article 7.6 of the CRLPA relating to
dissenters' rights.
10
<PAGE> 25

MARKETS AND MARKET PRICES

Home Depot. Home Depot Common Stock is listed on the New York Stock
Exchange under the symbol "HD." Home Depot has paid a dividend on its shares of
Home Depot Common Stock for each of the quarters and in the amounts set forth
below.

The following table sets forth for the calendar quarter indicated the low
and high sales prices per share of Home Depot Common Stock as reported on a
consolidated basis on the New York Stock Exchange and the quarterly cash
dividend paid per share of Home Depot Common Stock.

<TABLE>
<CAPTION>
HOME DEPOT
COMMON STOCK
--------------------------
LOW HIGH DIVIDEND
------ ------ --------
<S> <C> <C> <C>
FISCAL YEAR 1994
First Quarter ended May 1, 1994........................... $37.13 $44.63 $.03
Second Quarter ended July 31, 1994........................ 39.63 46.38 .04
Third Quarter ended October 30, 1994...................... 39.75 46.25 .04
Fourth Quarter ended January 29, 1995..................... 44.13 48.25 .04
FISCAL YEAR 1995
First Quarter ended April 30, 1995........................ 40.25 50.00 .04
Second Quarter ended July 30, 1995........................ 38.63 45.25 .05
Third Quarter ended October 29, 1995...................... 36.63 44.88 .05
Fourth Quarter ended January 28, 1996..................... 37.13 48.00 .05
FISCAL YEAR 1996
First Quarter ended April 28, 1996........................ 42.50 50.38 .05
Second Quarter ended July 28, 1996........................ 45.50 57.00 .06
Third Quarter ended October 27, 1996...................... 50.25 59.50 .06
Fourth Quarter ended February 2, 1997..................... 47.75 57.25 .06
</TABLE>

On (i) the Last Trading Date, and (ii) January 15, 1997, the last trading
date prior to public announcement of the Mergers, the closing sale price of Home
Depot Common Stock, as reported on a consolidated basis on the New York Stock
Exchange, was $51.50 and $50.25 per share, respectively.

Maintenance Warehouse. Maintenance Warehouse is privately held and there
is no established public market for any of the Maintenance Warehouse Common
Stock. As of the date of this Proxy Statement/ Prospectus, there were 11 holders
of record of Maintenance Warehouse Common Stock, representing 100% of the
ownership of Maintenance Warehouse Common Stock.

Affiliated Companies. Each of the nine Affiliated Companies is privately
held and there is no public market for any of the percentage interests in the
Affiliated Companies. As of the date of the Proxy Statement/ Prospectus, there
were seven holders of record of Partnership Interests in the Affiliated
Companies, representing 100% of the ownership of the Partnership Interests.
11
<PAGE> 26

COMPARATIVE PER SHARE INFORMATION

The following table sets forth certain per common share information for
Home Depot and Maintenance Warehouse on a historical basis.

<TABLE>
<CAPTION>
PER SHARE OF COMMON STOCK*
------------------------------------------------------------
CASH BOOK CASH
INCOME(1)(2) DIVIDENDS VALUE(2)(3) DISTRIBUTIONS(2)
------------ ------------ ----------- ----------------
<S> <C> <C> <C> <C>
Home Depot
Year ended January 30, 1994................ $ 1.01 $0.11 $ 6.26 $ --
Year ended January 29, 1995................ 1.32 0.15 7.59 --
Year ended January 28, 1996................ 1.54 0.19 10.45 --
Nine months ended October 27, 1996......... 1.42 0.17 11.81 --
Maintenance Warehouse
Year ended December 31, 1993............... $1,130.58 -- $ 837.07 $1,209.03
Year ended December 31, 1994............... 1,266.02 -- 935.10 1,202.99
Year ended December 31, 1995............... 1,692.29 -- 1,102.82 1,524.57
Nine months ended September 30, 1996....... 1,430.23 -- 1,363.10 1,169.96
</TABLE>

- ---------------

(1) Income represents income from continuing operations.
(2) Reflects the income, book value and cash distributions of Maintenance
Warehouse and the Affiliated Companies on a combined basis.
(3) Historical book value per share information for Home Depot and Maintenance
Warehouse as of the end of each period presented is computed by dividing
historical shareholders' equity for each respective company by the number
of shares of Home Depot Common Stock, or Maintenance Warehouse Common
Stock, as the case may be, outstanding at the end of each period presented,
excluding common stock equivalents.

* The pro forma per share data of Home Depot, after giving effect to the
Mergers, does not differ materially from the historical per share data of Home
Depot.
12
<PAGE> 27

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data under the captions "Consolidated
Statement of Earnings Data" and "Consolidated Balance Sheet Data" in the
following table for each of the years in the five-year period ended January 28,
1996, are derived from Home Depot's consolidated financial statements. Such
financial statements have been audited by KPMG Peat Marwick LLP, independent
certified public accountants. The selected consolidated financial data in the
following table for each of the nine-month periods ended October 29, 1995 and
October 27, 1996, have not been audited by independent certified public
accountants but reflect, in the opinion of Home Depot, all adjustments necessary
to present fairly the results for such period. The information below should be
read in conjunction with the consolidated financial statements, related notes
and other information incorporated by reference herein.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
------------------------------------------------------------------- -------------------------
FEBRUARY 2, JANUARY 31, JANUARY 30, JANUARY 29, JANUARY 28, OCTOBER 29, OCTOBER 27,
1992 1993 1994 1995 1996 1995 1996
----------- ----------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND SALES PER SQUARE FOOT DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF EARNINGS DATA:
Net sales....................... $5,136,674 $7,148,436 $9,238,763 $12,476,697 $15,470,358 $11,718,474 $14,576,963
Cost of merchandise sold........ 3,692,337 5,179,368 6,685,384 8,991,204 11,184,772 8,521,350 10,581,887
---------- ---------- ---------- ----------- ----------- ----------- -----------
Gross profit............ 1,444,337 1,969,068 2,553,379 3,485,493 4,285,586 3,197,124 3,995,076
---------- ---------- ---------- ----------- ----------- ----------- -----------
Operating Expenses:
Selling and store operating... 928,928 1,245,608 1,624,920 2,216,540 2,783,926 2,080,258 2,601,352
Pre-opening................... 17,668 26,959 36,816 51,307 52,342 40,794 37,640
General and administrative.... 116,063 147,080 184,954 230,456 269,464 199,470 234,097
---------- ---------- ---------- ----------- ----------- ----------- -----------
Total operating
expenses.............. 1,062,659 1,419,647 1,846,690 2,498,303 3,105,732 2,320,522 2,873,089
---------- ---------- ---------- ----------- ----------- ----------- -----------
Operating income........ 381,678 549,421 706,689 987,190 1,179,854 876,602 1,121,987
---------- ---------- ---------- ----------- ----------- ----------- -----------
Interest income (expense)
Interest and investment
income...................... 26,790 67,562 60,896 28,510 19,597 13,745 12,815
Interest expense.............. (12,348) (41,010) (30,714) (35,949) (4,148) (3,772) (5,568)
---------- ---------- ---------- ----------- ----------- ----------- -----------
Interest, net........... 14,442 26,552 30,182 (7,439) 15,449 9,973 7,247
---------- ---------- ---------- ----------- ----------- ----------- -----------
Earnings before income
taxes................. 396,120 575,973 736,871 979,751 1,195,303 886,575 1,129,234
Income taxes.................... 146,970 213,110 279,470 375,250 463,780 340,450 442,670
---------- ---------- ---------- ----------- ----------- ----------- -----------
Net earnings............ 249,150 362,863 457,401 604,501 731,523 546,125 686,564
---------- ---------- ---------- ----------- ----------- ----------- -----------
Earnings per common and common
equivalent share(1)........... $ 0.60 $ 0.82 $ 1.01 $ 1.32 $ 1.54 $ 1.15 $ 1.42
========== ========== ========== =========== =========== =========== ===========
Weighted average number of
common and common equivalent
shares (000s)(1).............. 415,997 444,989 453,037 475,947 477,977 477,469 483,577
========== ========== ========== =========== =========== =========== ===========
OTHER OPERATING DATA:
Number of stores................ 174 214 264 340 423 401 479
Square footage at end of period
(000s)........................ 16,480 20,897 26,383 35,133 44,356 42,029 50,379
Weighted average sales per
square foot................... $ 348 $ 387 $ 398 $ 404 $ 390 $ 406 $ 413
Comparable Store Sales.......... 11% 15% 7% 8% 3% 3% 7%
CONSOLIDATED BALANCE SHEET DATA:
Working Capital................. $ 623,937 $ 807,028 $ 993,963 $ 918,724 $ 1,255,487 $ 904,509 $ 1,751,576
Total assets.................... 2,510,292 3,931,790 4,700,889 5,778,041 7,354,033 7,136,946 9,381,316
Long-term debt.................. 270,575 843,672 874,048 983,369 720,080 291,401 1,247,208
Stockholder's equity............ 1,691,212 2,304,081 2,814,100 3,442,223 4,987,766 4,810,424 5,711,989
</TABLE>

- ---------------

(1) Adjusted retroactively for three-for-two and four-for-three stock splits
effected in the form of a stock dividend in June 1991 and April 1993,
respectively.

13
<PAGE> 28

SELECTED COMBINED HISTORICAL FINANCIAL DATA

The selected combined financial data under the captions "Combined
Statements of Earnings Data" and "Combined Balance Sheet Data" in the following
table for each of the years in the five-year period ended December 31, 1995 and
for the nine month periods ended September 30, 1996 and 1995 are derived from
the Maintenance Warehouse and Affiliated Companies' financial statements. Such
financial statements as of and for the year ended December 31, 1995 have been
audited by Deloitte & Touche LLP, independent certified public accountants. Such
financial statements as of and for the other years and periods presented have
not been audited by independent certified public accountants but reflect, in the
opinion of the management of Maintenance Warehouse and the Affiliated Companies
all adjustments necessary to present fairly the results for such periods. The
information below should be read in conjunction with the combined financial
statements, related notes, other information presented and with the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing elsewhere in this Proxy Statement/Prospectus.

COMBINED STATEMENT OF EARNINGS DATA
<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1991 1992 1993
-------------------- -------------------- --------------------
<S> <C> <C> <C>
Net sales................. $69,336,948 $73,042,727 $84,581,754
Cost of sales............. 40,952,278 43,717,993 51,335,999
----------- -----------
Gross profit.............. 28,384,670 29,324,734 33,245,755
Distribution center
expenses................ 8,238,723 9,262,476 9,328,877
General and
administrative.......... 7,187,300 7,219,730 10,838,418
----------- -----------
Total operating
expenses................ 15,426,023 16,482,206 20,167,295
----------- -----------
Income from operations.... 12,958,647 12,842,528 13,078,460
Interest expense.......... 1,580,597 1,681,573 1,481,107
----------- -----------
Income before income
taxes................... 11,378,050 11,160,955 11,597,353
Income taxes.............. 218,500 254,800 291,600
----------- -----------
Net income................ $11,159,550 $10,906,155 $11,305,753
=========== ===========
Earnings per common
share................... $ 1,115.96 $ 1,090.62 $ 1,130.58
=========== ===========
Weighted average common
shares (000s)........... 10 10 10
=========== ===========

<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------------- -------------------------------------------
1994 1995 1995 1996
-------------------- ---------------------- -------------------- --------------------
<S> <C> <C> <C> <C>

Net sales................. $97,044,330 $117,037,418 $87,829,432 $96,673,137

Cost of sales............. 59,294,200 69,778,051 52,304,608 58,131,036

----------- ------------ ----------- -----------

Gross profit.............. 37,750,130 47,259,367 35,524,824 38,542,101

Distribution center

expenses................ 10,845,876 12,141,946 9,111,343 9,303,993

General and

administrative.......... 12,396,099 15,627,609 11,485,842 12,825,856

----------- ------------ ----------- -----------

Total operating

expenses................ 23,241,975 27,769,555 20,597,185 22,129,849

----------- ------------ ----------- -----------

Income from operations.... 14,508,155 19,489,812 14,927,639 16,412,252

Interest expense.......... 1,604,783 2,255,685 1,662,918 1,824,726

----------- ------------ ----------- -----------

Income before income

taxes................... 12,903,372 17,234,127 13,264,721 14,587,526

Income taxes.............. 243,200 311,200 247,400 285,200

----------- ------------ ----------- -----------

Net income................ $12,660,172 $ 16,922,927 $13,017,321 $14,302,326

=========== ============ =========== ===========

Earnings per common

share................... $ 1,266.02 $ 1,692.29 $ 1,301.73 $ 1,430.23

=========== ============ =========== ===========

Weighted average common

shares (000s)........... 10 10 10 10

=========== ============ =========== ===========

</TABLE>

COMBINED BALANCE SHEET DATA
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------------------------------------
1991 1992 1993 1994
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Working capital............... $ 2,663,034 $ 5,934,661 $ 5,642,494 $ 2,790,888
Total assets.................. 35,240,582 37,382,389 40,475,747 45,331,948
Long-term debt................ 16,381,290 17,259,564 16,665,700 15,678,250
Owners' equity................ 7,418,454 8,914,250 8,370,686 9,350,971

<CAPTION>
DECEMBER 31, SEPTEMBER 30,
------------------ ---------------------------------------
1995 1995 1996
------------------ ------------------ ------------------
<S> <C> <C> <C>
Working capital............... $ 3,429,681 $ 5,477,916 $ 2,683,810
Total assets.................. 52,636,843 51,972,348 58,236,374
Long-term debt................ 17,144,096 17,315,122 16,685,937
Owners' equity................ 11,028,233 12,521,511 13,630,963
</TABLE>

14
<PAGE> 29

GENERAL INFORMATION

This Proxy Statement/Prospectus is being furnished to (i) Maintenance
Warehouse Shareholders in connection with the solicitation of proxies by the
Board of Directors of Maintenance Warehouse for approval of the Principal Merger
Agreement and (ii) the Affiliated Partners in connection with the solicitation
of the consents of the Affiliated Partners for approval of the Affiliated Merger
Agreement. The Maintenance Warehouse Shareholders will be asked to consider and
vote on a proposal to approve and adopt the Principal Merger Agreement; the
Affiliated Partners will be asked to consider and consent to a proposal to
approve and adopt the Affiliated Merger Agreement.

If the Principal Merger is consummated, each outstanding share of
Maintenance Warehouse Common Stock (other than treasury shares and shares held
by Maintenance Warehouse Shareholders who perfect their appraisal rights under
Texas law) will be converted into the right to receive such number of shares of
Home Depot Common Stock as has a value equal to the Conversion Amount, plus cash
for any fractional shares of Home Depot Common Stock after such conversion.

If the Affiliated Merger Agreement is consummated, each percentage of
partnership interest in the Affiliated Companies (other than those held by the
Affiliated Partners who perfect their appraisal rights under California law)
will be converted into the right to receive such number of shares of Home Depot
Common Stock as has a value equal to the amount indicated beside the name of
such entity on Schedule A to the Affiliated Merger Agreement (totalling
$1,425,592, in the aggregate), divided by one hundred (100), plus cash for any
fractional shares of Home Depot Common Stock after such conversion.

This Proxy Statement/Prospectus also constitutes the Prospectus of Home
Depot with respect to the shares of Home Depot Common Stock to be issued in the
Mergers. Information in this Proxy Statement/ Prospectus with respect to Home
Depot has been supplied by Home Depot. The information with respect to each of
Maintenance Warehouse and the Affiliated Companies has have been supplied by
Maintenance Warehouse and the Affiliated Companies, respectively.

THE MAINTENANCE WAREHOUSE PROXY SOLICITATION PROCESS

SPECIAL MEETING

RECORD DATE AND SHARES ENTITLED TO VOTE

Only holders of record of shares of Maintenance Warehouse Common Stock at
the close of business on the Record Date are entitled to vote at the Special
Meeting. As of such date, there were 10,000 shares of Maintenance Warehouse
Common Stock issued and outstanding held by 11 holders of record. Maintenance
Warehouse Shareholders who wish to vote at the Special Meeting must either
execute and return a proxy in accordance with the procedures set forth herein
and in the accompanying proxy or attend the Special Meeting in person.

VOTE REQUIRED; SECURITY OWNERSHIP OF MANAGEMENT

Under Texas law and Maintenance Warehouse's Articles of Incorporation and
Bylaws, the affirmative vote of a majority of the issued and outstanding shares
of Maintenance Warehouse Common Stock is required to approve the Principal
Merger Agreement. However, under the terms of the Principal Merger Agreement,
Home Depot has the right to refuse to consummate the Principal Merger Agreement
if the holders of more

15
<PAGE> 30

than 3% of the outstanding shares of Maintenance Warehouse Common Stock exercise
their appraisal rights under the TBCA. As of the Record Date, the executive
officers and directors of Maintenance Warehouse beneficially owned an aggregate
of 7,600 shares of Maintenance Warehouse Common Stock, or approximately 76% of
the shares of Maintenance Warehouse Common Stock then outstanding. Approval of
the Principal Merger Agreement by the stockholders of Home Depot is not
required.

Although each of the shareholders of Maintenance Warehouse executed the
Principal Merger Agreement, the shareholders are not legally bound to vote their
shares of Maintenance Warehouse Common Stock to approve the Principal Merger
Agreement. Each shareholder should decide whether to vote to approve
the Principal Merger Agreement based on the information contained in the
accompanying Proxy Statement/Prospectus.

THE AFFILIATED COMPANIES CONSENT SOLICITATION PROCESS

DATE AND PURPOSE

RECORD DATE

Only holders of record of shares of Partnership Interests in the Affiliated
Companies as of the close of business on the Record Date are entitled to consent
to the Affiliated Merger.

VOTE REQUIRED; SECURITY OWNERSHIP OF MANAGEMENT

16
<PAGE> 31

THE MERGERS

BACKGROUND OF THE MERGERS

In August 1996, the Board of Directors of Maintenance Warehouse retained
DLJ to serve as its financial advisor in connection with the exploration of
strategic alternatives including the potential sale of Maintenance Warehouse and
the Affiliated Companies. In November 1996, at the direction of the Board of
Directors of Maintenance Warehouse, DLJ conducted an auction to solicit bids
from parties who were interested in acquiring the business of Maintenance
Warehouse and the Affiliated Companies. On December 18, 1996, the Board of
Directors accepted the bid of Home Depot. A definitive Principal Merger
Agreement and a definitive Affiliated Merger Agreement were executed on January
16, 1997. Prior to the auction process and the execution of the Principal Merger
Agreement and the Affiliated Merger Agreement, there was no material
relationship between Home Depot and Maintenance Warehouse or any of the
Affiliated Companies.

STRUCTURE OF THE MERGERS

The Mergers are structured as two separate and related transactions, the
Principal Merger and the Affiliated Merger. As described more fully below,
Maintenance Warehouse will merge with and into Sub pursuant to the Principal
Merger Agreement, becoming a wholly owned subsidiary of Home Depot, with all the
shares of Maintenance Warehouse being converted into Home Depot Common Stock as
a result of the Principal Merger. In a simultaneous and combined merger of nine
separate entities into Home Depot or a wholly owned subsidiary of Home Depot,
each of the Affiliated Companies will merge with and into Home Depot or its
wholly owned subsidiary pursuant to the Affiliated Merger Agreement, with all of
the Partnership Interests being converted into Home Depot Common Stock as a
consequence of the Affiliated Merger. The Affiliated Merger is to be effective
immediately following the Principal Merger.

REASONS FOR THE MERGERS

Affiliated Companies. In approving and adopting the Affiliated Merger
Agreement and formulating its recommendation that the Affiliated Partners of the
Affiliated Companies approve the Affiliated Merger and the consummation of the
Affiliated Merger, the General Partner of the Affiliated Companies considered a
number of factors, including, without limitation the following: (i) the
privately-held status of Maintenance Warehouse and the Affiliated Companies;
(ii) the impending Principal Merger and approved Principal Merger Agreement
between Home Depot and Maintenance Warehouse; (iii) the primary use of the
properties and business operations of the Affiliated Companies in connection
with the business of Mainte-

17
<PAGE> 32

nance Warehouse and (iv) Home Depot's desire to acquire the properties and
business operations of the Affiliated Companies in addition to acquiring
Maintenance Warehouse.

Home Depot. In approving the Mergers, the Principal Merger Agreement, the
Affiliated Merger Agreement and the transactions contemplated thereby, the Board
of Directors of Home Depot considered, among other things, (i) the opportunity
to develop new lines of business and (ii) the Home Depot strategic plan.

TERMS OF THE PRINCIPAL MERGER AGREEMENT AND THE AFFILIATED MERGER AGREEMENT

General. The Principal Merger Agreement provides that, following the
approval of the Principal Merger Agreement by the Maintenance Warehouse
Shareholders and the satisfaction or waiver of the other conditions to the
Principal Merger, at the Principal Effective Time, Sub will be merged with and
into Maintenance Warehouse in accordance with the provisions of the TBCA.
Maintenance Warehouse will be the surviving corporation in the Principal Merger.
As a result of the Principal Merger, the separate corporate existence of Sub
will cease, and Maintenance Warehouse will become a wholly owned subsidiary of
Home Depot. Immediately after the Principal Effective Time, Home Depot intends
to assign its rights under the Affiliated Merger Agreement to Maintenance
Warehouse. Thereafter, at the Affiliated Effective Time, the Affiliated
Companies will be merged with and into Maintenance Warehouse in accordance with
applicable law. Maintenance Warehouse will also be the surviving corporation of
the Affiliated Merger. As a result of the Affiliated Merger, the separate
existence of the Affiliated Companies will cease.

Conversion Amount. Each share of Maintenance Warehouse Common Stock issued
and outstanding at the time of the Mergers (other than treasury shares and
shares held by Maintenance Warehouse Shareholders who perfect their appraisal
rights under the TBCA) will be converted into the right to receive that number
of shares of Home Depot Common Stock as has a value equal to the Conversion
Amount. The "Conversion Amount" will be determined by dividing $245,433,514 by
the Outstanding Share Amount. Each percentage of partnership interest in the
Affiliated Companies (other than percentage interests held by Affiliated
Partners who perfect their appraisal rights under California law) will be
converted into the right to receive such number of shares of Home Depot Common
Stock as has a value equal to the amount indicated beside the name of such
entity on Schedule A to the Affiliated Merger Agreement (totalling $1,425,592,
in the aggregate), divided by one hundred (100). For purposes of these
calculations, each share of Home Depot Common Stock shall be valued at the
Average Closing Price. Any fractional shares of Home Depot Common Stock that
would result from such calculation will be converted into the cash value of such
fraction based on the Average Closing Price. It is expected that each
Maintenance Warehouse Shareholder will receive, depending on the Average Closing
Price, between 446.242 and 522.199 shares of Home Depot Common Stock (or cash
for fractional shares) in exchange for each share of Maintenance Warehouse
Common Stock owned by such shareholder. It is expected that the Affiliated
Partners will receive, in the aggregate and depending on the Average Closing
Price, between 25,919 and 30,331 shares of Home Depot Common Stock. Beginning on
March 10, 1997, Maintenance Warehouse Shareholders and Affiliated Partners may
call 1-800-233-6166 and ask for Mr. Ron Turk in order to receive an estimate of
the number of shares of Home Depot Common Stock to be issued in exchange for
each share of Maintenance Warehouse Common Stock and each percentage of
partnership interest in the Affiliated Companies. The Conversion Amount was
determined in arms' length negotiations between representatives of Home Depot,
Maintenance Warehouse and the Affiliated Companies.

Post-Closing Adjustment. The Conversion Amount is subject to adjustment
following the Effective Time based on the combined shareholders' equity of
Maintenance Warehouse and the Affiliated Companies as of the Effective Time. As
promptly as practicable after the Effective Time, but in any case not later than
90 days thereafter, Home Depot shall cause the Closing Balance Sheet to be
prepared and delivered to the Maintenance Warehouse Shareholders. The
Maintenance Warehouse Shareholders will have the right to

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<PAGE> 33

dispute the Closing Balance Sheet under the procedures set forth in Sections 2.5
and 2.6 of the Principal Merger Agreement.

If the Net Worth (the shareholders' equity reflected on the final Closing
Balance Sheet is referred to herein as the "Net Worth") is greater than
$6,468,124 (such excess is referred to herein as the "Excess Amount"), the
Conversion Amount will be increased by an amount equal to (i) the Excess Amount
divided by (ii) the Outstanding Share Amount. If the Net Worth is less than
$6,468,124 (such deficit is referred to herein as the "Deficit Amount"), the
Conversion Amount will be decreased by an amount equal to (i) the Deficit Amount
divided by (ii) the Outstanding Share Amount. Within five days following the
determination of the final Closing Balance Sheet, (i) in case of an Excess
Amount, Home Depot shall issue to each Maintenance Warehouse Shareholder the
additional number of shares of Home Depot Common Stock (and cash for any
fractional share) to which such shareholder is entitled based on the adjusted
Conversion Amount and (ii) in the case of a Deficit Amount, each Maintenance
Warehouse Shareholder shall surrender to Home Depot for cancellation without
consideration the number of excess shares of Home Depot Common Stock (and cash
for any fractional share) that was issued to such shareholder at the Principal
Effective Time based on the adjusted Conversion Amount. Each share of Home Depot
Common Stock shall be valued at the Average Closing Price for purposes of such
adjustments and calculations.

Indemnification Obligations. The Maintenance Warehouse Shareholders will
be responsible for certain post-closing indemnifications relating to
representations, warranties and covenants made by Maintenance Warehouse and the
Maintenance Warehouse Shareholders to Home Depot in the Principal Merger. In
order to secure such obligations, the Maintenance Warehouse Shareholders will be
required, at the Principal Effective Time, to place into escrow for a period of
one year following the Principal Effective Time a number of shares of Home Depot
Common Stock equal to $10,000,000 divided by the Average Closing Price. The
Maintenance Warehouse Shareholders will generally be liable for Home Depot
Losses to the extent that the losses exceed, in the aggregate, the Shareholder
Basket Amount. Maintenance Warehouse Shareholders will generally not be liable
for any amount of Home Depot Losses that exceed, in the aggregate, the
Shareholder Maximum Indemnity. The indemnification obligations of Maintenance
Warehouse Shareholders generally will end one year after the Effective Time. A
copy of the proposed Escrow Agreement is attached hereto as Annex C.

Conditions to the Mergers. In addition to the approval of the Principal
Merger Agreement by the holders of at least 97% of the shares of outstanding
Maintenance Warehouse Common Stock, the unanimous approval of the Affiliated
Merger Agreement by the Affiliated Partners and certain customary conditions,
consummation of the Mergers is subject to the satisfaction or waiver of, among
others, the following conditions: (i) that Home Depot shall have been advised in
writing by KPMG that, in accordance with generally accepted accounting
principles, the Mergers qualify to be treated as a pooling of interests for
accounting purposes, and Home Depot and Maintenance Warehouse shall have been
advised in writing as of the Effective Time by D&T that after considering the
facts, circumstances, assumptions and representations of Maintenance Warehouse
and the Affiliated Companies, they believe that Maintenance Warehouse and the
Affiliated Companies would meet the criteria for a pooling of interests in
accordance with generally accepted accounting principles in connection with the
Mergers; (ii) that shareholders holding not more than three percent of the
outstanding shares of Maintenance Warehouse Common Stock shall have dissented
from approval of the Principal Merger; (iii) that the Registration Statement
covering the shares of Home Depot Common Stock and the Partnership Interests
into which shares of Maintenance Warehouse Common Stock will be converted in the
Mergers shall be effective; (iv) the applicable waiting period shall have
expired under the HSR Act; (v) that the certificate of merger relating to the
Affiliated Merger shall have been executed by each of the Affiliated Companies
and delivered to Home Depot for filing; (vi) all of the Shareholders and the
Affiliated Partners shall have executed and delivered to Home Depot written
consents to the Affiliated Merger; and (vii) that each Maintenance Warehouse
Shareholder and Affiliated Partner shall have paid in full all amounts of any
kind owed by such shareholder or partner to Maintenance Warehouse and each
Affiliated Company.

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<PAGE> 34

Amendment. Each of the Principal Merger Agreement and the Affiliated
Merger Agreement may be amended by mutual agreement of the parties thereto. Any
amendment to the Principal Merger Agreement and the Affiliated Merger Agreement
must be in writing and signed by the parties thereto.

Termination. The Principal Merger Agreement may be terminated (i) by
mutual written agreement by Maintenance Warehouse and Home Depot; (ii) by
Maintenance Warehouse or Home Depot if the conditions to such parties'
obligations to consummate the Merger have not been complied with or performed
and such noncompliance or nonperformance has not been cured or eliminated within
ten days after such party has given notice to the other party of its intent to
terminate the Principal Merger Agreement; provided that if such noncompliance or
nonperformance cannot reasonably be cured within such ten-day period despite
good faith efforts, such party shall not be permitted to terminate the Principal
Merger Agreement unless such noncompliance or nonperformance has not been cured
or eliminated within thirty (30) days of such notice; (iii) by Home Depot if, on
or prior to the twenty-fifth (25th) business day following the delivery of this
Proxy Statement/Prospectus to the Maintenance Warehouse Shareholders and the
Affiliated Partners, the holders of more than 3% of the outstanding shares of
Maintenance Warehouse Common Stock shall have elected to exercise appraisal
rights under the TBCA or if any of the Affiliated Partners shall have failed to
consent to the Affiliated Merger; and (iv) by Maintenance Warehouse or by Home
Depot if the Principal Effective Time has not occurred by May 31, 1997.

Fees and Expenses. Home Depot will pay its own fees, costs and expenses
incurred in connection with the Principal Merger Agreement and the Affiliated
Merger Agreement and the transactions contemplated thereby. Maintenance
Warehouse and the Maintenance Warehouse Shareholders will pay their own
respective fees, costs and expenses incurred in connection with the Principal
Merger Agreement and the transactions contemplated thereby or such fees, costs
and expenses will be accrued as liabilities on the Closing Balance Sheet. In
addition, Maintenance Warehouse has agreed that, if the Principal Merger
Agreement is terminated pursuant to the provision in the Principal Merger
Agreement described in clause (iii) of the preceding paragraph, then Maintenance
Warehouse shall pay Home Depot $10 million to reimburse and compensate Home
Depot for its expense, time and effort in connection with the matters
contemplated by the Principal Merger Agreement and the Affiliated Merger
Agreement. The Affiliated Companies and the Affiliated Partners will each pay
their respective fees, costs and expenses incurred in connection with the
Affiliated Merger Agreement and the transactions contemplated thereby.

EFFECTIVE TIME OF THE MERGER AND EXCHANGE OF SHARES

Effective Time of the Merger. The Principal Merger will become effective
at the Principal Effective Time. The Affiliated Merger will become effective at
the Affiliated Effective Time. The "Effective Time" shall occur upon the last to
occur of the Principal Effective Time and the Affiliated Effective Time. Each of
the Principal Merger Agreement and the Affiliated Merger Agreement provides that
the parties thereto will cause such certificates of merger to be filed as soon
as practicable after all of the conditions to the consummation of the Mergers
have been satisfied or waived.

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<PAGE> 35

Exchange of Maintenance Warehouse Stock Certificates. Prior to the
Effective Time, instructions and a letter of transmittal will be furnished to
all Maintenance Warehouse Shareholders for use in exchanging their stock
certificates for certificates evidencing the shares of Home Depot Common Stock
they will be entitled to receive as a result of the Mergers. SHAREHOLDERS OF
MAINTENANCE WAREHOUSE SHOULD NOT SUBMIT THEIR STOCK CERTIFICATES FOR EXCHANGE
UNTIL INSTRUCTIONS AND THE LETTER OF TRANSMITTAL ARE RECEIVED.

Exchange of Partnership Interests. Prior to the Effective Time,
instructions and a letter of transmittal will be furnished to all Affiliated
Partners for use in exchanging their Partnership Interests for certificates
evidencing shares of Home Depot Common Stock they will be entitled to receive as
a result of the Affiliated Merger.

RECOMMENDATION OF THE MAINTENANCE WAREHOUSE BOARD OF DIRECTORS

THE BOARD OF DIRECTORS OF MAINTENANCE WAREHOUSE HAS DETERMINED THAT THE
PRINCIPAL MERGER IS IN THE BEST INTERESTS OF MAINTENANCE WARE-HOUSE AND ITS
SHAREHOLDERS, HAS APPROVED THE PRINCIPAL MERGER, HAS APPROVED AND ADOPTED THE
PRINCIPAL MERGER AGREEMENT AND RECOMMENDS THAT THE MAINTENANCE WAREHOUSE
SHAREHOLDERS VOTE FOR THE PROPOSAL TO APPROVE THE PRINCIPAL MERGER AGREEMENT.

RECOMMENDATION OF AFFILIATED COMPANIES' GENERAL PARTNER

INTERESTS OF CERTAIN PERSONS IN THE MERGERS

In considering the Mergers, holders of Maintenance Warehouse Common Stock
and holders of Partnership Interests should be aware that certain executive
officers and directors of Maintenance Warehouse and General Partners of the
Affiliated Companies have certain interests that may present them with potential
conflicts of interest with respect to the Merger.

Ownership of Maintenance Warehouse Common Stock. As of the date of this
Proxy Statement/ Prospectus, executive officers and directors of Maintenance
Warehouse beneficially own or control an aggregate of 7,600 shares of
Maintenance Warehouse Common Stock. If the Principal Merger had occurred on the
Last Trading Date, the Conversion Amount (based on the number of shares of
Maintenance Warehouse Common Stock outstanding on the Last Trading Date) would
have been $24,543.35 and executive officers and directors of Maintenance
Warehouse would have been entitled to receive in the Principal Merger an
aggregate of 3,661,928 shares of Home Depot Common Stock having an aggregate
market value of approximately $188,589,292 based on the closing price per share
of Home Depot Common Stock reported on a consolidated basis on the New York
Stock Exchange on the Last Trading Date. See "Ownership of Maintenance Warehouse
Common Stock."

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<PAGE> 36

All of the shares of the General Partner are owned by the Neeley Revocable
Family Trust, of which Ronald L. Neely, Chief Executive Officer and Chairman of
the Board of Maintenance Warehouse, and Lucille A. Neely, President, Chief
Operating Officer and a Director of Maintenance Warehouse, are co-Trustees.

ACCOUNTING TREATMENT

The Mergers are expected to qualify to be treated as a pooling of interests
for financial accounting purposes. The obligation of Home Depot to consummate
the Merger is conditioned upon the receipt of an opinion of KPMG to the effect
that, in accordance with generally accepted accounting principles, the Mergers
will qualify to be treated as a pooling of interests for accounting purposes,
and Home Depot and Maintenance Warehouse shall have been advised in writing as
of the Effective Time by D&T that after considering the facts, circumstances,
assumptions and representations of Maintenance Warehouse and the Affiliated
Companies, they believe that Maintenance Warehouse and the Affiliated Companies
would meet the criteria for a pooling of interests in accordance with generally
accepted accounting principals in connection with the Mergers. Accordingly, the
Mergers will be treated as a continuation of the existing businesses of Home
Depot, Maintenance Warehouse and the Affiliated Companies and accounted for by
combining the historical balances and results of Home Depot, Maintenance
Warehouse and the Affiliated Companies. The assets and liabilities of Home
Depot, Maintenance Warehouse and the Affiliated Companies will be carried
forward at their recorded amounts. Income of Home Depot after the Merger will
include the income of Home Depot, Maintenance Warehouse and the Affiliated
Companies for the entire fiscal period in which the Mergers occur. The reported
income of Home Depot, Maintenance Warehouse and the Affiliated Companies for
prior periods will be combined and restated as income of the combined company.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following is a discussion of certain federal income tax consequences of
the Mergers. This discussion is based on provisions of the Code, the Treasury
Regulations thereunder, and rulings and court decisions as of the date hereof,
all of which are subject to change, possibly retroactively. The discussion is
included for general information purposes only.

Consequences of the Principal Merger. Home Depot received an opinion (the
"Tax Opinion") from its counsel, King & Spalding, that, based upon its review of
this Registration Statement, certain other facts and

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<PAGE> 37

documents which it has considered relevant, and certain representations made to
it by Home Depot and Maintenance Warehouse, the Principal Merger will have the
federal income tax consequences set forth below:

(i) the Principal Merger will constitute a "reorganization" within the
meaning of Section 368(a)(1);

(ii) no gain or loss will be recognized by Maintenance Warehouse
Shareholders upon the exchange in the Principal Merger of their Maintenance
Warehouse Common Stock for Home Depot Common Stock;

(iii) the tax basis of the Home Depot Common Stock received in the
Principal Merger by a Maintenance Warehouse Shareholder will be the same as
the tax basis of the Maintenance Warehouse Common Stock exchanged for such
Home Depot Common Stock;

(iv) the holding period of the Home Depot Common Stock received in the
Principal Merger by a Maintenance Warehouse Shareholder will include the
holding period of such Shareholder in the Maintenance Warehouse Common
Stock exchanged for such Home Depot Common Stock, provided that the
Maintenance Warehouse Common Stock is held as a capital asset at the
Effective Time;

(v) a Maintenance Warehouse Shareholder who receives cash in the
Principal Merger in lieu of a fractional share interest in Home Depot
Common Stock will be treated as having received such fractional share in
the Principal Merger and then as having exchanged such fractional share for
cash in a redemption subject to Section 302; and

(vi) if a Maintenance Warehouse Shareholder dissents to the Merger and
receives solely cash in exchange for such Shareholder's Maintenance
Warehouse Common Stock, such cash will be treated as having been received
in redemption of the Maintenance Warehouse Common Stock (or possibly Home
Depot Common Stock deemed to have been received), subject to the provisions
and limitations of Section 302.

In rendering the Tax Opinion, counsel has relied upon certain written
representations as to factual matters made by appropriate officers of Home Depot
and Maintenance Warehouse. Such representations are customary for opinions of
this type; the Tax Opinion cannot be relied upon, however, if any such
representation is, or later becomes, inaccurate. No ruling from the Internal
Revenue Service (the "Service") with respect to the tax consequences of the
Principal Merger has been, or will be, requested, and the Tax Opinion is not
binding upon the Service or the courts. If the Principal Merger is consummated,
and it is later determined that the Principal Merger did not qualify as a
"reorganization" under the Code, then each Maintenance Warehouse Shareholder
would recognize taxable gain or loss equal to the difference between the fair
market value of the Home Depot Common Stock received by him or her in the
Principal Merger and his or her tax basis in the Maintenance Warehouse Common
Stock exchanged therefor.

The foregoing discussion of the tax consequences of the Principal Merger
applies only to a Maintenance Warehouse Shareholder who holds Maintenance
Warehouse Common Stock as a capital asset, and may not apply to special
situations, such as Maintenance Warehouse Shareholders, if any, who received
their Maintenance Warehouse Common Stock upon the exercise of employee stock
options or otherwise as compensation and Maintenance Warehouse Shareholders that
are insurance companies, securities dealers, financial institutions, or foreign
persons.

Consequences of the Affiliated Merger. The transfer by the Affiliated
Companies in the Affiliated Merger of assets to Home Depot in exchange for Home
Depot Common Stock will be a taxable transaction. Each Affiliated Company will
recognize gain or loss on such transfer equal to the difference between the
amount realized by the Affiliated Company on such transfer (generally, the value
of the Home Depot Common Stock received plus any liabilities of the Affiliated
Company transferred to Home Depot) and its adjusted tax basis in the assets
transferred. The character of any such gain or loss may be capital or ordinary,

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depending on whether the transferred assets are capital assets in the hands of
the Affiliated Company and whether the transfer is subject to the depreciation
recapture provisions of the Code. Any capital gain or loss will be a long term
gain or loss if the asset from which such gain or loss is derived has been held
for more than one year.

Backup Withholding. Any cash received in the Mergers by a Maintenance
Warehouse Shareholder or by an Affiliated Partner may be subject to backup
withholding at a rate of 31 percent. Backup withholding will not apply, however,
to a taxpayer who (i) furnishes a correct taxpayer identification number ("TIN")
and certifies that he or she is not subject to backup withholding on IRS Form
W-9 (or an appropriate substitute form), (ii) provides a certificate of foreign
status on IRS Form W-8 (or an appropriate substitute form), or (iii) is
otherwise exempt from backup withholding. The Service may impose a $50 penalty
upon any taxpayer who fails to provide the correct TIN, as required.

THE FOREGOING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGERS AND DOES NOT PURPORT TO BE
A COMPLETE ANALYSIS OF ALL POTENTIAL TAX EFFECTS RELEVANT TO A DECISION WHETHER
A MAINTENANCE WAREHOUSE SHAREHOLDER SHOULD VOTE IN FAVOR OF THE PRINCIPAL MERGER
OR WHETHER AN AFFILIATED PARTNER SHOULD VOTE IN FAVOR OF THE AFFILIATED MERGER.
BECAUSE CERTAIN TAX CONSEQUENCES OF THE MERGERS MAY VARY DEPENDING UPON THE
PARTICULAR CIRCUMSTANCES OF EACH MAINTENANCE WAREHOUSE SHAREHOLDER OR EACH
AFFILIATED PARTNER, EACH HOLDER OF MAINTENANCE WAREHOUSE COMMON STOCK AND EACH
AFFILIATED PARTNER IS URGED TO CONSULT HIS OR HER OWN TAX ADVISOR TO DETERMINE
THE PARTICULAR TAX CONSEQUENCES TO SUCH SHAREHOLDER OR SUCH PARTNER OF THE
MERGERS (INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL, AND FOREIGN TAX
LAWS).

RESALE OF HOME DEPOT COMMON STOCK

Shares of Home Depot Common Stock to be issued to Maintenance Warehouse
Shareholders in connection with the Mergers will be freely transferrable under
the Securities Act, except for shares issued to any person or entity who, at the
time of the Mergers, may be deemed an "affiliate" of Maintenance Warehouse
within the meaning of Rule 145 under the Securities Act. In general, affiliates
of Maintenance Warehouse include its executive officers and directors and any
other person or entity who controls, is controlled by or is under common control
with Maintenance Warehouse. Rule 145, among other things, imposes certain
restrictions upon the resale of securities received by affiliates in connection
with certain reclassifications, mergers, consolidations or asset transfers.
These restrictions will consist of volume and manner of sale restrictions on the
resale of shares of Home Depot Common Stock issued to such person and entities.
In addition, each of the Maintenance Warehouse Shareholders has agreed under
Section 8.6 of the Principal Merger Agreement that (in order that the Mergers
shall qualify to be treated as a pooling of interests for accounting purposes)
such shareholder will not offer to sell, transfer or otherwise dispose of any
shares of Home Depot Common Stock received in the Mergers until such time as
financial results covering at least thirty (30) days of combined operations of
Home Depot, Maintenance Warehouse and the Affiliated Companies shall have been
published within the meaning of Section 201.01 of the Commission's Codification
of Financial Reporting Policies. Home Depot may place legends on certificates
representing shares of Home Depot Common Stock that are issued to Maintenance
Warehouse Shareholders and Affiliated Partners in the Mergers to restrict such
transfers.

APPRAISAL RIGHTS

Holders of Maintenance Warehouse Common Stock. Holders of Maintenance
Warehouse Common Stock are entitled to appraisal rights under Article 5.11 of
the TBCA in conjunction with the Principal Merger. A person having a beneficial
interest in shares of Maintenance Warehouse Common Stock held of record in the
name of another person, such as a broker or nominee, must act promptly to cause
the record

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holder to follow the steps summarized below properly and in a timely manner to
perfect whatever appraisal rights the beneficial owner may have.

The following discussion is not a complete statement of the law pertaining
to appraisal rights under the TBCA and is qualified in its entirety by the full
text of Articles 5.11, 5.12 and 5.13 which are reprinted in their entirety as
Annex D to this Proxy Statement/Prospectus and are incorporated herein by this
reference. All references in this appraisal rights discussion to a "shareholder"
are to the record holder of the shares of Maintenance Warehouse Common Stock as
to which appraisal rights are asserted. Any shareholder who wishes to exercise
such appraisal rights or wishes to preserve the right to do so should review the
following discussion and Annex D carefully because failure to timely and
properly comply with the procedure specified will result in the loss of
appraisal rights under the TBCA.

Under the Procedure for Dissent stated in Article 5.12, when a merger is to
be submitted for approval at a meeting of shareholders, the shareholder must
file with the corporation, prior to the meeting, a written objection to the
action setting out that the shareholder's right to dissent will be exercised if
the action is effective and giving the shareholder's address, to which notice of
the action will be sent if it is effected. A holder of shares of Maintenance
Warehouse Common Stock wishing to exercise his appraisal rights must, therefore,
deliver to Maintenance Warehouse, before the vote on the Principal Merger
Agreement, a written demand for appraisal of his shares of Maintenance Warehouse
Common Stock and must not vote in favor of adoption of the Principal Merger
Agreement. Because a proxy which does not contain voting instructions will,
unless revoked, be voted for adoption of the Principal Merger Agreement, a
holder of shares of Maintenance Warehouse Common Stock who votes by proxy and
who wishes to exercise his appraisal rights must (i) vote against adoption of
the Principal Merger Agreement or (ii) abstain from voting on adoption of the
Principal Merger Agreement. A vote against adoption of the Principal Merger
Agreement, in person or by proxy, will not in and of itself constitute a written
demand for appraisal satisfying the requirements of Article 5.12. In addition, a
holder of shares of Maintenance Warehouse Common Stock wishing to exercise his
appraisal rights must hold of record such shares on the date the written demand
for appraisal is made and must continue to hold such shares until the Principal
Effective Time.

Only a holder of record of shares of Maintenance Warehouse Common Stock is
entitled to assert appraisal rights for the shares of Maintenance Warehouse
registered in that holder's name. A demand for appraisal should therefore be
executed by or on behalf of the holder of record, fully and correctly, as the
holder's name appears on the stock certificates. If the shares of Maintenance
Warehouse Common Stock are owned of record in a fiduciary capacity, such as by a
trustee, guardian or custodian, execution of the demand should be made in that
capacity, and if the shares of Maintenance Warehouse Common Stock are owned of
record by more than one person, as in a joint tenancy or tenancy-in-common, the
demand should be executed by or on behalf of all joint owners. An authorized
agent, including one or more joint owners, may execute a demand for appraisal on
behalf of a holder of record; however, the agent must identify the record owner
or owners and expressly disclose the fact that, in executing the demand, the
agent is agent for such owner or owners. A record holder such as a broker who
holds shares of Maintenance Warehouse Common Stock as nominee for several
beneficial owners may exercise appraisal rights with respect to the shares of
Maintenance Warehouse Common Stock held for one or more beneficial owners while
not exercising such right with respect to the shares of Maintenance Warehouse
Common Stock held for other beneficial owners; in such case, the written demand
should set forth the number of shares of Maintenance Warehouse Common Stock,
and, where no number of shares of Maintenance Warehouse Common Stock is
expressly mentioned, the demand will be presumed to cover all shares of
Maintenance Warehouse Common Stock held in the name of the record owner.
Stockholders who own their shares of Maintenance Warehouse Common Stock in
brokerage accounts or other nominee forms and who wish to exercise appraisal
rights are urged to consult with their brokers to determine the appropriate
procedures for the making of a demand for appraisal by such a nominee. All
written demands for appraisal should be sent or delivered to Maintenance
Warehouse at 5505 Morehouse Drive, Suite 300, San Diego, California 92121,
Attention: Jon Gilbert.

If the action is effected, the surviving corporation in the case of a
merger must, within ten (10) days after the action, deliver or mail to the
shareholder written notice that the action has been effective and that the
shareholder may exercise his right. If the shareholder did not consent to the
merger, the shareholder may,

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within twenty (20) days after the mailing of such notice, make written demand on
the surviving corporation for payment of the fair market value of the
shareholder's shares. The fair value of the shares will be the value thereof as
of the day immediately preceding the meeting, excluding any appreciation or
depreciation in anticipation of the proposed action. The shareholder's demand
must state the number of shares owned by the shareholder and the fair market
value of the shares as estimated by the shareholder. Any shareholder who fails
to make a demand within the twenty (20) day period will be bound by the terms of
the action.

Within twenty (20) days after receipt of a written demand for payment made
by a dissenting shareholder in accordance with the above procedure, the
surviving corporation must deliver or mail to the shareholder a written notice
(i) accepting the amount claimed in the demand and agreeing to pay that amount
within ninety (90) days after the date on which the Principal Merger was
effective, or (ii) estimating the fair value of the shares and making an offer
to pay the amount of that estimate within ninety (90) days after the date on
which the action was effected upon receipt of notice within sixty (60) days
after that date from the shareholder that the shareholder agrees to accept that
amount and, in the case of shares represented by certificates, upon the
surrender of the certificates duly endorsed.

If, within sixty (60) days after the date on which the Principal Merger was
effected, the value of the shares is agreed upon between the shareholder and the
surviving corporation, payment for the shares must be made within ninety (90)
days after the effective date of the Principal Merger and, in the case of shares
represented by certificates, upon surrender of the certificates duly endorsed.
Upon payment of the agreed value, the shareholder will cease to have any
interest in the shares or in the corporation.

If the shareholder and the surviving corporation do not agree on a price
within sixty (60) days after the effective date of the action, the shareholder
or the corporation may, within sixty (60) days after the expiration of that
sixty (60) day period, file a petition in any court of competent jurisdiction in
the county in which the principal office of the corporation is located, asking
for a finding and determination of the fair value of the shareholder's shares.
The clerk of the court will give notice of the time and place fixed for a
hearing by registered mail to the corporation and to all the shareholders named
on the list of shareholders who have demanded payment for their shares and with
whom agreements as to the value of the shares have not been reached. The list of
such names will have been provided to the court by the corporation within ten
(10) days of the court's service notice of the shareholder's petition. The
corporation may also file a petition asking for a finding and determination of
the fair value of a shareholder's assets, and such petition must be accompanied
by such a list. The clerk of the court must give notice of the time and place
for the hearing of the petition by registered mail to the corporation and to the
shareholders named on the list. All shareholders thus notified and the
corporation are thereafter be bound by the final judgment of the court.

After the hearing of the petition, the court will determine the
shareholders who have complied with the dissent procedure of Article 5.12 and
have become entitled to the valuation and payment for their shares, and will
appoint one or more qualified appraisers as Masters in Chancery to determine
that value. The appraisers will have the power to examine the books and records
of the corporation and make a determination of the fair value of the shares. The
appraisers will also give the shareholders and other parties in interest the
opportunity to submit pertinent evidence as to the value of the shares. The
court will, by its judgment, determine the fair value of the shares of the
shareholders entitled to payment for their shares and will direct the payment of
that value by the surviving or new corporation together with interest thereon,
beginning ninety-one (91) days after the date on which the applicable corporate
action from which the shareholder elected to dissent was effective until the
date of such judgment, to the shareholders entitled to payment. Upon payment of
their judgment, the dissenting shareholders will cease to have any interest in
those shares or in the corporation. All court costs, including reasonable
appraisal fees, will be allotted between the parties by the court.

Maintenance Warehouse Shareholders considering seeking appraisal rights
should be aware that the fair value of their shares of Maintenance Warehouse
Common Stock determined under Article 5.12 could be more than, the same as, or
less than the value of the Principal Merger consideration they will be entitled
to receive if they do not seek appraisal of their shares of Maintenance
Warehouse Common Stock, and that opinions of investment banking firms as to
fairness from a financial point of view are not necessarily opinions as to fair
value under Article 5.12. The cost of the appraisal proceeding may be determined
by the Master in Chancery

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and taxed upon the parties as the Master in Chancery deems equitable in the
circumstances. Upon application of a dissenting shareholder, the Master in
Chancery may order that all or a portion of the expenses incurred by any
dissenting shareholder in connection with the appraisal proceeding, including,
without limitation, reasonable attorneys' fees and the fees and expenses of
experts, be charged pro rata against the value of all shares of Maintenance
Warehouse Common Stock entitled to appraisal. In the absence of such a
determination or assessment, each party will bear its own expenses.

Upon receiving a demand for payment from any dissenting shareholder,
Maintenance Warehouse will make an appropriate notation thereof in its
shareholder records. Within twenty (20) days after demanding payment for his
shares in accordance with either Article 5.12 or 5.16 of the TBCA, each holder
of certificates representing shares so demanding payment must submit such
certificates to Maintenance Warehouse for notation thereon that such demand has
been made. The failure of holders of certificated shares to do so will, at the
option of Maintenance Warehouse, terminate such shareholder's rights of
appraisal under Article 5.12 unless a court of competent jurisdiction for good
and sufficient cause shown directs otherwise. If uncertificated shares for which
payment has been demanded or shares represented by a certificate on which
notation has been so made are transferred, any new certificate issued therefor
must bear similar notation together with the name of the original dissenting
holder of such shares and a transferee of such shares will acquire by such
transfer no rights in the corporation other than those which the original
dissenting shareholder had after making demand for payment of the fair value
thereof.

Any holder of Maintenance Warehouse Common Stock who has duly demanded an
appraisal in accordance with Article 5.12 will not thereafter be entitled to
vote the shares of Maintenance Warehouse Common Stock or be entitled to the
payment of dividends or other distributions on those shares (except for
dividends or other distributions payable to holders of shares of Maintenance
Warehouse Common Stock as of a date prior to the appraisal demand and the right
to maintain an appropriate action to obtain relief on the ground that the
corporate action would be or was fraudulent).

In the absence of fraud in the Principal Merger, the appraisal rights
remedy provided by Article 5.12 to a shareholder objecting to any corporate
action is the exclusive remedy for recovery of the value of the shareholder's
shares or money damages to the shareholder with respect to the action. If the
surviving corporation complies with the requirements of Article 5.12, any
shareholder who fails to comply with the requirements of Article 5.12 will not
be entitled to bring suit for the recovery of the value of his shares or money
damages to the shareholder with respect to the action.

Any shareholder who has demanded payment for his shares in accordance with
Article 5.12 may withdraw such demand at any time before payment for his shares
or before any petition has been filed pursuant to Article 5.12 asking for a
finding and determination of the fair value of such shares, but no such demand
may be withdrawn after such payment has been made or, unless the corporation
shall consent thereto, after any such petition has been filed. If, however, such
demand is withdrawn as hereinbefore provided, or if no petition asking for a
finding and determination of fair value of such shares by a court shall have
been filed within the time provided in Article 5.12, or if after the hearing of
a petition filed pursuant to Article 5.12, the court determines that such
shareholder is not entitled to the relief provided by that Article, then, in any
such case, such shareholder and all persons claiming under him will be
conclusively presumed to have approved and ratified the corporate action from
which he dissented and will be bound thereby, the right of such shareholder to
be paid the fair value of his shares shall cease, and his status as a
shareholder shall be restored without prejudice to any corporate proceedings
which may have been taken during the interim, and such shareholder shall be
entitled to receive any dividends or other distributions made to shareholders in
the interim.

Failure to follow any of the steps required by Article 5.12 of the TBCA for
perfecting appraisal rights may result in the loss of such rights (in which
event a shareholder will be entitled to receive the merger consideration). In
view of the complexity of these provisions of Texas law, Maintenance Warehouse
Shareholders who are considering dissenting from the approval and adoption of
the Principal Merger Agreement and exercising their rights under Article 5.11
should consult their legal advisors.

Holders of Partnership Interests in the Affiliated Companies. Affiliated
Partners are entitled to appraisal rights under Article 7.5 of the California
Revised Limited Partnership Act (the "CRLPA") in conjunction

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<PAGE> 42

with the Affiliated Merger. A person having a Partnership Interest in an
Affiliated Company held of record in the name of another person, such as a
broker or nominee, must act promptly to cause the record holder to follow the
steps summarized below properly and in a timely manner to perfect whatever
appraisal rights the beneficial owner may have.

The following discussion is not a complete statement of the law pertaining
to appraisal rights under the CRLPA and is qualified in its entirety by the full
text of Article 7.5 which is reprinted in its entirety as Annex E to this Proxy
Statement/Prospectus and is incorporated herein by this reference. All
references in this summary to a "Partnership Interest Holder" are to the record
holder of the Partnership Interests in the Affiliated Companies as to which
appraisal rights are asserted. Any holder of a Partnership Interest who wishes
to exercise such appraisal rights or wishes to preserve the right to do so
should review the following discussion and Annex E carefully because failure to
timely and properly comply with the procedure specified will result in the loss
of appraisal rights under the CRLPA.

Under the CRLPA, when the approval of outstanding limited partnership
interest is required for the limited partnership to participate in a
reorganization such as the Affiliated Merger, pursuant to the limited
partnership agreement of the partnership, or otherwise, a dissenting limited
partner is entitled to require the limited partnership to purchase for cash, at
its fair market value, the dissenting interest owned by the dissenting limited
partners. The fair market value of a dissenting partnership interest is
determined as of the day before the first announcement of the terms of the
proposed reorganization, excluding any appreciation or depreciation in
consequence of the proposed reorganization.

In order for dissenting Affiliated Partners to require the Affiliated
Companies to purchase their Partnership Interests for cash, the Partnership
Interest of the holder must qualify as a dissenting interest under Section
15679.2. Under this Section, the Partnership Interest must be outstanding on the
date of the determination of Affiliated Partners entitled to vote on the
Affiliated Merger; the Partnership Interest must be voted against the Affiliated
Merger; the Affiliated Partner must demand that the Affiliated Companies
purchase the Partnership Interest at its fair market value; and the Partnership
Interest must be submitted for endorsement, if applicable, in accordance with
Section 15679.4.

If the Affiliated Merger is approved by the required consent of the
Affiliated Partners and is not abandoned or terminated, each dissenting
Affiliated Partner who votes against the Affiliated Merger and who follows the
procedure set forth in the CRLPA will be entitled to have such holder's
Partnership Interest purchased by the Affiliated Company for cash, at its fair
market value. The fair market value of such Partnership Interest will be
determined as of the day before the first announcement of the terms of the
proposed Affiliated Merger, excluding any appreciation or depreciation in
consequence of the proposed Affiliated Merger.

Within ten (10) days after approval of the Affiliated Merger by the
Affiliated Partners, the Affiliated Companies must mail a notice of such
approval by the requisite consent of the Affiliated Partners, accompanied by a
copy of Sections 15679.2, 15679.3, 15679.4, 15679.5 and 15679.6, a statement of
the price determined by the Affiliated Companies to represent the fair market
value of each outstanding Partnership Interest, and a brief description of the
procedure to be followed if the holder of the Partnership Interest desires to
exercise the rights granted under such Sections. The statement of price made in
the notice of approval will constitute an offer by the Affiliated Companies to
purchase all dissenting Partnership Interests at the stated amount, unless such
Partnership Interests lose their status as dissenting Partnership Interests as
described below. An Affiliated Partner must make a written demand upon that
Affiliated Company for the purchase of such holder's dissenting Partnership
Interest and for payment to the holder of a dissenting Partnership Interest in
cash of the fair market value of such Partnership Interest. Such written demand
is not effective for any purpose unless it is received by the Affiliated Company
in which the presenter of such demand holds a Partnership Interest or any
transfer agent thereof not later than the date of the Affiliated Partners'
consent to the Affiliated Merger.

The written demand must state the number or amount of the Affiliated
Partner's interest in the Affiliated Company and must contain a statement of
what such Affiliated Partner claims to be the fair market value of that interest
on the day before the announcement of the proposed Affiliated Merger. This
statement of fair

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<PAGE> 43

market value constitutes an offer by the Affiliated Partner to sell the
Partnership Interest at such price. The written demand should also specify the
Affiliated Partner's name and mailing address. In order for such demand to be
effective, it must be received by the Affiliated Companies within 30 days after
the date on which the notice of approval of the Affiliated Merger is mailed to
the holders of dissenting Partnership Interests. A holder of a dissenting
Partnership Interest must also submit to the Affiliated Company in which he
holds a Partnership Interest any certificate(s) representing such holder's
dissenting Partnership Interest for endorsement as a dissenting Partnership
Interest. The written demand and certificate(s) representing the dissenting
Partnership Interest should be delivered to the Affiliated Companies, c/o
Maintenance Warehouse, 5505 Morehouse Drive, Suite 300, San Diego, California
92121, Attention: Ronald L. Neeley.

If an Affiliated Company and a holder of a dissenting Partnership Interest
agree that the Affiliated Partner's interest is a dissenting Partnership
Interest and agree upon the price to be paid for the dissenting Partnership
Interest, the dissenting Affiliated Partner is entitled to the agreed price with
interest thereon at the legal rate on judgments from the date of consummation of
the Affiliated Merger. Payment for such dissenting Partnership Interest must be
made within thirty (30) days after the amount thereof has been agreed upon or
the date on which statutory and contractual conditions to the Affiliated Merger
are satisfied, and is subject to the surrender by the dissenting Affiliated
Partner of the certificates(s) representing the dissenting Partnership
Interests. If an Affiliated Company denies that a Partnership Interest is a
dissenting interest, or the Affiliated Company and a dissenting Affiliated
Partner fail to agree upon the fair market value of a dissenting Partnership
Interest, then the dissenting Affiliated Partner or any interested Affiliated
Company may file a complaint in the appropriate California Superior Court
requesting a determination as to whether the Partnership Interest is a
dissenting Partnership Interest or as to the fair market value of the dissenting
Partnership Interest, or both. Two or more dissenting Affiliated Partners may
join together as plaintiffs or be joined as defendants in any such action and
two or more such actions may be consolidated.

At trial, the court will determine the status of Partnership Interest as a
dissenting Partnership Interest if such status is an issue, or if the fair
market value of the dissenting Partnership Interest is an issue, the court or a
court-appointed appraiser may determine the fair market value of the dissenting
Partnership Interest. Court-appointed appraisers must make and file a report
with the court and the court will consider this and any additional evidence
submitted upon the motion of any party. The court may confirm the appraisers'
report or may determine the fair market value per Partnership Interest based on
other information.

The court's judgment in such an action is rendered against the Affiliated
Company for payment of an amount equal to the fair market value, as determined
by the court, of each dissenting Partnership Interest.

With respect to dissenting Partnership Interests evidenced by transferable
certificates of interest, only upon the endorsement and delivery to the
Affiliated Company of those certificates representing the interest described in
the court judgment will the assessed fair market value be payable. Any party may
appeal from the judgment and costs are assessed and apportioned by the court.

Any cash distributions made by an Affiliated Company to a dissenting
Affiliated Partner after the effective date of the Affiliated Merger, but prior
to any payment by an Affiliated Company for such dissenting Affiliated Partner's
interest, will be credited against the total amount to be paid by the Affiliated
Company for such dissenting interest. Dissenting Affiliated Partners will
continue to have all the rights and privileges incident to their interest, until
payment by the Affiliated Partnership for their dissenting interest. Also, a
dissenting Affiliated Partner may not withdraw a demand for payment unless the
Affiliated Company consents thereto. Holders of dissenting Partnership Interests
in an Affiliated Company considering dissenting from the Affiliated Merger
should be aware that the fair market value of their Partnership Interests
determined under Section 15679.7 could be more than, the same as, or less than
the value of the merger consideration they will be entitled to receive pursuant
to the Affiliated Merger Agreement if they do not dissent from the Affiliated
Merger and seek appraisal of their dissenting Partnership Interests, and that
opinions of investment banking firms as to fairness from a financial point of
view are not necessarily opinions as to fair value under Section 15679.7. The
cost of any appraisal proceeding will be determined by the court and assessed
upon the parties as the court deems equitable in the circumstances.

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<PAGE> 44

Failure to follow any of the procedures required by the CRLPA for achieving
purchase of dissenting Partnership Interests may result in the loss of such
rights (in which event the holder of Partnership Interests in the Affiliated
Companies will be entitled to receive the Affiliated Merger consideration). In
view of the complexity of these provisions of California law, holders of
Partnership Interests who are considering dissenting from the approval and
adoption of the Affiliated Merger Agreement and exercising their rights under
Section 15679.3 should consult their legal advisors.

COMPARISON OF RIGHTS OF HOLDERS OF MAINTENANCE WAREHOUSE COMMON STOCK AND HOME
DEPOT COMMON STOCK

Upon consummation of the Principal Merger, and to the extent they receive
shares of Home Depot Common Stock, shareholders of Maintenance Warehouse, a
Texas corporation, will become shareholders of Home Depot, a Delaware
corporation. The rights of Maintenance Warehouse Shareholders will thereafter be
governed by applicable Delaware law ("Delaware Law"), including the Delaware
Code, and by the Certificate of Incorporation and Bylaws of Home Depot (the
"Home Depot Certificate and the "Home Depot Bylaws," respectively). The
following is a summary of the material differences between the rights of
shareholders of Maintenance Warehouse and stockholders of Home Depot pursuant to
the differences in Delaware Law and applicable Texas law ("Texas Law"),
including the TCBA, and between the Home Depot Certificate and Home Depot
Bylaws, on the one hand, and the Articles of Incorporation and Bylaws of
Maintenance Warehouse (the "Maintenance Warehouse Articles" and the "Maintenance
Warehouse Bylaws," respectively), on the other hand. The following summary does
not purport to be a complete statement of the difference in the rights of
Maintenance Warehouse Shareholders and Home Depot stockholders. This summary is
qualified in its entirety by reference to the full text of the Home Depot
Certificate and the Home Depot Bylaws, the Maintenance Warehouse Articles and
Maintenance Warehouse Bylaws, the Delaware Law and the Texas Law.

Authorized Capital Stock. The authorized capital stock of Maintenance
Warehouse consists of 10,000,000 shares of common stock. The authorized capital
stock of Home Depot consists of 1,000,000,000 shares of common stock. Home Depot
shares have a par value of five cents (.05) per share. Maintenance Warehouse
shares have no par value.

Dividends and Other Distributions. Delaware Law permits a corporation to
declare and pay dividends out of surplus (defined as net assets minus capital)
or, if there is no surplus, out of net profits for the fiscal year in which the
dividend is declared and/or for the proceeding fiscal year as long as the amount
of capital of the corporation following the declaration and payment of the
dividend is not less than the aggregate amount of the capital represented by the
issued and outstanding stock of any classes which may have a preference upon the
distribution of assets. The Home Depot Certificate contains no restrictions on
the payment of dividends or other distributions.

Under Texas law, a corporation may declare and pay dividends to its
shareholders out of the unreserved and unrestricted earned surplus of the
corporation. No dividends may be paid when (i) the corporation is insolvent;
(ii) such payment or distribution would render the corporation insolvent or
(iii) the declaration or payment thereof would be contrary to any restrictions
contained in the articles of incorporation. The Maintenance Warehouse Articles
provide that the Board of Directors may, before the payment of any dividend, set
aside out of the funds available for dividends such sums as the directors think
proper as a reserve fund to meet contingencies, equalize dividends or to repair
or maintain corporate property.

Special Meeting of Stockholders. Under the Home Depot Bylaws, a special
meeting of the stockholders of Home Depot may be called by the Chairman of the
Board, the President or the Board of Directors. Under the Maintenance Warehouse
Bylaws, special meetings of the shareholders of Maintenance Warehouse may be
called by the President, the Board of Directors or the holders of not less than
one-tenth ( 1/10) of all the shares entitled to vote at the meeting.

Voting Requirements Generally. Under Delaware Law, the affirmative vote of
the majority of shares present in person or represented by proxy at a duly held
meeting at which a quorum is present and entitled to vote on the subject matter
is deemed to be the act of the stockholders, unless the Delaware Code, the

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certificate of incorporation or the bylaws of the corporation specify a
different voting requirement. Under Texas Law, the vote of the holders of a
majority of the shares entitled to vote and thus represented at a meeting at
which a quorum is present shall be the act of the shareholder's meeting.

Both the Home Depot Bylaws and the Maintenance Warehouse Bylaws provide
that on matters other than the election of directors, the affirmative vote of
the majority of the shares represented at a meeting at which a quorum is present
shall be the action of the shareholders, unless a greater vote is required by
Delaware Law or the Home Depot Certificate, or by Texas Law or the Maintenance
Warehouse Articles, respectively. See the subsections below for a description of
voting requirements with respect to certain events.

Amendment of Certificate or Articles of Incorporation; Amendment of
Bylaws. Under Delaware Law, an amendment to a corporation's certificate of
incorporation requires the approval of the board of directors and the approval
of a majority of the outstanding stock entitled to vote thereon. The holders of
the outstanding shares of a class are entitled to vote as a separate class on a
proposed amendment that would increase or decrease the aggregate number of
authorized shares of such class, increase or decrease the par value of the
shares of such class or alter or change the powers, preferences or special
rights of the shares of such class so as to affect them adversely. If any
proposed amendment would alter or change the powers, preferences or special
rights of one or more series of any class so as to affect them adversely, but
would not so affect the entire class, then only the shares of the series so
affected by the amendment will be considered a separate class for purposes of
voting by classes.

Under Texas Law, an amendment to a corporation's articles of incorporation
requires the adoption of the resolution stating the proposed amendment by the
board of directors and the affirmative vote of the holders of at least
two-thirds ( 2/3) of the outstanding shares entitled to vote thereon.

Under Delaware Law, an amendment to a corporation's bylaws requires the
approval of the stockholders, unless the certificate of incorporation confers
the power to amend the bylaws upon the board of directors.

Texas law provides that the power to amend or repeal corporate bylaws,
subject to repeal or change by action of the shareholders, is vested in the
board of directors unless reserved to the shareholders by the articles of
incorporation.

The Home Depot Certificate of Incorporation generally requires the consent
of the holders of eighty percent (80%) of all shares of the Corporation entitled
to vote in the election of directors for the adoption of any amendment to the
Certificate of Incorporation which would change the entitlement of stockholders
to vote in the election of directors or authorize the Corporation to issue share
of stock, bonds, debentures or other obligations. The Home Depot Bylaws empower
the Board of Directors to amend the Home Depot Bylaws except as may otherwise be
provided in the Home Depot Bylaws.

The Maintenance Warehouse Bylaws grant the Board of Directors the authority
to amend or repeal the Bylaws by the affirmative vote of a majority of the Board
at any regular or special meeting of the Board, subject to repeal or change by
the affirmative vote of a majority of the stock entitled to vote at any regular
or special meeting of the shareholders. There is no language in the Articles of
Incorporation or Bylaws of Maintenance Warehouse which addresses the amendment
of the Maintenance Warehouse Articles of Incorporation.

Action by Written Consent. Under Delaware Law, unless otherwise provided
in a corporation's articles of incorporation or certificate or articles of
incorporation, any action that may be taken at any annual or special meeting of
stockholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding shares having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted.

Texas law provides that, unless otherwise restricted by the articles of
incorporation or bylaws, any action which may be taken at a meeting of
shareholders may be taken without a meeting if a consent in writing setting
forth the action is signed by all the shareholders entitled to vote thereon.

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Neither the Maintenance Warehouse Articles nor the Home Depot Certificate
restricts the ability of the shareholders of the corporation to take action by
written consent. The Home Depot Bylaws allow stockholder actions by written
consent consistent with the provisions of Delaware Law. The Maintenance
Warehouse Bylaws provide that action by written consent must be signed by all
the shareholders entitled to vote with respect to the subject matter thereof.

Voting in the Election of Directors. Under Delaware Law, vacancies and
newly created directorships may be filled by a majority of the directors then in
office, although less than a quorum, unless otherwise provided in the
certificate of incorporation or bylaws. If, at the time of filling any vacancy
or newly created directorship, the directors then in office constitute less than
a majority of the whole board as constituted immediately prior to such increase,
the Delaware Court of Chancery may, upon application of stockholders holding at
least ten percent (10%) of the total number of shares outstanding having the
right to vote for such directors, order an election to be held to fill any such
vacancies or newly created directorships or to replace the directors chosen by
the directors then in office.

The Home Depot Certificate provides that directors of Home Depot shall be
elected by the stockholders entitled to vote at the annual meeting of the
stockholders. Vacancies on the Home Depot board of directors resulting from an
increase in the number of directors may be filled by a majority of the board of
directors then in office, although less than a quorum, or by a sole remaining
director.

Under Texas Law, a vacancy on the board of directors may be filled by the
affirmative vote of a majority of the remaining directors though less than a
quorum. Directorships resulting from an increase in the number of directors
shall be filled by election at any annual or special meeting of shareholders.

The Maintenance Warehouse Bylaws provide that vacancies on the Board of
Directors may be filled by the shareholders at an annual meeting or by the
affirmative vote of a majority of the remaining directors though less than a
quorum of the Board of Directors. A directorship filled by reason of an increase
in the number of directors may be filled at an annual or special meeting of
shareholders called for that purpose.

Number and Qualification of Directors. Under Delaware Law, the minimum
number of directors is one. Delaware Law permits the board of directors alone to
change the authorized number, or the range, of directors by amendment to the
bylaws, unless the directors are not authorized in the certificate of
incorporation to amend the bylaws or the number of directors is fixed in the
certificate of incorporation, in which cases a change in the number of directors
may be made only upon amendment of the certificate of incorporation.

Under Texas Law, the size of a corporation's board of directors shall
consist of one or more members, with the number of directors fixed by the
articles of incorporation or the bylaws.

The Maintenance Warehouse Bylaws provide for four (4) directors. The Home
Depot Certificate provides that the authorized number of directors is between
three (3) and fifteen (15), with the exact number currently fixed by board
resolution at eleven (11).

None of Texas Law, Delaware Law, the Maintenance Warehouse Articles or the
Maintenance Warehouse Bylaws set forth specific qualification requirements for
directors. The Home Depot Certificate provides that no director shall be
eligible for directorship unless a written request that the person's name be
placed in nomination is received from a stockholder of record by the Secretary
of Home Depot together with the written consent of such person to serve as a
director at least 30 days prior to the stockholder meeting date. The Maintenance
Warehouse Bylaws state that directors of the corporation need not be residents
of Texas nor shareholders of the corporation.

Classification of Board. A classified board of directors is one in which a
certain number, but not all, of the directors of a corporation are elected on a
rotating basis each year. This method of electing directors makes changes in the
composition of the board of directors, and thus a potential change in control of
a corporation, a lengthier and more difficult process.

Delaware Law permits, but does not require, a classified Board of
Directors, with staggered terms under which one-half or one-third of the
directors are elected for terms of two or three years, respectively. The Home
Depot Certificate divides the Home Depot Board of Directors into three (3)
classes with each serving three (3) year terms.

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Texas Law provides that when a board of directors has nine or more members,
the bylaws may provide that the directors be divided into two or three classes.
Neither the Maintenance Warehouse Articles nor the Maintenance Warehouse Bylaws
provide for a classified board of directors.

Removal of Directors. Under Delaware Law, a director of a corporation with
a classified board of directors may be removed only for cause, unless the
certificate of incorporation provides otherwise. The Home Depot Bylaws provide
that any director or the entire Board of Directors 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.

Under Texas Law, the bylaws or articles of incorporation of a corporation
may provide that at any meeting of shareholders called for that purpose any
director or the entire Board of Directors may be removed with the approval of a
majority of the outstanding shares entitled to vote. The Maintenance Warehouse
Articles and Bylaws are silent on the removal of directors.

Indemnification and Limitation of Liability. Under Delaware Law, a
corporation has the power to indemnify any agent against expenses, judgments,
fines and settlements incurred in a proceeding, other than an action by or in
the right of the corporation, if the person acted in good faith and in a manner
that the person reasonably believed to be in the best interests of the
corporation or not opposed to the best interests of the corporation, and, in the
case of a criminal proceeding, had no reason to believe that their conduct was
unlawful. In the case of an action by or in the right of the corporation, the
corporation has the power to indemnify any agent against expenses incurred in
defending or settling the action if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation; provided, however, that no indemnification may be
made when a person is adjudged liable to the corporation, unless a court
determines such person is entitled to indemnity for expenses, and then such
indemnification may be made only to the extent that such court shall determine.
Delaware Law requires that to the extent an officer, director, employee or agent
of a corporation is successful on the merits or otherwise in defense of any
third-party or derivative proceeding, or in defense of any claim, issue or
matter therein, the corporation must indemnify such person against expenses
incurred in connection therewith.

Under Delaware Law, a corporation may adopt a provision in its certificate
of incorporation eliminating or limiting the personal liability of a director to
the corporation or its stockholders for monetary damages for breaches of
fiduciary duty as a director; provided, however, that such provision may not
eliminate or limit a director's monetary liability for (i) breaches of the
director's duty of loyalty to the corporation or its stockholders; (ii) acts or
omissions not in good faith or involving intentional misconduct or knowing
violations of law; (iii) the payment of unlawful dividends or unlawful stock
repurchases or redemptions or (iv) transactions in which the director received
an improper personal benefit. The Home Depot Bylaws provide that each former,
present or future director, officer, employee or agent of Home Depot serving at
the request of Home Depot shall be indemnified to the full extent and in the
manner permitted under Delaware Law.

Under Texas Law, a corporation has the power to indemnify any current or
former director or officer against expenses actually and necessarily incurred by
him in a proceeding other than an action by or in the right of the corporation
if the person in connection with the defense of any action, suit or proceeding
in which he is made a party by reason of his current or former corporate
position, except where such individual is adjudged to be liable for negligence
or misconduct in performance of duties. The Maintenance Warehouse Articles of
Incorporation and Bylaws contain no provisions addressing indemnification.

Mergers and Sales of Substantially all of the Assets. Under Texas Law, a
plan of merger or consolidation must be approved by the affirmative vote of at
least two-thirds of the outstanding shares of each of the merging corporations.

Under Delaware Law, the principal terms of a merger generally require the
approval of the stockholders of each of the merging corporations. Unless
otherwise required in a corporation's certificate of incorporation, Delaware Law
does not require the vote of stockholders of a constituent corporation surviving
the merger if (i) the merger agreement does not amend the existing certificate
of incorporation; (ii) each share of stock of the surviving corporation
outstanding before the merger is an identical outstanding or treasury share
after the merger and (iii) either no shares of the surviving corporation and no
securities convertible into such stock are

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to be issued in the merger or the number of shares to be issued by the surviving
corporation in the merger does not exceed twenty percent (20%) of the shares
outstanding immediately prior to the merger.

The Maintenance Warehouse Articles and Maintenance Warehouse Bylaws do not
contain any provisions relating to mergers, tender offers or sales of
substantially all of the corporation's assets. The Home Depot Certificate
requires the consent of holders of eighty percent (80%) of all shares of the
Corporation entitled to vote in the election of directors for (i) the adoption
of a merger or other business combination if the other entity is the beneficial
owner, directly or indirectly, of more than twenty percent (20%) of the
outstanding shares of the corporation entitled to vote in the election of
directors or (ii) a proposed dissolution of the Corporation.

Proxies. Under the Home Depot Bylaws, each stockholder entitled to vote at
a meeting of stockholders or to express consent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. No proxy shall be valid after the expiration of three years from the date
thereof unless the proxy provides for a longer period. Under the Maintenance
Warehouse Bylaws, each stockholder entitled to vote at a meeting of stockholders
or to express consent to corporate action in writing without a meeting also may
authorize another person or persons to act for him by proxy.

Right of First Refusal. Neither the Home Depot Bylaws nor the Home Depot
Certificate provide for a right of first refusal with respect to the sale or
transfer of any shares of Home Depot Common Stock held by a stockholder. Under
the Maintenance Warehouse Shareholder Stock Restriction Agreement, however, no
shareholder shall sell or transfer any shares of Maintenance Warehouse Common
Stock without the prior written consent of the Board of Directors of Maintenance
Warehouse and all of the Maintenance Warehouse shareholders.

Taxation of Ownership Interest. Corporations, as separate legal entities,
are taxed by the federal and state government. Corporate earnings distributed at
the shareholder level are also taxed to the shareholder as personal income. The
corporate earnings of Home Depot are, therefore, taxed at the applicable
corporate rate, while Home Depot dividends and other distributions are, in turn,
taxed as personal income to the stockholder recipients of such dividends and
distributions.

Maintenance Warehouse, as a Subchapter S corporation, is exempt from
federal or state taxation at the corporate level; the earnings of Maintenance
Warehouse are taxed once as they flow from Maintenance Warehouse to its
shareholders. Maintenance Warehouse shareholders are taxed for the corporate
earnings of Maintenance Warehouse as personal income.

COMPARISON OF RIGHTS OF AFFILIATED PARTNERS AND HOLDERS OF HOME DEPOT COMMON
STOCK

Upon consummation of the Affiliated Merger, and to the extent they receive
shares of Home Depot Common Stock, the Affiliated Partners in the Affiliated
Companies will become stockholders of Home Depot, a Delaware corporation, with
their rights as Home Depot stockholders being governed by the Delaware Code and
applicable Delaware Laws (collectively, the "Delaware Law"), and by the Home
Depot Certificate and the Home Depot Bylaws. The following is a summary of the
material differences between the rights of the Affiliated Partners under the
CRLPA and the Limited Partnership Agreements governing the Affiliated Companies,
on the one hand, and the rights of Home Depot Shareholders under Delaware Law,
the Home Depot Certificate and Home Depot Bylaws, on the other hand. The summary
does not purport to be a complete statement of the rights of the shareholders of
Home Depot and the Affiliated Partners of the Affiliated Companies; it is
qualified in its entirety by reference to the full text of the Home Depot
Certificate and the Home Depot Bylaws, the Limited Partnership Agreements of
each of the Affiliated Companies listed as Annex F to this Proxy
Statement/Prospectus, and by Delaware Law and the CRLPA.

Meetings of Holders of Ownership Interests. Under the CRLPA, meetings of
partners may be called by any of the general partners or by limited partners
representing more than ten percent (10%) of the interest of limited partners for
any matters on which the limited partners may vote. Partners present at a duly
called or held meeting at which a quorum of limited partners is present may
continue to transact business until adjournment notwithstanding the withdrawal
of enough partners to leave less than a quorum.

34
<PAGE> 49

Under the Home Depot Bylaws, a special meeting of the stockholders of Home
Depot may be called by the Chairman of the Board, the President or the Board of
Directors.

Action by Written Consent. Under Delaware Law, unless otherwise provided
in a corporation's articles of incorporation or certificate of incorporation,
any action that may be taken at any annual or special meeting of Stockholders
may be taken without a meeting and without prior notice, if a consent in
writing, setting forth the action so taken, is signed by the holders of
outstanding shares having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. The Home Depot Bylaws allow
shareholder actions by written consent consistent with the provisions of
Delaware Law.

Under the CRLPA, unless otherwise provided in the partnership agreement,
any action which may be taken at a meeting of the partners may be taken without
a meeting if the consent in writing, setting forth the action taken, is signed
by partners have not less than the minimum number of votes that would be
necessary to authorize or take the action at a meeting at which all entitled to
vote thereon were present and voted.

Proxies. Limited partnerships and their limited partners may use proxies
in connection with taking partnership actions. The use of proxies is governed in
the same manner as in the case of corporations formed under the California
General Corporation Law.

Under the Home Depot Bylaws, each stockholder entitled to vote at a meeting
of stockholders or to express consent to corporate action in writing without a
meeting may authorize another person or persons to act for him by proxy. No
proxy shall be valid after the expiration of three years from the date thereof
unless the proxy provides for a longer period.

Form of Contribution. The contribution of an Affiliated Partner to an
Affiliated Company may be made in money, property, or services rendered, or in a
promissory note of obligation to contribute money or property or to render
services. Stockholders of corporations such as Home Depot make financial
contributions to the corporation through their purchase of shares.

Owner's Returns. Under the CRLPA, the profits of a limited partnership are
allocated to each partner's capital account in proportion to the amount of
capital each partner made to the limited partnership, unless the applicable
limited partnership agreement provides otherwise. Each Limited Partnership
Agreement governing an Affiliated Company provides specific procedures for the
distribution of the Affiliated Company's profits.

Home Depot stockholders may receive dividends and other corporate
distributions in accordance with Delaware Law, which provides that a corporation
may declare and pay dividends out of surplus (defined as net assets minus
capital) or, if there is no surplus, out of net profits for the fiscal year in
which the dividend is declared and/or for the proceeding fiscal year as long as
the amount of capital of the corporation following the declaration and payment
of the dividend is not less than the aggregate amount of the capital represented
by the issued and outstanding stock of any classes which may have a preference
upon the distribution of assets.

Transferability of Interests. Under the CRLPA, a limited partnership
interest is assignable in whole or in part. An assignment of a limited
partnership interest does not dissolve a limited partnership or entitle the
assignee to become or to exercise any rights of a partner. However, because cash
withdrawal from the partnership may be limited by the partnership agreement,
transferability of a partnership interest may be somewhat limited and it is
often difficult to put a market value on partnership interests.

Each of the Limited Partnership Agreements governing the Affiliated
Companies provides for a limited transferability of interests; specifically, an
Affiliated Partner generally must provide written notice of the terms of any
offer to sell, encumber or otherwise hypothecate any portion of that Affiliated
Partner's Partnership Interest to either the other partners in the Affiliated
Company or, in certain of the Limited Partnership Agreements, to the General
Partner. The other partners then have either thirty (30) or sixty (60) days,
depending on the particular partnership agreement, after such notice is given to
purchase, encumber or otherwise acquire the designated interest of the
Affiliated Partner providing such notice on the same terms as those contained in
the offer. If no other partner exercises this right of first refusal within this
thirty (30) to

35
<PAGE> 50

sixty (60) day period, the Affiliated Partner may proceed to complete the
transaction with the offeror on the same terms as those contained in the offer.

Ownership of shares in a corporation, such as the Home Depot stockholders
maintain, does allow unrestricted transferability of interests. Generally, Home
Depot common stock may be sold on the open securities market without
restriction.

Taxation of Ownership Interest. Limited Partnerships are not separate
legal entities and are, therefore, not taxed by federal or state governments;
all earnings of a limited partnership are taxed at the individual limited
partners' own federal and state tax rates, whether such earnings are distributed
to the limited partners or are capitalized. Thus, the Affiliated Partners are
subject to federal and state taxation on their respective shares of the earnings
of the Affiliated Companies in which they have a Partnership Interest.

Corporations, as separate legal entities, are taxed by the federal and
state government; corporate earnings distributed at the shareholder level are
also taxed to the shareholder as personal income. The corporate earnings of Home
Depot are thus taxed at the applicable corporate rate; Home Depot dividends and
other distributions are, in turn, taxed as personal income to the stockholder
recipient of the corporate dividend or distribution.

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<PAGE> 51

BUSINESS OF HOME DEPOT

GENERAL

Home Depot is the leading retailer in the home improvement industry and
ranks among the 10 largest retailers in the United States based on net sales
volume. As of October 27, 1996, Home Depot operated 474 full-service,
warehouse-style stores in 35 states in the United States (450 stores) and three
provinces in Canada (24 stores). In addition, Home Depot operated five Expo
design centers in the United States. As of October 27, 1996, aggregate selling
space for all Home Depot locations approximated 50 million square feet. Home
Depot's stores average approximately 105,200 square feet of indoor selling
space, with an additional 20,000 to 28,000 square feet of outside garden center
area. Home Depot's business strategy is to offer the broadest assortment of
high-quality merchandise at low "Day-In, Day-Out" warehouse prices through
highly-trained and knowledgeable customer service associates. Home Depot employs
approximately 100,000 associates.

Since a large portion of Home Depot's customers are individual homeowners,
many of whom may have limited experience in do-it-yourself projects, management
considers its associates' knowledge of products and home improvement techniques
and applications to be very important to its marketing approach, as well as to
its ability to maintain customer satisfaction. Home Depot also offers
installation services for a variety of products, which target the
buy-it-yourself customer who desires to purchase an item but relies upon a
professional for installation services. In addition, Home Depot devotes
significant marketing, advertising and service efforts toward attracting
professional remodelers and commercial customers.

Home Depot's stores offer approximately 40,000-50,000 SKUs of high-quality
and nationally advertised brand name building materials and home improvement
products catering primarily to the do-it-yourself and professional business
customer. Product groups include building materials, lumber and floor and wall
covering (33.9% of fiscal 1995 sales); plumbing, heating, lighting and
electrical supplies (27.7%); seasonal and specialty items (14.8%); hardware and
tools (13.2%); and paint and other (10.4%). Home Depot sources its merchandise
from approximately 5,400 vendors worldwide, of which no single vendor accounts
for as much as 5% of purchases.

Home Depot expects to increase its store count on a basis consistent with
its current policy of not exceeding a maximum new store growth rate of
approximately 22% per year. Home Depot plans to open approximately 89 new stores
and relocate seven existing stores during fiscal 1996 (of which 81 have been
opened and six have been relocated as of January 16, 1997). While it is
anticipated that a large number of such stores will be opened in existing
markets, Home Depot has opened or plans to open stores in a number of new
markets in fiscal 1996, including Little Rock, Louisville, Memphis,
Minneapolis/St. Paul, Pittsburgh, St. Louis, Spokane, Syracuse and Windsor,
Ontario. Home Depot also plans to open approximately 117 stores, including
relocations, in fiscal 1997. As of October 27, 1996, Home Depot owned
approximately 73% of its stores (including those owned subject to a ground
lease). Home Depot prefers to own its stores, as compared to leasing, since it
provides Home Depot with greater levels of operating and financial flexibility.

For the nine months ended October 27, 1996, Home Depot's sales increased
24% to approximately $14.6 billion and net earnings increased 26% to
approximately $686.6 million as compared to the comparable period of fiscal
1995. Comparable store sales for the nine months ended October 27, 1996
increased 7%. Home Depot intends to continue its long-term strategy, where
appropriate, of opening new stores within a close vicinity of existing stores
that are operating at or above their optimum capacities, thereby intentionally
"cannibalizing" certain stores. While such a strategy may initially have a
negative impact on the rate of comparable store sales growth, management
believes the benefits include increasing customer satisfaction and increasing
market share by reducing shopping delays, increasing utilization by existing
customers and attracting new customers to more convenient locations. Excluding
the impact of cannibalized stores, comparable store sales would have increased
10% for the nine months ended October 27, 1996.

Home Depot was founded in 1978 in Atlanta, Georgia. Home Depot has been a
publicly held company since 1981. Its stock is traded on the New York Stock
Exchange under the symbol "HD" and is included in the Standard & Poor's 500
Index. Home Depot's corporate offices are located at 2727 Paces Ferry Road,
Atlanta, Georgia 30339-4089, telephone number (770) 433-8211.

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<PAGE> 52

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF MAINTENANCE WAREHOUSE

RESULTS OF OPERATIONS

Nine months ended September 30, 1996 and 1995

Sales increased 10.1% to $96.7 million in 1996 from $87.8 million in 1995.
The increase in sales results from the combination of an increase in the number
of SKUs sold by Maintenance Warehouse and the Affiliated Companies, which
increased by a net of approximately 800 items during the period, and an increase
in the customer base of Maintenance Warehouse and the Affiliated Companies,
which grew by approximately 4,600 active customers during the period.

Gross profit increased by 8.5% to $38.5 million in 1996 from $35.5 million
in 1995. Gross margin decreased to 39.9% in 1996 from 40.4% in 1995. The
decrease in gross margin occurred due to selected product price changes.

Operating expenses increased 7.4% to $22.1 million in 1996 from $20.6
million in 1995. As a percentage of sales, operating expense decreased to 22.9%
in 1996 from 23.5% in the prior year. This decrease is attributable to improved
productivity in the distribution facilities of Maintenance Warehouse and the
Affiliated Companies.

Interest expense increased 9.7% to $1.8 million in 1996 from $1.7 million
in 1995. As a percentage of sales, interest expense remained constant at 1.9%.
This constant is a result of increased borrowings to finance two additional
owned distribution facilities in 1996 offset by lower rates on borrowings during
1996.

Maintenance Warehouse and the Affiliated Companies' income taxes are
immaterial as federal taxes are not paid by the S-Corporation or partnerships
and only insignificant amounts of state taxes are paid. Income taxes as a
percentage of sales has remained constant at 0.3%.

Net income increased by 9.9% to $14.3 million in 1996 from $13.0 million in
1995. As a percentage of sales, net income remained constant at 14.8%. This
constant is attributable to improved operating expense margins offset by lower
gross margins, as described above.

Year ended December 31, 1995 compared to December 31, 1994

Sales increased 20.6% to $117.0 million in 1995 from $97.0 million in 1994.
The increase in sales results from the combination of an increase in the number
of SKUs sold by Maintenance Warehouse and the Affiliated Companies, which
increased by a net of approximately 1,200 items during 1995, and an increase in
the customer base of Maintenance Warehouse and the Affiliated Companies, which
grew by approximately 8,500 active customers during 1995. Of the increase in
sales, approximately half occurred due to the addition of new customers while
half occurred due to the addition of new products.

Gross profit increased by 25.2% to $47.3 million in 1995 from $37.8 million
in 1994. Gross margin increased to 40.4% in 1995 from 38.9% in 1994. The
increase in gross margin occurred due to increased volume and trade discounts as
a percentage of inventory purchases, selected product price changes and certain
vendor product cost reductions.

Operating expenses increased 19.5% to $27.8 million in 1995 from $23.2
million in 1994. As a percentage of sales, operating expenses decreased to 23.7%
in 1995 from 23.9% in 1994. Operating expenses as a percent of sales decreased
due to improved productivity in the distribution operations of Maintenance
Warehouse and the Affiliated Companies, partially offset by increases in direct
marketing expenses.

Interest expense increased 40.6% to $2.3 million in 1995 from $1.6 million
in 1994. As a percentage of sales, interest expense increased 0.2% to 1.9% in
1995 from 1.7% in 1994. This increase is attributable to two additional real
estate mortgages for new properties during 1995 and slightly higher interest
rates on all borrowings during 1995.

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<PAGE> 53

Net income increased by 33.7% to $16.9 million in 1995 from $12.7 million
in 1994. As a percentage of sales, net income increased to 14.5% from 13.0%.
This increase is attributable to the higher gross margins, lower operating
expense margins, partially offset by higher interest expense, as described
above.

Year ended December 31, 1994 compared to December 31, 1993

Sales increased 14.7% to $97.0 million in 1994 from $84.6 million in 1993.
The increase in sales results from the combination of an increase in the number
of SKUs sold by Maintenance Warehouse and the Affiliated Companies, which
increased by a net of approximately 600 items during 1994, and an increase in
the customer base of Maintenance Warehouse and the Affiliated Companies, which
grew by approximately 11,700 active customers during 1994. Customer growth was
focused in the lodging segment of Maintenance Warehouse and the Affiliated
Companies which grew by 7,400 new customers.

Gross profit increased by 13.5% to $37.8 million in 1994 from $33.2 million
in 1993. Gross margin decreased slightly to 38.9% in 1994 from 39.3% in 1993.
The decrease in gross margin occurred primarily due to the efforts of
Maintenance Warehouse and the Affiliated Companies to convert its customers to
preferred customer status, which allows them to purchase higher quantities at
lower prices, thus negatively affecting margins. In addition, Maintenance
Warehouse and the Affiliated Companies faced slight margin pressure due to
competition.

Operating expenses increased 15.2% to $23.2 million in 1994 from $20.2
million in 1993. As a percentage of sales, operating expenses increased slightly
to 23.9% in 1994 from 23.8% in 1993. This was a result of increases in general
and administrative expenses related to increasing the management depth of
Maintenance Warehouse and the Affiliated Companies.

Interest expense increased 8.4% to $1.6 million in 1994 from $1.5 million
in 1993. As a percentage of sales, interest expense decreased to 1.7% in 1994
from 1.8% in 1993. This decrease is attributable to a slight improvement in
interest rates charged during 1994.

Net income increased by 12.0% to $12.7 million in 1994 from $11.3 million
in 1993. As a percentage of sales, net income decreased to 13.0% from 13.4%.
This decrease is attributable to lower gross margins and slightly higher
operating expense margins, partially offset by lower interest expense as a
percentage of sales, as described above.

LIQUIDITY AND CAPITAL RESOURCES

Cash flow generated from operations provides Maintenance Warehouse and the
Affiliated Companies with a significant source of liquidity. Maintenance
Warehouse and the Affiliated Companies distribution policy is to distribute
substantially all of the available cash flow to the shareholders and partners
each year.

During 1997, Maintenance Warehouse plans to construct a distribution
facility in Cleveland, converting this leased location to a company owned
property at an estimated cost of $2.25 million. Maintenance Warehouse's other
capital expenditure requirements for 1997 are estimated at $2.5 million, which
are primarily comprised of investments in technology assets for corporate and
distribution centers and additional leasehold improvements at three distribution
center locations.

During the nine months ended September 30, 1996, Maintenance Warehouse
refinanced substantially all of its outstanding indebtedness through credit
facilities arranged with Bank of America at improved interest rates. These
facilities are guaranteed by a shareholder of Maintenance Warehouse. These
facilities contain various restrictive covenants. Subsequent to September 30,
1996, Maintenance Warehouse was not in compliance with certain of these
covenants. The bank has granted a waiver with regard to Maintenance Warehouse's
requirement to comply with these covenants.

As of September 30, 1996, Maintenance Warehouse and the Affiliated
Companies had $1.0 million in cash and cash equivalents. Management believes
that its current cash position, internally generated funds, its credit facility
arrangements, and/or its ability to obtain alternative sources of financing
should enable Maintenance Warehouse and the Affiliated Companies to meet their
capital expenditure requirements through the next several years.

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<PAGE> 54

BUSINESS OF MAINTENANCE WAREHOUSE

OVERVIEW AND HISTORY

Maintenance Warehouse is a direct-mail business-to-business marketer of
maintenance, repair and operations ("MRO") products to the U.S. building and
facilities management market. Maintenance Warehouse offers a broad selection of
major brand name and generic products to meet its customers' plumbing, hardware,
lighting, appliance, electrical, tools, HVAC, paint supply, janitorial,
communications, and other maintenance and repair needs. Maintenance Warehouse's
products are used in various segments of facilities management including the
multi-family housing, lodging, commercial building, health care facility,
industrial plant, institutional (such as military installations, government
buildings and correctional facilities) and educational facility markets.

Maintenance Warehouse's executive offices are located at 5505 Morehouse
Drive, Suite 300, San Diego, California 92121 and its telephone number is (619)
552-6200.

INDUSTRY

Maintenance Warehouse estimates, based on industry sources, that the total
U.S. market for the categories of MRO products sold or targeted by Maintenance
Warehouse was approximately $10 billion in 1996. The MRO industry is extremely
fragmented, with the largest distributors accounting for only a small portion of
the market. Maintenance Warehouse believes that in 1996, in terms of sales, it
was the largest direct-mail supplier of MRO products to its customer segment in
the United States, with a market share of slightly greater than 1%. The MRO
market is serviced by multiple channels of distribution, including retail
outlets, small distributorship, direct-mail suppliers and large warehouse
stores. Direct mail marketers have captured an increasing market share over the
past decade.

OPERATING STRATEGY

Maintenance Warehouse's operating strategy is to expand its business by
providing its customers with a low cost, convenient, and dependable solution to
the procurement of MRO supplies. This strategy contains the following key
elements: (i) maintaining a broad selection of in-stock products; (ii) offering
free, same-day shipment for next-day delivery; (iii) striving to provide
superior customer service and (iv) continuing an active commitment to
technological innovation.

Broad Product Selection. The ability to satisfy a broad range of a
customer's MRO requirements is a key component of Maintenance Warehouse's
strategy because Maintenance Warehouse believes that its customers are
increasingly consolidating their purchases with fewer suppliers to reduce the
administrative burden of dealing with multiple suppliers. By offering over 7,600
products across ten product categories which are replenished through an
inventory management system, Maintenance Warehouse strives to provide a "one-
stop shopping" concept for its customers.

Efficient Operations and Control Systems. Maintenance Warehouse's
proprietary order entry, fulfillment and delivery system enables it to provide
free, next-day delivery via low cost small parcel carriers to over ninety
percent (90%) of its potential customers in the United States. Maintenance
Warehouse believes that this prompt delivery allows customers to reduce the
inventory and carrying costs of maintaining emergency MRO inventory and
simplifies life for the maintenance professional.

Emphasis on Customer Service. Maintenance Warehouse believes that customer
service is a key element in becoming a customer's preferred provider of MRO
supplies. Maintenance Warehouse supports its customer service with sophisticated
information systems and extensive training. In-bound telemarketing
representatives are able to utilize systems which inform customers on a real
time basis of Maintenance Warehouse's in-stock inventory position, assist in
product selection, verify credit information, receive custom orders, source
hard-to-find items and provide technical product information.

Commitment to Technological Innovation. Maintenance Warehouse has
developed integrated information systems which include automated call
distribution, automatic number identification and integrated

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<PAGE> 55

inventory marketing and replenishment. Maintenance Warehouse's proprietary
software tracks all 7,600 plus SKUs in each of its 13 locations, and enables its
customer and call center representatives to review availability, alternative
products and pricing.

GROWTH STRATEGY

Maintenance Warehouse's objective is to become the preferred supplier of
MRO supplies to a broad spectrum of building facilities management markets.
Maintenance Warehouse's growth strategy consists of the following elements: (i)
increasing the breadth of its product line both in existing and new product
categories; (ii) expanding its customer base and customer penetration through
the expanded distribution of its master catalog; (iii) improving penetration of
non-West Coast markets through the use of direct marketing techniques and (iv)
leveraging its distribution facilities and infrastructure to exploit end-markets
beyond the multi-family and lodging industries.

PRODUCTS & MERCHANDISING

Maintenance Warehouse currently offers more than 7,600 SKUs in ten product
categories. Maintenance Warehouse seeks to satisfy an expanding portion of its
customers' MRO needs by increasing SKUs in core categories and adding new
categories. Maintenance Warehouse offers products in the following categories:
plumbing, hardware, lighting, appliances, electrical, tools, HVAC, paint
supplies and sundries, janitorial and communications.

THE MAINTENANCE WAREHOUSE CATALOG

The Maintenance Warehouse Catalog has historically been Maintenance
Warehouse's primary merchandising vehicle and sales and marketing voice.
Although Maintenance Warehouse has recently initiated a more targeted and
aggressive direct marketing effort, Maintenance Warehouse anticipates that the
catalog will continue to be its principal tool to sell products. The catalog
features three-tier pricing (based upon volume) for all merchandise and
guarantees pricing for the six-month life of the catalog. The catalog is mailed
semi-annually in February and August. Maintenance Warehouse currently mails the
catalog primarily to customers who were active in the prior period.

OPERATIONS

Customer Order Entry. Maintenance Warehouse's order processing system is
based upon the principle of providing the customer with an easy and pleasant
ordering experience. Incoming calls are answered by a customer service
representative (a "CSR") shortly after being placed. A computerized system
identifies the customer based upon their phone number, and provides the CSR's
computer with appropriate account information. CSRs also have immediate access
to information on product availability. New inbound phone numbers are
automatically captured and entered into the customer database.

Executional Excellence. Maintenance Warehouse has designed its front end
systems to facilitate the logical flow of orders. The management of each order
is facilitated by an integrated system which brings together all of the data of
Maintenance Warehouse in a single environment. Each order is routed through a
Wide Area Network to the most appropriate of Maintenance Warehouse's 13
distribution centers located across the United States, and pick tickets are
laser printed in an efficient picking sequence to maximize warehouse efficiency.
All catalog items are carried in stock at each warehouse facility and
continually replenished through an inventory forecasting system.

Delivery. Orders are shipped free-of-charge for next-day delivery to over
ninety percent (90%) of Maintenance Warehouse's potential customers in the
United States. Orders under $25 are assessed a small handling fee. Maintenance
Warehouse guarantees same-day shipment of orders placed by 2:00 p.m. in all four
time zones.

Management Information Systems. Maintenance Warehouse's integrated
management information system is designed to enable it to receive and process
orders, manage inventory, verify credit and payment

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<PAGE> 56

history, invoice customers, receive payments and manage its proprietary customer
support systems. All 13 distribution centers are connected via a Wide Area
Network, providing each distribution center with access to all required
information, including inventory availability data and a real-time order
tracking capability.

COMPETITION

The distribution of MRO items to the multi-family and lodging markets is
highly fragmented and served by multiple channels. The market is principally
served by numerous small retailers and local distributors each selling a limited
line of MRO supplies to local markets through a direct sales force. Additional
distribution channels include broadline regional and national distributors,
broadline direct mail suppliers, large warehouse stores and specialty suppliers.
Maintenance Warehouse believes that its most direct competition in the multi-
family sector comes from a few national firms such as Wilmar Industries, Inc.,
Barnett Inc. and Century Supply and that the competition in the lodging market
is highly fragmented.

REAL ESTATE/FACILITIES

Maintenance Warehouse's facilities consist of 13 distribution centers and
its corporate offices located in San Diego, California. The 13 distribution
centers are strategically located to allow Maintenance Warehouse to maintain
next-day delivery to over ninety percent (90%) of the population of the United
States. Maintenance Warehouse owns ten of its 14 locations. The chart below
depicts certain information regarding Maintenance Warehouse's facilities.

<TABLE>
<CAPTION>
YEAR OF
MARKET
LOCATION SQUARE FEET OWNERSHIP ENTRY
-------- ----------- --------- -------
<S> <C> <C> <C>
Atlanta, GA................................................. 35,000 Owned 1984
Cleveland, OH............................................... 24,000 Leased 1992
Dallas, TX.................................................. 58,000(1) Owned 1983
Denver, CO.................................................. 67,000(2) Owned 1991
Hartford, CT................................................ 58,800 Owned 1987
Fontana, CA................................................. 68,500 Owned 1981
Madison, WI................................................. 35,500 Leased 1993
Richmond, VA................................................ 40,000 Owned 1990
Sacramento, CA.............................................. 58,800 Owned 1996
St. Louis, MO............................................... 79,100 Owned 1992
San Diego, CA............................................... 38,000 Owned 1973
Seattle, WA................................................. 28,900 Leased 1989
Tampa, FL................................................... 16,200 Leased 1992
San Diego, CA(3)............................................ 72,500 Owned N/A
-------
Total............................................. 680,300
</TABLE>

- ---------------

(1) Includes approximately 31,500 square feet sublet to others.
(2) Includes approximately 46,000 square feet sublet to others.
(3) Corporate headquarters.

EMPLOYEES

As of December 31, 1996, Maintenance Warehouse employed a total of 380
employees, including 232 employees at Corporate offices and 148 employees at
Maintenance Warehouse's 13 distribution centers.

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<PAGE> 57

MAINTENANCE WAREHOUSE PRINCIPAL SHAREHOLDERS

The following table sets forth certain information known to Maintenance
Warehouse with respect to beneficial ownership of the Maintenance Warehouse
Common Stock as of December 31, 1996, by (i) each shareholder who is known by
Maintenance Warehouse to own beneficially more than 5% of the Maintenance
Warehouse Common Stock; (ii) the Chief Executive Officer and the four other most
highly compensated executive officers of Maintenance Warehouse on January 15,
1997; (iii) each director; and (iv) all executive officers and directors of
Maintenance Warehouse as a group.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
--------------------------------------------------------------------------------
PERCENT OF TOTAL PERCENT OF TOTAL
MAINTENANCE SHARES OF HOME DEPOT
NUMBER OF SHARES OF WAREHOUSE COMMON HOME DEPOT COMMON STOCK
MAINTENANCE STOCK OUTSTANDING COMMON STOCK OUTSTANDING
WAREHOUSE COMMON PRIOR BENEFICIALLY OWNED AFTER
BENEFICIAL OWNERS STOCK TO THE MERGER AFTER THE MERGER(2) THE MERGER(3)
----------------- ------------------- ----------------- ------------------- ----------------
<S> <C> <C> <C> <C>
Neeley Revocable Family
Trust(4)................... 5,700 57.0% 2,683,877 *
5505 Morehouse Drive
San Diego, CA 92121
Jonathan Lee Neeley(5)....... 1,000 10.0% 470,856 *
5505 Morehouse Drive
San Diego, CA 92121
Steven Lee Neeley(6)......... 750 7.5% 353,142 *
5505 Morehouse Drive
San Diego, CA 92121
Jon Gilbert.................. 900 9.0% 423,770 *
5505 Morehouse Drive
San Diego, CA 92121
David J. Dorne and Bankers
Trust Company(7)........... 1,099 11.0% 517,941 *
750 "B" Street, Suite 2100
San Diego, CA 92101
Ronald Turk.................. -- -- -- --
Beth Rush.................... -- -- -- --
All directors and current
executive officers as a
group (6 persons).......... 7,600 76.0% 3,578,503
</TABLE>

- ---------------

(1) This table is based upon information supplied by officers, directors and
principal stockholders. Unless otherwise indicated in the footnotes to this
table and subject to community property laws where applicable, each of the
stockholders named in this table has sole voting and investment power with
respect to the shares indicated as beneficially owned. Applicable
percentages are based on 10,000 shares outstanding on January 15, 1997.
(2) Calculated by multiplying the number of shares of Maintenance Warehouse
Common Stock beneficially owned on such date by an assumed Conversion
Amount of $24,543.35, and based on an assumed Average Closing Price of
$52.125, the closing price of the Home Depot Common Stock on the New York
Stock Exchange on January 21, 1997, and rounded down to the nearest whole
share. It is expected that each Maintenance Warehouse Shareholder will
receive, depending on the Average Closing Price, between 446.242 and
522.199 shares of Home Depot Common Stock (or cash for fractional shares)
in exchange for each share of Maintenance Warehouse Common Stock owned by
such shareholder.
(3) Based on 480,452,578 shares of Home Depot Common Stock outstanding January
21, 1997, plus the additional shares estimated to be issued in the
Principal Merger. Does not include shares which will be issued in the
Affiliated Merger. See "Ownership of Affiliated Partnership Interests."

43
<PAGE> 58

(4) Ronald L. Neeley, Chief Executive Officer and Chairman of the Board, and
Lucille A. Neeley, President, Chief Operating Officer and a Director are
co-trustees of the Neeley Revocable Family Trust, and, in such capacity,
share voting and investment power over the shares of the Maintenance
Warehouse Common Stock held by the Trust. Does not include shares
beneficially owned by the adult children of Ronald Neeley and Lucille
Neeley, as to which Mr. and Mrs. Neeley disclaim beneficial ownership.
(5) Shares are held by the Jonathan Lee Neeley Trust of which Mr. Jonathan Lee
Neeley is sole trustee. Does not include 183 shares held by the Jonathan
Neeley 1996 Trust, as to which Mr. Jonathan Lee Neeley disclaims beneficial
ownership.
(6) Shares are held by the Steven Lee Neeley Trust of which Mr. Steven Lee
Neeley is sole trustee. Does not include 383 shares held by the Steven
Neeley 1996 Trust, as to which Mr. Steven Lee Neeley disclaims beneficial
ownership.
(7) David J. Dorne and Bankers Trust Company are co-trustees of, and share
voting and investment control over, the shares of Maintenance Warehouse
Common Stock held by the following trusts: The Alison Neeley 1996 Trust
(533 shares); The Steven Lee Neeley 1996 Trust (383 shares); and the
Jonathan Lee Neeley 1996 Trust (183 shares). Does not include 100 shares
held in a separate trust for the benefit of Mr. Jon Gilbert's children, of
which Mr. Dorne is trustee.
* Less than one percent (1%).

44
<PAGE> 59

BUSINESS OF AFFILIATED COMPANIES

Each of the Affiliated Companies is a California limited partnership which
was formed for the purpose of, and is in the primary business of, owning certain
of the Maintenance Warehouse distribution centers and the Maintenance Warehouse
corporate office. The Affiliated Companies lease the distribution centers and
the corporate office to Maintenance Warehouse.

The table below sets forth each of the Affiliated Companies and the
respective distribution center or the corporate headquarters, which it owns:

<TABLE>
<CAPTION>
AFFILIATED COMPANIES FACILITY LOCATION
-------------------- -----------------
<S> <C>
86 Warehouse II........................................... San Diego, California
86 Warehouse III.......................................... Denver, Colorado(1)
DFW Warehouse Four Limited Partnership.................... Dallas, Texas
MWAC One.................................................. San Diego, California(2)
Denver Warehouse Five..................................... Denver, Colorado
Fontana Warehouse Six..................................... Fontana, California
ATL Warehouse Seven....................................... Atlanta, Georgia
Richmond Warehouse Eight.................................. Richmond, Virginia
St. Louis Warehouse Nine.................................. St. Louis, Missouri
</TABLE>

- ---------------

(1) 86 Warehouse III and Denver Warehouse Five each hold an ownership interest
in the distribution center in Denver, Colorado.
(2) Corporate headquarters.

45
<PAGE> 60

OWNERSHIP OF PARTNERSHIP INTERESTS

The following table sets forth information known to the Affiliated
Companies with respect to the beneficial ownership of each of the Affiliated
Companies as of January 15, 1997. The net book value attributed to each
Affiliated Company on Schedule A to the Affiliated Merger Agreement is in
parentheses next to the name of the Affiliated Company.

<TABLE>
<CAPTION>
SHARES OF
HOME DEPOT
PERCENTAGE COMMON STOCK
AFFILIATED COMPANIES PARTNERSHIP BENEFICIALLY OWNED
AND PARTNERS INTEREST AFTER THE MERGER(1)
-------------------- ----------- -------------------
<S> <C> <C>
86 WAREHOUSE II ($46,714)
General Partner
MWAC Real Estate, Inc.(2).............................. 4.60% 41
Limited Partners
Neeley Revocable Family Trust.......................... 30.00% 268
Warehouse One.......................................... 56.14% 503
Jon S. Gilbert......................................... 9.26% 82
86 WAREHOUSE III ($105,608)
General Partner
MWAC Real Estate, Inc.(2).............................. 5.00% 101
Limited Partners
Neeley Revocable Family Trust.......................... 85.0% 1,722
Jon S. Gilbert......................................... 10.0% 202
DFW WAREHOUSE FOUR LIMITED PARTNERSHIP ($15,873)
General Partner
MWAC Real Estate, Inc.(2).............................. 5.00% 15
Limited Partners
Neeley Revocable Family Trust.......................... 10.00% 30
Jon S. Gilbert......................................... 10.00% 30
Jonathan Neeley........................................ 25.00% 76
Steven Neeley.......................................... 25.00% 76
Alison Neeley.......................................... 25.00% 76
MWAC ONE ($22,175)
General Partner
MWAC Real Estate, Inc.(2).............................. 5.00% 21
Limited Partners
Neeley Revocable Family Trust.......................... 25.00% 106
Jon S. Gilbert......................................... 10.00% 42
Jonathan Neeley........................................ 20.00% 85
Steven Neeley.......................................... 20.00% 85
Alison Neeley.......................................... 20.00% 85
DENVER WAREHOUSE FIVE ($292,949)
General Partner
MWAC Real Estate, Inc.(2).............................. 10.02% 563
Limited Partners
Jon S. Gilbert......................................... 10.00% 562
Jonathan Neeley........................................ 26.66% 1,498
Steven Neeley.......................................... 26.66% 1,498
Alison Neeley.......................................... 26.66% 1,498
</TABLE>

46
<PAGE> 61

<TABLE>
<CAPTION>
SHARES OF
HOME DEPOT
PERCENTAGE COMMON STOCK
AFFILIATED COMPANIES PARTNERSHIP BENEFICIALLY OWNED
AND PARTNERS INTEREST AFTER THE MERGER(1)
-------------------- ----------- -------------------
<S> <C> <C>
FONTANA WAREHOUSE SIX ($105,608)
General Partner
MWAC Real Estate, Inc.(2).............................. 10.02% 203
Limited Partners
Jon S. Gilbert......................................... 10.00% 202
Jonathan Neeley........................................ 26.66% 540
Steven Neeley.......................................... 26.66% 540
Alison Neeley.......................................... 26.66% 540
ATL WAREHOUSE SEVEN ($222,651)
General Partner
MWAC Real Estate, Inc.(2).............................. 10.02% 428
Limited Partners
Jon S. Gilbert......................................... 10.00% 427
Jonathan Neeley........................................ 26.66% 1,138
Steven Neeley.......................................... 26.66% 1,138
Alison Neeley.......................................... 26.66% 1,138
RICHMOND WAREHOUSE EIGHT ($262,562)
General Partner
MWAC Real Estate, Inc.(2).............................. 10.02% 504
Limited Partners
Jon S. Gilbert......................................... 10.00% 503
Jonathan Neeley........................................ 26.66% 1,342
Steven Neeley.......................................... 26.66% 1,342
Alison Neeley.......................................... 26.66% 1,342
ST. LOUIS WAREHOUSE NINE ($351,453)
General Partner
MWAC Real Estate, Inc.(2).............................. 10.00% 674
Limited Partners
Neeley Revocable Family Trust.......................... 80.00% 5,394
Jon S. Gilbert......................................... 10.00% 674
</TABLE>

- ---------------

(1) Calculated by multiplying the respective partnership interest by the
respective value of the Affiliated Company (as set forth in Schedule A to
the Affiliated Merger Agreement), and divided by an assumed Average Closing
Price of $52.125, the closing price of the Home Depot Common Stock as
reported on a consolidated basis on the New York Stock Exchange on January
21, 1997, and rounded down to the nearest whole share. It is expected that
the Affiliated Partners will receive, in the aggregate and depending on the
Average Closing Price, between 25,919 and 30,331 shares of Home Depot
Common Stock.
(2) All of the shares of MWAC Real Estate, Inc. are owned by the Neeley
Revocable Family Trust.

47
<PAGE> 62

EXPERTS

The consolidated financial statements of The Home Depot, Inc. and
subsidiaries as of January 28, 1996 and January 29, 1995, and for each of the
years in the three-year period ended January 28, 1996, have been incorporated by
reference herein and in the registration statement in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing.

The combined financial statements of Maintenance Warehouse/America Corp.
and affiliates as of December 31, 1995, and for the year then ended have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report appearing in this registration statement, and included in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.

LEGAL MATTERS

The validity of the shares of Home Depot Common Stock being registered
under the Registration Statement of which this Proxy Statement/Prospectus forms
a part will be passed upon for Home Depot by King & Spalding, Atlanta, Georgia.
Certain legal matters in connection with the Merger will be passed upon for
Maintenance Warehouse and the Affiliated Companies by Selzer Caplan Wilkins &
McMahon, San Diego, California and Latham & Watkins, San Diego, California.

STOCKHOLDER PROPOSALS

In order to be eligible for inclusion in Home Depot's proxy solicitation
materials for its 1998 Annual Meeting of Stockholders, any stockholder proposal
to be considered at such meeting must be received by the Secretary of Home Depot
on or before December 17, 1997. Any such proposal will be subject to the
requirements contained in the Home Depot Bylaws relating to stockholder
proposals and the proxy rules under the Exchange Act. See "Comparison of Rights
of Holders of Maintenance Warehouse Common Stock and Home Depot Common Stock."

48
<PAGE> 63

MAINTENANCE WAREHOUSE

INDEX TO COMBINED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Deloitte & Touche LLP, Independent Accountants.... F-2
Combined Balance Sheets..................................... F-3
Combined Statements of Income and Owners' Equity............ F-4
Combined Statements of Cash Flows........................... F-5
Notes to Combined Financial Statements...................... F-6
</TABLE>

F-1
<PAGE> 64

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Owners of
Maintenance Warehouse/America Corp. and affiliates:

We have audited the accompanying combined balance sheet of Maintenance
Warehouse/America Corp. and affiliates as of December 31, 1995, and the related
combined statements of income and owners' equity, and of cash flows for the year
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion, the 1995 combined financial statements present fairly, in
all material respects, the financial position of Maintenance Warehouse/America
Corp. and affiliates as of December 31, 1995, and the results of its operations
and its cash flows for the year then ended in conformity with generally accepted
accounting principles.

(DELOITTE & TOUCHE LLP)

January 17, 1997

F-2
<PAGE> 65

MAINTENANCE WAREHOUSE/AMERICA CORP.

COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------- SEPTEMBER 30,
1994 1995 1996
----------- ----------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash.................................................. $ 863,975 $ 733,881 $ 1,042,161
Accounts receivable, net (Note 3)..................... 8,594,325 9,896,556 12,062,759
Due from related parties (Note 4)..................... 765,067 2,381,860 298,640
Inventory............................................. 12,487,336 14,506,713 16,582,331
Prepaid expenses and other............................ 382,912 375,185 617,393
----------- ----------- -----------
Total current assets.......................... 23,093,615 27,894,195 30,603,284
----------- ----------- -----------
Property and equipment, net (Note 5).................... 22,047,378 24,586,300 27,256,126
Other assets............................................ 190,955 156,348 376,964
----------- ----------- -----------
Total assets.................................. $45,331,948 $52,636,843 $58,236,374
=========== =========== ===========

LIABILITIES AND OWNERS' EQUITY
Current liabilities:
Bank checks outstanding............................... $ 1,071,390 $ 1,899,475 $ 1,578,134
Due to related parties................................ -- 260,980 4,830,677
Note payable to bank (Notes 6 and 7).................. 9,611,000 12,608,000 10,444,665
Current portion of long-term debt (Note 7)............ 242,878 335,963 618,211
Current portion of long-term debt, related parties
(Note 7)........................................... 42,746 91,193 134,586
Accounts payable...................................... 7,035,580 6,142,475 7,549,753
Accrued liabilities................................... 2,261,595 3,087,690 2,745,073
Tenant deposits....................................... 37,538 38,738 18,375
----------- ----------- -----------
Total current liabilities..................... 20,302,727 24,464,514 27,919,474
----------- ----------- -----------
Long-term debt, less current portion (Note 7)........... 11,253,750 10,973,963 15,585,058
Long-term debt, related parties, less current portion
(Note 7).............................................. 4,424,500 6,170,133 1,100,879
Commitments (Note 10)
Owners' equity (Note 8)................................. 9,350,971 11,028,233 13,630,963
----------- ----------- -----------
Total liabilities and owners' equity.................... $45,331,948 $52,636,843 $58,236,374
=========== =========== ===========
</TABLE>

See accompanying notes

F-3
<PAGE> 66

MAINTENANCE WAREHOUSE/AMERICA CORP.

COMBINED STATEMENTS OF INCOME AND OWNERS' EQUITY

See accompanying notes

F-4
<PAGE> 67

MAINTENANCE WAREHOUSE/AMERICA CORP.

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------ --------------------------
1993 1994 1995 1995 1996
------------ ------------ ------------ ----------- ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income........................... $ 11,305,753 $ 12,660,172 $ 16,922,927 $13,017,321 $ 14,302,326
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization...... 1,524,921 1,710,715 1,879,660 1,391,628 1,413,959
(Gain)/loss on disposition of
assets.......................... 69 (18,524) (21,799) (21,799) 61,312
Changes in operating assets and
liabilities:
Accounts receivable............. (1,218,269) (1,356,006) (1,302,231) (2,651,062) (2,166,203)
Due from related parties........ (198,453) (566,614) (1,616,793) 318,672 2,086,784
Inventories..................... (2,211,750) (374,625) (2,019,377) (2,295,535) (2,075,618)
Prepaid expenses and other...... (254,241) 213,300 7,727 (20,659) (242,208)
Other assets.................... 29,576 (42,091) 18,081 25,470 (257,274)
Due to related parties.......... -- -- 260,980 190,490 4,830,677
Accounts payable................ 1,444,366 1,164,476 (893,105) 9,877 1,407,278
Accrued liabilities............. (175,369) 878,182 826,095 698,460 (342,617)
Tenant deposits................. -- -- 1,200 -- (20,363)
------------ ------------ ------------ ----------- ------------
Net cash provided by operating
activities......................... 10,246,603 14,268,985 14,063,365 10,662,863 18,998,053
------------ ------------ ------------ ----------- ------------
INVESTING ACTIVITIES:
Proceeds from sale of property and
equipment.......................... 3,200 25,998 23,627 23,627 6,280
Purchases of property and
equipment.......................... (723,941) (4,520,539) (4,403,884) (3,539,310) (4,379,263)
------------ ------------ ------------ ----------- ------------
Net cash used by investing
activities......................... (720,741) (4,494,541) (4,380,257) (3,515,683) (4,372,983)
------------ ------------ ------------ ----------- ------------
FINANCING ACTIVITIES:
Increase (decrease) in bank checks
outstanding........................ 233,121 191,188 828,085 206,710 (321,341)
Net borrowings (repayments) under
bank agreements.................... 2,918,000 3,816,000 2,997,000 683,000 (2,163,335)
Proceeds from long-term borrowings... 1,000,000 1,901,930 1,885,000 1,907,568 17,159,785
Payments on long-term borrowings..... (1,780,764) (4,075,860) (277,622) (226,353) (17,292,303)
Distributions paid................... (12,090,313) (12,029,887) (15,245,665) (9,846,781) (11,699,596)
Capital contributions................ 250,000 350,000 -- -- --
------------ ------------ ------------ ----------- ------------
Net cash used by financing
activities......................... (9,469,956) (9,846,629) (9,813,202) (7,275,856) (14,316,790)
------------ ------------ ------------ ----------- ------------
Net increase(decrease) in cash....... 55,906 (72,185) (130,094) (128,676) 308,280
Cash at beginning of period.......... 880,254 936,160 863,975 863,975 733,881
------------ ------------ ------------ ----------- ------------
Cash at end of period................ $ 936,160 $ 863,975 $ 733,881 $ 735,299 $ 1,042,161
============ ============ ============ =========== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest............................. $ 1,534,836 $ 1,645,035 $ 2,177,973 $ 1,622,563 $ 1,761,880
Income taxes......................... $ 314,845 $ 216,891 $ 291,449 $ 277,262 $ 298,649
</TABLE>

See accompanying notes

F-5
<PAGE> 68

MAINTENANCE WAREHOUSE/AMERICA CORP.

NOTES TO COMBINED FINANCIAL STATEMENTS
(INFORMATION AS OF DECEMBER 31, 1994 AND SEPTEMBER 30, 1996 AND FOR THE
YEARS ENDED DECEMBER 31, 1993 AND 1994 AND FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1995 AND 1996 IS UNAUDITED)

1. BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

Maintenance Warehouse/America Corp. ("Maintenance Warehouse") was formed
January 25, 1985. Maintenance Warehouse is a nationwide leader in supplying
maintenance, repair and operations (MRO) products to multi-unit housing, lodging
and commercial building customers. Maintenance Warehouse's semi-annually
distributed catalog features over 7,000 products which are ordered primarily by
business customers using Maintenance Warehouse's nationwide, inbound WATS (800)
telephone and fax lines. Orders are filled through a network of 13 strategically
located distribution centers which allow for "next day" delivery service to more
than 90% of the nation's population.

86 Warehouse II, LP; 86 Warehouse III, LP; DFW Warehouse Four, LP; Denver
Warehouse Five, LP; Fontana Warehouse Six, LP; ATL Warehouse Seven, LP; Richmond
Warehouse Eight, LP; St. Louis Warehouse Nine, LP and MWAC One, LP (collectively
the "Partnerships") are all California limited partnerships which are controlled
by the shareholders of Maintenance Warehouse. The Partnerships are in the
business of leasing to Maintenance Warehouse certain of Maintenance Warehouse's
operating facilities and its corporate office.

PRINCIPLES OF COMBINING

The combined financial statements include the accounts of Maintenance
Warehouse and the Partnerships (collectively "the Company"). All significant
accounts and transactions between Maintenance Warehouse and the Partnerships
have been eliminated in the combined financial statements.

FISCAL YEAR

Maintenance Warehouse's fiscal year is on a 52-53 week basis and ends on
the Sunday nearest to December 31. However, for ease of presentation, all fiscal
years in this report are referred to as having ended on December 31. All nine
month periods in this report are referred to as having ended September 30. The
fiscal years ended December 31, 1995, 1994 and 1993 were 52, 52 and 53 week
years, respectively. The Partnerships are calendar year entities and
consequently their year ends on December 31.

INVENTORIES

Inventories are valued at the lower of average cost or market value.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation is provided using
the straight-line method over the estimated useful lives of the assets as
follows:

<TABLE>
<S> <C>
Buildings and leasehold improvements........................ 15 to 39 years
Vehicles and equipment...................................... 5 to 15 years
</TABLE>

Leasehold improvements are amortized using the straight-line method over
the shorter of the lease term or estimated useful lives of the improvements.

F-6
<PAGE> 69

MAINTENANCE WAREHOUSE/AMERICA CORP.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

INCOME TAXES

Federal and state income taxes on the taxable income of the Partnerships is
the responsibility of the individual partners. Therefore, the provision for
income taxes in the combined financial statements does not include any taxes on
taxable income of the Partnerships. Maintenance Warehouse has elected to be
taxed under the provisions of Subchapter S of the Internal Revenue Code. Under
these provisions, Maintenance Warehouse does not pay corporate federal income
tax on its current income. Maintenance Warehouse's shareholders are liable for
federal income taxes on their respective portion of Maintenance Warehouse's
taxable income. For state purposes, certain states do not recognize comparable
tax treatment for Subchapter S. Accordingly, the provision for income taxes in
the combined financial statements includes Maintenance Warehouse's tax liability
to these states.

CONCENTRATION OF CREDIT RISK

During 1993, 1994 and 1995 the majority of sales and the related accounts
receivable were from apartment owners and related management companies
throughout the United States. The Company performs ongoing credit evaluations of
its customers and does not require collateral. Reserves for doubtful accounts
are maintained by the Company; to date such losses have been insignificant and
within management expectations.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform with the
current year presentation.

UNAUDITED FINANCIAL INFORMATION

The combined financial information for the nine months ended September 30,
1995 and 1996, included in the combined financial statements and notes thereto,
is unaudited. In the opinion of management, such information contains all
adjustments, consisting only of normal recurring accruals, necessary for a fair
presentation of such information.

Information for the nine months ended September 30, 1996 is not necessarily
indicative of the results to be expected for the entire year.

2. SUBSEQUENT EVENT

On January 16, 1997, the Company entered into a definitive agreement with
The Home Depot, Inc. to exchange all of the common stock and partnership
interests of the Company for shares of The Home Depot, Inc. common stock. This
agreement is subject to regulatory approval and customary closing conditions.
This merger is expected to be accounted for as a "pooling of interests".

3. ACCOUNTS RECEIVABLE

Accounts receivable are shown net of allowance for doubtful accounts of
$125,000 and $150,000 at December 31, 1994 and 1995, respectively.

F-7
<PAGE> 70

MAINTENANCE WAREHOUSE/AMERICA CORP.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

4. RELATED PARTY TRANSACTIONS

Due from related parties consists of net advances made to affiliates of the
Company. Advances bear interest at various rates up to the prime rate (8.5% as
of December 31, 1995). The Company recorded interest income related to these
advances of $43,039 and $33,567 in 1994 and 1995, respectively (no interest was
recorded in 1993). Purchases of inventory from an affiliate amounted to
$121,442, $654,746 and $645,185 in 1993, 1994 and 1995, respectively.

5. PROPERTY AND EQUIPMENT

Property and equipment summarized by major classifications, is as follows:

<TABLE>
<CAPTION>
1994 1995
----------- -----------
<S> <C> <C>
Land...................................................... $ 5,708,026 $ 5,708,026
Buildings................................................. 13,285,256 15,438,024
Vehicles.................................................. 565,201 721,146
Furniture and equipment................................... 4,910,172 5,041,190
Leasehold improvements.................................... 2,475,466 2,536,881
Computer equipment........................................ 2,832,703 4,318,279
Assets not yet in service................................. 132,270 287,174
----------- -----------
29,909,094 34,050,720
Less accumulated depreciation and amortization............ (7,861,716) (9,464,420)
----------- -----------
$22,047,378 $24,586,300
=========== ===========
</TABLE>

6. NOTE PAYABLE TO BANK

Note payable to bank consists of advances under a line of credit agreement.
At December 31, 1995, the maximum amount of the line was $15,750,000. Amounts
borrowed under the agreement are charged interest at various indexed rates
(6.98% to 9.0% during 1995). This credit line is part of a Credit Facility
Commitment provided by the bank which was due to expire May 1, 1996.

In April 1996, Maintenance Warehouse refinanced the existing bank credit
line with a new bank credit line agreement (the "Agreement") which provides for
an expiration date of May 1, 1998. The Agreement is guaranteed by certain
shareholders of Maintenance Warehouse. Under the terms of the Agreement, this
debt is secured by Maintenance Warehouse's accounts receivable, inventory and
all of its personal property. Furthermore, the Agreement contains certain
restrictive covenants including those with respect to working capital, tangible
net worth, quarterly net profits and personal property lease payments.
Subsequent to September 30, 1996, Maintenance Warehouse was not in compliance
with the covenants regarding tangible net worth and use of credit line proceeds.
The bank has granted a waiver with regard to Maintenance Warehouse's requirement
to comply with these covenants.

F-8
<PAGE> 71

MAINTENANCE WAREHOUSE/AMERICA CORP.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

7. LONG-TERM DEBT

During the period of May 1996 through July 1996, substantially all mortgage
debt was refinanced with variable rate mortgages with due dates that range from
2 to 10 years. These new mortgages are also collateralized by first trust deeds
on land and buildings.

Long-term debt at December 31 consists of the following:

<TABLE>
<CAPTION>
1994 1995
----------- -----------
<S> <C> <C>
DUE TO NON-RELATED PARTIES:
Variable rate mortgages, due in monthly installments ranging
from $8,180 to $43,627, with interest at rates ranging
from 7.875% to 9.5%, collateralized by a first trust deed
on land and buildings with a net book value of $13,853,553
at December 31, 1995...................................... $10,999,782 $10,943,975
Variable rate term loan payable in monthly installments of
$11,766 through November 1998, collateralized by equipment
with a net book value of $386,001 at December 31, 1995.... 473,413 365,951
3.4% equipment note payable in monthly installments of
$1,713 through 1995....................................... 23,433 --
----------- -----------
11,496,628 11,309,926
Less current maturities..................................... (242,878) (335,963)
----------- -----------
$11,253,750 $10,973,963
=========== ===========
DUE TO RELATED PARTIES:
Variable rate mortgages with related parties, due in monthly
installments ranging from $9,319 to $18,481, with interest
at rates ranging from 8.031% to 9.5%, collateralized by a
first trust deed on land and buildings with a net book
value of $4,591,560 at December 31, 1995.................. $ 4,412,246 $ 6,261,326
Unsecured construction loan................................. 55,000 --
----------- -----------
4,467,246 6,261,326
Less current maturities..................................... (42,746) (91,193)
----------- -----------
$ 4,424,500 $ 6,170,133
=========== ===========
</TABLE>

At December 31, 1995 future minimum principal payments due under the
refinanced debt terms are as follows:

<TABLE>
<S> <C>
1996........................................................ $ 427,156
1997........................................................ 757,043
1998........................................................ 756,022
1999........................................................ 631,526
2000........................................................ 631,526
Thereafter.................................................. 14,367,978
-----------
$17,571,251
===========
</TABLE>

Total interest incurred on long-term debt and note payable to bank for the
years ended December 31, 1993, 1994 and 1995, amounted to $1,269,713, $1,413,573
and $1,769,774, respectively.

8. OWNERS' EQUITY

Maintenance Warehouse's capital structure consists of 10,000,000 authorized
shares of no par value common stock. As of December 31, 1995, 10,000 shares of
common stock were issued and outstanding. At December 31, 1995, owners' equity
includes retained earnings which consists of $4,441,606 of income taxed

F-9
<PAGE> 72

MAINTENANCE WAREHOUSE/AMERICA CORP.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

to shareholders, but not distributed and $4,461,616 of retained earnings
accumulated prior to the Maintenance Warehouse Subchapter S election.

9. EMPLOYEE BENEFIT PLAN

Maintenance Warehouse has a 401(k) plan which covers substantially all
employees that have attained the age of 21 and completed one year of service.
Maintenance Warehouse matches 300% of the employees' contributions (up to 3.5%
of the employee's gross compensation). Maintenance Warehouse contributions
aggregated $528,113, $569,264 and $675,741 for the years ended December 31,
1993, 1994 and 1995, respectively.

10. COMMITMENTS

Maintenance Warehouse conducts certain of its operations from leased
facilities. These leases expire at various dates through September 2001, and
provide for additional payments through cost of living index changes, property
tax payments, utilities and maintenance. There are options to renew certain of
these leases, varying from one to five year periods, at an increased monthly
rental.

Rent expense relating to leases for the years ended December 31, 1993, 1994
and 1995 was $588,532, $635,963 and $570,324, respectively.

Future minimum rental payments due under operating leases as of December
31, 1995 are as follows:

<TABLE>
<S> <C>
1996........................................................ $ 466,698
1997........................................................ 213,954
1998........................................................ 148,440
1999........................................................ 152,760
2000........................................................ 157,080
Thereafter.................................................. 120,240
----------
$1,259,172
==========
</TABLE>

11. RENTAL INCOME UNDER OPERATING LEASES

Maintenance Warehouse subleases a portion of its Corporate offices and
operating warehouse facilities. These subleases expire at various dates through
August 1999, and provide for additional payments through cost of living index
changes, property tax payments, utilities and maintenance. Rental income
received on the subleases was $543,713, $544,629 and $481,418 in 1993, 1994 and
1995, respectively.

The following is a schedule of future minimum rental receipts under these
subleases as of December 31, 1995:

12. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of cash, accounts receivable, bank checks outstanding
and accounts payable approximate fair market value because of the short maturity
of those instruments.

F-10
<PAGE> 73

MAINTENANCE WAREHOUSE/AMERICA CORP.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The fair values of notes payable to bank and long-term debt (Notes 6 and 7)
are estimated to approximate the carrying amount. The interest rates charged on
these credit facilities reflect current market rates and are either variable or
may be fixed for short-term periods.

F-11
<PAGE> 74

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Article IV, Section 4, of the Registrant's Restated By-Laws provides that
to the fullest extent permitted by Delaware law, each former, present or future,
director, officer, employee or agent of the Registrant, and each person who may
serve at the request of the Registrant as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise
shall be indemnified by the Registrant in all events.

Article NINTH of the Registrant's Restated Certificate of Incorporation
provides that to the fullest extent permitted by Delaware law, no director of
the Registrant shall be liable to the Registrant or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the Registrant
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit.

Section 145 of the General Corporation Law of the State of Delaware sets
forth the applicable terms, conditions and limitations governing the
indemnification of officers, directors and other persons.

In addition, the Registrant maintains officers' and directors' liability
insurance for the benefit of its officers and directors.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

a. Exhibits

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <C> <S>
*2.1 -- Principal Merger Agreement dated as of January 16, 1997, by
and among Registrant, Home Depot Sub, Inc., Maintenance
Warehouse/America Corp. and the shareholders of Maintenance
Warehouse/America Corp. (included as Annex A of the Proxy
Statement/Prospectus which forms a part of this Registration
Statement)
*2.2 -- Affiliated Merger Agreement dated as of January 16, 1997 by
and among Registrant and certain affiliated property
partnerships (included as Annex B of the Proxy
Statement/Prospectus which forms a part of this Registration
Statement)
*4.1 -- Specimen Common Stock Certificate
4.2 -- Form of Escrow Agreement (included as Annex C of the Proxy
Statement/Prospectus which forms a part of this Registration
Statement)
*5.1 -- Form of Opinion of King & Spalding
*8.1 -- Form of Opinion of King & Spalding as to tax matters
23.1 -- Consent of KPMG Peat Marwick LLP
23.2 -- Consent of Deloitte & Touche LLP
23.3 -- Consent of King & Spalding (included in Exhibit 5.1)
*24.1 -- Power of attorney of certain directors of Registrant signing
this Registration Statement
99.1 -- Form of Proxy
</TABLE>

- ---------------

* Previously filed.

b. Financial Statement Schedules.

None.

II-1
<PAGE> 75

ITEM 22. UNDERTAKINGS

The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

The undersigned registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.

The registrant undertakes that every prospectus (i) that is filed pursuant
to the immediately preceding paragraph, or (ii) that purports to meet the
requirements of section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.

The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

II-2
<PAGE> 76

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 2 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Atlanta, State of Georgia, on February 13, 1997.

The Home Depot, Inc.

By: /s/ BERNARD MARCUS
------------------------------------
Bernard Marcus

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities indicated below on February 13, 1997.

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ BERNARD MARCUS Chairman of the Board, Chief Executive
- -------------------------------------------------------- Officer and Secretary (Principal Executive
Bernard Marcus Officer)

/s/ ARTHUR M. BLANK President, Chief Operating Officer and
- -------------------------------------------------------- Director
Arthur M. Blank

/s/ RONALD M. BRILL Executive Vice President, Chief
- -------------------------------------------------------- Administrative Officer, Assistant
Ronald M. Brill Secretary and Director

* Director
- --------------------------------------------------------
Frank Borman

* Director
- --------------------------------------------------------
John L. Clendenin

* Director
- --------------------------------------------------------
Johnetta B. Cole

* Director
- --------------------------------------------------------
Berry R. Cox

/s/ MARSHALL L. DAY Senior Vice President and Chief Financial
- -------------------------------------------------------- Officer (Principal Financial and
Marshall L. Day Accounting Officer)

* Director
- --------------------------------------------------------
Milledge A. Hart, III

* Director
- --------------------------------------------------------
Donald R. Keough

* Director
- --------------------------------------------------------
Kenneth G. Langone

* Director
- --------------------------------------------------------
M. Faye Wilson

*By: /s/ BERNARD MARCUS
---------------------------------------------------
Bernard Marcus
Attorney-in-fact
</TABLE>

II-3
<PAGE> 77

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <C> <S> <C>
*2.1 -- Merger Agreement dated as of January 16, 1997, by and among
Registrant, Home Depot Sub, Inc., Maintenance
Warehouse/America Corp. and the shareholders of Maintenance
Warehouse/America Corp. (included as Annex A of the Proxy
Statement/Prospectus which forms a part of this Registration
Statement)
*2.2 -- Affiliated Merger Agreement by and among Registrant and
certain California affiliated limited partnerships (listed
at Annex F of the Proxy Statement/Prospectus which forms a
part of this Registration Statement), dated as of January
16, 1997 (included as Annex B of the Proxy
Statement/Prospectus which forms a part of this Registration
Statement)
*4.1 -- Specimen Common Stock Certificate
4.2 -- Form of Escrow Agreement (included as Annex C of the Proxy
Statement/ Prospectus which forms a part of this
Registration Statement)
*5.1 -- Form of Opinion of King & Spalding
*8.1 -- Form of Opinion of King & Spalding as to tax matters
23.1 -- Consent of KPMG Peat Marwick LLP
23.2 -- Consent of Deloitte & Touche LLP
23.3 -- Consent of King & Spalding (included in Exhibit 5.1)
*24.1 -- Power of attorney of certain directors of Registrant signing
this Registration Statement
99.1 -- Form of Proxy
</TABLE>

- ---------------

* Previously filed.
<PAGE> 78

<TABLE>
<CAPTION>
ANNEX DESCRIPTION
- ----- -----------
<C> <S> <C>
A. Merger Agreement dated as of January 16, 1997, by and among
Registrant, Home Depot Sub, Inc., Maintenance
Warehouse/America Corp. and the shareholders of Maintenance
Warehouse/America Corp. (included as Annex A of the Proxy
Statement Prospectus which forms a part of this Registration
Statement)
B. Affiliated Merger Agreement by and among Registrant and
certain affiliated real property partnerships, dated as of
January 16, 1997 (included as Annex B of the Proxy/Statement
Prospectus which forms a part of this Registration
Statement)
C. Form of Escrow Agreement (included as Annex C of the Proxy
Statement Prospectus which forms a part of this Registration
Statement)
D. Articles 5.11, 5.12 and 5.13 of the Texas Business
Corporation Act
E. Article 7.5 of the California Revised Limited Partnership
Act
F. List of Affiliated Companies
</TABLE>
<PAGE> 79

ANNEX A

PRINCIPAL MERGER AGREEMENT

[SEE ATTACHED]
<PAGE> 80

MERGER AGREEMENT

by and among

THE HOME DEPOT, INC.

HOME DEPOT SUB, INC.

MAINTENANCE WAREHOUSE/AMERICA CORP.

and

THE SHAREHOLDERS OF MAINTENANCE WAREHOUSE/AMERICA CORP.

As of January 16, 1997

<PAGE> 81
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE 1
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Articles of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Tax-Free Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE 2
Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Manner of Converting of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Exchange of Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Conversion Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5 Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.6 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.7 Post-Closing Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

ARTICLE 3
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

ARTICLE 4
Individual Shareholder Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.1 Power and Authority of Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.2 Ownership of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.3 Ownership of Affiliated Company Interests. . . . . . . . . . . . . . . . . . . . . . . . . 10

ARTICLE 5
Joint and Several Shareholder Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 11
5.1 Corporate Organization: Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

</TABLE>

i
<PAGE> 82

<TABLE>
<S> <C>
5.2 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.3 Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.4 Ownership Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.5 No Commitment to Issue or Rights to Acquire Equity Interests . . . . . . . . . . . . . . . . . . . . 13
5.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.7 Unreported and Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.8 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.9 Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.11 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.12 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.13 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.14 Compliance With Laws Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.15 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.16 Intellectual Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.17 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.18 No Broker Involved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.19 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.20 Officers and Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.21 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.22 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.23 Title to Property and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.24 Computer Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.25 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.26 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.27 Nondisclosed Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.28 Securities Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.29 Pooling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.30 Disclaimers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

ARTICLE 6
Representations and Warranties of Parent and Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.2 Authorization and Approval of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.3 Ability to Carry Out Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.4 Investment Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.5 No Broker Involved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.6 Parent Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.7 Parent SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.8 Material Misstatements or Omissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>

ii
<PAGE> 83

<TABLE>
<S> <C>
ARTICLE 7
Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.2 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.3 Supplements to Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.4 Pooling of Interests Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.5 The NYSE Additional Shares Listing Application . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.6 Antitrust Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.7 No Solicitation of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.8 Affiliated Owner Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.9 Disposition of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

ARTICLE 8
Post-Closing Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.1 Shareholder Parties' Post-Closing Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.2 Parent's Post-Closing Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.3 Post-Closing Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.4 Noncompetition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.5 Related Party Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.6 Transfer of Parent Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

ARTICLE 9
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.1 Indemnification Obligations of the Shareholder Parties . . . . . . . . . . . . . . . . . . . . . . . 41
9.2 Indemnification Obligations of Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.3 Limitations on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.4 Indemnification Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.5 Claims Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.6 Recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.7 Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.8 Limitation on Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

ARTICLE 10
Conditions Precedent To Obligations Of Parent and Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
10.1 Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
10.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

ARTICLE 11
Conditions Precedent to Obligations of the Shareholder Parties and the Company . . . . . . . . . . . . . . 49
</TABLE>

iii

<PAGE> 84

<TABLE>
<S> <C>
11.1 Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

ARTICLE 12
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
12.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
12.2 Specific Performance and Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.3 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.4 Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

ARTICLE 13
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

ARTICLE 14
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
14.1 Cooperation Following the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
14.2 Benefits and Burdens: Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
14.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
14.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
14.5 Entire Understanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
14.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
14.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
14.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
14.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
14.10 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
14.11 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
14.12 Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
14.13 Shareholder Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
</TABLE>

<PAGE> 85

DEFINED TERMS

The following is a list of the defined terms used in this Agreement:

<TABLE>
<CAPTION>
Terms Section
<S> <C>
1995 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6(a)
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.25
Affiliated Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Affiliated Company Ancillary Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(d)
Affiliated Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Affiliated Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Affiliated Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8
Affiliated Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12(a)
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Antitrust Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
Arbitrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6
Average Closing Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.15(b)
CERCLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.13(b)
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3(a)
Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3(a)
Claims Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.5
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
Closing Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
COBRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.15(e)
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Company Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4(a)
Company Ancillary Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(a)
Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
Company Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.19
Company License Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.24(b)
Company Licensed Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.24(a)
Company Proprietary Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.24(a)
Company Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.24(a)
Competing Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.7
Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4(a)
Conversion Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
D&T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5(f)
Deficit Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7
Delivery Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3(f)
</TABLE>

<PAGE> 86

DEFINED TERMS

<TABLE>
<CAPTION>
Terms Section
- ----- -------
<S> <C>
Disputed Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.15(b)
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.13(a)
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.15(a)
Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1(h)
Excess Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Article 13
Financial Statement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6(a)
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5(a)
Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.13
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3
Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.17(d)
Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4(a)
Indemnifying Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4(a)
Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.16
Interim Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6(b)
Interim Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6(b)
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11
KPMG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5(e)
Leased Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12(a)
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Multiemployer Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.15(h)
Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6
NLRB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.21(a)
Noncompete Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4(a)
Notice of Dispute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
OSHA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.21(a)
Outstanding Share Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
Owned Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12(a)
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Parent Ancillary Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2
Parent Basket Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3(b)
Parent Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8
Parent Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1
Parent Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1
Parent Maximum Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3(b)
Parent SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
</TABLE>

<PAGE> 87

DEFINED TERMS

<TABLE>
<CAPTION>
Terms Section
- ----- -------
<S> <C>
Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3
Personal Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(1)
Plan of Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8
Qualified Retirement Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.15(k)
Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12(a)
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8
Related Party Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.25(b)
Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.13
Review Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
Rule 145 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.28(c)
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8
Severance Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5(c)
Shareholder Ancillary Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1
Shareholder Basket Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3(a)
Shareholder Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2
Shareholder Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2
Shareholder Maximum Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3(a)
Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Shareholder Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4(a)
Stay Bonuses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5(c)
Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.17(c)
TBCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Technical Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.24(a)
Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1
Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4
Territory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4(a)
To The Knowledge Of The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.11
Trade Secrets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4(a)
</TABLE>

<PAGE> 88

SCHEDULES

<TABLE>
<S> <C> <C>
Schedule A - Affiliated Companies
Schedule 4.2(a) - Exceptions to Ownership of Shares
Schedule 4.2(b) - Ownership of Shares
Schedule 4.3 - Ownership of Affiliated Company Interests
Schedule 5.1(b) - Corporate Authorizations
Schedule 5.2(a) - No Violation of Company
Schedule 5.2(b) - No Violation of Affiliated Companies
Schedule 5.4(b) - Ownership Interest of Affiliated Companies
Schedule 5.5 - Commitments to Issue or Rights to Acquire Equity Interests
Schedule 5.6(a) - 1995 Financial Statements
Schedule 5.6(b) - Interim Balance Sheet
Schedule 5.7 - Unreported and Contingent Liabilities
Schedule 5.8 - Absence of Certain Changes
Schedule 5.9 - Licenses and Permits
Schedule 5.10 - Litigation
Schedule 5.12(a)(i) - Owned Real Property
Schedule 5.12(a)(ii) - Affiliated Real Property
Schedule 5.12 (a)(iii) - Leased Real Property
Schedule 5.12(b) - Owned Real Property Title Exceptions
Schedule 5.12(c) - Affiliated Real Property Title Exceptions
Schedule 5.12(d) - Leasedhold Interest Title Exceptions
Schedule 5.12(g) - Improvements and Fixtures of Real Property
Schedule 5.13 - Environmental Matters
Schedule 5.13(f) - Environmental Fines, Penalties and Assessments
Schedule 5.15(a) - Employee Compensation and Benefits
Schedule 5.15(b) - Employee Benefit Plans
Schedule 5.15(d) - Violations of ERISA and Related Laws
Schedule 5.15(i) - Exceptions to Benefit Plans
Schedule 5.15(j) - Insurance Reserves, Trust Fundings and Accrued Liabilities
Schedule 5.16 - Intellectual Properties
Schedule 5.17(a) - Tax
Schedule 5.17(b) - Tax Returns - Jurisdictions
Schedule 5.19 - Company Contracts
Schedule 5.20 - Officers and Employees
Schedule 5.21 - Labor Relations
Schedule 5.22 - Insurance
Schedule 5.24 - Company Software
Schedule 5.25(a) - Transactions with Affiliates
Schedule 5.25(b) - Related Party Obligations
Schedule 5.28(c) - Rule 145 Affiliates
Schedule 5.29 - Pooling of Interests
Schedule 7.1(l) - Assets to be Purchased by Officers
Schedule 10.1(c) - Consents to Contracts
</TABLE>

<PAGE> 89

EXHIBITS

<TABLE>
<S> <C>
Exhibit 1.1 Certificate of Merger

Exhibit 10.1(d)(iv) Opinion of Counsel for the Company, the Affiliated
Companies and the Shareholders

Exhibit 10.1(f) Deloitte & Touche LLP Opinion

Exhibit 10.1(h) Escrow Agreement

Exhibit 11.1(c)(iii) Opinion of Counsel for Parent and Sub

</TABLE>
<PAGE> 90

MERGER AGREEMENT

THIS MERGER AGREEMENT, dated as of January 16, 1997 (the
"Agreement"), by and among THE HOME DEPOT, INC., a Delaware corporation
("Parent"), HOME DEPOT SUB, INC., a Texas corporation and a wholly owned
subsidiary of Parent ("Sub"), MAINTENANCE WAREHOUSE/AMERICA CORP., a Texas
corporation (the "Company"), and the shareholders of the Company who have
executed this Agreement (the "Shareholder Parties");

W I T N E S S E T H:

WHEREAS, Parent and Sub each have approved this Agreement and the
merger (the "Merger") of Sub with and into the Company on the terms and
conditions contained herein and in accordance with the Texas Business
Corporation Act ("TBCA");

WHEREAS, Parent, as the sole shareholder of Sub, has approved this
Agreement, the Merger and the transactions contemplated hereby pursuant to
action taken by unanimous written consent in accordance with the requirements
of the TBCA and the Articles of Incorporation and the Bylaws of Sub;

WHEREAS, the Board of Directors of the Company has approved this
Agreement and the Merger pursuant to action taken by unanimous written consent
in accordance with the requirements of the TBCA and the Articles of
Incorporation and the Bylaws of the Company, and has directed that this
Agreement and the Merger be submitted to the shareholders of the Company (the
"Shareholders") for their approval;

WHEREAS, the Merger will be effected by the filing of a certificate
of merger in the form attached as Exhibit 1.1 hereto (the "Certificate of
Merger") with the Secretary of State of the State of Texas;

WHEREAS, the parties to this Agreement intend that the Merger qualify
as a "reorganization" within the meaning of Section 368 of the Internal Revenue
Code of 1986 (the "Code");

WHEREAS, immediately following the consummation of the Merger, each
of the California limited partnerships listed on Schedule A hereto (the
"Affiliated Companies") will be merged with and into Parent or a wholly owned
subsidiary of Parent (the "Affiliated Merger" and, together with the Merger,
the "Mergers"), pursuant to an Affiliated Merger Agreement, dated the date
hereof, among Parent and the Affiliated Companies (the "Affiliated Merger
Agreement");

NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:

<PAGE> 91

ARTICLE 1

The Merger

1.1 Surviving Corporation. Subject to the provisions of this
Agreement, and the TBCA, at the Effective Time (as hereinafter defined), Sub
shall be merged with and into the Company, and the separate corporate existence
of Sub shall cease. The Company shall be the surviving corporation in the
Merger (hereinafter sometimes called the "Surviving Corporation") and shall
continue its corporate existence under the laws of the State of Texas.

1.2 Articles of Incorporation. The Articles of Incorporation of
Sub shall be the Articles of Incorporation of the Surviving Corporation.

1.3 Bylaws. The Bylaws of Sub shall be the Bylaws of the
Surviving Corporation.

1.4 Directors. The directors of the Surviving Corporation shall
consist of the directors of Sub immediately prior to the Effective Time, such
directors to keep their positions on the Board of Directors of the surviving
corporation until their respective successors are duly elected and qualified.

1.5 Officers. The officers of the Surviving Corporation shall
consist of the officers of Sub immediately prior to the Effective Time, such
officers to hold office from the Effective Time until their respective
successors are duly elected and qualified.

1.6 Effective Time. Upon satisfaction or waiver of the conditions
set forth in Articles 10 and 11 hereof, and if this Agreement shall not have
been terminated in accordance with Article 12 hereof, the parties hereto shall
cause the Certificate of Merger to be properly executed and filed on the
Closing Date (as hereinafter defined) with the Secretary of State of the State
of Texas. The Merger shall become effective as of the time of filing of a
properly executed Certificate of Merger or at such later date and time as is
specified in the Certificate of Merger. The date and time when the Merger
becomes effective is herein referred to as the "Effective Time".

1.7 Tax-Free Reorganization. The Merger is intended to be a
reorganization within the meaning of Section 368 of the Code, and this
Agreement is intended to be a "plan of reorganization" within the meaning of
the regulations promulgated under Section 368 of the Code.

1.8 Registration Statement. The shares of voting common stock,
par value $.05 per share, of Parent ("Parent Common Stock") to be issued in the
Mergers will be registered under the Securities Act of 1933 (the "Securities
Act") pursuant to a registration statement of the Company on Form S-4 (the
"Registration Statement"). The Registration Statement shall be filed with the
Securities and Exchange Commission ("SEC"), and each of Parent and the Company
shall use its commercially reasonable efforts to respond to the comments of the
SEC and to cause the Registration Statement to be declared effective and the
definitive proxy statement that will form a

<PAGE> 92

part of the Registration Statement (the "Proxy Statement") to be mailed to the
Shareholders and the partners of the Affiliated Companies (collectively, the
"Affiliated Owners") as soon as reasonably practicable. Parent and the Company
shall each provide the other parties to this Agreement any information for
inclusion in the Registration Statement or Proxy Statement which may be
required under applicable law and which is reasonably requested by such other
party. Parent and the Company shall promptly notify the other of the receipt
of the comments of the SEC and of any request from the SEC for amendments or
supplements to the Registration Statement or for additional information, and
will promptly supply the other with copies of all correspondence between it or
its representatives, on the one hand, and the SEC or members of its staff, on
the other hand, with respect to the Registration Statement. If any time prior
to the Effective Time any event should occur which is required by applicable
law to be set forth in an amendment of, or a supplement to, the Registration
Statement, the party with knowledge of such event will promptly inform the
other parties to this Agreement. In such case, Parent and the Company will,
upon learning of such event, promptly prepare such amendment or supplement and
shall file such amendment or supplement with the SEC. The Company will notify
Parent at least 24 hours prior to the mailing of the Proxy Statement, or any
amendment or supplement thereto, to the Affiliated Owners.

ARTICLE 2

Conversion of Shares

2.1 Manner of Converting of Shares. As of the Effective Time, by
virtue of the Merger and without any action on the part of any holder thereof,
the shares of the constituent corporations shall be converted as follows:

(a) Subject to Section 2.2, each share of common stock,
no par value per share, of the Company ("Company Common Stock") issued
and outstanding immediately prior to the Effective Time (except for
Dissenting Shares (as defined below) and treasury shares) shall
automatically be converted into the right to receive such number of
shares of Parent Common Stock as has a value equal to the Conversion
Amount (as hereinafter defined). For the purposes of this
calculation, each share of Parent Common Stock shall be valued at the
arithmetic average of the closing price per share of Parent Common
Stock, as reported on a consolidated basis on the New York Stock
Exchange (the "NYSE") for each of the ten (10) consecutive trading
days ending with the trading day which occurs immediately prior to the
Effective Time (the "Average Closing Price"). Notwithstanding the
foregoing, for the purposes of this Agreement, if the preceding
sentence results in (i) an Average Closing Price less than $47.00,
then the Average Closing Price shall equal $47.00 and (ii) an Average
Closing Price greater than $55.00, then the Average Closing Price
shall equal $55.00. If, between the date hereof and the Closing Date
(as defined below), Parent effects any stock split, stock combination,
stock dividend or similar transaction with respect to the outstanding
shares of Parent Common Stock, the dollar amounts in the preceding
sentence shall be adjusted simultaneously with the effectiveness of
such transaction by multiplying such dollar

<PAGE> 93

amounts by a fraction, the numerator of which shall equal the number
of outstanding shares of Parent Common Stock outstanding immediately
prior to the effectiveness of such transaction, and the denominator of
which shall equal the number of outstanding shares of Parent Common
Stock outstanding immediately following the effectiveness of such
transaction.

(b) Each share of Company Common Stock that is held in
the Company's treasury immediately prior to the Effective Time (if
any) shall be cancelled and retired and all rights in respect thereof
shall cease to exist, without any conversion thereof or payment of any
consideration therefor.

(c) Each share of common stock, no par value per share,
of Sub that is issued and outstanding immediately prior to the
Effective Time shall be converted into one share of common stock, no
par value per share, of the Surviving Corporation.

2.2 Fractional Shares. No scrip or fractional shares of Parent
Common Stock shall be issued in the Mergers. All fractional shares of Parent
Common Stock to which a Shareholder immediately prior to the Effective Time
would otherwise be entitled at the Effective Time shall be aggregated with the
fractional shares to be received by such Shareholder (if any) in the Affiliated
Merger. If a fractional share results from such aggregation, such Shareholder
shall be entitled, after the later of (a) the Effective Time or (b) the
surrender of such Shareholder's Certificate(s) (as defined below) that
represent such shares of Company Common Stock, to receive from Parent an amount
in cash in lieu of such fractional share, based on the Average Closing Price.

2.3 Exchange of Company Common Stock.

(a) On or prior to the Closing Date, Parent shall make
available to each record holder who, as of the Effective Time, was a
holder of an outstanding certificate or certificates which immediately
prior to the Effective Time represented shares of the Company Common
Stock (the "Certificate" or "Certificates"), a form of letter of
transmittal and instructions for use in effecting the surrender of the
Certificates for payment therefor and conversion thereof, which form
of letter of transmittal and instructions shall be reasonably
satisfactory to the Company. Delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to Parent and the form of letter of
transmittal shall so reflect. Upon surrender to Parent of a
Certificate, together with such letter of transmittal duly executed,
the holder of such Certificate shall be entitled to receive in
exchange therefor (i) one or more certificates as requested by the
holder (properly issued, executed and countersigned, as appropriate)
representing that number of whole shares of fully paid and
nonassessable shares of Parent Common Stock to which such holder of
Company Common Stock shall have become entitled pursuant to the
provisions of Section 2.1 hereof, (ii) as to any fractional share of
Parent Common Stock, a check representing the cash consideration to
which such holder shall have become entitled pursuant to Section 2.2
hereof, and (iii) any dividend or other distribution to which such
holder is entitled pursuant

<PAGE> 94

to Section 2.3(b) hereof, and the Certificate so surrendered shall
forthwith be cancelled. No interest will be paid or accrued on the
cash payable upon the surrender of the Certificates. If any portion
of the consideration to be received pursuant to Sections 2.1, 2.2 and
2.3(b) upon exchange of a Certificate (whether a certificate
representing shares of Parent Common Stock or by check representing
cash for a fractional share) is to be issued or paid to a person other
than the person in whose name the Certificate surrendered in exchange
therefor is registered, it shall be a condition of such issuance and
payment that the Certificate so surrendered shall be properly endorsed
or otherwise in proper form for transfer and that the person
requesting such exchange shall pay in advance any transfer or other
taxes required by reason of the issuance of a Certificate representing
cash for a fractional share to such other person, or established to
the satisfaction of Parent that such tax has been paid or that such
tax is not applicable. From the Effective Time until surrender in
accordance with the provisions of this Section 2.3, each Certificate
shall represent for all purposes only the right to receive the
consideration provided in Sections 2.1, 2.2 and 2.3(b). All payments
of respective shares of Parent Common Stock that are made upon
surrender of Certificates in accordance with the terms hereof shall be
deemed to have been made in full satisfaction of rights pertaining to
the shares of Company Common Stock evidenced by such Certificates.

(b) No dividends or other distributions with respect to
Parent Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate with respect to
the shares of Parent Common Stock, and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section
2.2, in each case until the surrender of such Certificate in
accordance with this Article 2. Following surrender of any such
Certificate, there shall be paid to the holder of the certificate
representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of a fractional share of Parent
Common Stock to which such holder is entitled pursuant to Section 2.2
and the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole
shares of Parent Common Stock and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record
date after the Effective Time but prior to such surrender and with a
payment date subsequent to such surrender payable with respect to such
whole shares of Parent Common Stock.

(c) In the case of any lost, mislaid, stolen or destroyed
Certificate, the holder thereof may be required, as a condition
precedent to delivery to such holder of the consideration described in
Sections 2.1, 2.2 and 2.3(b) hereof, to deliver to Parent a bond in
such reasonable sum or a reasonably satisfactory indemnity agreement
as Parent may direct as indemnity against any claim that may be made
against Parent or the Surviving Corporation with respect to the
Certificate alleged to have been lost, mislaid, stolen or destroyed.

(d) After the Effective Time, there shall be no transfers
on the stock transfer books of the Surviving Corporation of the shares
of Company Common Stock that were

<PAGE> 95

outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving
Corporation for transfer, they shall be cancelled and exchanged for
the consideration described in Sections 2.1, 2.2 and 2.3(b) hereof.

(e) Any shares of Parent Common Stock or cash due former
shareholders of the Company pursuant to Sections 2.1, 2.2 and 2.3(b)
hereof that remain unclaimed by such former shareholders for six (6)
months after the Effective Time shall be held by Parent, and any
former holder of Company Common Stock who has not theretofore complied
with Section 2.3(a) shall thereafter look only to Parent for issuance
of the number of shares of Parent Common Stock and other consideration
to which such holder has become entitled pursuant to the provisions of
Sections 2.1, 2.2 and 2.3(b) hereof; provided, however, that neither
Parent nor any party hereto shall be liable to a former holder of
shares of Company Common Stock for any amount required to be paid to a
public official pursuant to any applicable abandoned property, escheat
or similar law.

(f) To the extent that appraisal rights are available
under the TBCA, shares of Company Common Stock that are issued and
outstanding immediately prior to the Effective Time and that have not
been voted for adoption of the Merger and with respect to which
appraisal rights have been properly demanded in accordance with the
TBCA ("Dissenting Shares") shall not be converted into the right to
receive the consideration provided for in this Article 2 at or after
the Effective Time unless and until the holder of such shares becomes
ineligible for such appraisal rights. If a holder of Dissenting
Shares becomes ineligible for appraisal, then, as of the Effective
Time or the occurrence of such event, whichever later occurs, such
holder's Dissenting Shares shall cease to be Dissenting Shares and
shall be converted into and represent the right to receive the
consideration provided for in this Article 2 (subject to all of the
rights and obligations of the Shareholders hereunder). If any
Shareholder asserts the right to be paid for the fair value of such
Company Common Stock as described above, the Company shall give Parent
notice of such assertion and Parent shall have the right to
participate in all negotiations and proceedings with respect to any
such demands. The Company shall not, except with the prior written
consent of Parent, voluntarily make any payment with respect to, or
settle or offer to settle, any such demand for payment. Payment for
Dissenting Shares shall be made as required by the TBCA.

2.4 Conversion Amount. The "Conversion Amount" shall be equal to
the number obtained by dividing (i) $245,433,514 by (ii) the number of shares
of Company Common Stock issued and outstanding immediately prior to the
Effective Time (the "Outstanding Share Amount"). The Conversion Amount is
subject to adjustment as provided in Section 2.7 below.

2.5 Balance Sheet. As promptly as practicable after the Closing
Date, but in any case not later than 90 days thereafter, Parent shall cause to
be prepared and delivered to the Shareholder Parties a combined balance sheet
of the Company and the Affiliated Companies (the "Closing Balance Sheet") in
accordance with the following guidelines (the date on which the Closing Balance
Sheet is delivered by Parent to the Shareholder Parties is referred to herein
as the "Delivery Date"):

<PAGE> 96

(a) the Closing Balance Sheet shall set forth the
combined net book value of the assets and liabilities of the Company
and the Affiliated Companies as of the Effective Time, which net book
value shall be (i) derived from and in accordance with the books and
records of the Company and the Affiliated Companies and (ii)
determined in accordance with generally accepted accounting principles
("GAAP") applied on a basis consistent with the principles used in the
preparation of the Interim Balance Sheet (as defined in Section 5.6);

(b) all fees and expenses payable by the Company or any
Affiliated Company relating to this Agreement and the transactions
contemplated hereby, including without limitation fees and expenses of
Donaldson, Lufkin & Jenrette Securities Corporation, counsel and
accountants to the Company and the Affiliated Companies, transfer
taxes and fees, title insurance and surveys and other costs relating
to the transfer to the Company of the Affiliated Real Property (as
defined in Section 5.12), shall be accrued on the Closing Balance
Sheet except to the extent paid by the Company or an Affiliated
Company prior to the Effective Time;

(c) the Closing Balance Sheet shall not include any
accrual relating to stay bonuses ("Stay Bonuses") that will become
payable to certain of the Company's employees after the Closing Date
except to the extent (if any) that the maximum amount payable of the
Stay Bonuses exceeds $953,000, and shall not include any accrual for
any severance pay which may become payable after the Closing Date
pursuant to the Company's severance pay plans ("Severance Plan") among
the current officers and employees of the Company;

(d) the Closing Balance Sheet shall include an accrual
relating to any special payments to officers and employees of the
Company (other than the Stay Bonuses) arising as a result of the
transactions contemplated by this Agreement;

(e) the Closing Balance Sheet shall have been audited by
KPMG Peat Marwick L.L.P. ("KPMG") and shall be accompanied by their
report thereon; and

(f) Deloitte & Touche L.L.P. ("D&T") shall have the right
to observe all steps (including any physical inventory) taken by
Parent in connection with the preparation of the Closing Balance Sheet
and to review all work papers and procedures relating thereto.

Upon receipt by the Shareholder Parties of the Closing Balance Sheet,
the Shareholder Parties shall have thirty (30) days after the Delivery Date to
review the Closing Balance Sheet delivered by Parent (the "Review Period"). If
the Shareholder Parties dispute the Closing Balance Sheet so delivered by
Parent, the Shareholder Parties shall, on or prior to the last day of the
Review Period, prepare and submit to Parent a notice of dispute (a "Notice of
Dispute") which shall set forth the Shareholder Parties' proposed Closing
Balance Sheet and shall specifically enumerate the items and calculations
objected to in the Closing Balance Sheet delivered by Parent (the "Disputed
Items"). If the Shareholder Parties fail to deliver a Notice of Dispute prior
to the last day of the Review Period, the Closing Balance Sheet delivered by
Parent to the Shareholder Parties shall be the final

<PAGE> 97

Closing Balance Sheet for purposes of this Agreement. Upon receipt of a Notice
of Dispute, the Shareholder Parties and Parent will, for a period of thirty (30)
days following delivery of such Notice of Dispute, seek in good faith to resolve
all Disputed Items and agree on a Closing Balance Sheet.

2.6 Arbitration. After receipt of a Notice of Dispute, if the
Shareholder Parties and Parent are unable to agree on a Closing Balance Sheet
within the thirty (30) day period referred to in the last sentence of Section
2.5, D&T and KPMG shall jointly choose a nationally recognized firm of
independent public accountants as promptly as practicable (the "Arbitrator"),
and each of the Shareholder Parties and D&T, on the one hand, and Parent and
KPMG, on the other hand, shall, within forty-five (45) days after the date on
which the Notice of Dispute was delivered by the Shareholder Parties to Parent,
prepare and submit to the other and to the Arbitrator its respective proposed
Closing Balance Sheet together with a statement of its position with respect to
any unresolved Disputed Items. The Arbitrator shall, after the submission of
such information by Parent and the Shareholder Parties, review such Disputed
Items only and submit its written decision to the Shareholder Parties and
Parent within forty-five (45) days after receipt of such information from
Parent and the Shareholder Parties, and the Closing Balance Sheet as adjusted
by the Arbitrator shall be the final Closing Balance Sheet for purposes of this
Agreement. In connection with such review, the Arbitrator shall have complete
access to all books and records of the Company and the Affiliated Companies
relevant to preparation of the Closing Balance Sheet. Any determination by the
Arbitrator with respect to any disputes regarding the Closing Balance Sheet
shall be final and binding on the Shareholder Parties and Parent. The costs of
the Arbitrator shall be borne fifty percent (50%) by the Shareholder Parties
and fifty percent (50%) by Parent. The shareholders' equity reflected on the
final Closing Balance Sheet is hereinafter referred to as the "Net Worth."

2.7 Post-Closing Adjustment. If the Net Worth is greater than
$6,468,124 (such excess being hereinafter referred to as the "Excess Amount"),
the Conversion Amount will be increased by an amount equal to (i) the Excess
Amount divided by (i) the Outstanding Share Amount. If the Net Worth is less
than $6,468,124 (such deficit being hereinafter referred to as the "Deficit
Amount"), the Conversion Amount will be decreased by an amount equal to (i) the
Deficit Amount divided by the (ii) the Outstanding Share Amount. Within five
(5) days following the determination of the final Closing Balance Sheet, (i) in
the case of an Excess Amount, Parent shall issue to each Shareholder the
additional number of shares of Parent Common Stock (and cash pursuant to
Section 2.2 for any fractional share) to which such Shareholder is entitled
based on the adjusted Conversion Amount and (ii) in the case of a Deficit
Amount, each Shareholder shall surrender to Parent for cancellation without
consideration the number of excess shares of Parent Common Stock (and cash
pursuant to Section 2.2 for any fractional share) that was issued to such
Shareholder on the Closing Date based on the adjusted Conversion Amount. For
the purposes of the adjustments and calculations contemplated by this Section
2.7, each share of Parent Common Stock shall be valued at the Average Closing
Price.

8
<PAGE> 98

ARTICLE 3

Closing

3.1 The Closing. The closing ("Closing") will take place at 10:00
a.m., San Diego, California time on the 20th business day following the mailing
of the Proxy Statement to the Shareholders, at the offices of Seltzer Caplan
Wilkins & McMahon, 750 "B" Street, Suite 2100, San Diego, California 92101,
upon fulfillment of all the conditions set forth in Article 10 which have not
been waived by Parent, and all the conditions set forth in Article 11 which
have not been waived by the Shareholder Parties and Company. If these
conditions have not been fulfilled or waived by such date, the Closing will
take place within five business days after fulfillment or waiver of all such
conditions but in no event later than May 31, 1997, unless otherwise mutually
agreed in writing by Parent, the Shareholder Parties and the Company. The date
on which the Closing is held is referred to as the "Closing Date".

ARTICLE 4

Individual Shareholder Representations and Warranties

Each Shareholder Party, severally and not jointly, represents and
warrants only on such Shareholder Party's behalf to Parent as follows:

4.1 Power and Authority of Shareholder. Such Shareholder Party
has the right, power and capacity to execute and deliver this Agreement and
each other agreement, instrument or document executed and delivered by or on
behalf of such Shareholder Party in connection with the transactions
contemplated hereby, including, without limitation, all agreements relating to
the Affiliated Merger (the "Shareholder Ancillary Agreements") and to fully
perform the obligations required to be performed by such Shareholder Party
hereunder and thereunder. Each of this Agreement and the Shareholder Ancillary
Agreements has been duly and validly executed and delivered by such Shareholder
Party and constitutes such Shareholder Party's legal, valid and binding
obligation, enforceable in accordance with its terms, except as the
enforceability may be limited by laws of general application relating to
bankruptcy, insolvency and debtors' relief, and by general principles of
equity. The execution, delivery and performance of this Agreement and each of
the Shareholder Ancillary Agreements has been duly and validly authorized by
such Shareholder Party acting in a fiduciary, representative or corporate
capacity (if applicable). The execution, delivery and performance by such
Shareholder Party of this Agreement and the Shareholder Ancillary Agreements
and the consummation of the transactions contemplated hereby and thereby will
not, with or without the giving of notice or the lapse of time, or both, (a)
violate any provision of law, statute, rule or regulation to which such
Shareholder Party is subject, (b) violate any order, judgment or decree
applicable to such Shareholder Party, (c) violate, conflict with, or result in
a breach or default under, or cause the termination of, any term or condition
of any court order, trust document, will, agreement, document or other
instrument to which such Shareholder Party is a party or by

<PAGE> 99

which such Shareholder Party or such Shareholder Party's properties may be
bound, (d) require the consent of any other party to any of the items referred
to above or (e) violate any of the governing documents of the Company or any
Affiliated Company. Prior to its execution of this Agreement, if such
Shareholder Party is acting in a fiduciary, representative or corporate
capacity, it has furnished to Parent a true and correct copy of each and every
will, trust agreement or other document that establishes or relates to the
right, power, capacity or authority of such Shareholder Party to execute,
deliver and perform this Agreement and the Shareholder Ancillary Agreements and
to consummate the transactions contemplated hereby and thereby. Such
Shareholder Party is not a party to, or subject to any judgment, decree or
order entered in, any suit, action, claim or proceeding that prevents such
Shareholder Party from executing this Agreement or any of the Shareholder
Ancillary Agreements or performing such Shareholder Party's obligations
hereunder.

4.2 Ownership of Shares. Except as set forth on Schedule 4.2(a),
such Shareholder Party owns good and marketable record and beneficial title to
the number of shares of Company Common Stock set forth beside such Shareholder
Party's name and federal tax identification number on Schedule 4.2(b), and such
shares (i) are validly issued, fully paid and nonassessable, and (ii) are free
and clear of any liens, restrictions, claims, equities, charges, options,
rights of first refusal, or encumbrances, with no defects of title whatsoever.
Other than the shares shown on Schedule 4.2(b), such Shareholder Party owns no
shares of capital stock of the Company or any other equity security of the
Company or right of any kind to have any such equity security issued. Such
Shareholder Party has the exclusive right, power and authority to vote the
shares of Company Common Stock owned by such Shareholder Party. Such
Shareholder Party covenants that it is not party to or bound by any agreements
affecting or relating to such Shareholder Party's right to transfer or vote the
shares of Company Common Stock owned by such Shareholder Party.

4.3 Ownership of Affiliated Company Interests. Such Shareholder
Party and its Affiliates (as defined in Section 5.25) owns good and marketable
record and beneficial title to the percentage interest in each of the
Affiliated Real Property Partnerships set forth beside the name of such
Shareholder Party on Schedule 4.3, and such partnership interests (the
"Partnership Interests") (i) are validly issued and (ii) are free and clear of
any liens, restrictions, claims, equities, charges, options, rights of first
refusal or encumbrances, with no defects of title whatsoever. Other as shown
on Schedule 4.3, such Shareholder Party and its Affiliates own no other equity
security of any Affiliated Company or right of any kind to have any such equity
security issued. Such Shareholder Party and its Affiliates have the exclusive
right, power and authority to vote the Partnership Interests owned by such
Shareholder Party and its Affiliates. Such Shareholder Party covenants that it
is not party to or bound by any agreements affecting or relating to such
Shareholder Party's right to transfer or vote the Partnership Interests owned
by such Shareholder.

<PAGE> 100

ARTICLE 5

Joint and Several Shareholder Representations and Warranties

The Shareholder Parties jointly and severally represent and warrant to
Parent that:

5.1 Corporate Organization; Authorization.

(a) The Company has the requisite power and authority to
execute and deliver this Agreement and all agreements, documents and
instruments executed and delivered by the Company in connection with
the transactions contemplated by this Agreement (which shall, for all
purposes hereunder include the Affiliated Merger) (the "Company
Ancillary Agreements") and to fully perform its respective obligations
hereunder and thereunder, and the execution and delivery of this
Agreement and the Company Ancillary Agreements by the Company and the
Company's performance of the transactions contemplated herein and
therein have been duly authorized by all requisite corporate and
shareholder action.

(b) The Company is a corporation validly existing and in
good standing under the laws of the State of Texas and has all
requisite corporate power and authority to own, operate and lease
its property and to carry on its business as now being conducted. The
Company is qualified to conduct business as a foreign corporation in
each jurisdiction in which the ownership or leasing of its properties
or the conduct of its business requires such qualification. Schedule
5.1(b) sets forth (i) a list of all jurisdictions in which the Company
is qualified to do business and (ii) a list of all jurisdictions in
which the Company is operating under a trade name, and each
jurisdiction in which any such trade name is registered.

(c) Each of the Affiliated Companies is a limited
partnership validly existing and in good standing under the
laws of the State of California and has all requisite power and
authority to own, operate and lease its property and to carry on its
business as now being conducted. None of the Affiliated Companies is
required to be qualified to conduct business as a foreign partnership
in any jurisdiction other than the state in which the real property
owned by such Affiliated Company is located.

(d) Each of the Affiliated Companies has the requisite
power and authority to execute and deliver the Affiliated Merger
Agreement and all agreements, documents and instruments executed and
delivered by such Affiliated Company in connection with the
transactions contemplated by the Affiliated Merger Agreement (the
"Affiliated Company Ancillary Agreements") and to fully perform its
respective obligations thereunder, and the execution and delivery of
the Affiliated Merger Agreement and the Affiliated Company Ancillary
Agreements by such Affiliated Company and such Affiliated Company's
performance of the transactions contemplated therein have been duly
authorized by all requisite action on the part of such Affiliated
Company and its partners.

<PAGE> 101

5.2 No Violation.

(a) Except as set forth in Schedule 5.2(a), neither the
execution and delivery of this Agreement or any of the Company
Ancillary Agreements by the Company nor the consummation of the
transactions contemplated hereby or thereby by the Company shall (a)
violate or result in a breach of or constitute a default under any
provision of the Company's charter documents or bylaws, (b) violate
any order, arbitration award, judgment, decree, law, ordinance,
regulation or any other restriction of any kind or character to which
the Company is a party or is bound or to which any property of the
Company is subject or is bound, (c) violate or result in a breach of
or constitute a default (or would result in or constitute such a
breach or default with notice or lapse of time or both) under any
provision of any Company Contract (as defined below), (d) require the
consent of any other party to any of the items described in this
subsection or (e) require the consent or approval of any governmental
body, agency or authority.

(b) Except as set forth on Schedule 5.2(b), neither the
execution and delivery of the Affiliated Merger Agreement or any of
the Affiliated Company Ancillary Agreements by the Affiliated
Companies nor the consummation of the transactions contemplated
thereby by the Affiliated Companies shall (a) violate or result in a
breach of or constitute a default under any provision of any
Affiliated Company's partnership agreement, (b) violate any order,
arbitration award, judgment, decree, law, ordinance, regulation or any
other restriction of any kind or character to which an Affiliated
Company is a party or is bound or to which any property of an
Affiliated Company is subject or is bound, (c) violate or result in a
breach of or constitute a default (or would result in or constitute
such a breach or default with notice or lapse of time or both) under
any provision of any Company Contract, (d) require the consent of any
other party to any of the items described in this subsection or (e)
require the consent or approval of any governmental body, agency or
authority.

5.3 Enforceability. The Company has duly executed and delivered
this Agreement and each of the Company Ancillary Agreements, and this Agreement
and each of the Company Ancillary Agreements constitutes a valid and binding
agreement, enforceable against the Company in accordance with its terms, except
as enforceability may be limited by laws of general application relating to
bankruptcy, insolvency and debtors' relief, and by general principles of
equity. Each of the Affiliated Companies has duly executed and delivered the
Affiliated Merger Agreement and each of the Affiliated Company Ancillary
Agreements, and the Affiliated Merger Agreement and each of the Affiliated
Company Ancillary Agreements constitutes a valid and binding agreement
enforceable against each of the Affiliated Companies in accordance with its
terms, except as enforceability may be limited by laws of general application
relating to bankruptcy, insolvency and debtors' relief, and by general
principles of equity.

<PAGE> 102

5.4 Ownership Interests.

(a) The authorized capital stock of the Company consists of
10,000,000 shares of common stock, no par value per share, of which 10,000
shares have been issued and are outstanding (the "Shares"). The Shares
constitute all of the issued and outstanding shares of the capital stock of the
Company. All of the Shares are validly issued, fully paid and non-assessable,
free of pre-emptive rights, and no such Shares have been issued in violation of
any federal or state securities law.

(b) Schedule 5.4(b) sets forth a true and correct list of
the general and limited partners of each of the Affiliated Companies.

(c) No prior offer, issue, redemption, call, transfer or
transaction of any nature with respect to any capital stock or equity interest
of the Company or any Affiliated Company, or any corporation or organization
which has been merged into the Company or any Affiliated Company, has given or
could reasonably be expected to give rise to any valid claim or action by any
person against the Company or any Affiliated Company. Neither the Company nor
any of the Affiliated Companies owns an equity interest in any corporation,
limited liability company, partnership or other entity.

5.5 No Commitment to Issue or Rights to Acquire Equity Interests.
Except as set forth on Schedule 5.5, neither the Company nor any Affiliated
Company has entered into any contract or agreement or made any commitment to
sell or otherwise transfer or issue any shares of capital stock or any other
equity or profits interests in the Company or any Affiliated Company, nor are
there any outstanding options, subscriptions, warrants, conversion rights or
similar rights of any kind convertible into any equity or profits interests in
the Company or any Affiliated Company.

5.6 Financial Statements.

(a) The Company's audited balance sheet as of the end of,
and related audited statements of income, retained earnings and cash
flow for, the fiscal year ended December 31, 1995 (the "Financial
Statement Date"), are attached hereto as Schedule 5.6(a) and are
referred to herein as the "1995 Financial Statements." The 1995
Financial Statements (i) present fairly, in all material respects, the
financial position, results of operations and changes in cash flows,
as the case may be, of the Company at the Financial Statement Date,
and (ii) were prepared in conformity with GAAP in a manner consistent
with the Company's historic accounting practices applied on a
consistent basis, except as otherwise indicated in the text of such
statements.

(b) The unaudited combining balance sheet of the Company
and each of the Affiliated Companies as of October 27, 1996 (the
"Interim Balance Sheet"), attached as Schedule 5.6(b) and the related
combining statements of income for the ten (10) fiscal periods ended
October 27, 1996, are referred to herein as the "Interim Financial
Statements." The Interim Financial Statements (i) present fairly, in
all material respects, the financial

<PAGE> 103

position and results of operations, as the case may be, of the Company
and each of the Affiliated Companies at October 27, 1996, and (ii)
were prepared in conformity with GAAP and in a manner consistent with
the Company's historic accounting practice applied on a consistent
basis, subject to year-end closing adjustments and the lack of full
footnote presentations.

5.7 Unreported and Contingent Liabilities. Except (a) as set
forth on Schedule 5.7, (b) as set forth in the 1995 Financial Statements, (c)
for liabilities of a type reflected on the 1995 Financial Statements that have
arisen in the ordinary course of business following the Financial Statement
Date, and (d) for obligations and liabilities disclosed on any Schedule hereto
or made by the Company or an Affiliated Company in the ordinary course of its
business, neither the Company nor any Affiliated Company has any liabilities or
obligations, whether accrued, absolute, fixed, known or unknown, contingent or
otherwise, existing, arising out of or relating to any transaction entered
into, or state of facts existing, on or prior to the date of this Agreement.

5.8 Absence of Certain Changes. Since the Financial Statement
Date, the business of the Company and each of the Affiliated Companies has been
conducted only in the ordinary course, and except as set forth on Schedule 5.8,
there has not been (a) any material adverse change (or any event that is
reasonably likely to result in a material adverse change) in the condition
(financial or otherwise), assets, liabilities, earnings, business or operations
of the Company or any Affiliated Company; (b) any damage, destruction, casualty
or other similar occurrence or event (whether or not insured against), which
either singly or in the aggregate materially adversely affects the assets,
liabilities, earnings, business or operations of the Company or any Affiliated
Company; (c) any mortgage or pledge of or encumbrance attached to any of the
properties or assets of the Company or any Affiliated Company not in the
ordinary course of business; (d) any incurrence or creation of any liability,
commitment or obligation in excess of $100,000 by the Company or any Affiliated
Company, except unsecured trade payables and other unsecured liabilities
incurred in the ordinary course of business, and capital expenditures or
contracts and commitments for capital expenditures made or entered into in the
ordinary course of business; or (e) any sale, transfer or other disposition by
the Company or any Affiliated Company of any of its assets (other than the
Personal Assets as defined in Section 7.1(l)) in excess of $100,000 in the
aggregate, except for inventory and equipment sold by the Company in the
ordinary course of business.

5.9 Licenses and Permits. The Company and each of the Affiliated
Companies possesses all material licenses or permits necessary to conduct its
business as now operated. Such licenses and permits are valid and in full
force and effect. No action or claim is pending, or, to the knowledge of the
Company, threatened, to revoke or terminate any such licenses or permits or
declare any of them invalid in any respect and the transactions contemplated by
this Agreement will not result in the revocation or termination of any such
licenses or permits. A list of all such licenses and permits is attached as
Schedule 5.9.

5.10 Litigation. Except as set forth on Schedule 5.10, there is
not pending against the Company or any Affiliated Company or, to the knowledge
of Company, threatened against the

<PAGE> 104

Company or any Affiliated Company any claim, action, suit, arbitration
proceeding, governmental proceeding or investigation or other proceeding of any
character (a) demanding money damages from the Company or any Affiliated
Company, or (b) demanding a temporary restraining order, preliminary injunction
or a permanent injunction or order of specific performance against the Company
or any Affiliated Company. All pending suits, actions, claims, proceedings or
investigations relating to or involving the Company (or any of its officers or
directors as such) are adequately provided for in the Interim Balance Sheet in
accordance with GAAP. Neither the Company nor any Affiliated Company is
expressly subject to any judgment, decree, injunction, rule or order of any
court, and neither the Company nor any Affiliated Company is subject to any
governmental restriction which is reasonably likely (i) to have a material
adverse effect on the assets, liabilities, results of operations, financial
condition, business or prospects of the Company or any Affiliated Company or
(ii) to cause a material limitation on Parent's ability to operate the business
of the Company or any Affiliated Company after the Closing.

5.11 Inventory. Except as set forth on any Schedule hereto, all of
the Company's inventory and supplies held for sale or use in connection with
operating the retail business of the Company (the "Inventory") was purchased in
the ordinary course of business and is owned by the Company free and clear of
all liens, security interests and encumbrances, other than security interests
securing debt to unaffiliated third parties pursuant to existing credit
agreements reflected on the Interim Balance Sheet. The Inventory is maintained
on the financial records of the Company using historical valuation methods and
practices consistent with those used in preparing the 1995 Financial Statements
and the Interim Financial Statements, respectively.

5.12 Real Property.

(a) Schedule 5.12(a)(i) sets forth a true and correct
legal description of the parcels of real property currently owned by
the Company (together with the fixtures and improvements thereon, the
"Owned Real Property"). Schedule 5.12(a)(ii) sets forth a true and
correct legal description of the parcels of real property currently
owned by the Shareholders and their Affiliates (including the
Affiliated Companies) that are used by or leased to the Company
(together with all improvements and fixtures thereon, the "Affiliated
Real Property") and also identifies the owner of each parcel of
Affiliated Real Property. Schedule 5.12 (a)(iii) sets forth a true
and correct legal description of the parcels of real property
currently leased by the Company from unaffiliated third parties
(together with all fixtures and improvements thereon, the "Leased Real
Property" and collectively with the Owned Real Property and the
Affiliated Real Property, the "Real Property").

(b) Except as set forth on Schedule 5.12(b), the Company
has good and marketable title to the Owned Real Property free and
clear of all liens, pledges, security interests, charges, claims,
leasehold interests, tenancies, restrictions and encumbrances of any
nature whatsoever other than (i) liens for taxes not yet due and
payable, (ii) statutory liens of landlords and liens of carriers,
warehousemen, mechanics, materialmen and repairmen incurred in the
ordinary course of business and not yet delinquent and (iii) zoning,
building,

<PAGE> 105

or other restrictions, variances, covenants, rights of way,
encumbrances, easements and other minor irregularities in title, none
of which, individually or in the aggregate, (A) interfere with the
present use of or occupancy of any of the Owned Real Property by the
Company, (B) have more than an immaterial effect on its use or the
value thereof for its present use, or (C) would impair the ability of
the Company to sell any such Owned Real Property for its present use.

(c) Except as set forth on Schedule 5.12(c), each of the
owners identified on Schedule 5.12(a)(ii) has good and marketable
title to the applicable parcel of Affiliated Real Property, free and
clear of all liens, pledges, security interests, charges, claims,
leasehold interests, tenancies, restrictions and encumbrances of any
nature whatsoever other than (i) liens for taxes not yet due and
payable, (ii) statutory liens of landlords and liens of carriers,
warehousemen, mechanics, materialmen and repairmen incurred in the
ordinary course of business and not yet delinquent and (iii) zoning,
building, or other restrictions, variances, covenants, rights of way,
encumbrances, easements and other minor irregularities in title, none
of which, individually or in the aggregate, (A) interfere with the
present use of or occupancy of any of the Affiliated Real Property by
the Company, (B) have more than an immaterial effect on its use or the
value thereof for its present use or (C) would impair the ability of
such partnerships to sell any such Affiliated Real Property for its
present use. The Affiliated Companies do not own any real property
except as described on Schedule 5.12(a)(ii).

(d) Except as set forth on Schedule 5.12(d),The Company
has a valid leasehold interest in the Leased Real Property, free and
clear of any mortgages, pledges, liens, security interests or other
encumbrances of any nature.

(e) The leases of the Leased Real Property are in full
force and effect. The Company has neither sent nor received written
notice of any default under the leases of the Leased Real Property,
and the Company has not breached any material covenant, agreement or
condition contained in any lease of the Leased Real Property, nor has
there occurred any event which with the passage of time or the giving
of notice or both would constitute such a breach by the Company.

(f) No portion of the Real Property, or any of the
buildings and improvements located thereon, violates in any material
respect any law, rule, regulation, ordinance, or statute, including
those relating to zoning, building, land use, environmental, health
and safety, fire, air, sanitation and noise control. To the knowledge
of the Company, no pending or threatened condemnation or similar
proceeding exists with respect to the Real Property.

(g) Except as set forth on Schedule 5.12(g) to the
knowledge of the Company, the improvements and fixtures located on the
Real Property are in good condition and working order, without any
material defect of any kind. The Company is in possession of all of
the Real Property and all improvements and fixtures located thereon,
and the Company

<PAGE> 106

has adequate rights of ingress and egress with respect to such Real
Property and the improvements and fixtures located thereon.

5.13 Environmental Matters. Except as set forth in Schedule 5.13:

(a) the Company and each Affiliated Company possesses,
and is in compliance in all material respects with, all permits,
licenses and government authorizations and has filed all notices that
are required under local, state and federal laws and regulations
relating to protection of the environment, pollution control, product
registration and hazardous materials (as defined below)
("Environmental Laws"), and the Company and each Affiliated Company is
in compliance in all material respects with all applicable
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in those
laws or contained in any law, regulation, code, plan, order, decree,
judgment, notice, permit or demand letter issued, entered, promulgated
or approved thereunder;

(b) neither the Company nor any Affiliated Company has
received notice of actual or threatened liability under the Federal
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA") or any similar state or local statute or ordinance from any
governmental agency or any third party and there are no facts or
circumstances which could reasonably form the basis for the assertion
of any claim against the Company under any Environmental Laws
including, without limitation, CERCLA or any similar local, state or
foreign law with respect to any on-site or off-site location;

(c) neither the Company nor any Affiliated Company has
entered into, agreed to nor contemplates entering into any consent
decree or order, and is not subject to any judgment, decree or
judicial or administrative order relating to compliance with, or the
cleanup of hazardous materials under, any applicable Environmental
Laws;

(d) neither the Company nor any Affiliated Company has
been alleged to be in violation of, and has not been subject to any
administrative or judicial proceeding pursuant to, applicable
Environmental Laws or regulations either now or any time during the
past five years;

(e) neither the Company nor any Affiliated Company is
subject to any claim, obligation, liability, loss, damage or expense
of whatever kind or nature, contingent or otherwise, incurred or
imposed or based upon any provision of any Environmental Law and
arising out of any act or omission of the Company or any Affiliated
Company or their respective employees, agents or representatives or
arising out of the ownership, use, control or operation by the Company
or any Affiliated Company of any plant, facility, site, area or
property (including, without limitation, any plant, facility, site,
area or property currently or previously owned or leased by the
Company or any Affiliated Company) from which any hazardous materials
were released into the environment (the term "release" meaning any

<PAGE> 107

spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping or disposing into the
environment, and the term "environment" meaning any surface or ground
water, drinking water supply, soil, surface or subsurface strata or
medium, or the ambient air);

(f) the Company and each Affiliated Company has
heretofore provided Parent with true, correct and complete copies of
all files of the Company and each Affiliated Company relating to
environmental matters (or an opportunity to review such files), and
Schedule 5.13(f) sets forth the amount of all fines, penalties or
assessments paid within the last five years by the Company and each
Affiliated Company with respect to environmental matters, including
the date of payment and the basis for the assertions of liability; and

(g) neither the Real Property nor improvements or
equipment included within the Real Property contains any asbestos,
PCBs or underground storage tanks.

As used in this Section 5.13, the term "hazardous materials" means any
pollutant, hazardous substance, toxic, ignitable, reactive or corrosive
substance, hazardous waste, special waste, industrial substance, by-product,
process intermediate product or waste, petroleum or petroleum-derived substance
or waste, chemical liquids or solids, liquid or gaseous products, or any
constituent of any such substance or waste, the use, handling or disposal of
which by the Company or any Affiliated Company is in any way governed by or
subject to any applicable law, rule or regulation of any governmental or
regulatory authority.

5.14 Compliance With Laws Generally. The Company and each
Affiliated Company has complied and is in current compliance in all material
respects with all laws, rules, regulations and ordinances to which it is
subject or by which it is bound. Except for laws, rules, regulations or
ordinances that are or are to be of general applicability, there are no
existing or, to the knowledge of the Company, proposed laws, rules, regulations
or ordinances of such a nature as could reasonably be expected to materially
adversely affect the continued conduct or profitability of the Company's or any
Affiliated Company's business in the manner presently conducted.

5.15 Employee Benefit Plans.

(a) Schedule 5.15(a) sets forth a true and complete list
of (i) the names, titles, locations of employment, annual salaries and
other compensation and benefits of all employees of the Company and
(ii) the wage rates for non-salaried employees of the Company. Except
as set forth on Schedule 5.15(a), there are no employees of the
Company who are on military, disability, family or other leave of
absence (whether or not approved) and who have reemployment rights or
rights to health care continuation coverage under Part 6 of Title I of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or similar rights to benefits continuation.

<PAGE> 108

(b) Schedule 5.15(b) contains a true and
complete list of all the following agreements or plans
("Benefit Plans") which are presently in effect or which have
previously been in effect and which cover or covered any current or
former employees, officers, directors or independent contractors of
the Company ("Employees"):

(i) any employee benefit plan as defined in
Section 3(3) of ERISA, under which the Company has any
outstanding, present, or future obligation or liability, or
under which any Employee has any present or future right to
benefits which are covered by ERISA; or

(ii) any other pension, profit sharing,
retirement, deferred compensation, stock purchase, stock
option, incentive, bonus, vacation, severance, disability,
hospitalization, medical, life insurance, or other employee
benefit plan, program, policy, or arrangement, which the
Company maintains or to or under which the Company has any
outstanding, present, or future obligations to contribute or
make payments, whether voluntary, contingent or otherwise.

(c) The Company has made available to Parent true,
correct and complete copies of all documents that Parent has requested
relating to the Benefit Plans, including but not limited to: (i) all
plan documents, amendments, trust instruments and other material
agreements adopted or entered into in connection with each of the
Benefit Plans; (ii) all insurance and annuity contracts related to any
Benefit Plans; (iii) all administrative notices and forms used for the
Benefit Plans, including the notices and election forms used to notify
employees and their dependents of their continuation coverage rights
under the Company's group health plans; and (iv) the most recently
available Form 5500 annual reports, certified financial statements,
actuarial reports, summary plan descriptions and favorable
determination letters for the Benefit Plans. Since the date these
documents were supplied to Parent, no plan amendments have been
adopted, no changes to these documents have been made, and no
amendments or changes will be adopted or made prior to the Closing
Date.

(d) Except as set forth in Schedule 5.15(d), all of the
Benefit Plans and the related trusts subject to ERISA comply and have
been administered in compliance with (i) the provisions of ERISA,
(ii) all provisions of the Code applicable to secure the intended tax
consequences, (iii) all applicable state and federal securities laws
and (iv) all other applicable laws, rules, regulations and collective
bargaining agreements, except where the failure to so comply or to be
so administered would not result in any monetary penalty against the
Company. The Company has not received any written notice from any
governmental agency or instrumentality questioning or challenging such
compliance.

(e) The Company has complied with the continuation
coverage requirements of Section 1001 of the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, and ERISA Sections 601
through 608 ("COBRA"), except where the failure to so comply would not
result in a monetary penalty against the Company.

<PAGE> 109

(f) Neither the Company, its ERISA Affiliates (that is,
any entity which, together with the company, will be treated as a
single employer within the meaning of Code Section 414(b), (c), (m) or
(o)), nor any administrator or fiduciary of any Benefit Plan (or agent
or delegate of any of the foregoing) has engaged in any transaction or
acted or failed to act in any manner that could subject the Company to
any direct or indirect liability (by indemnity or otherwise) for a
breach of any fiduciary or co-fiduciary duty under ERISA. No party in
interest (as defined in ERISA) or disqualified person (as defined in
the Code) of any Benefit Plan has engaged in any prohibited
transaction (within the meaning of ERISA Section 406 or Code Section
4975).

(g) No Benefit Plan is subject to Title IV of ERISA, and
neither the Company nor any of its ERISA Affiliates have incurred any
liability under Title IV of ERISA arising in connection with the
termination of any plan covered or previously covered by Title IV of
ERISA that could become, after the Closing Date, an obligation of Sub
or any of its ERISA Affiliates.

(h) Neither the Company nor any of its ERISA Affiliates
currently is a party to any pension or welfare plan that is a
multiemployer plan within the meaning of ERISA Section 4001(a)(3)
("Multiemployer Plan"). Neither the Company nor any of its ERISA
Affiliates (i) currently has any liability to make any withdrawal
liability payment to any Multiemployer Plan; (ii) will incur any such
liability for which Sub or its affiliates may become liable; (iii) is
delinquent in making any contributions required to be paid to any
Multiemployer Plan; or (iv) is involved in any pending dispute with
any Multiemployer Plan.

(i) Except as identified on Schedule 5.15(i), none of the
Benefit Plans provides welfare benefits, including, without
limitation, death or medical benefits (whether or not insured), with
respect to current or former Employees beyond their retirement or
other termination of service (other than coverage required by COBRA or
any similar state law).

(j) Levels of insurance reserves, trust funding and
accrued liabilities with regard to all Benefit Plans (to which such
reserves or liabilities do or should apply) are described on Schedule
5.15(j), and such levels are reasonable and sufficient to provide for
all incurred but unreported claims and any retroactive or prospective
premium adjustments.

(k) Each Benefit Plan which is intended to be qualified
under Code Section 401(a) ("Qualified Retirement Plan") is qualified
under Code Section 401(a) and its related trust is tax-exempt under
Code Section 501. For each such plan, the Company has received from
the Internal Revenue Service a favorable determination letter to the
effect that the plan in form satisfies the requirements for
qualification under Code Section 401(a) (taking into account the
provisions of the Tax Reform Act of 1986 and all subsequent
legislation). No amendment to any Qualified Retirement Plan made
since applying for such determination letter could cause a
disqualification of such plan. Any noncompliance or failure prior to
the Closing Date properly to maintain, operate, or administer any
Qualified Retirement Plan has

<PAGE> 110

not rendered and will not render: (i) such plan or its related trust
or Sub or its ERISA Affiliates subject to, or liable (directly or
indirectly) for, any taxes, penalties, or liabilities to any person or
governmental agency; (ii) such plan subject to disqualification; or
(iii) the trust under such plan subject to any liability for taxes.

(l) The Company's records accurately reflect its
Employees' employment histories, including their hours of service and
years of vesting and eligibility service.

(m) There is no pending or threatened complaint, claim
(other than a routine claim for benefits), proceeding, audit, or
investigation of any kind in or before any court, tribunal, or
governmental agency with respect to any Benefit Plan.

(n) None of the Affiliated Companies has, or has ever
had, any employees or any benefit plans of the type described in
Section 5.15(b).

5.16 Intellectual Properties. Attached hereto as Schedule 5.16 is
a list of all copyrights, trade names and trademarks, trade secrets, service
marks or patents which are used in the business of the Company or any
Affiliated Company or as to which the Company or any Affiliated Company claims
an ownership interest or as to which the Company or any Affiliated Company is a
licensee or licensor (the "Intellectual Property") and jurisdictions where
registered (if any). The Company and each Affiliated Company (as applicable)
has good and marketable title to or possesses adequate licenses or other valid
rights to use the Intellectual Property, free and clear of all liens, charges,
claims and other encumbrances. To the knowledge of the Company, the use of the
Intellectual Property does not misappropriate, infringe upon or conflict with
any patent, copyright, trade name, trade secret or trademark of any third
party. No party has filed a claim (or, to the knowledge of Company, threatened
to file a claim) against the Company or any Affiliated Company alleging that it
has violated, infringed on or otherwise improperly used the intellectual
property rights of such party and, to the knowledge of Company, neither the
Company nor any Affiliated Company has violated or infringed any patent,
trademark, trade name, service mark, service name, copyright or trade secret
held by others.

5.17 Tax Matters. (a) Except as set forth in Schedule 5.17(a):

The Company is a "small business corporation" and has
maintained a valid election to be an "S corporation" under Subchapter
S of the Code and the equivalent provisions of all applicable state
income tax statutes since January 1, 1987. The Company and each
Affiliated Company has timely filed, including applicable extensions,
all federal, state, local and foreign Tax returns required to be filed
by it, all such returns are accurate and complete in all material
respects, and the Company and each Affiliated Company has paid or made
adequate provision on its books and records for the payment of all
Taxes (as defined in Section 5.17(c)) (including any interest,
penalties and additions to Tax) required to be paid by the Company and
each Affiliated Company for all tax periods ending on or prior to the
Closing Date, whether or not in connection with such returns. All
deficiencies asserted

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against the Company and each Affiliated Company as a result of any
examinations by the Internal Revenue Service or any other taxing
authority have been paid, fully settled or adequately provided for in
the Interim Balance Sheet. The liability for Taxes reflected in the
Interim Balance Sheet and the Closing Balance Sheet (excluding any
reserve for deferred Taxes or portion thereof which is attributable to
differences between the timing of income or deductions for tax and
financial accounting purposes) is or will be sufficient for the
payment of all unpaid Taxes which are owed by the Company and the
Affiliated Companies (including interest, penalties and additions to
Tax), whether or not disputed, that are accrued or applicable for the
period ended October 27, 1996, or the Closing Date (as applicable) and
for all years and periods ended prior thereto. There are no pending
claims asserted for Taxes of the Company or any Affiliated Company or
outstanding agreements or waivers extending the statutory period of
limitation applicable to any Tax return of the Company for any period
or any Affiliated Company. The Company and each Affiliated Company
has complied for all prior periods with the Tax withholding provisions
of all applicable federal, state, local and other laws. All
accounting periods and methods used by the Company and each Affiliated
Company for Tax reporting purposes are permissible periods and methods
under applicable law. Neither the Company nor any Affiliated Company
has been a member of an affiliated group of corporations filing a
consolidated federal income tax return. The Company and each
Affiliated Company has made available to Parent true, complete and
correct copies of its federal income tax returns for the last three
(3) taxable years and made available such other tax returns requested
by Parent.

(b) Schedule 5.17(b) sets forth a true and complete list
of each jurisdiction in which the Company has filed sales or use tax
returns prior to the date hereof.

(c) "Taxes" means all state, federal, and foreign taxes,
levies, duties, assessments, reassessments and other charges of any
nature whatsoever including income tax, profits tax, gross receipts
tax, franchise tax, corporation tax, sales and use tax, wage tax,
payroll tax, worker's compensation levy, capital tax, stamp duty, real
and personal property tax, land transfer tax, customs or excise duty,
excise tax, turnover or value added tax on goods sold or services
rendered, withholding tax, social security, unemployment insurance
charges or retirement contributions.

(d) "Income Taxes" means all state, federal, and foreign
taxes measured on the income of the Company or any Affiliated Company,
but shall not include other items contained in the definition of
Taxes.

5.18 No Broker Involved. Except for Donaldson, Lufkin & Jenrette
Securities Corporation, neither the Shareholder Parties nor the Company nor any
Affiliated Company have engaged any broker, finder or agent with respect to the
transactions contemplated by this Agreement or with respect to the Company's
sale or merger or any other transaction relating to the disposition of the
Company's assets.

<PAGE> 112

5.19 Contracts. Schedule 5.19 contains a true and
complete list of the following (hereinafter referred to as the
"Company Contracts"):

(a) all bonds, debentures, notes, mortgages, indentures
or guarantees to which the Company or any Affiliated Company is a
party or by which any of its properties or assets (real, personal or
mixed, tangible or intangible) is bound pursuant to which any
indebtedness of the Company or any Affiliated Company in the aggregate
principal amount in excess of $100,000 is outstanding;

(b) all leases to which the Company or any Affiliated
Company is a party or by which any of its properties or assets (real,
personal or mixed, tangible or intangible) is bound involving an
annual rental payment in excess of $10,000 individually;

(c) all loans and credit commitments to the Company or
any Affiliated Company which are outstanding and pursuant to which any
indebtedness of the Company or any Affiliated Company in the aggregate
principal amount in excess of $100,000 is outstanding, together with a
brief description of such commitments and the name of each financial
institution granting the same;

(d) all contracts or agreements which limit or restrict
in any material respect the Company or any Affiliated Company from
engaging in any business in any jurisdiction;

(e) all existing agreements, contracts and commitments,
written or oral (other than those described in subparagraph (a), (b),
(c), or (d) of this Section 5.19) to which the Company or any
Affiliated Company is a party or by which the Company or any
Affiliated Company or any of their respective properties or assets may
be bound (i) involving an annual commitment or annual payment by any
party thereto of more than $10,000 individually, (ii) which cannot be
terminated by the Company or any Affiliated Company without penalty or
further obligations on not more than 90 days' notice or (iii) which is
otherwise material to the Company or any Affiliated Company.

True and complete copies of all Company Contracts, including all amendments
thereto, have been made available to Parent. The Company Contracts are valid
and enforceable in accordance with their respective terms with respect to the
Company or the Affiliated Company (as applicable) and valid and enforceable in
accordance with their respective terms with respect to any other party thereto,
except as the enforceability may be limited by laws of general application
relating to bankruptcy, insolvency, and debtor's relief and by the general
principles of equity. The Company has physical possession of all equipment and
other assets which are covered by leases set forth on Schedule 5.19. There is
not under any of the Company Contracts any existing breach, default or event of
default by the Company or any Affiliated Company or event that with notice or
lapse of time or both would constitute a breach, default or event of default by
the Company or any Affiliated Company, nor does the Company know of, and
neither the Company nor any Affiliated Company has received notice of, or made
a claim with respect to, any breach or default by any other party thereto. To
the

<PAGE> 113

knowledge of the Company, no customer or supplier which paid the
Company or any Affiliated Company or was paid by the Company or any
Affiliated Company more than $10,000 during calendar year 1996 intends
to terminate or materially alter its level of business with the
Company or any Affiliated Company as a result of the transactions
contemplated by this Agreement.

5.20 Officers and Employees. Schedule 5.20 contains a true and
complete list of all of the officers and managers of the Company, specifying
their title and annual rate of compensation, bonus eligibility and a true and
complete list of all of the employees of the Company as of the date hereof with
whom the Company has a written employment agreement or to whom the Company has
made verbal commitments which are binding on the Company under applicable law.

5.21 Labor Relations. Except as set forth in Schedule 5.21:

(a) Since January 1, 1993, (1) employees of the Company
have not been and are not represented by a labor organization which
was either National Labor Relations Board ("NLRB") certified or
voluntarily recognized or recognized under foreign law; (2) the
Company has not been and is not a signatory to a collective bargaining
agreement with any labor organization; (3) no representation election
petition has been filed by employees of the Company or is pending with
the NLRB and no union organizing campaign involving employees of the
Company has occurred or is in progress; (4) no NLRB unfair labor
practice claims have been filed and/or are presently pending against
the Company or any labor organization representing its employees; (5)
no grievance or arbitration demand, whether or not filed pursuant to a
collective bargaining agreement, has been filed or is pending against
the Company; (6) no hand billing, picketing, work stoppage
(sympathetic or otherwise), or other "concerted action" involving the
employees of the Company has occurred or is in progress; (7) no breach
of contract and/or denial of fair representation claim has been filed
or is pending against the Company and/or any labor organization
representing its employees; (8) no claim for unpaid wages or overtime
or for child labor or recordkeeping violations has been filed or is
pending under the Fair Labor Standards Act, Davis-Bacon Act,
Walsh-Healey Act, or Service Contract Act or any other Federal, state,
local or foreign law, regulation, or ordinance; (9) no discrimination
and/or retaliation claim has been filed or is pending against the
Company under the 1866 or 1964 Civil Rights Acts, the Equal Pay Act,
the Age Discrimination in Employment Act, the Americans with
Disabilities Act, the Family and Medical Leave Act, the Fair Labor
Standards Act, ERISA or any other Federal law or any comparable state
fair employment practices act or foreign law regulating discrimination
in the workplace; (10) if the Company is a Federal or State contractor
obligated to develop and maintain an affirmative action plan, no
discrimination claim, show cause notice, conciliation proceeding,
sanctions or debarment proceeding has been filed or is pending with
Office of Federal Contract Compliance Programs or any other Federal
agency or any comparable State or foreign agency or court and no desk
audit or on-site review is in progress; (11) no citation has been
issued by Occupational Safety and Health Administration ("OSHA")
against the Company and no notice of contest or OSHA administrative
enforcement proceeding involving the Company has been filed or is
pending; (12) no workers' compensation or

<PAGE> 114

retaliation claim has been filed or is pending against the Company;
and/or (13) no citation of the Company has occurred and no enforcement
proceeding has been initiated or is pending under Federal or foreign
immigration law; and

(b) The Company has not taken any action which would
constitute a "Mass Layoff" or "Plant Closing" within the meaning of
the Worker Adjustment and Retraining Notification Act or otherwise
trigger notice requirements or liability under any local or state
plant closing notice law.

5.22 Insurance. Schedule 5.22 sets forth a true and complete list
of the current insurance coverages for the Company and each Affiliated Company,
including names of carriers, amounts of coverage and premiums therefor. The
Company has made available to the Parent true and complete copies of all such
insurance policies.

5.23 Title to Property and Related Matters. The Company and each
Affiliated Company has good and valid title to or valid leasehold interest in
its personal property, as reflected in the Interim Balance Sheet or acquired
after the date thereof (other than property sold or otherwise disposed of in
the ordinary course of business since such date), and all of such properties
are held free and clear of all title defects, liens, encumbrances, security
interests and restrictions whatsoever, except, with respect to all such
properties, (a) liens securing debt reflected as liabilities on the Interim
Balance Sheet and (b) (i) liens for current taxes and assessments not in
default or which are being contested in good faith, and (ii) mechanics',
carriers', workmen's, repairmen's, statutory or common law liens relating to
payments that are not delinquent and which are being contested in good faith.

5.24 Computer Software.

(a) Schedule 5.24 sets forth a true and complete list of:
(i) all software owned by the Company or licensed to or used in
connection with the business of the Company (the "Company Proprietary
Software"); and (ii) all software (other than the Company Proprietary
Software) used in connection with the business of the Company (the
"Company Licensed Software" and together with the Company Proprietary
Software, the "Company Software"); and (iii) all technical and
restricted materials other than inventory relating to the acquisition,
design, development, use or maintenance of computer code program
documentation and materials used in connection with the business of
the Company (the "Technical Documentation").

(b) The Company has all right, title and interest in and
to all intellectual property rights in the Company Proprietary
Software. The Company has developed the Company Proprietary Software
materially through its own efforts, as described in Section 5.24(d),
for its own account, and the Company Proprietary Software is free and
clear of all liens, claims and encumbrances. The use of the Company
Licensed Software and the use and distribution of the Company
Proprietary Software does not breach any terms of any license or other

<PAGE> 115

contract between the Company and any third party. The Company is in
compliance in all material respects with the terms and conditions of
all license agreements in favor of the Company relating to the Company
Licensed Software (the "Company License Agreements").

(c) To the best of the Company's knowledge, the Company
Proprietary Software does not infringe any United States patent,
copyright or trade secret or any other intellectual property right of
any third party. The source code for the Company Proprietary Software
has been maintained in confidence.

(d) The Company Proprietary Software was: (i) developed
by the Company employees working within the scope of their employment
at the time of such development; (ii) developed by agents,
consultants, contractors or others who have executed appropriate
instruments of assignment in favor of the Company as assignee that
have conveyed to the Company ownership of all of their intellectual
property rights in the Company Proprietary Software; or (iii) acquired
by the Company in connection with acquisitions in which the Company
obtained appropriate representations, warranties and indemnities from
the transferring party relating to the title to such Company
Proprietary Software. The Company has not received notice from any
third party claiming any right, title or interest in the Company
Proprietary Software. To the knowledge of the Company and each
Shareholder, the Company has not suffered (and is not reasonably
likely to suffer), as a result of the Company's recent software
conversion, any material loss of data, any material loss of capability
or any other material disruption of its operations.

(e) The Company has not granted rights in the Company
Software to any third party.

(f) The Company Software and the hardware on which the
Company Software is operated are adequate in all material respects,
together with the other assets of the Company, to (i) operate the
business of the Company in the same manner as such business is
currently operated and (ii) to the best of the Company's knowledge,
permit the Company to accomplish the business objectives set forth in
the Company's five-year business plan included in the confidential
offering memorandum prepared by the Company and its financial advisor,
without any material upgrade to the Company Software (other than as
called for in the Company's internal capital expenditure projections)
or any material additional investments by the Company.

5.25 Transactions with Affiliates. Except as disclosed on Schedule
5.25(a) and other than the Affiliated Real Property, no Shareholder or officer
of the Company, or any person with whom any such Shareholder or officer has any
direct or indirect relation by blood, marriage or adoption, or any entity
(other than the Company) in which any such person owns any beneficial interest
(other than a publicly held corporation whose stock is traded on a national
securities exchange or in the over-the-counter market and less than 1% of the
stock of which is beneficially owned by all such persons) (in any such case, an
"Affiliate") has any interest in: (i) any contract, arrangement or

<PAGE> 116

understanding with, or relating to, the business or operations of the
Company or any Affiliated Company; (ii) any loan, arrangement,
understanding, agreement or contract for or relating to indebtedness
of the Company or any Affiliated Company; or (iii) any property (real,
personal or mixed), tangible or intangible, used or currently intended
to be used in, the business or operations of the Company or any
Affiliated Company. Following the Closing, neither the Company nor
any Affiliated Company will have any obligations of any kind to any
Shareholder or any Affiliate of a Shareholder except for (i) accrued
salary for the pay period commencing immediately prior to the Closing
Date and (ii) the obligations set forth on Schedule 5.25(b)
(collectively, the "Related Party Obligations").

5.26 Accounts Receivable. The accounts receivable of the Company
and the Affiliated Companies reflected on the Interim Balance Sheet arose from
bona fide transactions in the ordinary course of business, have been extended
on terms consistent with the past practice of the Company and the Affiliated
Companies and are not subject to any counterclaims or setoffs other than in the
ordinary course (except for the amount of any applicable existing reserves for
counterclaims or setoffs).

5.27 Nondisclosed Payments. Neither the Company, the Affiliated
Companies nor any of the Company's officers or directors, nor anyone acting on
behalf of any of them, has made or received any payments not correctly
categorized and fully disclosed in the Company's or the Affiliated Company's
books and records in connection with or in any way relating to or affecting the
Company, the Affiliated Companies or their respective business.

5.28 Securities Matters.

(a) None of the information with respect to the Company,
the Shareholders, the Affiliated Companies or the Mergers (or any of
the officers, directors or general partners of the Company or the
Affiliated Companies) to be included in the Proxy Statement will, on
the date the Proxy Statement is first mailed to the Shareholders and
Affiliated Owners or on the date of the Shareholders' meeting referred
to in Section 7.8, contain any untrue statement of a material fact, or
omit to state any material fact required to be stated thereon or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.

(b) None of the information with respect to the Company,
the Shareholders, the Affiliated Companies or the Mergers (or any of
the officers, directors or general partners of the Company or the
Affiliated Companies) to be included in the Registration Statement
will, at the time it becomes effective and on the Effective Date,
contain any untrue statement of a material fact, or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they are made, not misleading.

<PAGE> 117

(c) Schedule 5.28(c) lists each Shareholder which
is an "affiliate" of the Company for the purposes of Rule 145
under the Securities Act (the "Rule 145 Affiliates").

5.29 Pooling. Except as set forth on Schedule 5.29, since
the date two (2) years prior to the date hereof:

(a) neither the Company nor any of the Affiliated
Companies has been a subsidiary or division of another corporation or
other entity;

(b) neither the Company, the Affiliated Companies nor any
of the Affiliated Owners has effected any transactions changing the
relative percentage ownership of the Affiliated Owners in the Company
or any Affiliated Company;

(c) neither the Company nor any of the Affiliated
Companies has purchased any treasury shares or redeemed any shares of
capital stock or partnership interests or effected any exchange of
securities; or

(d) neither the Company nor any Affiliated Company has
paid any dividend or made any distribution in excess of historical
dividends or distributions or paid any bonus to shareholder employees
in excess of historical levels.

In addition, the shares of Parent Common Stock issued in the Merger
will be shared ratably by the Shareholders based on their respective percentage
ownership of the Company Common Stock, and there is no agreement among the
Shareholders providing for any reallocation of such Parent Common Stock among
the Shareholders.

5.30 Disclaimers. Notwithstanding any other provision of this
Agreement to the contrary, the Shareholder Parties and the Company make no
representation or warranty relating to any liability, claim, obligation, loss,
cost, expense, penalty, fine and damage with respect to any sales tax, use tax,
or similar charge which may be imposed on the Company by any jurisdiction other
than those jurisdictions where the Company has filed sales and use tax returns.
Except as and to the extent expressly set forth in this Agreement and the other
agreements and instruments contemplated hereby and subject to the limitations
and restrictions contained in this Agreement, neither the Shareholder Parties
nor the Company or any of their respective agents, representatives, employees
or affiliates makes any representation or warranty, either express or implied,
as to the accuracy or completeness of any of the information (including
projections of future performance of the Company such as, without limitation,
projections of income, sales and EBIT) provided or made available to Parent and
Sub or their respective employees, agents or representatives.

<PAGE> 118
Parent and Sub jointly and severally represent and warrant to the
Shareholder Parties that:

6.1 Corporate Organization. Parent is a corporation validly
existing and in good standing under the laws of Delaware. Sub is a corporation
validly existing and in good standing under the laws of Texas.

6.2 Authorization and Approval of Agreement. Parent and Sub have
all requisite corporate power and authority to execute and deliver this
Agreement and the other agreements, documents and instruments executed and
delivered by Parent or Sub in connection with the transactions contemplated by
this Agreement (the "Parent Ancillary Agreements"), and to fully perform the
obligations required to be performed by them hereunder and thereunder. All
corporate proceedings required by Parent's and Sub's respective charter
documents or otherwise required by law for the execution and delivery of this
Agreement and the Parent Ancillary Agreements and for the consummation of the
transactions provided for herein and therein have been duly taken. This
Agreement and each of the Parent Ancillary Agreements has been duly and validly
executed and delivered by Parent and Sub and is enforceable against Parent and
Sub in accordance with its terms, except as the enforceability may be limited
by laws of general application relating to bankruptcy, insolvency and debtors'
relief, and by the general principles of equity.

6.3 Ability to Carry Out Agreement. The execution and delivery of
this Agreement and the Parent Ancillary Agreements by Parent and Sub and the
performance by Parent and Sub of their obligations hereunder and thereunder
will not conflict with, violate or result in any breach of or constitute a
default under any provisions of Parent's and Sub's charter documents or of any
of the provisions of any material indenture, mortgage, lease, agreement,
license, permit, instrument, order, arbitration award, judgment, decree, law,
ordinance, regulation or any other restriction of any kind or character to
which Parent or Sub is a party or by which either of them is bound. Except for
compliance with the applicable requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") and the Securities Act, the Securities
Exchange Act of 1934, (the "Exchange Act"), applicable state securities laws
and the rules of the NYSE, no consent of any governmental authority or other
third party is required to be obtained on the part of Parent in connection with
Parent's execution, delivery or performance of this Agreement or the Parent
Ancillary Agreements.

6.4 Investment Representation. Parent and Sub are acquiring the
Shares for investment and not with a view to, or for resale in connection with,
any distribution of the Shares.

6.5 No Broker Involved. Except for Credit Suisse First Boston
Corporation, Parent and Sub have not expressly or impliedly engaged any broker,
finder or agent with respect to the transactions contemplated by this
Agreement.

6.6 Parent Common Stock. The shares of Parent Common Stock to be
issued in the Mergers will be validly issued, fully paid, nonassessable and
free of pre-emptive rights.

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<PAGE> 119
6.7 Parent SEC Reports. Parent has made available to each
Shareholder (if and to the extent requested by such Shareholder) true and
complete copies of each registration statement, report and proxy or information
statement filed by Parent with the SEC since January 1, 1996, (collectively,
the "Parent SEC Reports"), all of which, as of their respective filing dates,
complied in all material respects with all applicable requirements of the
Securities Act and the Exchange Act, and the rules and regulations promulgated
thereunder. None of such Parent SEC Reports, as of the respective dates they
were filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. Each of the audited consolidated financial
statements of Parent (including any related notes and schedules) included
(incorporated by reference) in its Annual Report on Form 10-K for the fiscal
year ended January 28, 1996, fairly present, in conformity with GAAP applied on
a consistent basis (except as may be indicated in the notes thereto), the
consolidated financial position of Parent and its subsidiaries as of the date
thereof and the consolidated results of their operations and their cash flows
for the periods there ended.

6.8 Material Misstatements or Omissions.

(a) None of the information with respect to Parent or
Sub to be included (or incorporated by reference) in the Proxy
Statement will, on the date the Proxy Statement is first mailed to the
Affiliated Owners, or on the date of the Shareholders' meeting
referred to Section 6.8, contain any untrue statement of a material
fact, or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy
Statement will comply as to form in all material respects with the
provisions of the Securities Act, except that no representation is
made with respect to information supplied in writing by the Company,
Affiliated Owners or any Affiliated Company specifically for inclusion
in the Proxy Statement.

(b) None of the information with respect to Parent or Sub
to be included (or incorporated by reference) in the Registration
Statement will, at the time it becomes effective or on the Effective
Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under
which they are made, not misleading. The Registration Statement will
comply as to form in all material respects with the provisions of the
Securities Act, except that no representation is made with respect to
information supplied in writing by the Company, Affiliated Owners or
any Affiliated Company specifically for inclusion in the Registration
Statement.

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<PAGE> 120

ARTICLE 7

Covenants

7.1 Conduct of Business. The Shareholder Parties and the Company,
jointly and severally, covenant and agree that from the date of this Agreement
to the Closing Date, the Company and each Affiliated Company shall (except as
otherwise consented to in writing by Parent):

(a) carry on its business in a manner consistent with
prior practice and only in the usual and ordinary course, and use
reasonable efforts to preserve its business organization intact and
conserve the good will and relationships of its customers, suppliers
and others having business relations with it;

(b) maintain its existence and good standing in its
jurisdiction of organization plus in each jurisdiction in which the
ownership or leasing of its property or the conduct of its business
requires such qualification;

(c) duly and timely file or cause to be filed all reports
and returns required to be filed with any governmental body, agency or
authority and promptly pay or cause to be paid when due all taxes,
assessments and governmental charges, including interest and penalties
levied or assessed, unless diligently contested in good faith by
appropriate proceedings;

(d) maintain in existing condition and repair, consistent
with past practice, all buildings, offices, shops and other structures
located on the Real Property, and all equipment, fixtures and other
tangible personal property located on the Real Property;

(e) give Parent and Parent's employees, counsel,
accountants and advisors, full access upon reasonable notice during
normal business hours to all of the properties, personnel, financial
and operating data, books, tax returns, contracts, commitments, and
records of the Company and the Affiliated Companies in connection with
reviewing the Company and the Affiliated Companies and their
respective properties and operations;

(f) maintain in full force and effect all existing
policies of insurance except for replacements or renewals in the
ordinary course of business;

(g) use its reasonable best efforts to permit the Company
and each Affiliated Company to retain the material benefits provided
by all existing contracts and licenses to which the Company and each
Affiliated Company is a party under arrangements similar to those in
effect prior to the Closing Date;

(h) not amend its charter documents, partnership
agreement or bylaws;

(i) not authorize for issuance, issue or deliver any
additional shares of its capital stock or partnership interests or
securities convertible into or exchangeable for shares of its capital
stock or partnership interests, or issue or grant any right, option or
other commitment for the issuance of shares of its capital stock or
partnership interests or of such securities, or split, combine or
reclassify any shares of its capital stock or partnership interests;

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(j) not incur any liability, commitment or obligation,
except unsecured current and trade liabilities and other unsecured
liabilities incurred in the ordinary course of business;

(k) not borrow, or agree to borrow, any funds other than
pursuant to its existing loan agreements or otherwise in the ordinary
course of business;

(l) not sell, transfer or otherwise dispose of assets,
except for the sale or disposition of obsolete or damaged tangible
personal property and except for (i) the sale of inventory and other
assets in the ordinary course of business and (ii) sales of
Company-owned vehicles, art, and other assets identified on Schedule
6.1(l) ("Personal Assets") to one or more Shareholders for cash equal
to the book value of the Personal Assets);

(m) except for amounts committed for emergency repairs,
not make any material capital commitments;

(n) not mortgage, pledge or encumber any of its assets or
guaranty the obligations of any party except in the ordinary course of
business;

(o) not make any adjustments in the salary or wage rate
of, or make or authorize any bonus payments to or consulting
arrangements with, any officer or employee or amend or adopt any
employee benefit plan, without Parent's prior written consent, other
than bonuses for the 1996 year and salary increases for the 1997 year
which shall be made in amounts consistent with past practices;

(p) take any action with the intention of causing any of
the representations and warranties made herein to be inaccurate on the
Closing Date;

(q) not dispose of or permit to lapse any rights to the
use of any patent, trademark, trade name, license or copyright, or
dispose of or disclose to any person, any trade secret, formula,
process, technology or know-how not heretofore a matter of public
knowledge;

(r) maintain (in the case of the Company) its election to
be an S corporation under subchapter S of the Code and the equivalent
provisions of all applicable state income statutes;

(s) not declare, pay or set aside for payment any
dividend or other distribution in respect of the capital stock or
other equity securities or equity interests of the Company or any
Affiliated Company and not redeem, purchase or issue any shares of the
capital stock or other securities or equity interests of the Company
or any Affiliated Company or rights or obligations convertible into or
exchangeable for any shares of the capital stock or other securities
or equity interests of the Company or any Affiliated Company or
obligations

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convertible into such, or any options, warrants or other rights to
purchase or subscribe to any of the foregoing; provided that the
Company may pay cash dividends if it obtains the advice of D&T that
the payment of such dividends will not jeopardize "pooling of
interests" treatment for the merger and advises Parent in advance of
the payment of such dividend;

(t) deliver to Parent on or prior to the fifteenth (15th)
business day of each month a combining balance sheet of the Company
and the Affiliated Companies in the form of the Interim Balance Sheet
as of the end of the prior month and an income statement for such
month in each case accompanied by a certificate executed by the chief
financial officer on behalf of the Company that such statements have
been prepared in accordance with the standards set forth in Section
5.6(b); and

(u) not take any action outside the ordinary course of
business consistent with past practice (unless contemplated by this
Agreement) without having notified Parent and D&T of such proposed
action and obtaining the advice of D&T that such action will not
jeopardize the characterization of the Mergers as a "pooling of
interests" for accounting purposes.

The parties understand and acknowledge that nothing contained in this
Agreement shall be construed to prevent the Shareholder Parties from causing
the Company to pay any out-of-pocket expense arising by reason of or leading up
to the preparation of this Agreement or the consummation of the transactions
contemplated hereunder.

7.2 Public Announcements. The timing and content of all
announcements regarding any aspect of this Agreement or the Mergers to the
financial community, government agencies, employees or the general public shall
be mutually agreed upon in advance (unless Parent or the Company is advised by
counsel in writing that any such announcement or other disclosure not mutually
agreed upon in advance is required to be made by law or applicable rule of the
NYSE, and then only after consulting the other party and making reasonable
efforts to comply with the provisions of this Section).

7.3 Supplements to Schedules. From time to time prior to the
Closing Date, the Company and Parent will each promptly supplement or amend the
respective disclosure schedules which they have delivered pursuant to this
Agreement with respect to any matter hereafter arising which, if existing or
occurring at or prior to the date of this Agreement, would have been required
to be set forth or described in the disclosure schedule or which is necessary
to correct any information in any such disclosure schedule which has been
rendered inaccurate thereby. No supplement or amendment to any such disclosure
schedule shall have any effect for the purpose of determining satisfaction of
the conditions set forth in Sections 10.1(a) or 11.1(a) of this Agreement.

7.4 Pooling of Interests Accounting. From and after the date
hereof and until the Closing Date, neither Parent nor the Company nor any
Affiliated Company, nor any of their respective subsidiaries or other
Affiliates, nor any of the Shareholder Parties shall take, any of the actions

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specified in Section 5.29, except as expressly authorized by this Agreement.
Following the Closing Date, Parent shall use its commercially reasonable
efforts to conduct the business of Parent in a manner that would not jeopardize
the characterization of the Mergers as a "pooling of interests" for accounting
purposes.

7.5 The NYSE Additional Shares Listing Application. Parent will
file an additional shares listing application with the NYSE to approve for a
listing, subject to official notice of its issuance, the shares of Parent
Common Stock to be issued in the Mergers. Parent shall exercise reasonable
good faith efforts to cause its shares of Parent Common Stock to be issued in
the Mergers to be approved for listing on the NYSE, subject to official notice
of issuance, prior to the Closing Date.

7.6 Antitrust Filing. As soon as practicable following the
execution of this Agreement, both Parent and Company shall file an Antitrust
Improvements Act Notification and Report Form under the HSR Act (the "Antitrust
Filing") relating to the transactions contemplated by this Agreement and the
Affiliated Merger Agreement with the Federal Trade Commission and the
Department of Justice. Parent shall pay all filing fees required in connection
therewith, and Parent and Company shall use their respective commercially
reasonable efforts to take all action necessary, proper and advisable under
applicable laws and regulations to cause the expiration or termination of the
waiting periods under the HSR Act as soon as practicable.

7.7 No Solicitation of Transactions. Until the valid termination
of this Agreement pursuant to Article 12, neither the Company nor any
Shareholder Party shall directly or indirectly, through any officer, director,
agent or otherwise, initiate, solicit or knowingly encourage (including by way
of furnishing non-public information or assistance), or enter into negotiations
of any type, directly or indirectly, or enter into a letter of intent or
purchase agreement, merger agreement or other similar agreement with any
person, firm or corporation other than Parent with respect to a sale of any
substantial portion of the assets of the Company or an Affiliated Company, or a
merger, consolidation, business combination, sale of all or any portion of the
Company's capital stock, or the liquidation or similar extraordinary
transaction with respect to the Company or any Affiliated Company (a "Competing
Transaction"). The Shareholder Parties shall notify Parent orally (within one
business day) and in writing (as promptly as practicable) of all relevant terms
of any proposals by a third party to do any of the foregoing which the Company
or any Shareholder Party or any of their respective officers, directors,
employees, investment bankers, financial advisors, attorneys, accountants or
other representatives may receive relating to any of such matters and, if such
proposal is in writing, the Shareholder Parties shall deliver to Parent a copy
of such inquiry or proposal.

7.8 Affiliated Owner Approval.

(a) The Company shall call a meeting of the Shareholders
to be held on the 20th business day after the mailing of the Proxy
Statement for the purpose of voting upon the approval of the Merger
and the other transactions contemplated by this Agreement. The

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Company will, through its Board of Directors, recommend to the
Shareholders that the Shareholders approve this Agreement and the
transactions contemplated hereby.

(b) On the twentieth (20th) business day following the
mailing of the Proxy Statement, the Shareholder Parties shall cause
each of the Affiliated Companies to (i) circulate for signature to its
partners a written consent for the purpose of approving the Affiliated
Merger and the transactions contemplated by the Affiliated Merger
Agreement and (ii) use its commercially reasonable efforts to obtain
the signatures of all of its partners as promptly as practicable.

7.9 Disposition of Shares. Each of the Shareholder Parties
covenants and agrees with Parent that except pursuant to the terms of this
Agreement, such Shareholder will not, without the prior written consent of
Parent, directly or indirectly, (i) grant any proxies or enter into any voting
trust or other agreement or arrangement with respect to the voting of the
Shares, (ii) acquire or sell, assign, transfer or otherwise dispose of the
Shares or (iii) enter into any contract, option or other arrangement or
understanding with respect to the direct or indirect acquisition of sale,
assignment, transfer or other disposition of the Shares.

ARTICLE 8

Post-Closing Covenants

8.1 Shareholder Parties' Post-Closing Covenants. In the event
that a lease, contract or license does not expressly permit the Company or any
Affiliated Company to maintain its rights and obligations thereunder after the
Closing Date, or the Company or any Affiliated Company has not obtained the
necessary written consents under any specific lease, contract or license prior
to the Closing Date, the Shareholder Parties shall cooperate with Parent and
the Company or such Affiliated Company in any reasonable arrangement not
requiring any out-of-pocket expense by the Shareholder Parties (unless
reimbursed by Parent) designed to provide the Company or such Affiliated
Company with the material benefits to have been received by the Company of such
Affiliated Company if the consent or approval had been obtained.

8.2 Parent's Post-Closing Covenants. Parent covenants and agrees
that, from and after Closing, it shall and shall cause the Company and each
Affiliated Company to:

(a) not destroy or dispose of the books and records of
the Company relating to periods prior to the Closing Date for a period
of seven (7) years after the Closing Date without giving adequate
notice to the Shareholder Parties of such pending disposal and
offering the Shareholder Parties the right to copy or take possession
of such record;

(b) give the Shareholder Parties and their counsel,
accountants and advisors full access upon reasonable notice during
normal business hours to all such records for any

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proper purpose including, without limitation, preparing any tax
returns, tax elections or financial statements, or any judicial,
quasi-judicial, administrative, tax audit or arbitration proceeding;
and

8.3 Post-Closing Tax Matters.

(a) Record Maintenance. Parent shall not dispose of any
records of the Taxes paid or payable by the Company or any Affiliated
Company (including but not limited to returns, reports, books,
records, financial data, receipts, notices, assessments,
reassessments, earnings and profits data, and work papers) prior to
the seventh anniversary of the Closing Date, unless Parent shall first
have received the Shareholder Parties' consent.

(b) Tax Returns. The Shareholder Parties shall be solely
responsible for, and shall have the exclusive right in respect of, the
preparation and filing, on a timely basis, including applicable
extensions, of all necessary Tax returns for taxation periods of the
Company or any Affiliated Company ending on or prior to the Closing
Date. Such Tax returns shall be filed on a basis consistent with the
Company's past practice in filing Tax returns. Without limiting the
generality of the foregoing, the Shareholder Parties shall be entitled
to file any elections or designations with respect to taxation periods
of the Company or any Affiliated Company ending on or prior to the
Closing Date, as they deem appropriate. The Shareholder Parties shall
provide Parent with a copy of any Tax return filed. The Shareholder
Parties shall be solely responsible for, and shall have the exclusive
right in respect of, the preparation and filing of any amended Tax
return and/or refund claim relating to any taxation period of the
Company or any Affiliated Company ending on or prior to the Closing
Date. Unless the Shareholder Parties' consent is first obtained,
Parent agrees to refrain from any action which would in any way alter
the balance of Taxes owing or Tax refunds obtainable with respect to
any taxation period of the Company or any Affiliated Company ending on
or prior to the Closing Date.

(c) Tax Cooperation. Parent covenants and agrees to
cooperate, and to cause the Company and each Affiliated Company to
cooperate, with the Shareholder Parties in filing any Tax return,
amendment thereto, or consent contemplated by this Agreement and shall
take such action as the Shareholder Parties may reasonably request,
including without limitation:

(i) providing data for the preparation of any
original or amended Tax returns;

(ii) cooperating in any audit and providing
reasonable access to Parent's Tax personnel;

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(iii) filing protests or otherwise contesting any
audit, including the filing of petitions for redetermination
or prosecuting actions for refund in any court and pursuing
the appeal of any such actions; and

(iv) providing on demand books, records,
documentation or other information relating to any Tax return
until the expiration of the applicable statute of limitation
(giving effect to any extension, waiver, or mitigation
thereof), providing additional information and explanation of
material provided hereunder, and the use of Parent's
commercially reasonable efforts to obtain any documentation
from a governmental authority or third party that may be
necessary or helpful in connection with the foregoing.

(d) Resolution of Certain Conflicts. In the event that
Parent and the Shareholder Parties cannot agree on the calculation of
the amount of any liability for Taxes or entitlement to Tax refunds
hereunder, KPMG and D&T (on behalf of Parent and the Shareholder
Parties) shall appoint an independent public accounting firm of
national reputation, reasonably acceptable to each party, to make such
calculation, and the decision of such firm will be conclusive. The
cost of such engagement will be borne solely by the party that does
not prevail in substantial part (in the determination of the firm that
is engaged); provided, however, that if such firm determines that
neither party prevailed in substantial part, the cost of such
engagement shall be shared equally by Parent and the Shareholder
Parties.

(e) Tax Contests. The Shareholder Parties shall have the
exclusive right to control, conduct and/or represent the interests of
all affected parties hereto in any audit relating to Income Taxes, to
initiate any claim for an Income Tax refund, to contest, resolve and
defend against any determination, assessment, notice of deficiency, or
other adjustment or proposed adjustment of Income Taxes (including the
right to agree to any determination, assessment, deficiency, or
settlement of any of the foregoing items) relating to any Income Tax
return filed with respect to the Company or any Affiliated Company for
any taxable period ending on or prior to the Closing Date. Parent
covenants and agrees to execute and deliver (or to cause the Company
or the applicable Affiliated Company to execute and deliver to the
Shareholder Parties), promptly upon request, such powers of attorney
as may be reasonably necessary to authorize the Shareholder Parties to
extend statutes of limitations, receive Income Tax refunds, and take
such other actions that the Shareholder Parties may reasonably
consider to be appropriate or helpful to contest any audit or claim
any Income Tax refund, and shall not take any action inconsistent with
the authority granted to the Shareholder Parties hereunder. Further,
Parent shall promptly forward to the Shareholder Parties any notice of
any pending or threatened audit or other proceeding that may affect
the Shareholder Parties' liability for Taxes or entitlement to Tax
refunds hereunder.

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8.4 Noncompetition.

(a) Definitions. For the purposes of this Section 7.4,
the following definitions shall apply:

(i) "Company Activities" shall mean the
direct-mail sale or distribution of maintenance, cleaning,
electrical, plumbing, hardware or repair products.

(ii) "Confidential Information" shall mean any
data or information of the Company and each Affiliated Company,
other than Trade Secrets, which is valuable to the operation
of the business of the Company and not generally known to
competitors.

(iii) "Noncompete Period" shall mean the period
beginning on the Closing Date and continuing for a period of
four (4) years from the Closing Date.

(iv) "Territory" shall mean the United States of
America, such area being where the customers of the Company
are located.

(v) "Trade Secrets" shall mean information of the
Company and each Affiliated Company, including, but not
limited to, technical or nontechnical data, a formula,
pattern, compilation, program, including, without limitation,
computer software and related source codes, device, method,
technique, drawing, process, financial data, financial plan,
product plan, list of actual or potential customers or
suppliers, or other information similar to any of the
foregoing, which derives economic value, actual or potential,
from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can derive
economic value from its disclosure or use. For purposes of
this Section 7.4, the term Trade Secrets shall not include
information that the Shareholder Parties can show by competent
proof becomes generally known to the public after the Closing
Date through no act or omission of the Shareholders.

(b) Trade Secrets. For a period of four (4) years
following the Closing Date, each Shareholder Party shall hold in
confidence all Trade Secrets, and shall not disclose, publish or make
use of Trade Secrets, without the prior written consent of Parent.
Nothing in this Agreement shall diminish the rights of Parent or the
Company regarding the protection of Trade Secrets and other
intellectual property pursuant to applicable law.

(c) Confidential Information. Each Shareholder Party
hereby agrees that, for a period of four (4) years following the
Closing Date, such Shareholder Party shall hold in confidence all
Confidential Information and will not disclose, publish or make use of
Confidential Information without the prior written consent of Parent.

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(d) Noncompetition.

(i) Each Shareholder Party hereby acknowledges that
the Company conducts Company Activities throughout the
Territory. Each Shareholder Party acknowledges that to
protect adequately the interest of Parent in the business of
the Company, it is essential that any noncompete covenant with
respect thereto cover all Company Activities and the entire
Territory. Each Shareholder Party further acknowledges that
the covenants set forth in this Section 8.4 are a material
condition to Parent's willingness to proceed with the
transactions contemplated by this Agreement, and that such
Shareholder Party desires to enter into these covenants in
order to obtain the substantial benefits that such Shareholder
Party will obtain as a result of the Merger.

(ii) Each Shareholder Party hereby agrees
that such Shareholder Party shall not, during the Noncompete
Period, in any manner, directly or indirectly or by assisting
others, engage in, have an equity or profit interest in, or
render services (of an executive, marketing, manufacturing,
research and development, administrative, financial or
consulting nature) to any business that conducts any of the
Company Activities in the Territory. However, this paragraph
will not prohibit (a) the Shareholder Parties from owning (in
the aggregate) less than five percent (5%) of any class of
securities that is traded on the NASDAQ Stock Market or a
national securities exchange, or (b) any Shareholder Party
from being employed by any business that derives less than ten
percent (10%) of its revenues from Company Activities in the
Territory so long as such Shareholder Party does not have any
supervisory role over, or provide any services to, the
subsidiary or division of such business that performs such
Company Activities.

(e) Nonsolicitation. Each Shareholder Party hereby
agrees that, prior to the fourth anniversary of the Closing Date, such
Shareholder Party shall not, without prior written consent of Parent,
in any manner, directly or indirectly or by assisting others, recruit
or hire away or attempt to recruit or hire away, on its behalf or on
behalf of any other person, firm or corporation, any person who is an
employee of the Company as of the date hereof.

(f) Severability. If a judicial or arbitral
determination is made that any of the provisions of this Section 8.4
constitutes an unreasonable or otherwise unenforceable restriction
against the Shareholder Parties, the provisions of this Section 8.4
shall be rendered void only to the extent that such judicial or
arbitral determination finds such provisions to be unreasonable or
otherwise unenforceable with respect to the Shareholder Parties. In
this regard, the Shareholder Parties and Parent hereby agree that any
judicial authority construing this Agreement shall be empowered to
sever any portion of the Territory, any prohibited business activity
or any time period from the coverage of this Section 8.4 and to apply
the provisions of this Section 8.4 to the remaining portion of the
Territory, the remaining business activities and the remaining time
period not so severed by such judicial or arbitral

<PAGE> 129

authority. Moreover, notwithstanding the fact that any provision of
this Section 8.4 is determined not to be specifically enforceable,
Parent shall nevertheless be entitled to recover monetary damages as a
result of the breach of such provision by the Shareholder Parties.
The time period during which the prohibitions set forth in this
Section 8.4(a) shall apply with respect to any Shareholder Party shall
be tolled and suspended for a period equal to the aggregate time
during which such Shareholder Party violates such prohibitions in any
respect.

(g) Injunctive Relief. The Shareholder Parties hereby
agree that any remedy at law for any breach of the provisions
contained this Section 8.4 shall be inadequate and that Parent shall
be entitled to injunctive relief in addition to any other remedy
Parent might have under this Agreement.

(h) Several Liability. Each Shareholder Party shall be
liable severally with respect to any violation of this Section 8.4 by
such Shareholder Party, and no Shareholder Party shall be jointly and
severally liable for any violation of this Section 8.4 by any other
Shareholder Party.

8.5 Related Party Debt. Immediately following the Effective Time,
(i) Parent shall cause the Company to repay in full all indebtedness for
borrowed money owed by the Company to any Shareholder Party or any Affiliate of
a Shareholder Party and (ii) Parent shall repay in full all other indebtedness
of the Company for borrowed money or shall cause the Shareholder Parties to be
completely released from any and all guarantees, personal or otherwise, pledges
or other similar arrangements relating to such indebtedness, and cause to be
released as security all collateral owned by the Shareholder Parties relating
to any such indebtedness of the Company or any Affiliated Company.

8.6 Transfer of Parent Common Stock. Each of the Shareholder
Parties that is a Rule 145 Affiliate agrees that such Shareholder Party will
not offer to sell, transfer or otherwise dispose of any of the shares of Parent
Common Stock issued to such Shareholder Party pursuant to the Mergers, except
(i) in accordance with the applicable provisions of the Securities Act and the
rules and regulations thereunder and (ii) until such time as financial results
covering at least thirty (30) days of combined operations of Parent, the
Company and the Affiliated Companies have been published within the meaning of
Section 201.01 of the SEC's Codification of Financial Reporting Policies.
Parent shall be entitled to place legends on any certificates of Parent Common
Stock issued in the Mergers to restrict transfer of such shares as set forth
above.

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ARTICLE 9

Indemnification

9.1 Indemnification Obligations of the Shareholders. Each
Shareholder Party shall jointly and severally indemnify (subject to Section
8.4(h) hereof), defend and hold harmless Parent and its subsidiaries and
Affiliates (including Sub, the Company and the Affiliated Companies), each of
their respective officers, directors, employees, agents and representatives and
each of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "Parent Indemnified Parties") from, against and in respect
of any and all claims, liabilities, obligations, losses, costs, expenses,
penalties, fines and judgments (at equity or at law) and damages whenever
arising or incurred (including, without limitation, amounts paid in settlement,
costs of investigation and reasonable attorneys' fees and expenses) arising out
of or relating to:

(a) any breach or inaccuracy of any representation or
warranty made by the Company or any Shareholder Party in this
Agreement;

(b) any breach of any covenant, agreement or undertaking
made by the Company or any Shareholder Party in this Agreement;

(c) any fraud or intentional misrepresentation by the
Company or any Shareholder in connection with this Agreement and the
transactions contemplated hereby; or

(d) the exercise by any Shareholder of appraisal rights
under the TBCA.

The claims, liabilities, obligations, losses, costs, expenses, penalties, fines
and damages of the Parent Indemnified Parties described in this Section 9.1 as
to which the Parent Indemnified Parties are entitled to indemnification are
hereinafter collectively referred to as "Parent Losses."

9.2 Indemnification Obligations of Parent. Parent shall indemnify
and hold harmless the Shareholder Parties and each of the affiliates, heirs,
executors, successors and assigns of any Shareholder Party (collectively, the
"Shareholder Indemnified Parties") from, against and in respect of any and all
claims, liabilities, obligations, losses, costs, expenses, penalties, fines and
judgments (at equity or at law) and damages whenever arising or incurred
(including, without limitation, amounts paid in settlement, costs of
investigation and reasonable attorneys' fees and expenses) arising out of or
relating to:

(a) any breach or inaccuracy of any representation or
warranty made by Parent in this Agreement;

(b) any breach of any covenant, agreement or undertaking
made by Parent or Sub in this Agreement; or

(c) any fraud or intentional misrepresentation by Parent
in connection with this Agreement and the transactions contemplated
hereby.

<PAGE> 131

The claims, liabilities, obligations, losses, costs, expenses, penalties, fines
and damages of the Shareholder Indemnified Parties described in this Section
9.2 as to which the Shareholder Indemnified Parties are entitled to
indemnification are hereinafter collectively referred to as "Shareholder
Losses."

9.3 Limitations on Indemnification.

(a) Except for the specific exceptions contained in this
Section 9.3(a), the Parent Indemnified Parties will not be entitled to
seek indemnification under Section 9.1 unless and until the aggregate
of all Parent Losses incurred by the Parent Indemnified Parties
exceeds $1,000,000 (the "Shareholder Basket Amount"). In the event
that the aggregate of all Parent Losses exceeds the Shareholder Basket
Amount, the Parent Indemnified Parties will only be entitled to seek
indemnification in respect of Parent Losses in excess of the
Shareholder Basket Amount, but in no event will the Shareholder
Parties' obligations for Parent Losses be greater than $25,000,000
(the "Shareholder Maximum Indemnity"); provided, however, that the
Shareholder Basket Amount and the Shareholder Maximum Indemnity shall
not apply with respect to Parent Losses arising under (i) Section
9.1(a) with respect to any breach or inaccuracy of any representation
or warranty made by the Shareholder Parties in Section 5.1, 5.2, 5.3,
5.4, 5.5, 5.17 or 5.25, (ii) Section 9.1 (b), other than with respect
to any breach by the Company or a Shareholder Party of the covenants
contained in Article 7 (unless such Article 7 breach is willful or
this Agreement is terminated pursuant to Article 12 after such Article
7 breach, in which case the Shareholder Basket Amount and the
Shareholder Maximum Indemnity shall not apply) or (iii) Section 9.1(c)
or 9.1(d). In addition, the Shareholder Basket Amount shall not apply
with respect to Parent Losses arising under Section 9.1(a) with
respect to any breach or inaccuracy of any representation or warranty
made by the Shareholder Parties in Section 5.29. Notwithstanding any
other provision herein, the Shareholder Parties shall not in any event
indemnify a Parent Indemnified Party for any claims, liabilities,
obligations, losses, costs, expenses, penalties, fines and damages
relating to sales tax, use tax, or other similar charges imposed by
any jurisdiction other than a jurisdiction in which the Company has
filed sales or use tax returns; and

(b) The Shareholder Indemnified Parties will not be
entitled to seek indemnification under Section 9.2 for Shareholder
Losses unless and until the aggregate amount of all Shareholder Losses
incurred by the Shareholder Indemnified Parties exceeds $1,000,000
(the "Parent Basket Amount"). In the event that the aggregate of all
Shareholder Losses exceeds the Parent Basket Amount, the Shareholder
Indemnified Parties will only be entitled to seek indemnification in
respect of Shareholder Losses in excess of the Parent Basket Amount,
but in no event will Parent's obligation for Shareholder Losses be
greater than $25,000,000 (the "Parent Maximum Indemnity"); provided,
however, that the Parent Basket Amount

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and the Parent Maximum Indemnity shall not apply with respect to
Shareholder Losses arising under (i) Section 9.2(a) with respect to
any breach or inaccuracy or any representation or warranty made by
Parent in Sections 6.1, 6.2, 6.3 or 6.7 or (ii) Section 9.2(b) or
9.2(c).

9.4 Indemnification Procedure.

(a) Promptly after receipt by a Parent Indemnified Party
or a Shareholder Indemnified Party (hereinafter collectively referred
to as an "Indemnified Party") of notice from a third party of any
complaint or the commencement of any action, proceeding or claim with
respect to which such Indemnified Party may be entitled to receive
payment from the other party for any Parent Losses or Shareholder
Losses (as the case may be and subject to the limitation on Parent
Losses and Shareholder Losses in Section 9.3), such Indemnified Party
shall notify Parent or the Shareholder Parties, whoever is the
appropriate indemnifying party hereunder (the "Indemnifying Party"),
of the commencement of such action, proceeding or claim; provided,
however, that the failure to so notify the Indemnifying Party shall
not relieve the Indemnifying Party from liability for such claim
arising otherwise than under this Agreement and such failure to so
notify the Indemnifying Party shall relieve the Indemnifying Party
from liability under this Agreement with respect to such matter only
if, and only to the extent that, such failure to notify the
Indemnifying Party results in the forfeiture by the Indemnifying Party
of rights and defenses otherwise available to the Indemnifying Party
with respect to such matter. The Indemnifying Party shall have the
right, upon written notice delivered to the Indemnified Party within
twenty (20) days thereafter, to assume the defense of such matter,
including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of the fees and disbursements of
such counsel. In the event, however, that the Indemnifying Party
declines or fails to assume the defense of the matter or to employ
counsel reasonably satisfactory to the Indemnified Party, in either
case within such twenty (20) day period, then such Indemnified Party
may employ counsel to represent or defend it in any such action or
proceeding and the Indemnifying Party shall pay the reasonable fees
and disbursements of such counsel as incurred; provided, however, that
the Indemnifying Party shall not be required to pay the fees and
disbursements of more than one counsel for all Indemnified Parties in
any jurisdiction in any single action or proceeding. In any action or
proceeding with respect to which indemnification is being sought
hereunder, the Indemnified Party or the Indemnifying Party, whichever
is not assuming the defense of such action, shall have the right to
participate in such matter and to retain its own counsel at such
party's own expense. The Indemnifying Party or the Indemnified Party,
as the case may be, shall at all times use reasonable efforts to keep
the Indemnifying Party or the Indemnified Party, as the case may be,
reasonably apprised of the status of the defense of any action the
defense of which they are maintaining and to cooperate in good faith
with each other with respect to the defense of any such action.

<PAGE> 133

(b) No Indemnified Party may settle or compromise any
claim or consent to the entry of any judgment with respect to which
indemnification is being sought hereunder without the prior written
consent of the Indemnifying Party, unless (i) the Indemnifying Party
fails to assume and maintain the defense of such claim pursuant to
Section 9.4(a), or (ii) such settlement, compromise or consent
includes an unconditional release of the Indemnifying Party from all
liability arising out of such claim. An Indemnifying Party may not,
without the prior written consent of the Indemnified Party, settle or
compromise any claim or consent to the entry of any judgment with
respect to which indemnification is being sought hereunder unless such
settlement, compromise or consent includes an unconditional release of
the Indemnified Party from all liability arising out of such claim and
does not contain any equitable order, judgment or term which in any
manner affects, restrains or interferes with the business of the
Indemnified Party or any of the Indemnified Party's respective
affiliates.

(c) In the event an Indemnified Party shall claim a right
to payment (or, a credit towards the Shareholders Basket Amount or
Parent Basket Amount) pursuant to this Agreement, such Indemnified
Party shall send written notice of such claim to the appropriate
Indemnifying Party. Such notice shall specify the basis for such
claim. As promptly as possible after the Indemnified Party has given
such notice, such Indemnified Party and the appropriate Indemnifying
Party shall establish the merits and amount of such claim (by mutual
agreement, litigation, arbitration or otherwise) and, within five
business days of the final determination of the merits and amount of
such claim, the Indemnifying Party shall pay to the Indemnified Party
immediately available funds (or, if applicable, shall provide notice
to the escrow agent regarding disbursement of the appropriate portion
of the escrow fund) in an amount equal to such claim as determined
hereunder (or shall record an appropriate credit against the
Shareholder Basket Amount or Parent Basket Amount).

9.5 Claims Period. For purposes of this Agreement, a "Claims
Period" shall be the period during which a claim for indemnification may be
asserted under this Agreement by an Indemnified Party. The Claims Periods
under this Agreement shall commence on the date of this Agreement and shall
terminate as follows:

(a) with respect to Parent Losses arising under Section
9.1(a) with respect to any breach or inaccuracy of any representation
or warranty of the Shareholder Parties in Section 5.6, 5.11 or 5.26,
the Claims Period shall terminate on the date which is thirty (30)
days following the final determination of the Closing Balance Sheet
pursuant to Section 2.5 or 2.6;

(b) with respect to Parent Losses arising under Section
9.1(a) with respect to any breach or inaccuracy of any representation
or warranty of the Shareholder Parties other than Sections 5.6, 5.11
and 5.26, the Claims Period shall terminate one (1) year following the
Closing Date;

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(c) with respect to Parent Losses arising under Section
9.1(b) with respect to any breach by the Company or any Shareholder
Party of any covenant, agreement or undertaking contained in Article
7, the Claims Period shall terminate one (1) year following the
Closing Date; provided that in the case of any breach of Section 7.7,
the Claims Period shall continue indefinitely, except as limited by
law (including by applicable statutes of limitation);

(d) with respect to Parent Losses arising under Section
9.1(b) with respect to any breach by the Company or the Shareholder
Parties of any covenant, agreement or undertaking by the Company or
any Shareholder Party in this Agreement other than Article 7 or under
Section 9.1(c) or 9.1(d), the Claims Period shall continue
indefinitely, except as limited by law (including by applicable
statutes of limitation);

(e) with respect to Shareholder Losses arising under
Section 9.2(a) with respect to any breach or inaccuracy of any
representation or warranty of Parent, the Claims Period shall
terminate one (1) year following the Closing Date;

(f) with respect to Shareholder Losses arising under
Section 9.2(b) with respect to any breach by Parent of any covenant,
agreement or undertaking contained in Article 7, the Claims Period
shall terminate one (1) year following the Closing Date; provided that
if such breach of Article 7 is willful or if the claim for
indemnification is asserted by the Shareholder Indemnified Parties
prior to the Closing and the Closing does not thereafter occur, the
Claims Period shall continue indefinitely, except as limited by law
(including by applicable statutes of limitation);

(g) with respect to Shareholder Losses arising under
Section 9.2(b) with respect to any breach of any covenant, agreement
or undertaking by Parent in this Agreement other than Article 7 or
under Section 9.2(c), the Claims Period shall continue indefinitely,
except as limited by law (including by applicable statutes of
limitation).

Notwithstanding the foregoing, if prior to the close of business on
the last day of the applicable Claims Period, an Indemnifying Party shall have
been properly notified as provided hereunder of a claim for indemnity hereunder
and such claim shall not have been finally resolved or disposed of at such
date, such claim shall continue to survive and shall remain a basis for
indemnity hereunder until such claim is finally resolved or disposed of in
accordance with the terms hereof.

9.6 Recovery. Parent may recover Parent Losses in accordance with
the provisions of the Escrow Agreement (as defined in Section 10.1(h));
provided, however, that Parent's ability to recover Parent Losses in accordance
with the Escrow Agreement shall not in any way be construed to limit any remedy
Parent may have against the Shareholder Parties under this Agreement.

<PAGE> 135

9.7 Exclusive Remedy. The terms of the indemnification provided
pursuant to this Article 9 constitute the exclusive remedy that a Parent
Indemnified Party or a Shareholder Indemnified Party, as the case may be, shall
have following the Closing against a Shareholder Indemnified Party or a Parent
Indemnified Party, as the case may be, as to matters that result, directly or
indirectly, from any breach of representations or warranties or the
nonfulfillment or default in the performance of any of the covenants or
agreements made by the parties in this Agreement or in any Schedule,
certificate, instrument or agreement delivered pursuant thereto.

9.8 Limitation on Losses. Notwithstanding anything herein to the
contrary, the terms "Parent Losses" and "Shareholder Losses" shall be
calculated after considering all insurance proceeds actually received by the
Indemnified Party with respect to the specific event that gives rise to the
claim by the Indemnified Party.

ARTICLE 10

Conditions Precedent To Obligations Of Parent and Sub

10.1 Conditions Precedent. Parent's and Sub's obligation to
consummate the Merger and the transactions contemplated by this Agreement is
subject to the fulfillment on or before the Closing Date of each of the
following conditions:

(a) Representations, Warranties and Covenants. The
representations and warranties of the Company and the Shareholder
Parties set forth herein shall be accurate in all material respects on
and as of the Closing Date as if made on and as of such date (or any
date, including the date of this Agreement, at which a representation
or warranty is expressly made), and the Company and the Shareholder
Parties shall have complied in all material respects with or performed
in all material respects all agreements, covenants and conditions on
their part to be performed or complied with on or prior to the Closing
Date.

(b) Legal Actions. No suit, action or other proceeding
by any third party shall be pending before any court or governmental
body, agency or authority seeking to restrain or prohibit, or to
obtain damages or other relief in connection with, this Agreement or
the consummation of the transactions contemplated hereby or which is
likely to materially adversely affect the value of the assets or
business of the Company and the Affiliated Companies (taken as a
whole).

(c) Consents. All consents, authorizations, orders and
approvals of (or filings or registrations with) any governmental
commission, board or other regulatory body required in connection with
the execution, delivery and performance of this Agreement by the
Company shall have been obtained or made, except for filing of the
Certificate of Merger and any other documents required to be filed
after the Effective Time and except where the failure to have obtained
or made any such consent, authorization, order approval, filing or

<PAGE> 136

registration would not have a material adverse effect on the business
of Parent and the Company following the Effective Time. Parent shall
also have received consents to assignment of all Company Contracts or
written waivers of the provisions of any Company Contracts requiring
the consents of third parties as set forth in Schedule 10.1(c).

(d) Deliveries. The Shareholder Parties and the Company
shall have delivered to Parent:

(i) A certificate executed by the Shareholder
Parties and the Company certifying to the accuracy on the
Closing Date of the Shareholder Parties' and the Company's
respective representations and warranties set forth in
Articles 4 and 5;

(ii) A certificate by the Secretary of the Company
as to the Board of Directors and Shareholders of the Company
having taken all actions necessary to authorize the execution,
delivery and performance of this Agreement by the Company and
the consummation of the transactions contemplated thereby;

(iii) The minute books, stock transfer books
(containing canceled stock certificates representing all
transfers of its capital stock prior to the Closing Date) and
corporate seal of the Company which are in the Company's
possession;

(iv) The opinion of counsel for the Company, the
Affiliated Companies and the Shareholders in the form of
Exhibit 10.1(d)(iv) hereto; and

(v) Such other documents and items as are
contemplated by this Agreement or as Parent may reasonably
request.

(e) Antitrust Filing. The waiting period required in
connection with the Antitrust Filing, if any, shall have expired or
been terminated.

(f) Pooling Opinion. Parent shall have been advised in
writing, as of the Closing Date, by KPMG, that, in accordance with
GAAP, the Mergers are qualified to be treated as a "pooling of
interests" for accounting purposes, and that based upon their
examination of the financial statements of Company and the Affiliated
Companies, they are not aware of any conditions relating to the
Company or any Affiliated Company that would preclude the use of
"pooling of interests" accounting in connection with the Mergers. In
addition, D&T shall deliver to Parent and the Company an opinion
letter in the form attached as Exhibit 10.1(f) hereto that, based upon
inquiries and their examination of the financial statements of the
Company or any of the Affiliated Companies, they are not aware of any
conditions relating

<PAGE> 137

to the Company and the Affiliated Companies that would preclude the
use of pooling-of-interests accounting in connection with the Mergers.

(g) Listing of Parent Common Stock. The Parent Common
Stock to be issued pursuant to the Mergers shall have been approved
for listing on the NYSE, subject only to official notice of issuance
by Parent.

(h) Escrow Agreement. Each Shareholder Party shall have
executed and delivered the Escrow Agreement, substantially in the form
attached hereto as Exhibit 10.1(h) (the "Escrow Agreement"), pursuant
to which the Shareholder Parties shall deposit with Bank of America,
N.A. on the Closing Date a number of shares of Parent Common Stock
equal to $10,000,000 divided by the Average Closing Price (rounded to
the nearest whole share) to secure their obligations under this
Agreement.

(i) No Material Adverse Change. There shall not have
occurred after the date hereof (nor shall Parent have become aware
after the date hereof of any circumstances that are reasonably likely
to cause or result in) any material adverse change in the financial
condition, business or results of operations or prospects of the
Company and the Affiliated Companies (taken as a whole).

(j) Related Party Debt. Each Shareholder shall have paid
in full all amounts of any kind owed by such Shareholder or its
Affiliate to the Company and each Affiliated Company, or such amount
shall have been offset on a dollar-for-dollar basis against any
indebtedness for borrowed money owed by the Company or any Affiliated
Company to such Shareholder or its Affiliate.

(k) Dissenting Shares. Holders of not more than 3% of
the outstanding shares of the Company Common Stock shall have elected
to exercise appraisal rights pursuant to the TBCA.

(l) Affiliated Owner Approval. The Merger and the
transactions contemplated by this Agreement shall have been approved
at the Shareholders' meeting referred to in Section 7.8(a) by the
holders of at least ninety seven percent (97%) of the outstanding
shares of the Company Common Stock. All of the partners of each of
the Affiliated Companies shall have executed and delivered to Parent
written consents evidencing such partners' consent to and approval of
the Affiliated Merger and the transactions contemplated by the
Affiliated Merger Agreement.

(m) Certificates of Merger. The certificates of merger
relating to the Affiliated Merger shall have been executed by each of
the Affiliated Companies and delivered to Parent for filing.

48
<PAGE> 138

(n) Registration Statement. The Registration Statement
shall be effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall be in
effect and no proceedings for such purpose, or under the proxy rules
of the SEC pursuant to the Exchange Act and with respect to the
transactions contemplated by this Agreement or the Affiliated Merger
Agreement, shall be pending before or threatened by the SEC. All
applicable state securities laws shall have been complied with in
connection with the issuance of Parent Common Stock to be issued
pursuant to the Mergers, and no stop order suspending the
effectiveness of any qualification or registration of such Parent
Common Stock under such state securities laws shall have been issued
and pending or threatened by the authorities of any such state.

(o) Mission Valley. The Company shall be relieved from
any and all of its obligations under that certain Loan Agreement,
dated March 1, 1996, by and between Met Life Capital and the Company.

10.2 Waiver. Parent shall have the right to waive the foregoing
conditions, or any of them, wholly or in part; provided however, that no such
waiver shall be deemed to have occurred unless the same is set out in writing
and executed by Parent.

ARTICLE 11

Conditions Precedent to Obligations of the Shareholder Parties and the
Company

11.1 Conditions Precedent. The obligation of the Shareholder
Parties and the Company to consummate the Merger and the transactions
contemplated by this Agreement is subject to the fulfillment, on or before the
Closing Date, of each of the following conditions:

(a) Representations, Warranties and Covenants. The
representations and warranties made by Parent and Sub herein shall be
accurate in all material respects on and as of the Closing Date to the
same extent as if made on and as of such date, and Parent and Sub
shall have complied in all material respects with or performed in all
material respects all agreements, covenants and conditions on their
part to be performed or complied with on or prior to the Closing Date.

(b) Legal Actions. No suit, action or other proceeding
by any third party shall be pending before any court or governmental
agency seeking to restrain or prohibit, or to obtain damages or other
relief in connection with, this Agreement or the consummation of the
transactions contemplated hereby.

<PAGE> 139

(i) A certificate executed by Parent and
Sub certifying to the accuracy on the Closing Date of Parent's
and Sub's representations and warranties set forth in Article
6;

(ii) A certificate by the Secretary or any Assistant
Secretary of Parent and Sub as to the due adoption by the
Board of Directors of Parent and the Board of Directors and
shareholders of Sub of the required corporate resolutions
authorizing the execution, delivery and performance of this
Agreement by Parent and Sub and the consummation of the
transactions contemplated thereby;

(iii) The opinion of counsel for Parent and Sub in
the form of Exhibit 11.1(c)(iii) hereto; and

(iv) Such other documents and items as are
contemplated by this Agreement or as the Shareholder Parties
may reasonably request.

(d) Antitrust Filing. The waiting period required in
connection with the Antitrust Filing, if any, shall have expired or
been terminated.

(e) Listing of Parent Common Stock. The Parent Common
Stock to be issued pursuant to the Mergers shall have been approved
for listing on the NYSE, subject only to official notice of issuance
by Parent.

(f) Registration Statement. The Registration Statement
shall be effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall be in
effect and no proceedings for such purpose shall be pending before or
threatened by the SEC. All applicable state securities laws shall
have been complied with in connection with the issuance of Parent
Common Stock to be issued pursuant to the Mergers, and no stop order
suspending the effectiveness of any qualification or registration of
such Parent Common Stock under such state securities laws shall have
been issued and pending or threatened by the authorities of any such
state.

(g) Shareholder Approval. The Merger, this Agreement and
the transactions contemplated hereby shall have been approved at the
Shareholders meeting by the holders of a majority of the outstanding
Company Common Stock

11.2 Waiver. The Shareholder Parties and the Company shall have
the right to waive the foregoing conditions, or any of them, wholly or in part;
provided, however, that no such waiver shall be deemed to have occurred unless
the same is set out in writing and executed by the Shareholder Parties and the
Company. Any waiver made by the Shareholder Parties and the Company hereunder
shall also constitute a waiver with respect to any rights or remedies that the
Shareholder Parties and

<PAGE> 140

the Company may otherwise have against Parent in respect of or relating to the
specific conditions waived.

ARTICLE 12

Termination

12.1 Termination. This Agreement may be terminated at any time at
or prior to the Closing (the "Termination Date"):

(a) in writing by mutual consent of Parent and the
Company;

(b) by written notice from the Company to Parent if (i)
Parent or Sub shall breach or fail to perform in any material respect
any of its agreements contained herein required to be performed by it
on or prior to the Closing Date or (ii) any of the representations and
warranties of Parent and Sub contained herein shall be inaccurate in
any material respect, which breach, failure or inaccuracy is not cured
within ten (10) days after the Company has notified Parent of its
intent to terminate this Agreement pursuant to this subparagraph (b);
provided that if any such breach, failure or inaccuracy is not
reasonably capable of cure within such 10-day period and Parent is
using its good faith efforts to effect such cure at the earliest
practicable time, the Company shall not be permitted to terminate this
Agreement pursuant to this subparagraph (b) unless such breach,
failure or inaccuracy is not cured within thirty (30) days after the
Company has notified Parent of its intent to terminate this Agreement
pursuant to this subparagraph (b);

(c) by written notice from Parent to the Company, if (i)
the Company or any Shareholder Party shall breach or fail to perform
in any material respect any of its agreements contained herein
required to be performed by it on or prior to the Closing Date, or
(ii) any of the representations and warranties of the Shareholder
Parties contained herein shall be inaccurate in any material respect,
which breach, failure or inaccuracy is not cured within ten (10) days
after Parent has notified the Company of its intent to terminate this
Agreement pursuant to this subparagraph (c); provided that if any such
breach, failure or inaccuracy is not reasonably capable of cure within
such 10-day period and Company is using its good faith efforts to
effect such cure at the earliest practicable time, the Company shall
not be permitted to terminate this Agreement pursuant to this
subparagraph (c) unless such breach, failure or inaccuracy is not
cured within thirty (30) days after Parent has notified the Company of
its intent to terminate this Agreement pursuant to this subparagraph
(c);

<PAGE> 141

(d) by written notice by either Parent or the Company to the
other, if the Closing has not occurred by May 31, 1997, for any reason
other than delay or nonperformance of the party seeking such
termination; or

(e) by written notice by Parent to the Shareholder
Parties, if the conditions in either or both of Sections 10.1(k) and
10.1(l) have not been satisfied on or prior to the twenty-fifth (25th)
business day following the mailing of the Proxy Statement to the
Affiliated Owners.

12.2 Specific Performance and Other Remedies. The parties hereto
each acknowledge that the rights of each party to consummate the transactions
contemplated hereby are special, unique and of extraordinary character, and
that, in the event that any party violates or fails or refuses to perform any
covenant or agreement prior to the Closing Date made by it herein, the
non-breaching party may be without an adequate remedy at law. The parties each
agree, therefore, that in the event that either party violates or fails or
refuses to perform any covenant or agreement made by such party herein, the
non-breaching party or parties may, subject to the terms of this Agreement and
in addition to any remedies at law for damages or other relief, institute and
prosecute an action in any court of competent jurisdiction to enforce specific
performance of such covenant or agreement or seek any other equitable relief.

12.3 Effect of Termination. In the event of termination of this
Agreement pursuant to this , this Agreement shall forthwith become void and
there shall be no liability on the part of any party or its respective
officers, directors or stockholders, except for obligations under Section 7.2,
Section 12.4, Article 13 and this Section, all of which shall survive the
Termination Date. Notwithstanding the foregoing, nothing contained herein
shall relieve any party from liability for any breach of this Agreement (except
to the extent contemplated by Section 12.4(b)); provided that none of the
Shareholder Parties shall have any liability for any breach of this Agreement
(other than Sections 7.2 and 7.7) if this Agreement is terminated prior to the
satisfaction of the conditions in Sections 10.1(k) and 10.1(l).

12.4 Termination Fee.

(a) If this Agreement is terminated by Parent pursuant to
Section 12.1(e), the Company shall pay to Parent within two (2)
business days following such termination (by wire transfer of
immediately available funds to an account designated by Parent) the
amount of $10,000,000 (the "Termination Fee"). If such Termination
Fee is not paid when due, the Termination Fee shall accrue simple
interest on a daily basis at a rate equal to 15% per annum from the
due date until paid in full.

(b) The payment of the Termination Fee pursuant to
Section 12.4(b) shall be treated as liquidated damages and shall
relieve the Company and the Shareholder Parties from any liability to
Parent and Sub with respect to any breach of this Agreement that
occurs prior to the payment of the Termination Fee. Notwithstanding
the foregoing, nothing

<PAGE> 142

contained herein shall relieve the Company or the Shareholder Parties
from any liability for any breach of Section 7.7 of this Agreement.

ARTICLE 13

Expenses

The Shareholder Parties and the Company, on the one hand, and Parent,
on the other hand, shall each pay its own expenses in connection with the
negotiations leading up to and the preparation of this Agreement and the
consummation of the transactions provided for herein (collectively,
"Expenses"), including without limitation fees and expense of their respective
investment advisors, brokers, legal counsel, accountants and, in the case of
Parent, other outside experts retained by it to conduct due diligence.

ARTICLE 14

Miscellaneous

14.1 Cooperation Following the Closing. Following the Closing, the
Shareholder Parties, the Company and Parent shall deliver to the other such
further information and documents and shall execute and deliver to the other
such further information and documents and shall execute and deliver such
further instruments and agreements as the other shall reasonably request in
order to consummate or confirm the transactions provided for herein, to
accomplish the purpose of this Agreement or to assure to the other the benefits
of this Agreement.

14.2 Benefits and Burdens: Assignment.

(a) Upon the execution of this Agreement by Parent, Sub,
the Company and Shareholders holding 97% or more of the outstanding
Company Common Stock, this Agreement shall become a binding and
enforceable agreement with respect to Parent, Sub, the Company and
each Shareholder that has executed this Agreement, and thereafter
shall be the binding and enforceable agreement of any Shareholder that
subsequently executes this Agreement.

(b) This Agreement shall inure to the benefit of and
shall be binding upon each Shareholder Party, the Company, Sub and
Parent, and the respective heirs, executors, successors and permitted
assigns of such Shareholder, the Company, Sub and Parent. No party to
this Agreement may assign its rights or obligations hereunder without
the prior written consent of each of the other parties hereto;
provided however, that this Agreement may be assigned by Parent to a
corporation, all of whose issued and outstanding capital stock

<PAGE> 143

is owned directly or indirectly by Parent, but in such event Parent
shall not be released from its obligations hereunder.

14.3 Amendment. This Agreement may be amended only by an
instrument in writing signed by the Shareholder Parties, the Company and
Parent.

14.4 Notices. All notices, communications and deliveries hereunder
shall be made in writing signed by or on behalf of the party making the same,
shall specify the Section hereunder pursuant to which it is given or being
made, and shall be delivered personally or by telecopy transmission or sent by
registered or certified mail (return receipt requested) or by any national
overnight courier service (with postage and other fees prepaid) as follows:

If to Parent or, after the Closing, the Company:

The Home Depot, Inc.
2455 Paces Ferry Road
Atlanta, Georgia 30339
Attention: Lawrence A. Smith
Telecopy: (770) 431-2739

With a copy to:

King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: Michael J. Egan III
Telecopy: (404) 572-5145

If to the Shareholder Parties or, prior to Closing, the Company:

Maintenance Warehouse/America Corp.
5505 Morehouse Drive, Suite 300
San Diego, California 92121
Attention: Ronald L. Neeley
Telecopy: (619) 458-9863

With a copy to:

Seltzer Caplan Wilkins & McMahon
750 "B" Street, Suite 2100
San Diego, California 92101

<PAGE> 144

Attention: David J. Dorne
Telecopy: (619) 685-3100

Latham & Watkins
701 "B" Street, Suite 2100
San Diego, California 92101
Attention: Scott N. Wolfe
Telecopy: (619) 696-7419

or to such other address or to such other person or persons designated in
writing by such party or counsel, as the case may be. Any such notice,
communication or delivery shall be deemed given or made (a) on the date of
delivery if delivered in person, (b) on the date after delivery to a national
overnight courier service, (c) upon transmission by facsimile if receipt is
confirmed by telephone or (d) on the fifth (5th) business day after it is
mailed by registered or certified mail.

14.5 Entire Understanding. This Agreement and the Schedules and
Exhibits referred to herein represent the entire understanding of the parties
with respect to the subject matter hereof and supersedes all correspondence,
memoranda, conversations or other communications with respect thereto.

14.6 Headings. The section headings in this Agreement are intended
solely for convenience and shall be given no effect in the construction and
interpretation hereof.

14.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument, and, when signed by all
of the parties hereto, shall become legally binding on such parties effective
as of the date set forth at the beginning of this Agreement.

14.8 Governing Law. This Agreement shall be governed by and
interpreted under the laws of the State of California applicable to contracts
made and to be performed entirely within such State and without giving effect
to the choice of law principles of such State.

14.9 Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.

14.10 Time. Time is of the essence under this Agreement.

14.11 Knowledge. The phrase "to the knowledge of the Company" or
its equivalent as used herein shall mean to the actual knowledge, without the
obligation to undertake any investigation or inquiry of any kind, of the
Company and the following persons: Ronald L. Neeley, Lucille A. Neeley, Jon S.
Gilbert, Steven L. Neeley, Karen E. Rush, Ronald F. Turk and Jonathan L.
Neeley.

<PAGE> 145

14.12 Statutes. Any reference herein to any federal, state or local
statute shall include all amendments to such statute through the date of this
Agreement or the Effective Time, as applicable.

14.13 Shareholder Representative. By the execution and delivery of
this Agreement, including counterparts hereof, each Shareholder Party hereby
irrevocably constitutes and appoints Ronald L. Neeley as the true and lawful
agent and attorney-in-fact (referred to in this Agreement as the
"Representative") of such Shareholder Party with full powers of substitution to
act in the name, place and stead of such Shareholder Party with respect to the
performance on behalf of such Shareholder Party under the terms and provisions
of this Agreement, as the same may be from time to time amended, and to do or
refrain from doing all such further acts and things, and to execute all such
documents, as the Representative shall deem necessary or appropriate in
connection with any of the transactions contemplated under this Agreement,
including without limitation the power:

(a) to receive, hold and deliver to Parent any of the
Certificates, accompanied by the Letters of Transmittal and any other
documents relating thereto on behalf of such Shareholder Party;

(b) to receive on behalf of such Shareholder Party any
shares of Parent Common Stock issued to such Shareholder Party
pursuant to this Agreement;

(c) to execute and deliver the Escrow Agreement and all
other ancillary agreements, certificates, and documents which the
Representative deems necessary or appropriate in connection with the
consummation of the transactions contemplated by the terms and
provisions of this Agreement;

(d) to act for such Shareholder Party with respect to all
indemnification matters referred to in this Agreement, including the
right to compromise or settle any such claims on behalf of such
Shareholder Party;

(e) to amend or waive any provision of this Agreement
(including any condition to closing) in any manner which does not
differentiate among the Shareholder Parties;

(f) to employ and obtain the advice of legal counsel,
accountants and other professional advisors as the Representative, in
his sole discretion, deems necessary or advisable in the performance
of his duties as Representative and to rely on their advice and
counsel;

(g) to incur any expenses, to liquidate and withhold
assets received on behalf of the Shareholder Parties prior to their
distribution to the Shareholder Parties to the extent of any amount
which the Representative deems necessary for payment of or as a
reserve against expenses, and to pay such expenses or to deposit the
same in an interest-bearing bank account established for such purpose;

<PAGE> 146

(h) to receive all notices, communications and deliveries
hereunder on behalf of such Shareholder Party under this Agreement; and

(i) to do or refrain from doing any further act or deed
on behalf of such Shareholder Party which the Representative deems
necessary or appropriate in his sole discretion relating to the
subject matter of this Agreement as fully and completely as any of the
Shareholder Parties could do if personally present and acting and as
though any reference to a Shareholder Party or the Shareholder Parties
in this Agreement were a reference to the Representative.

The appointment of the Representative shall be deemed coupled with an
interest and shall be irrevocable, and Parent and any other person may
conclusively and absolutely rely, without inquiry, upon any action of the
Representative as the act of the Shareholder Parties in all matters referred to
in this Agreement. Each Shareholder hereby ratifies and confirms all that the
Representative shall do or cause to be done by virtue of his appointment as
Representative of such Shareholder Party. The Representative shall act for the
Shareholder Parties on all of the matters set forth in this Agreement in the
manner the Representative believes to be in the best interest of the
Shareholder Parties, but the Representative shall not be responsible to any
Shareholder Party for any loss or damage any Shareholder Party may suffer by
reason of the performance by the Representative of his duties under this
Agreement, other than loss or damage arising from willful misconduct in the
performance of his duties under this Agreement.

Each of the Shareholder Parties hereby expressly acknowledges and
agrees that the Representative is authorized to act on behalf of such
Shareholder Party notwithstanding any dispute or disagreement among the
Shareholder Parties, and that Parent shall be entitled to rely on any and all
action taken by the Representative under this Agreement without liability to,
or obligation to inquire of, any of the Shareholder Parties. If the
Representative resigns or ceases to function in such capacity for any reason
whatsoever, then Shareholder Parties which held a majority of the Company
Common Stock on the date hereof shall appoint a successor; provided, however,
that if for any reason no successor has been appointed within thirty (30) days,
then any Shareholder Party shall have the right to petition a court of
competent jurisdiction for appointment of a successor. The Shareholder Parties
do hereby jointly and severally agree to indemnify and hold the Representative
harmless from and against any and all liability, loss, cost, damage or expense
(including without limitation attorneys' fees) reasonably incurred or suffered
as a result of the performance of its duties under this Agreement except for
willful misconduct.

<PAGE> 147

IN WITNESS WHEREOF, the parties have executed or caused to be executed
this Agreement effective as of the day and year first above written.

MAINTENANCE WAREHOUSE/AMERICA CORP.

__________________________________
Ronald L. Neeley
Chief Executive Officer

THE HOME DEPOT, INC.

__________________________________
Marshall L. Day
Senior Vice President and
Chief Financial Officer

HOME DEPOT SUB, INC.

_________________________________
Carol B. Tome
Vice President

SHAREHOLDER PARTIES

__________________________________
Alison Neeley-Avvampato, as her sole
and separate property

__________________________________
Charles Avvampato

<PAGE> 148
-----------------------------------------------------
Jonathan Lee Neeley, Trustee of The Jonathan Lee Neeley
Trust, under Declaration of Trust dated April 2, 1996

-----------------------------------------------------
Steven Lee Neeley, Trustee of The Steven Lee Neeley Trust,
dated September 22, 1994

-----------------------------------------------------
Ronald L. Neeley, Trustee Under Declaration of Trust
dated September 15, 1981, as amended

-----------------------------------------------------
Lucille A. Neeley, Trustee Under Declaration of Trust
dated September 15, 1981, as amended

-----------------------------------------------------
David J. Dorne, Trustee of The Jonathan Lee Neeley 1996
Trust

Bankers Trust Company, as Trustee of The Jonathan Lee
Neeley 1996 Trust

By:
-----------------------------------------------------

Title:
-----------------------------------------------------

-----------------------------------------------------
David J. Dorne, Trustee of The Steven Lee Neeley 1996
Trust

<PAGE> 149

-----------------------------------------------------
Bankers Trust Company, as Trustee of The Steven Lee Neeley
1996 Trust

By:
-----------------------------------------------------

Title:
-----------------------------------------------------

-----------------------------------------------------
David J. Dorne, Trustee of The Alison Neeley 1996 Trust

Bankers Trust Company, as Trustee of The Alison Neeley
1996 Trust

By:
-----------------------------------------------------

Title:
-----------------------------------------------------

-----------------------------------------------------
Jon S. Gilbert

-----------------------------------------------------
David J. Dorne, Trustee of The Karly E. Gilbert 1996
Trust

-----------------------------------------------------
David J. Dorne, Trustee of The Jennifer C. Gilbert 1996
Trust

<PAGE> 150

Each of the persons signing below is executing this Agreement as of
the day and year first written above in his or her individual capacity
in order to acknowledge that each such person is individually bound by
the provisions of this Agreement (and will for all purposes hereunder
be deemed a Shareholder Party) as fully and completely as if such
person owned shares of the Company Common Stock in an individual
capacity.

_______________________________
Ronald L. Neeley

_______________________________
Lucille A. Neeley

_______________________________
Jonathan Lee Neeley

_______________________________
Steven Lee Neeley

<PAGE> 151
EXHIBIT 1.1

FORM OF

ARTICLES OF MERGER

MERGING

HOME DEPOT SUB, INC.

WITH AND INTO

MAINTENANCE WAREHOUSE/AMERICA CORP.

Pursuant to the provisions of Article 5.04 of the Texas Business
Corporation Act (the "Act"), the undersigned corporations do hereby adopt the
following Articles of Merger for the purpose of merging them into one
corporation:

1. The name and state of incorporation of the merging corporation
is Home Depot Sub, Inc., a Texas corporation (the "Merging
Corporation").

2. The name and state of incorporation of the surviving
corporation is Maintenance Warehouse/America Corp., a Texas
corporation (the "Surviving Corporation").

3. Attached hereto is a true and correct copy of the Merger
Agreement between the Merging Corporation, the Surviving
Corporation, The Home Depot, Inc., a Delaware corporation
("Home Depot") and the shareholders of the Surviving
Corporation (the "Plan of Merger"), by which the Merging
Corporation shall merge with and into the Surviving
Corporation (the "Merger"), and the Surviving Corporation
shall assume all of the Merging Corporation's liabilities and
obligations.

4. As to each of the undersigned corporations, the number of
shares outstanding of each class of stock entitled to vote on
such Plan and the total votes for and against such Plan, are
as follows:

<PAGE> 152

<TABLE>
<CAPTION>
NAME OF TOTAL SHARES TOTAL VOTED TOTAL VOTED
CORPORATION OUTSTANDING FOR AGAINST
----------- ----------- ----------- -----------
<S> <C> <C> <C>
Home Depot Sub, Inc.

Maintenance Warehouse/
America Corp.
</TABLE>

5. The approval by the Surviving Corporation of the Plan of
Merger was duly authorized by all action required by the laws
of the State of Texas and by the governing documents of the
Surviving Corporation.

6. The approval by the Merging Corporation of the Plan of Merger
was duly authorized by all action required by the laws of the
State of Texas and by the governing documents of the Merging
Corporation.

7. The Plan of Merger shall be effective upon filing of these
Articles of Merger with the Secretary of the State of Texas.

2
<PAGE> 153

IN WITNESS WHEREOF, the undersigned have caused these Articles to be
executed as of the ____ day of _____________, 1997.

HOME DEPOT SUB, INC.

------------------------------------
Name:
-------------------------------
Title:
------------------------------

MAINTENANCE WAREHOUSE/AMERICA CORP.

------------------------------------
Name:
-------------------------------
Title:
------------------------------

3
<PAGE> 154

EXHIBIT 10.1(D)(IV)

FORM OF OPINION OF COUNSEL TO THE COMPANY AND THE SHAREHOLDERS

_________ __, 1997

The Home Depot, Inc.
2455 Paces Ferry Road
Atlanta, Georgia 30339

Ladies and Gentlemen:

We have acted as special counsel for Maintenance Warehouse/America
Corp., a Texas corporation (the "Company"), and its shareholders (the
"Shareholders") in connection with the matters contemplated in that certain
Merger Agreement, dated as of January __, 1997 (the "Principal Merger
Agreement"), by and among The Home Depot, Inc., a Delaware corporation
("Parent"), Home Depot Sub, Inc., a Texas corporation and a wholly owned
subsidiary of Parent ("Sub"), the Company and the Shareholders. We have also
acted as special counsel for the California limited partnerships listed on
Exhibit A hereto (the "Affiliated Companies") and their respective partners in
connection with the matters contemplated in that certain Affiliated Merger
Agreement, dated as of January __, 1997 (the "Affiliated Merger Agreement," and
together with the Principal Merger Agreement, the "Merger Agreements") by and
between Parent and the Affiliated Companies. Capitalized terms used in this
opinion and not otherwise defined herein shall have the meanings ascribed to
such terms in the Principal Merger Agreement.

Transaction Documents: In connection with the Mergers and in rendering
the opinions set forth below, we have examined originals or copies of only the
following documents (AS TO ITEMS 1 THROUGH ___ BELOW, THE "TRANSACTION
DOCUMENTS"): (LIST DOCUMENTS)

1.
2.
3.

<PAGE> 155

The Home Depot, Inc.
______________, 1997
Page 2

Client Documents: We have also reviewed only the following documents
pertaining to our clients: (LIST DOCUMENTS -- INCLUDE RESOLUTIONS,
CERTIFICATES, ETC.)

1.
2.
3.

In all such examinations, we have assumed the genuineness of
signatures on original documents and the conformity to such original documents
of all copies submitted to us as certified, conformed or photographic copies
and, as to certificates of public officials, we have assumed the same to have
been properly given and to be accurate. We also have relied, as to various
matters of fact relating to the opinions set forth below, on certificates of
public officials and officers of the Company, copies of which are attached
hereto, and the accuracy of factual matters stated in the representations and
warranties of the Shareholders contained in the Principal Merger Agreement.

Based upon the foregoing and subject to the limitations,
qualifications and assumptions set forth below, we are of the opinion that:

(i) The Company is a corporation validly existing and in
good standing under the laws of the State of Texas and has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.
Except as provided in the Principal Merger Agreement, each of the
Affiliated Companies is a limited partnership validly existing and in
good standing under the laws of the State of California and has all
requisite power and authority to own, lease and operate its properties
and to carry on its business as now being conducted.

(ii) The Company has all requisite corporate power and
authority to execute and deliver the Principal Merger Agreement and
the Company Ancillary Agreements and to perform its obligations under
the Principal Merger Agreement and the Company Ancillary Agreements
and to consummate the Merger and the other transactions contemplated
by the Principal Merger Agreement. The execution and delivery of the
Principal Merger Agreement and the Company Ancillary Agreements by the
Company, and the performance by the Company of its obligations under
the Principal Merger Agreement and the consummation of the Merger and
the other transactions provided for in the Principal Merger Agreement
have been duly and validly authorized under applicable law by all
necessary action on the part of the Company and the Shareholders.

(iii) Each of the Affiliated Companies has all requisite
power and authority to execute and deliver the Affiliated Merger
Agreement and to perform its obligations under the Affiliated Merger
Agreement and to consummate the Affiliated Merger and the other
<PAGE> 156

The Home Depot, Inc.
_______________, 1997
Page 3

transactions contemplated by the Affiliated Merger Agreement. The
execution and delivery of the Affiliated Merger Agreement by each of
the Affiliated Companies and the performance by each of the Affiliated
Companies of its obligations under the Affiliated Merger Agreement and
the consummation of the Affiliated Merger and the other transactions
provided for in the Affiliated Merger Agreement have been duly and
validly authorized by all necessary action on the part of each of the
Affiliated Companies and its shareholders or partners.

(iv) Each Shareholder that is a trust created under the
laws of the State of California has all requisite power and authority
under California law and under the instruments creating and governing
such trust to execute and deliver the Principal Merger Agreement and
to perform its obligations under the Principal Merger Agreement and
the transactions contemplated by the Principal Merger Agreement.

(v) Except for compliance with the applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, applicable state
securities laws and the filing and recordation of certificates of
merger as required by the appropriate jurisdictions and the other
actions contemplated in the Merger Agreements, no consent, approval,
order or authorization of, or registration, declaration or filing
with, any governmental agency or public or regulatory unit, agency,
body or authority with respect to the Company, any of the Affiliated
Companies or the Shareholders is required in connection with the
execution, delivery or performance of the Merger Agreements by the
Company, the Affiliated Companies or the Shareholders or the
consummation of the transactions contemplated in the Merger Agreements
by the Company, the Affiliated Companies and the Shareholders. [WE
ARE RELYING UPON THE OPINION OF LATHAM & WATKINS AND TEXAS COUNSEL
DELIVERED TO YOU ON THE DATE OF THIS LETTER FOR THE OPINION RENDERED
IN THIS PARAGRAPH (V) WITH RESPECT TO MATTERS OF CORPORATE LAW.]

(vi) Except as otherwise contemplated in the Merger
Agreements, the execution, delivery and performance of the Merger
Agreements, the consummation of the Mergers and the other transactions
contemplated in the Merger Agreements and the fulfillment of and
compliance with the terms and conditions of the Merger Agreements do
not and will not, with the passing of time or the giving of notice or
both, violate or materially conflict with, constitute a material
breach of or default under, result in the loss of any material benefit
under, or permit the acceleration of any obligation under, (a) any
term or provision of the articles or certificate of incorporation or
bylaws or partnership agreement of the Company or any of the
Affiliated Companies, (b) to the best of our knowledge, any Company
Contract, (c) any judgment, decree or order known to us of any court
or governmental authority or agency to which the Company or any of the
Affiliated

<PAGE> 157

The Home Depot, Inc.
_______________, 1997
Page 4

Companies is a party or by which the Company or any of the Affiliated
Companies or any of their respective properties is bound, or (d) any
California statute, law, regulation or rule known to us that is
applicable to the Company, any of the Affiliated Companies or the
Shareholders.

(vii) The Company has the authorized and issued capital
stock as set forth in Section 5.4 of the Principal Merger Agreement.
To our knowledge, there are no options, warrants or other rights to
purchase, agreements or other obligations to issue or otherwise to
convert any obligations into any shares of capital stock of or
ownership interests in the Company. Each share of capital stock of
the Company issued and outstanding as of the date hereof is duly
authorized, validly issued, fully paid and nonassessable and, to the
best of our knowledge, free of statutory preemptive rights.

(viii) The Principal Merger Agreement has been duly executed
and delivered by each of the Company and the Shareholders and
constitutes the legal, valid and binding agreement of each of the
Company and the Shareholders, enforceable against each of the Company
and the Shareholders in accordance with its terms. The Affiliated
Merger Agreement has been duly executed and delivered by each of the
Affiliated Companies and constitutes the legal, valid and binding
agreement of each of the Affiliated Companies, enforceable against
each of the Affiliated Companies in accordance with its terms.

(ix) Except as set forth in Schedule 5.10 to the Principal
Merger Agreement, to our knowledge, there are no material suits,
actions, claims, proceedings or investigations pending, or threatened
against, relating to or involving the Company or any of the Affiliated
Companies (or any of their respective officers or directors) before
any court, arbitrator or administrative or governmental body. To our
knowledge, neither the Company nor any of its Affiliated Companies is
subject to any judgment, decree, injunction, rule or order of any
court, which is reasonably likely to cause a material limitation upon
Parent's ability to operate the business of the Company and the
Affiliated Companies after the Closing.

We have participated in conferences with the officers and other
representatives of the Company, representatives of the independent public
accountants of the Company and your officers and representatives at which the
contents of the Registration Statement and related matters were discussed.
Although we have not independently verified the information contained in the
Registration Statement and we do not pass upon or assume any responsibility for
the accuracy, completeness or fairness of the statements contained in the
Registration Statement, during the course of such participation (relying as to
materiality to a large extent upon the statements of officers and other
representatives of the Company), no facts came to our attention

<PAGE> 158

The Home Depot, Inc.
_______________, 1997
Page 5

that caused us to believe that, as of the date the Registration Statement
became effective with the Commission or as of the Effective Time, the
information with respect to the Company, the Affiliated Companies or the
Shareholders contained in the Registration Statement (except for the financial
statements, schedules and other financial or statistical data contained
therein, as to which we express no belief), contained an untrue statement of a
material fact with respect to the Company, the Affiliated Companies or the
Shareholders or omitted to state a material fact with respect to the Company,
the Affiliated Companies or the Shareholders required to be stated therein or
necessary to make the statements therein with respect to the Company, the
Affiliated Companies or the Shareholders, in light of the circumstances under
which they were made, not misleading. [OPINION WILL BE GIVEN BY LATHAM &
WATKINS.]

The foregoing opinions are subject to the following limitations,
qualifications and assumptions:

(a) Whenever any opinion or confirmation in this opinion is
qualified by the words "to our knowledge," "known to us" or other words of
similar meaning, the quoted words mean the current awareness by Daniel W.
Negroni, David J. Dorne or David Minton of this firm of factual matters such
lawyer recognizes as being relevant to the opinion or confirmation so
qualified.

(b) In rendering the opinion set forth in paragraph (i) above
concerning the existence, qualification and good standing of the Company and
the Affiliated Companies, we have relied exclusively upon certificates of
authorities of the States of Texas and California and the opinion of Texas
local counsel described below.

(c) We are members of the Bar of the State of California and,
accordingly, do not purport to be experts on or to express any opinion herein
concerning any law other than the laws of the State of California and the
federal law of the United States. The Merger Agreements shall be interpreted
under California law.

(d) In rendering the opinion set forth in paragraph (vii) above
concerning the issued capital stock of the Company and the absence of options
or warrants or other rights to purchase, agreements or other obligations to
issue or otherwise to convert any obligations into any shares of capital stock
of or ownership interests in the Company, we have relied exclusively upon a
review of the minute books and stock records of the Company.

(e) In rendering the opinion set forth in paragraph (viii) above
concerning the Merger Agreements, we have assumed that the Merger Agreements
have been duly authorized, executed and delivered by each party thereto other
than the Company, the Affiliated Companies and the Shareholders and that the
Merger Agreements constitute the legal, valid, binding and enforceable

<PAGE> 159

The Home Depot, Inc.
_______________, 1997
Page 5

obligation of each of the parties thereto other than the Company, the
Affiliated Companies and the Shareholders.

(f) No opinion is expressed as to the enforceability of any
waiver, choice of law, jurisdiction, venue or service of process provisions of
any agreement or document.

(g) Each person executing the Merger Agreement and the documents
relating thereto is or was competent to do so.

(h) There are no other agreements, written or oral, which alter or
vary the provisions of the Merger Agreements or the documents executed in
connection therewith.

(i) There has not been any mutual mistake of fact or
misunderstanding, fraud, duress, or undue influence.

(j) The conduct of the parties to the Merger Agreements has
complied with any requirement of good faith and fair dealing.

The opinions expressed in this letter are subject to the following
limitations and exceptions, in addition to those set forth above, which, under
certain circumstances, may apply to the Merger Agreements under California law:

(1) By the use of the term "enforceable," we are not
expressing any opinion regarding the availability of equitable
remedies or the equitable limitations or judicial discretion a court
of equity would apply in granting equitable relief with respect to
such enforcement. However, such equitable limitations or exercise of
judicial discretion do not in our opinion render the Merger Agreements
inadequate for the practical realization of the principal benefits
intended to be provided thereby, and the Merger Agreements contain
adequate remedies, if properly invoked, for the practical realization
of the benefits under the Merger Agreements.

(2) We have undertaken no independent investigation of
the capitalization, financial status or condition of the Company or
any of the Shareholders and thus give no opinion concerning their
abilities to satisfy their obligations under the Merger Agreements.

(3) Enforceability of the Merger Agreements is subject to
the effect of bankruptcy, insolvency, reorganization, arrangement,
moratorium and other similar laws relating to or affecting the rights
and remedies of creditors or debtors generally.

<PAGE> 160

The Home Depot, Inc.
_______________, 1997
Page 6

(4) Enforceability of the Merger Agreements is subject to
the effect of general principles of equity, including without
limitation concepts of materiality, reasonableness, good faith and
fair dealing and the possible unavailability of specific performance
or injunctive relief, regardless of whether considered in a proceeding
in equity or at law.

(5) The following shall be deemed to be excluded from the
coverage of this Opinion: (i) choice-of- law provisions; (ii)
provisions for penalties, liquidated damages, acceleration of future
amounts due (other than principal) without appropriate discount to
present value, late charges, prepayment charges, and increased
interest rates upon default; (iii) time-is-of-the-essence clauses;
(iv) confession of judgment clauses; (v) provisions that contain a
waiver of (a) broadly or vaguely stated rights, (b) the benefits of
statutory, regulatory, or constitutional rights, unless and to the
extent the statute, regulation, or constitution explicitly allows
waiver, (c) unknown future defenses, and (d) the right to recover
damages; (vi) provisions that attempt to change or waive rules of
evidence or fix the method or quantum of proof to be applied in
litigation or similar proceedings; (viii) forum selection clauses and
consent to jurisdiction clauses (both as to personal jurisdiction and
subject matter jurisdiction); (ix) provisions releasing, exculpating
or exempting a party from, or requiring indemnification of a party
for, liability for its own action or inaction, to the extent the
action or inaction involves negligence, recklessness, willful
misconduct or unlawful conduct; (x) provisions waiving consideration
of the impracticability or impossibility of performance at the time of
attempted enforcement; (xi) provisions waiving consideration of the
materiality of (a) a breach and (b) the consequences of the breach to
the party seeking enforcement.

(6) The opinions expressed herein are subject to the
effect of generally applicable rules of law that: (i) limit or affect
the enforcement of provisions of a contract that purport to require
waiver of the obligations of good faith, fair dealing, diligence and
reasonableness; (ii) limit the availability of a remedy under certain
circumstances where another remedy has been elected; (iii) may, where
less than all of a contract may be unenforceable, limit the
enforceability of the balance of the contact to circumstances in which
the unenforceable portion is not an essential part of the agreed
exchange; (iv) govern and afford judicial discretion regarding the
determination of damages and entitlement to attorneys' fees and other
costs.

(7) We express no opinion as to provisions to the effect
that rights or remedies are not exclusive, that every right or remedy
is cumulative and may be exercised in addition to or with any other
right or remedy, that the election of some particular remedy or
remedies does not preclude recourse to one or another remedy or that
failure to exercise or delay in exercising rights or remedies will not
operate as a waiver of any such right or remedy.

<PAGE> 161

The Home Depot, Inc.
_______________, 1997
Page 8

(8) The refusal of a court to permit the exercise or
attempted exercise of any right or remedy provided in the Agreement if
such exercise or attempted exercise is not undertaken in a
commercially reasonable manner, is against public policy, is deemed a
breach of the covenant of good faith and fair dealing implied in all
agreements under California law, or is otherwise found to be
unconscionable under the circumstances then existing or as otherwise
then available.

(9) No opinion is expressed as to the enforceability of
provisions requiring indemnification for liabilities under the
securities law. Due to the factual sensitive nature of determining
the enforceability of restrictions on competition, it is the policy of
this firm not to render opinions with respect to the enforceability of
covenants not to compete. Therefore, our opinion in paragraph (viii),
excludes any opinion regarding the enforceability of Section 8.4 of
the Merger Agreement. This exclusion should not be interpreted in any
way as an indication that our firm has concluded that the covenants in
Section 8.4 may not be enforceable against the Shareholders.

We understand that we have no obligation to update this opinion to
reflect any facts or circumstances occurring after the date hereof.

We render the foregoing opinions as members of the Bar of the State of
California and express no opinion as to legal issues which pertain to antitrust
law, banking law, ERISA or other employee benefits law, land use or
environmental law, securities law, tax law, racketeering laws (e.g. RICO),
health and safety laws (e.g. OSHA), labor law, fraudulent transfer and
fraudulent conveyance laws, compliance with fiduciary duty laws, and the laws
applicable to patents, copyrights and trademarks. As to matters of Texas law,
we are relying on the opnion of Texas local counsel attached hereto.

This opinion has been furnished to you pursuant to Section
10.1(c)(iii) of the Merger Agreement, and no other person or entity shall be
entitled to rely upon this opinion without our prior written consent.

Very truly yours,

<PAGE> 162

EXHIBIT 10.1(F)

FORM OF DELOITTE & TOUCHE LLP OPINION

<PAGE> 163

SPOUSAL CONSENT TO MERGER AGREEMENT

I, Bobbie Gilbert, am the spouse of Jon G. Gilbert, identified in the
foregoing Merger Agreement as a Shareholder of Maintenance Warehouse/America
Corp. I have read the Agreement and know its contents and provisions. I am
aware that my spouse, as a party to the Agreement, has agreed to sell all of my
spouse's shares, including my community property interest therein, if any, on
the occurrence of certain events and on the terms and conditions set forth in
the Agreement. I hereby consent to and approve the terms, conditions and
provisions of the Agreement and I agree that the shares identified in the
Agreement as my spouse's shares, including my community property interest
therein, if any, shall be subject to the Agreement. I agree that I will not
sell, transfer, convey, assign, bequeath or otherwise dispose of any interest
which I may have in the shares, if any, except in accordance with the terms of
the Agreement.

DATED: January 16, 1997

____________________________________
BOBBIE GILBERT

<PAGE> 164

SPOUSAL CONSENT TO MERGER AGREEMENT

I, Rebecca Anne Neeley, am the spouse of Jonathan Lee Neeley, Trustee
identified in the foregoing Merger Agreement as a Shareholder of Maintenance
Warehouse/America Corp. I have read the Agreement and know its contents and
provisions. I am aware that my spouse, as a party to the Agreement, has agreed
to sell all of my spouse's shares, in which I have no community property
interest, on the occurrence of certain events and on the terms and conditions
set forth in the Agreement. I hereby consent to and approve the terms,
conditions and provisions of the Agreement and I agree that the shares
identified in the Agreement as my spouse's shares, in which I have no community
property interest, shall be subject to the Agreement.

DATED: January 16, 1997

____________________________________
REBECCA ANNE NEELEY

<PAGE> 165

SPOUSAL CONSENT TO MERGER AGREEMENT

I, Laura LeNoir McClain Neeley, am the spouse of Steven Lee Neeley,
Trustee identified in the foregoing Merger Agreement as a Shareholder of
Maintenance Warehouse/America Corp. I have read the Agreement and know its
contents and provisions. I am aware that my spouse, as a party to the
Agreement, has agreed to sell all of my spouse's shares, in which I have no
community property interest, on the occurrence of certain events and on the
terms and conditions set forth in the Agreement. I hereby consent to and
approve the terms, conditions and provisions of the Agreement and I agree that
the shares identified in the Agreement as my spouse's shares, in which I have
no community property interest, shall be subject to the Agreement.

DATED: January 16, 1997

_________________________________
LAURA LENOIR MCCLAIN NEELEY

<PAGE> 166

SPOUSAL CONSENT TO MERGER AGREEMENT

I, Alison Neeley-Avvampato, am the spouse of Charles Avvampato,
identified in the foregoing Merger Agreement as a Shareholder of Maintenance
Warehouse/America Corp. I have read the Agreement and know its contents and
provisions. I am aware that my spouse, as a party to the Agreement, has agreed
to sell all of our shares, including my community property interest therein, on
the occurrence of certain events and on the terms and conditions set forth in
the Agreement. I hereby consent to and approve the terms, conditions and
provisions of the Agreement, and I agree that shares identified in the
Agreement as my spouse's shares, including my community property interest
therein, shall be subject to the Agreement. I agree that I will not sell,
transfer, convey, assign, bequeath or otherwise dispose of any interest which I
may have in the shares, except in accordance with the terms of the Agreement.
By this Consent, however, I do not waive my rights under California law,
vis-a-vis Charles Avvampato, to my community property interest in such shares
or the proceeds therefrom.

DATED: January 16, 1997

___________________________________
ALISON NEELEY-AVVAMPATO

<PAGE> 167

EXHIBIT 10.1(H)

FORM OF

ESCROW AGREEMENT

THIS ESCROW AGREEMENT (the "Escrow Agreement"), made and entered into
the ___ day of _________, 1997, by and among the shareholders of Maintenance
Warehouse/America Corp., a Texas corporation ("Maintenance Warehouse"), listed
on Exhibit A hereto (the "Shareholders"), The Home Depot, Inc., a Delaware
corporation ("Home Depot"), and Bank of America, N.A., a national banking
association ("Escrow Agent"). Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the Merger Agreement
(as hereinafter defined).

W I T N E S S E T H:

WHEREAS, pursuant to a certain Merger Agreement (the "Merger
Agreement"), dated as of January __, 1997, by and among Home Depot, Home Depot
Sub, Inc., a Texas corporation and a wholly owned subsidiary of Home Depot,
Maintenance Warehouse and the Shareholders, the common stock, no par value per
share, of Maintenance Warehouse owned by the Shareholders has been
(simultaneously with the execution hereof) converted into the right to receive
shares of the common stock, par value $.05 per share, of Home Depot ("Home
Depot Common Stock");

WHEREAS, to induce Home Depot to consummate the transactions
contemplated by the Merger Agreement, the Shareholders desire to enter into
this Escrow Agreement;

WHEREAS, Escrow Agent is willing to act as escrow agent hereunder; and

WHEREAS, pursuant to the Merger Agreement, each Shareholder has
irrevocably appointed Mr. Ronald L. Neeley, a resident of the State of
California (the "Shareholder Representative"), the true and lawful agent and
attorney-in-fact of such Shareholder with full powers of substitution to act in
the name, place and stead of such Shareholder with respect to the execution and
delivery of this Escrow Agreement and the performance on behalf of such
Shareholder under the terms and provisions of this Escrow Agreement, and to do
or refrain from doing all such further acts and things, and to execute all such
documents, as the Shareholder Representative shall deem necessary or
appropriate in connection with this Escrow Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual
promises, covenants and agreements contained herein, the parties hereto,
intending to be legally bound, hereby agree as follows:
<PAGE> 168

Section 1. Establishment of Escrow Fund.

1.1. Delivery of Shares. Simultaneously with the execution hereof,
Home Depot has delivered to Escrow Agent on behalf of each Shareholder the
number of shares of Home Depot Common Stock set forth opposite such
Shareholder's name on Exhibit A hereto, consisting, in the aggregate, of
_______ shares of Home Depot Common Stock (such shares being hereinafter
referred to as the "Escrow Amount"). The Escrow Amount shall be represented by
a stock certificate in the name of "Bank of America, N.A., as Escrow Agent
under the Escrow Agreement, dated _________ __, 1997". Notwithstanding the
foregoing, during the term of this Escrow Agreement, each Shareholder shall
retain all rights to vote the shares of Home Depot Common Stock delivered on
behalf of such Shareholder to the Escrow Agent that are not transferred to Home
Depot pursuant to Section 2 hereof.

1.2. The Escrow Fund.

(a) All future stock, cash, dividends or other
distributions of any nature whatsoever made on the Escrow Amount shall
also be delivered to Escrow Agent (together with interest thereon, the
"Proceeds"). The Escrow Amount together with all such future
distributions are hereinafter collectively referred to as the "Escrow
Fund." The Escrow Fund shall be held by Escrow Agent subject to the
terms and conditions hereinafter set forth. Any cash proceeds
included in the Escrow Fund shall be deposited by Escrow Agent in
money market accounts of Escrow Agent. Any transfer by Escrow Agent
of Home Depot Common Stock out of the Escrow Amount to Home Depot or
the Shareholders shall be accompanied by a pro rata portion of the
then current balance of the Proceeds.

(b) During the term of this Agreement, the Shareholder
Representative may instruct the Escrow Agent to dispose of the shares
of Home Depot Common Stock in the Escrow Fund in a broker's
transaction on the New York Stock Exchange. Prior to effecting any
such transaction, (i) the Shareholder Representative will deliver to
Home Depot and the Escrow Agent a written opinion of Deloitte &
Touche, L.L.P. addressed to Home Depot that such transaction will not
jeopardize the treatment of the transactions contemplated by the
Merger Agreement as a "pooling of interests" for accounting purposes,
and (ii) the Shareholder Representative, Home Depot and Escrow Agent
shall enter into an appropriate amendment to this Agreement providing
for the disbursement of cash proceeds from the Escrow Amount, in a
manner that satisfies "pooling of interest" requirements. In the
event of any such transaction, the amount of cash for which such
shares are sold shall remain on deposit with the Escrow Agent as part
of the Escrow Amount and any earnings thereon shall be included in the
"Proceeds."

2
<PAGE> 169

Section 2. Claims Against the Escrow Fund.

The Escrow Fund shall secure the obligations of the Shareholders to
Home Depot as set forth in the Merger Agreement. In the event that Home Depot
shall claim a right to payment under the Merger Agreement, Home Depot shall
send written notice of such claim to each of Escrow Agent and the Shareholder
Representative. Such notice shall be signed by an officer of Home Depot, and
the Escrow Agent shall be entitled to rely on such notice as being duly
authorized and executed by Home Depot.

As promptly as possible after Home Depot has given such notice, Home
Depot and the Shareholder Representative shall establish the accuracy of such
claim (by mutual agreement, arbitration, litigation or otherwise) in accordance
with the provisions of the Merger Agreement and, upon final determination of
the merits of such claim, shall notify Escrow Agent (either by means of a
certified copy of the judgment, a certified copy of the arbitration decision,
the written determination of the Arbitrator (as defined in Section 2.6 of the
Merger Agreement) or a written instrument executed by Home Depot and the
Shareholder Representative) of the terms of such determination (including
instructions for the amount of disbursements from the Escrow Fund) (the
"Disbursement Notice").

Upon receipt of the Disbursement Notice, Escrow Agent shall thereupon
transfer to Home Depot out of the Escrow Fund a number of shares of Home Depot
Common Stock (the "Forfeited Shares") equal to (A) the amount of disbursement
specified as owing to Home Depot pursuant to the Disbursement Notice and the
documents attached thereto divided by (B) $________ (which equals the "Average
Closing Price" under the Merger Agreement), rounded to the nearest whole share.
The applicable "Deficit Amount" or "Parent Losses" (each as defined in the
Merger Agreement) for which the Shareholders are liable under the Merger
Agreement will be deemed satisfied in full upon the transfer of the Forfeited
Shares to Home Depot. Home Depot will be entitled to cancel such Forfeited
Shares upon its receipt thereof.

Section 3. Termination of Escrow Fund.

3.1. Termination Date. The escrow provided for hereunder
shall terminate completely upon the earlier of the following dates:

(a) the date of a mutual written consent of Home
Depot and the Shareholder Representative; or

(b) on the first anniversary of the date of this
Escrow Agreement; provided, however, that if Home Depot has provided
notice to the Shareholder Representative under the Merger Agreement of
any claim(s) by Home Depot for any Deficit Amount that has not been
finally resolved and settled pursuant to Article 2 of the Merger
Agreement and/or for any Parent Losses that has not been finally
resolved and settled pursuant to Article 9 of the Merger Agreement
prior to the first anniversary hereof, the escrow provided hereunder
shall continue until the final resolution and settlement of such
claim(s), and the Escrow Agent shall continue to hold a number of
shares of Home Depot

3
<PAGE> 170

Common Stock equal to Home Depot's good faith estimate (the
"Estimate") of the amount of Deficit Amount and/or Parent Losses
attributable to such claim(s) divided by the Average Closing Price.
The balance of the Escrow Amount in excess of the Estimate (and the
cash proceeds related thereto) shall be distributed to the Shareholder
Representative.

3.2. Payment Upon Termination. Upon such termination,
Escrow Agent shall transfer the balance, if any, of the Escrow Fund to the
Shareholder Representative on behalf of the Shareholders. The Shareholder
Representative shall be solely responsible for the disbursement of the balance,
if any, of the Escrow Fund to the individual Shareholders.

Section 4. Escrow Agent.

4.1. Duties. Escrow Agent's obligations and duties in connection
herewith are confined to those specifically enumerated in this Escrow
Agreement. Escrow Agent shall not be in any manner liable or responsible for
the sufficiency, correctness, genuineness or validity of any instruments
deposited with it or with reference to the form of execution thereof, or the
identity, authority or rights of any person executing or depositing same, and
Escrow Agent shall not be liable for any loss that may occur by reason of
forgery, false representation or the exercise of its discretion in any
particular manner or for any other reason, except for its own gross negligence
or willful misconduct.

4.2. Indemnification. Except in instances of Escrow Agent's own
gross negligence or willful misconduct, Home Depot and the Shareholders shall
indemnify, defend, and hold harmless Escrow Agent against any and all costs,
losses, claims, damages, liabilities, expenses, including reasonable costs of
investigation, court costs, and attorneys' fees, and disbursements, which may
be imposed upon Escrow Agent in connection with its acceptance of appointment
as Escrow Agent and the exercise or failure to exercise its discretion
hereunder, including any litigation arising from this Escrow Agreement
involving the subject matter hereof, and all such costs, expenses and
disbursement shall be for the account of and shall be borne and paid by Home
Depot and the Shareholders as a condition to termination of this Escrow
Agreement.

4.3. Disputes. In the event of a dispute between the parties, in
the discretion of Escrow Agent, Escrow Agent shall be entitled to tender into
the registry or custody of any court of competent jurisdiction all money or
property in its hands under this Escrow Agreement, together with such legal
pleadings as its deems appropriate, and thereupon shall be discharged from all
further duties and liabilities under this Escrow Agreement. Any such legal
action may be brought in such court as Escrow Agent shall determine to have
jurisdiction thereof. The filing of any such legal proceedings shall not
deprive Escrow Agent of its compensation earned prior to such filing.

4
<PAGE> 171

4.4. Receipt. By its execution and delivery of this Escrow
Agreement, Escrow Agent acknowledges receipt of _______ shares of Home Depot
Common Stock from Home Depot on behalf of the Shareholders.

4.5. Fees. Escrow Agent's fees hereunder shall be $________
annually, of which fifty percent (50%) shall be paid by the Shareholders and
fifty percent (50%) shall be paid by Home Depot at Closing. The fee agreed to
be paid by the Shareholders and Home Depot is intended as full compensation for
Escrow Agent's services as contemplated by this Escrow Agreement; however, in
the event that the conditions of this Escrow Agreement are not fulfilled or
Escrow Agent renders any material service not contemplated in this Escrow
Agreement, or there is any assignment of interest in the subject matter of this
Escrow Agreement, or any material modification hereof, or if any material
controversy arises hereunder, or Escrow Agent is made a party to or justifiably
intervenes in any litigation pertaining to this Escrow Agreement, or the
subject matter hereof, Escrow Agent shall be reasonably compensated for such
extraordinary services and reimbursed for all costs and expenses, including
reasonable attorneys' fees, occasioned by any delay, controversy, litigation or
event, and the same may be recoverable from Home Depot and the Shareholders in
accordance with the percentages described above.

Section 5. Miscellaneous.

5.1. Benefits and Burdens; Assignment. This Escrow Agreement
shall inure to the benefit of and shall be binding upon Home Depot and the
Shareholders and Escrow Agent and their respective heirs, representatives,
successors and assigns. No party to this Escrow Agreement may assign its
rights or obligations hereunder without the prior written consent of each of
the other parties hereto, provided however, that this Escrow Agreement may only
be assigned by Home Depot to a corporation, all of whose issued and outstanding
capital stock is owned directly or indirectly by Home Depot, and in such event
Home Depot shall not be released from its obligations hereunder.

5.2. Governing Law. This Escrow Agreement shall be deemed to be
made in, and in all respects shall be interpreted, construed and governed by
and in accordance with, the laws of the State of California.

5.3. Headings. The section and paragraph headings contained in
this Escrow Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Escrow Agreement.

5.4. Notices. Any notice or other communications required or
permitted hereunder shall be sufficiently given if sent by registered or
certified mail, postage prepaid, by national overnight courier service or by
telecopy, addressed as follows:

5
<PAGE> 172

Home Depot: The Home Depot, Inc.
2455 Paces Ferry Road
Atlanta, Georgia 30339
Attention: Lawrence A. Smith
Telecopy: (770) 431-2739
Taxpayer ID No.: __________________

Copy to: King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: Michael J. Egan III
Telecopy: (404) 572-5145

Shareholder
Representative: Mr. Ronald L. Neeley
___________________________
___________________________
___________________________
Telecopy: ( ) ___________
Taxpayer ID No.: __________________

Copy to: Seltzer Caplan Wilkins & McMahon
750 "B" Street, Suite 2100
San Diego, California 92101
Attention: David J. Dorne, Jr.
Telecopy: (619) 685-3100

Escrow Agent: Bank of America, N.A.
___________________________
___________________________
___________________________
Attention:
Phone:
Telecopy:

or such other addresses as shall be furnished in writing by any of the parties,
and any such notice or communication shall be deemed to have been given as of
the date so expressed or telecopied and three days after the date so mailed (if
mailed).

5.5. No Limitation. The parties hereto agree that the rights and
remedies of Home Depot hereunder shall not operate to limit any other rights
and remedies otherwise available to Home Depot against the Shareholders.

6
<PAGE> 173

5.6. Counterparts. This Escrow Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original but all
of which together shall constitute one and the same instrument.

5.7. Modification. This Escrow Agreement may be modified only by
a written instrument signed by each of the parties hereto.

5.8. Cooperation. Shareholders, Home Depot and the Escrow Agent
shall deliver to each other such information and documents and shall execute
and deliver to each other such further information and documents and shall
execute and deliver such further instruments and agreements as the others may
reasonably request in order to accomplish the purpose of this Escrow Agreement
or to assure to the others the benefits of this Escrow Agreement.

5.9. Entire Understanding. This Escrow Agreement and the exhibits
referred to herein represent the entire understanding of the parties with
respect to the subject matter hereof and supersede all correspondence,
memoranda, conversations or other communications with respect thereto.

5.10. Severability. The invalidity or unenforceability of any
provision of this Escrow Agreement shall not affect the validity or
enforceability of any other provision of this Escrow Agreement.

5.11. Time. Time is of the essence under this Escrow Agreement.

5.12. Statutes. Any reference herein to any federal, state or
local statute shall include all amendments to such statute through the date of
this Escrow Agreement.

7
<PAGE> 174

IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as of the date first written above.

THE HOME DEPOT, INC.

-----------------------------------
Marshall L. Day
Senior Vice President and
Chief Financial Officer

THE SHAREHOLDERS LISTED IN
EXHIBIT A HERETO

By: The Shareholder Representative

-----------------------------------
Name: Ronald L. Neeley

ESCROW AGENT:

BANK OF AMERICA, N.A.

By:
--------------------------------
Title:
-----------------------------

8
<PAGE> 175

EXHIBIT A

MAINTENANCE WAREHOUSE SHAREHOLDERS

<TABLE>
<CAPTION>
Shares of
Home Depot
Name Address Taxpayer Id Common Stock
- ---- ------- ----------- ------------
<S> <C> <C> <C>

</TABLE>

9
<PAGE> 176

EXHIBIT 11.1 (C)(III)

FORM OF OPINION OF COUNSEL TO PARENT AND SUB

___________ __, 1997

Maintenance Warehouse/America Corp.
5505 Morehouse Drive, Suite 300
San Diego, California 92121

Ladies and Gentlemen:

We have acted as counsel for The Home Depot, Inc., a Delaware
corporation ("Parent"), and Home Depot Sub, Inc., a Texas corporation and a
wholly owned subsidiary of Parent ("Sub"), in connection with the matters
contemplated in that certain Merger Agreement, dated as of January __, 1997
(the "Principal Merger Agreement"), by and among Parent, Sub, Maintenance
Warehouse/America Corp., a Texas corporation (the "Company"), and the
shareholders of the Company (the "Shareholders"). We have acted as counsel for
Parent in connection with the matters contemplated in that certain Affiliated
Merger Agreement, dated as of January __, 1997 (the "Affiliated Merger
Agreement," and together with the Principal Merger Agreement, the "Merger
Agreements"), by and between Parent, and certain California limited
partnerships(the "Affiliated Companies"). Capitalized terms used in this
opinion and not otherwise defined herein shall have the meanings ascribed to
such terms in the Principal Merger Agreement.

In so acting, we have examined and relied upon the accuracy of
original, certified, conformed or photographic copies of such records,
agreements, certificates and other documents as we have deemed necessary or
appropriate to enable us to render the opinions set forth below. In all such
examinations, we have assumed the genuineness of signatures on original
documents and the conformity to such original documents of all copies submitted
to us as certified, conformed or photographic copies and, as to certificates of
public officials, we have assumed the same to have been properly given and to
be accurate. We also have relied, as to various matters of fact relating to
the opinions set forth below, on certificates of public officials and officers
of Parent and Sub, copies of which are attached hereto and on the accuracy of
the factual matters

<PAGE> 177

Maintenance Warehouse/America Corp.
________________, 1997
Page 2

stated in the representations and warranties made by Parent and Sub in the
Principal Merger Agreement.

Based upon the foregoing and subject to the limitations,
qualifications and assumptions set forth below, we are of the opinion that:

(i) Each of Parent and Sub is a corporation, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation and has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business
as now being conducted.

(ii) Each of Parent and Sub has all requisite corporate
power and authority to execute and deliver the Merger Agreements and
the Parent Ancillary Agreements and to perform its obligations under
the Merger Agreements and the Parent Ancillary Agreements and to
consummate the Mergers and the other transactions contemplated by the
Merger Agreements. The execution and delivery of the Merger
Agreements and the Parent Ancillary Agreements, and the performance by
each of Parent and Sub of its respective obligations under the Merger
Agreements and the Parent Ancillary Agreements and the consummation of
the Mergers and the other transactions provided for in the Merger
Agreements have been duly and validly authorized by all necessary
corporate action on the part of Parent and Sub.

(iii) Except for compliance with the applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, applicable state
securities laws, and the filing and recordation of certificates of
merger as required by the appropriate jurisdictions, no consent,
approval, order or authorization of, or registration, declaration or
filing with, any governmental agency or public or regulatory unit,
agency, body or authority with respect to Parent or Sub is required in
connection with the execution, delivery or performance of the Merger
Agreements by Parent or Sub or the consummation of the transactions
contemplated in the Merger Agreements by Parent or Sub.

(iv) The execution, delivery and performance of the Merger
Agreements, the consummation of the Mergers and the other transactions
contemplated in the Merger Agreements and the fulfillment of and
compliance with the terms and conditions of the Merger Agreements do
not and will not, with the passing of time or the giving of notice or
both, violate or conflict with or constitute a breach of or default
under, (a) any term or

<PAGE> 178

Maintenance Warehouse/America Corp.
________________, 1997
Page 3

provision of the Articles or Certificate of Incorporation or Bylaws of
Parent or Sub, (b) any judgment, decree or order known to us of any
court or governmental authority or agency to which Parent or Sub is a
party or by which Parent or Sub or any of their respective properties
is bound, (c) to our knowledge, any material agreement to which Parent
or Sub is a party or (d) any Georgia statute, law, regulation or rule
known to us that is applicable to Parent or Sub.

(v) The shares of Parent Common Stock to be issued in
connection with the Mergers have been duly authorized and, when issued
in accordance with the terms of the Merger Agreements, will be validly
issued, fully paid and nonassessable and free of statutory preemptive
rights.

(vi) Each of the Merger Agreements has been duly executed
and delivered by each of Parent and (in the case of the Principal
Merger Agreement) Sub. Each of the Merger Agreements constitutes the
legal, valid and binding agreement of each of Parent and (in the case
of the Principal Merger Agreement) Sub, enforceable against each of
Parent and Sub in accordance with its terms, except (a) as rights to
indemnity and contribution under the Principal Merger Agreement may be
limited by applicable federal or state securities laws, (b) as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforceability of creditors' rights generally, (c) as the
enforceability thereof may be limited by general principles of equity
(regardless of whether such enforceability is considered in an action
at law or a suit in equity) including the availability of equitable
remedies, and (d) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
certain equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.

(vii) The Registration Statement has been declared
effective under the Securities Act, and, to our knowledge, no stop
order suspending the effectiveness of the Registration Statement has
been issued by the SEC and no proceedings for that purpose have been
instituted or are threatened or pending by the SEC. The Registration
Statement (other than the financial statements and notes thereto and
schedules and other financial and statistical data contained or
incorporated by reference in the Registration Statement or such other
documents, as to which we express no opinion), as of the effective
date of the Registration Statement, appeared on its face to be
appropriately responsive as to form in all material respects to the
requirements of the Securities Act or the Exchange Act, as the case
may be, and the rules and the regulations of the SEC promulgated
thereunder.

<PAGE> 179

Maintenance Warehouse/America Corp.
________________, 1997
Page 4

We have participated in conferences with the officers and other
representatives of Parent, representatives of the independent public
accountants of Parent and your officers and representatives at which the
contents of the Registration Statement and related matters were discussed and
reviewed. Although we have not independently verified the information
contained in the Registration Statement and we do not pass upon or assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement, on the basis of the foregoing, no
facts came to our attention that caused us to believe that, as of the date the
Registration Statement became effective with the SEC or as of the Effective
Time, the information with respect to Parent or Sub contained in or
incorporated by reference in the Registration Statement (except for the
financial statements and other financial or statistical data contained or
incorporated by reference therein, as to which we express no view), contained
an untrue statement of a material fact with respect to Parent or Sub or omitted
to state a material fact with respect to Parent or Sub required to be stated
therein or necessary to make the statements therein with respect to Parent or
Sub, in light of the circumstances under which they were made, not misleading.

The foregoing opinions are subject to the following limitations,
qualifications and assumptions:

(a) Whenever any opinion or confirmation in this opinion is
qualified by the words "to our knowledge," "known to us" or other words of
similar meaning, the quoted words mean the current awareness of Michael J. Egan
III and Raymond A. Baltz of factual matters such lawyers recognize as being
relevant to the opinion or confirmation so qualified.

(b) In rendering the opinion set forth in paragraph (i) above
concerning the existence, qualification and good standing of Parent and Sub, we
have relied exclusively upon certificates of the Secretary of State of the
States of Delaware and Texas.

(c) We are members of the Bar of the State of Georgia and,
accordingly, do not purport to be experts on or to express any opinion herein
concerning any law other than the laws of the State of Georgia, the Delaware
General Corporation Law and the federal law of the United States.

(d) In rendering the opinion set forth in paragraph (vi) above
concerning the Merger Agreements, we have assumed that the Merger Agreements
have been duly authorized, executed and delivered by each party thereto other
than Parent and Sub and that the Merger Agreements constitute the legal, valid,
binding and enforceable obligation of each of the parties thereto other than
Parent and Sub.

<PAGE> 180

Maintenance Warehouse/America Corp.
________________, 1997
Page 5

(e) No opinion is expressed as to the enforceability of any
waiver, choice of law, jurisdiction, venue or service of process provisions of
any agreement or document.

This opinion has been furnished to you pursuant to Section
11.1(c)(iii) of the Principal Merger Agreement, and no other person or entity
shall be entitled to rely upon this opinion without our prior written consent.
This opinion is given as of the date hereof, and we assume no obligation to
advise you after the date hereof of facts or circumstances that come to our
attention or changes in law that occur which could affect the opinions
contained herein.

Very truly yours,

KING & SPALDING

<PAGE> 181

ANNEX B

AFFILIATED MERGER AGREEMENT

[SEE ATTACHED]
<PAGE> 182

AFFILIATED MERGER AGREEMENT

by and among

THE HOME DEPOT, INC.

and

CERTAIN AFFILIATED REAL PROPERTY PARTNERSHIPS

As of January 16, 1997
<PAGE> 183

AFFILIATED MERGER AGREEMENT

THIS AFFILIATED MERGER AGREEMENT, dated as of January 16, 1997 (the
"Agreement"), is entered into by and between The Home Depot, Inc., a Delaware
corporation ("Home Depot"), and the California limited partnerships listed on
the signature page hereto (the "Affiliated Real Property Partnerships").

W I T N E S S E T H:

WHEREAS, pursuant to that certain Merger Agreement (the "Principal
Merger Agreement"), dated as of the date hereof, by and among Maintenance
Warehouse/America Corp., a Texas corporation ("Maintenance Warehouse"), Home
Depot, Home Depot Sub, Inc., a Texas corporation and a wholly owned subsidiary
of Home Depot ("Sub"), and the shareholders of Maintenance Warehouse, Sub will
be merged with and into Maintenance Warehouse and Maintenance Warehouse will
become a wholly owned subsidiary of Home Depot (the "Principal Merger");

WHEREAS, the properties and business operations of the Affiliated Real
Property Partnerships are used solely in connection with the business of
Maintenance Warehouse;

WHEREAS, Home Depot, in addition to the acquisition of Maintenance
Warehouse, also desires to acquire the properties and business operations of
the Affiliated Real Property Partnerships;

WHEREAS, Home Depot has approved this Agreement and the merger (the
"Affiliated Merger") of each of the Affiliated Real Property Partnerships with
and into Home Depot on the terms and conditions contained herein and in
accordance with applicable law;

WHEREAS, this Agreement has been executed by the general partner(s) of
each Affiliated Real Property Partnership on behalf of such partnership and
will be submitted to the limited partners of each Affiliated Real Property
Partnership for their approval; and

WHEREAS, the Affiliated Merger will be effected by the filing of
certificates of merger (the "Certificates of Merger") in the appropriate
jurisdictions;

NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:

ARTICLE 1

The Affiliated Merger

1.1 Surviving Corporation. Subject to the provisions of this
Agreement and applicable law, at the Effective Time (as hereinafter defined),
the Affiliated Real Property Partnerships shall
<PAGE> 184

be merged with and into Home Depot, and the separate partnership existence of
each of the Affiliated Real Property Partnerships shall cease. Home Depot
shall be the surviving corporation in the Affiliated Merger (hereinafter
sometimes called the "Surviving Corporation") and shall continue its corporate
existence under the laws of its jurisdiction of incorporation.

1.2 Articles of Incorporation. The Articles of Incorporation of
Home Depot shall be the Articles of Incorporation of the Surviving Corporation.

1.3 Bylaws. The Bylaws of Home Depot shall be the Bylaws of the
Surviving Corporation.

1.4 Directors. The directors of the Surviving Corporation shall
consist of the directors of Home Depot immediately prior to the Effective Time,
such directors to keep their positions on the Board of Directors of the
Surviving Corporation until their respective successors are duly elected and
qualified.

1.5 Officers. The officers of the Surviving Corporation shall
consist of the officers of Home Depot immediately prior to the Effective Time,
such officers to hold office from the Effective Time until their respective
successors are duly elected and qualified.

1.6 Effective Time. Upon satisfaction or waiver of the conditions
set forth in Articles 4 and 5 hereof, and if this Agreement shall not have
been terminated in accordance with Article 7 hereof, the parties hereto shall
cause the Certificates of Merger to be properly executed and filed on the
Closing Date (as hereinafter defined) in the appropriate jurisdictions. The
Affiliated Merger shall become effective as of the time set forth in the
Certificates of Merger. The date and time when the Affiliated Merger becomes
effective is herein referred to as the "Effective Time".

ARTICLE 2

Conversion of Partnership Interests

2.1 Manner of Converting Partnership Interests. Subject to
Section 2.2, as of the Effective Time and by virtue of the Affiliated Merger,
each percentage of partnership interest in the Affiliated Real Property
Partnerships (the "Partnership Interests") shall automatically be converted
into the right to receive such number of shares of voting common stock, par
value $.05 per share, of Home Depot ("Home Depot Common Stock") as has a value
equal to the amount indicated beside the name of such entity on Schedule A
hereto, divided by one hundred (100). For the purposes of this calculation,
each share of Home Depot Common Stock shall be valued at the Average Closing
Price (as defined in the Principal Merger Agreement).

2
<PAGE> 185

2.2 Fractional Shares. No scrip or fractional shares of
Home Depot Common Stock shall be issued in the Affiliated Merger. All
fractional shares of Home Depot Common Stock to which a partner in any of the
Affiliated Real Property Partnerships (a "Partner") immediately prior to the
Effective Time would otherwise be entitled at the Effective Time shall be
aggregated with the fractional shares to be received by such Partner in the
Principal Merger. If a fractional share results from such aggregation, such
Partner shall be entitled, after the Effective Time, to receive from Home Depot
an amount in cash in lieu of such fractional share, based on the Average
Closing Price.

2.3 Exchange of Partnership Interests.

(a) On or prior to the Closing Date, Home Depot shall
make available to each Partner a form of letter of transmittal (the
"Letter") and instructions for use in effecting the surrender of the
Partnership Interests for payment therefor and conversion thereof,
which form of Letter and instructions shall be in form reasonably
satisfactory to the Affiliated Real Property Partnerships. Delivery
shall be effected only upon proper delivery of the Letter to Home
Depot and the Letter shall so reflect. Upon delivery to Home Depot of
the Letter duly executed, the holder of the Partnership Interest shall
be entitled to receive in exchange therefor (i) one or more
certificates as requested by the holder (properly issued, executed and
countersigned, as appropriate) representing that number of whole
shares of fully paid and nonassessable shares of Home Depot Common
Stock to which such holder of a Partnership Interest shall have become
entitled pursuant to the provisions of Section 2.1 hereof, (ii) as to
any fractional share of Home Depot Common Stock, a check representing
the cash consideration to which such holder shall have become entitled
pursuant to Section 2.2 hereof, and (iii) any dividend or other
distribution to which such holder is entitled pursuant to Section
2.3(b) hereof. No interest will be paid or accrued on the cash
payable upon the delivery of the Letter. If any portion of the
consideration to be received pursuant to Sections 2.1, 2.2 and 2.3(b)
upon delivery of a Letter (whether a certificate representing shares
of Home Depot Common Stock or by check representing cash for a
fractional share) is to be issued or paid to a person other than the
Partner delivering the Letter, it shall be a condition of such
issuance and payment that any Letter so delivered shall be in proper
form and that the person requesting such exchange shall pay in advance
any transfer or other taxes required by reason of the issuance of a
certificate representing shares of Home Depot Common Stock or cash for
a fractional share to such other person, or established to the
satisfaction of Home Depot that such tax has been paid or that such
tax is not applicable. From the Effective Time until delivery to Home
Depot of the duly executed Letter in accordance with the provisions of
this Section 2.3, the Partnership Interests owned by such Partner
shall represent for all purposes only the right to receive the
consideration provided in Sections 2.1, 2.2 and 2.3(b). All payments
of respective shares of Home Depot Common Stock that are made upon
delivery of the Letter in accordance with the terms hereof and the
other payments and deliveries contemplated by this Article 2 shall be
deemed to have been made in full satisfaction of rights pertaining to
the Partnership Interests owned by the person delivering such Letter.

3
<PAGE> 186

(b) No dividends or other distributions with respect to
Home Depot Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Partnership Interest
with respect to the shares of Home Depot Common Stock, and no cash
payment in lieu of fractional shares shall be paid to any such holder
pursuant to Section 2.2, in each case until the delivery of the Letter
in accordance with this Article 2. Following such delivery and
surrender, there shall be paid to the holder of the certificate
representing whole shares of Home Depot Common Stock issued in
exchange therefor, without interest, (i) at the time of such delivery
and surrender, the amount of any cash payable in lieu of a fractional
share of Home Depot Common Stock to which such holder is entitled
pursuant to Section 2.2 and the amount of dividends or other
distributions with a record date after the Effective Time theretofore
paid with respect to such whole shares of Home Depot Common Stock and
(ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to
such delivery surrender and with a payment date subsequent to such
delivery and surrender payable with respect to such whole shares of
Home Depot Common Stock.

(c) Any shares of Home Depot Common Stock or cash due
former partners of the Affiliated Real Property Partnerships pursuant
to Sections 2.1, 2.2 and 2.3(b) hereof that remain unclaimed by such
former partners for six (6) months after the Effective Time shall be
held by Home Depot, and any former holder of a Partnership Interest
who has not theretofore complied with Section 2.3(a) shall thereafter
look only to Home Depot for issuance of the number of shares of Home
Depot Common Stock and other consideration to which such holder has
become entitled pursuant to the provisions of Sections 2.1, 2.2 and
2.3(b) hereof; provided, however, that neither Home Depot nor any
party hereto shall be liable to a former holder of a Partnership
Interest for any amount required to be paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.

ARTICLE 3

Closing

3.1 The Closing. The closing ("Closing") will take place at 10:00
a.m., San Diego, California time on the date of the closing under the Principal
Merger Agreement, at the offices of Seltzer Caplan Wilkins & McMahon, 750 "B"
Street, Suite 2100, San Diego, California 92101, upon fulfillment of all the
conditions set forth in Article 4 which have not been waived by Home Depot, and
all the conditions set forth in Article 5 which have not been waived by the
Affiliated Real Property Partnerships. If these conditions have not been
fulfilled or waived by such date, the Closing will take place within five
business days after fulfillment or waiver of all such conditions but in no
event later than May 31, 1997, unless otherwise mutually agreed in writing by
Home Depot and the Affiliated Real Property Partnerships. The date on which
the Closing is held is referred to as the "Closing Date".

4
<PAGE> 187

ARTICLE 4

Conditions Precedent To Obligations Of Home Depot

4.1 Conditions Precedent. Home Depot's obligation to consummate
the Affiliated Merger and the transactions contemplated by this Agreement is
subject to the fulfillment on or before the Closing Date of each of the
conditions set forth in Section 10.1 of the Principal Merger Agreement.

4.2 Waiver. Home Depot shall have the right to waive the
foregoing conditions, or any of them, wholly or in part; provided however,
that no such waiver shall be deemed to have occurred unless the same is set out
in writing and executed by Home Depot.

ARTICLE 5

Conditions Precedent to Obligations of the Affiliated Real Property
Partnerships

5.1 Conditions Precedent. The obligation of the Affiliated Real
Property Partnerships to consummate the Affiliated Merger and the transactions
contemplated by this Agreement is subject to the fulfillment, on or before the
Closing Date, of each of the conditions set forth in Section 11.1 of the
Principal Merger Agreement.

5.2 Waiver. The Affiliated Real Property Partnerships, in the
aggregate, shall have the right to waive the foregoing conditions, or any of
them, wholly or in part; provided however, that no such waiver shall be deemed
to have occurred unless the same is set out in writing and executed by each of
the Affiliated Real Property Partnerships.

ARTICLE 6

Covenants

6.1 Conduct of Business. Each of the Affiliated Real Property
Partnerships, jointly and severally, covenant and agree that from the date of
this Agreement to the Closing Date, each of the Affiliated Real Property
Partnerships shall be bound by and comply with the covenants applicable to the
Affiliated Companies (as defined in the Principal Merger Agreement) set forth
in Article 7 of the Principal Merger Agreement.

5
<PAGE> 188

ARTICLE 7

Termination

7.1 Termination. This Agreement shall be terminated
simultaneously with any termination of the Principal Merger Agreement pursuant
to Section 12.1 thereof (the "Termination Date").

7.2 Specific Performance and Other Remedies. The parties hereto
each acknowledge that the rights of each party to consummate the transactions
contemplated hereby are special, unique and of extraordinary character, and
that, in the event that any party violates or fails or refuses to perform any
covenant or agreement prior to the Closing Date made by it herein, the
non-breaching party may be without an adequate remedy at law. The parties each
agree, therefore, that in the event that either party violates or fails or
refuses to perform any covenant or agreement made by such party herein, the
non-breaching party or parties may, subject to the terms of this Agreement and
in addition to any remedies at law for damages or other relief, institute and
prosecute an action in any court of competent jurisdiction to enforce specific
performance of such covenant or agreement or seek any other equitable relief.

7.3 Effect of Termination. In the event of termination of this
Agreement pursuant to this Article 7, this Agreement shall forthwith become
void and there shall be no liability on the part of any party or its respective
officers, directors, shareholders or partners, except as set forth in the
Principal Merger Agreement.

ARTICLE 8

Miscellaneous

8.1 Benefits and Burdens; Assignment. This Agreement shall inure
to the benefit of and shall be binding upon the Affiliated Real Property
Partnerships and Home Depot, and the respective successors and permitted
assigns of the Affiliated Real Property Partnerships and Home Depot. No party
to this Agreement may assign its rights or obligations hereunder without the
prior written consent of each of the other parties hereto; provided however,
that this Agreement may be assigned by Home Depot prior to the Affiliated
Merger to any other corporation, all of whose issued and outstanding capital
stock is owned directly or indirectly by Home Depot, in which case (i) such
assignee corporation will assume and become bound by all of Home Depot's rights
and obligations hereunder, and (ii) all references herein to Home Depot shall
be treated as references to the assignee corporation, provided that such
assignment shall not affect Home Depot's obligation to cause the conversion of
the Partnership Interests in the Affiliated Merger into shares of Home Depot
Common Stock pursuant to Article 2.

6
<PAGE> 189

8.2 Amendment. This Agreement may be amended only by an
instrument in writing signed by each Affiliated Real Property Partnership and
Home Depot.

8.3 Notices. All notices, communications and deliveries hereunder
shall be made in writing signed by or on behalf of the party making the same,
shall specify the Section hereunder pursuant to which it is given or being
made, and shall be delivered personally or by telecopy transmission or sent by
registered or certified mail (return receipt requested) or by any national
overnight courier service (with postage and other fees prepaid) as follows:

If to Home Depot:

The Home Depot, Inc.
2455 Paces Ferry Road
Atlanta, Georgia 30339
Attention: Lawrence A. Smith
Telecopy: (770) 431-2739

With a copy to:

King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: Michael J. Egan III
Telecopy: (404) 572-5145

If to the Affiliated Real Property Partnerships:

c/o Maintenance Warehouse/America Corp.
5505 Morehouse Drive, Suite 300
San Diego, California 92121
Attention: Ronald L. Neeley
Telecopy: (619) 458-9863

With a copy to:

Seltzer Caplan Wilkins & McMahon
750 "B" Street, Suite 2100
San Diego, California 92101
Attention: David J. Dorne
Telecopy: (619) 685-3100

7
<PAGE> 190

Latham & Watkins
701 "B" Street, Suite 2100
San Diego, California 92101
Attention: Scott N. Wolfe
Telecopy: (619) 696-7419

8.4 Entire Understanding. This Agreement and the Schedules
referred to herein and the Principal Merger Agreement and the agreements
referred to therein represent the entire understanding of the parties with
respect to the subject matter hereof and supersedes all correspondence,
memoranda, conversations or other communications with respect thereto.

8.5 Headings. The section headings in this Agreement are intended
solely for convenience and shall be given no effect in the construction and
interpretation hereof.

8.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument, and, when signed by all
of the parties hereto, shall become legally binding on such parties effective
as of the date set forth at the beginning of this Agreement.

8.7 Governing Law. This Agreement shall be governed by and
interpreted under the laws of the State of California applicable to contracts
made and to be performed entirely within such State and without giving effect
to the choice of law principles of such State.

8.8 Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.

8.9 Time. Time is of the essence under this Agreement.

8.10 Statutes. Any reference herein to any federal, state or local
statute shall include all amendments to such statute through the date of this
Agreement or the Effective Time, as applicable.

8
<PAGE> 191

IN WITNESS WHEREOF, the parties have executed or caused to be executed
this Agreement effective as of the day and year first above written.

THE HOME DEPOT, INC., a Delaware corporation

-------------------------------------------------
Marshall L. Day
Senior Vice President and Chief Financial Officer
MWAC ONE, a California limited partnership
86 WAREHOUSE II, a California limited partnership
86 WAREHOUSE III, a California limited partnership
DFW WAREHOUSE FOUR, a California limited partnership
DENVER WAREHOUSE FIVE, a California limited partnership
FONTANA WAREHOUSE SIX, a California limited partnership
ATL WAREHOUSE SEVEN, a California limited partnership
RICHMOND WAREHOUSE EIGHT, a California limited partnership
ST. LOUIS WAREHOUSE NINE, a California limited partnership

By: MWAC Real Estate, Inc.,
Their General Partner

By:
---------------------------------------
Ronald L. Neeley
President

9
<PAGE> 192

SCHEDULE A

VALUES OF THE AFFILIATED REAL PROPERTY PARTNERSHIPS

<TABLE>
<S> <C> <C>
1. MWAC One, a California limited partnership $ 22,175
2. 86 Warehouse II, a California limited partnership $ 46,714
3. 86 Warehouse III, a California limited partnership $ 105,608
4. DFW Warehouse Four, Limited Partnership $ 15,873
5. Denver Warehouse Five, a California limited partnership $ 292,949
6. Fontana Warehouse Six, a California limited partnership $ 105,608
7. ATL Warehouse Seven, a California limited partnership $ 222,651
8. Richmond Warehouse Eight, a California limited partnership $ 262,562
9. St. Louis Warehouse Nine, a California limited partnership $ 351,453
------------
$ 1,425,592
============

</TABLE>

10
<PAGE> 193

ANNEX C

ESCROW AGREEMENT

[SEE ATTACHED]
<PAGE> 194

FORM OF

ESCROW AGREEMENT

THIS ESCROW AGREEMENT (the "Escrow Agreement"), made and entered into the
___ day of _________, 1997, by and among the shareholders of Maintenance
Warehouse/America Corp., a Texas corporation ("Maintenance Warehouse"), listed
on Exhibit A hereto (the "Shareholders"), The Home Depot, Inc., a Delaware
corporation ("Home Depot"), and Bank of America, N.A., a national banking
association ("Escrow Agent"). Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the Merger Agreement
(as hereinafter defined).

W I T N E S S E T H:

WHEREAS, pursuant to a certain Merger Agreement (the "Merger Agreement"),
dated as of January __, 1997, by and among Home Depot, Home Depot Sub, Inc., a
Texas corporation and a wholly owned subsidiary of Home Depot, Maintenance
Warehouse and the Shareholders, the common stock, no par value per share, of
Maintenance Warehouse owned by the Shareholders has been (simultaneously with
the execution hereof) converted into the right to receive shares of the common
stock, par value $.05 per share, of Home Depot ("Home Depot Common Stock");

WHEREAS, to induce Home Depot to consummate the transactions contemplated
by the Merger Agreement, the Shareholders desire to enter into this Escrow
Agreement;

WHEREAS, Escrow Agent is willing to act as escrow agent hereunder; and

NOW, THEREFORE, in consideration of the premises and the mutual promises,
covenants and agreements contained herein, the parties hereto, intending to be
legally bound, hereby agree as follows:

<PAGE> 195

Section 1. Establishment of Escrow Fund.

1.1 Delivery of Shares. Simultaneously with the execution hereof, Home
Depot has delivered to Escrow Agent on behalf of each Shareholder the number of
shares of Home Depot Common Stock set forth opposite such Shareholder's name on
Exhibit A hereto, consisting, in the aggregate, of _______ shares of Home Depot
Common Stock (such shares being hereinafter referred to as the "Escrow
Amount"). The Escrow Amount shall be represented by a stock certificate in the
name of "Bank of America, N.A., as Escrow Agent under the Escrow Agreement,
dated _________ __, 1997". Notwithstanding the foregoing, during the term of
this Escrow Agreement, each Shareholder shall retain all rights to vote the
shares of Home Depot Common Stock delivered on behalf of such Shareholder to
the Escrow Agent that are not transferred to Home Depot pursuant to Section 2
hereof.

1.2. The Escrow Fund.

(a) All future stock, cash, dividends or other distributions of
any nature whatsoever made on the Escrow Amount shall also be delivered to
Escrow Agent (together with interest thereon, the "Proceeds"). The Escrow
Amount together with all such future distributions are hereinafter
collectively referred to as the "Escrow Fund." The Escrow Fund shall be
held by Escrow Agent subject to the terms and conditions hereinafter set
forth. Any cash proceeds included in the Escrow Fund shall be deposited
by Escrow Agent in money market accounts of Escrow Agent. Any transfer by
Escrow Agent of Home Depot Common Stock out of the Escrow Amount to Home
Depot or the Shareholders shall be accompanied by a pro rata portion of
the then current balance of the Proceeds.

(b) During the term of this Agreement, the Shareholder
Representative may instruct the Escrow Agent to dispose of the shares of
Home Depot Common Stock in the Escrow Fund in a broker's transaction on
the New York Stock Exchange. Prior to effecting any such transaction, (i)
the Shareholder Representative will deliver to Home Depot and the Escrow
Agent a written opinion of Deloitte & Touche, L.L.P. addressed to Home
Depot that such transaction will not jeopardize the treatment of the
transactions contemplated by the Merger Agreement as a "pooling of
interests" for accounting purposes, and (ii) the Shareholder
Representative, Home Depot and Escrow Agent shall enter into an
appropriate amendment to this Agreement providing for the disbursement of
cash proceeds from the Escrow Amount, in a manner that satisfies "pooling
of interest" requirements. In the event of any such transaction, the
amount of cash for which such shares are sold shall remain on deposit with
the Escrow Agent as part of the Escrow Amount and any earnings thereon
shall be included in the "Proceeds."

Section 2. Claims Against the Escrow Fund.

2
<PAGE> 196

The Escrow Fund shall secure the obligations of the Shareholders to Home
Depot as set forth in the Merger Agreement. In the event that Home Depot shall
claim a right to payment under the Merger Agreement, Home Depot shall send
written notice of such claim to each of Escrow Agent and the Shareholder
Representative. Such notice shall be signed by an officer of Home Depot, and
the Escrow Agent shall be entitled to rely on such notice as being duly
authorized and executed by Home Depot.

As promptly as possible after Home Depot has given such notice, Home Depot
and the Shareholder Representative shall establish the accuracy of such claim
(by mutual agreement, arbitration, litigation or otherwise) in accordance with
the provisions of the Merger Agreement and, upon final determination of the
merits of such claim, shall notify Escrow Agent (either by means of a certified
copy of the judgment, a certified copy of the arbitration decision, the written
determination of the Arbitrator (as defined in Section 2.6 of the Merger
Agreement) or a written instrument executed by Home Depot and the Shareholder
Representative) of the terms of such determination (including instructions for
the amount of disbursements from the Escrow Fund) (the "Disbursement Notice").

Section 3. Termination of Escrow Fund.

3.1 Termination Date. The escrow provided for hereunder shall terminate
completely upon the earlier of the following dates:

(a) the date of a mutual written consent of Home Depot and the
Shareholder Representative; or

(b) on the first anniversary of the date of this Escrow
Agreement; provided, however, that if Home Depot has provided notice to
the Shareholder Representative under the Merger Agreement of any claim(s)
by Home Depot for any Deficit Amount that has not been finally resolved
and settled pursuant to Article 2 of the Merger Agreement and/or for any
Parent Losses that has not been finally resolved and settled pursuant to
Article 9 of the Merger Agreement prior to the first anniversary hereof,
the escrow provided hereunder shall continue until the final resolution
and settlement of such claim(s), and the Escrow Agent shall continue to
hold a number of shares of HomeDepot

<PAGE> 197

Common Stock equal to Home Depot's good faith estimate (the "Estimate") of
the amount of Deficit Amount and/or Parent Losses attributable to such
claim(s) divided by the Average Closing Price. The balance of the Escrow
Amount in excess of the Estimate (and the cash proceeds related thereto)
shall be distributed to the Shareholder Representative.

3.2 Payment Upon Termination. Upon such termination, Escrow Agent shall
transfer the balance, if any, of the Escrow Fund to the Shareholder
Representative on behalf of the Shareholders. The Shareholder Representative
shall be solely responsible for the disbursement of the balance, if any, of the
Escrow Fund to the individual Shareholders.

Section 4. Escrow Agent.

4.1 Duties. Escrow Agent's obligations and duties in connection
herewith are confined to those specifically enumerated in this Escrow
Agreement. Escrow Agent shall not be in any manner liable or responsible for
the sufficiency, correctness, genuineness or validity of any instruments
deposited with it or with reference to the form of execution thereof, or the
identity, authority or rights of any person executing or depositing same, and
Escrow Agent shall not be liable for any loss that may occur by reason of
forgery, false representation or the exercise of its discretion in any
particular manner or for any other reason, except for its own gross negligence
or willful misconduct.

4.2 Indemnification. Except in instances of Escrow Agent's own gross
negligence or willful misconduct, Home Depot and the Shareholders shall
indemnify, defend, and hold harmless Escrow Agent against any and all costs,
losses, claims, damages, liabilities, expenses, including reasonable costs of
investigation, court costs, and attorneys' fees, and disbursements, which may
be imposed upon Escrow Agent in connection with its acceptance of appointment
as Escrow Agent and the exercise or failure to exercise its discretion
hereunder, including any litigation arising from this Escrow Agreement
involving the subject matter hereof, and all such costs, expenses and
disbursement shall be for the account of and shall be borne and paid by Home
Depot and the Shareholders as a condition to termination of this Escrow
Agreement.

4.3 Disputes. In the event of a dispute between the parties, in the
discretion of Escrow Agent, Escrow Agent shall be entitled to tender into the
registry or custody of any court of competent jurisdiction all money or
property in its hands under this Escrow Agreement, together with such legal
pleadings as its deems appropriate, and thereupon shall be discharged from all
further duties and liabilities under this Escrow Agreement. Any such legal
action may be brought in such court as Escrow Agent shall determine to have
jurisdiction thereof. The filing of any such legal proceedings shall not
deprive Escrow Agent of its compensation earned prior to such filing.

4
<PAGE> 198

4.4 Receipt. By its execution and delivery of this Escrow Agreement,
Escrow Agent acknowledges receipt of _______ shares of Home Depot Common Stock
from Home Depot on behalf of the Shareholders.

4.5 Fees. Escrow Agent's fees hereunder shall be $________ annually, of
which fifty percent (50%) shall be paid by the Shareholders and fifty percent
(50%) shall be paid by Home Depot at Closing. The fee agreed to be paid by the
Shareholders and Home Depot is intended as full compensation for Escrow Agent's
services as contemplated by this Escrow Agreement; however, in the event that
the conditions of this Escrow Agreement are not fulfilled or Escrow Agent
renders any material service not contemplated in this Escrow Agreement, or
there is any assignment of interest in the subject matter of this Escrow
Agreement, or any material modification hereof, or if any material controversy
arises hereunder, or Escrow Agent is made a party to or justifiably intervenes
in any litigation pertaining to this Escrow Agreement, or the subject matter
hereof, Escrow Agent shall be reasonably compensated for such extraordinary
services and reimbursed for all costs and expenses, including reasonable
attorneys' fees, occasioned by any delay, controversy, litigation or event, and
the same may be recoverable from Home Depot and the Shareholders in accordance
with the percentages described above.

Section 5. Miscellaneous.

5.1 Benefits and Burdens; Assignment. This Escrow Agreement shall inure
to the benefit of and shall be binding upon Home Depot and the Shareholders and
Escrow Agent and their respective heirs, representatives, successors and
assigns. No party to this Escrow Agreement may assign its rights or
obligations hereunder without the prior written consent of each of the other
parties hereto, provided however, that this Escrow Agreement may only be
assigned by Home Depot to a corporation, all of whose issued and outstanding
capital stock is owned directly or indirectly by Home Depot, and in such event
Home Depot shall not be released from its obligations hereunder.

5.2 Governing Law. This Escrow Agreement shall be deemed to be made in,
and in all respects shall be interpreted, construed and governed by and in
accordance with, the laws of the State of California.

5.3 Headings. The section and paragraph headings contained in this
Escrow Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Escrow Agreement.

5.4 Notices. Any notice or other communications required or permitted
hereunder shall be sufficiently given if sent by registered or certified mail,
postage prepaid, by national overnight courier service or by telecopy,
addressed as follows:

<TABLE>
<S> <C>
Home Depot: The Home Depot, Inc.
2455 Paces Ferry Road
</TABLE>

5
<PAGE> 199

<TABLE>
<S> <C>
Atlanta, Georgia 30339
Attention: Lawrence A. Smith
Telecopy: (770) 431-2739
Taxpayer ID No.: _______________

Copy to: King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: Michael J. Egan III
Telecopy: (404) 572-5145

Shareholder
Representative: Mr. Ronald L. Neeley

________________________________

________________________________
Telecopy: ( ) ________________
Taxpayer ID No.: _______________

Copy to: Seltzer Caplan Wilkins & McMahon
750 "B" Street, Suite 2100
San Diego, California 92101
Attention: David J. Dorne, Jr.
Telecopy: (619) 685-3100

Escrow Agent: Bank of America, N.A.

________________________________

________________________________
Attention:
Phone:
Telecopy:
</TABLE>

5.5 No Limitation. The parties hereto agree that the rights and
remedies of Home Depot hereunder shall not operate to limit any other rights
and remedies otherwise available to Home Depot against the Shareholders.

6
<PAGE> 200

5.6 Counterparts. This Escrow Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.

5.7 Modification. This Escrow Agreement may be modified only by a
written instrument signed by each of the parties hereto.

5.8. Cooperation. Shareholders, Home Depot and the Escrow Agent shall
deliver to each other such information and documents and shall execute and
deliver to each other such further information and documents and shall execute
and deliver such further instruments and agreements as the others may
reasonably request in order to accomplish the purpose of this Escrow Agreement
or to assure to the others the benefits of this Escrow Agreement.

5.10. Severability. The invalidity or unenforceability of any provision
of this Escrow Agreement shall not affect the validity or enforceability of any
other provision of this Escrow Agreement.

5.11. Time. Time is of the essence under this Escrow Agreement.

5.12. Statutes. Any reference herein to any federal, state or local
statute shall include all amendments to such statute through the date of this
Escrow Agreement.

7
<PAGE> 201

IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement
as of the date first written above.

THE HOME DEPOT, INC.

____________________________________
Marshall L. Day
Senior Vice President and
Chief Financial Officer

THE SHAREHOLDERS LISTED IN
EXHIBIT A HERETO

By: The Shareholder Representative

____________________________________
Name: Ronald L. Neeley

ESCROW AGENT:

BANK OF AMERICA, N.A.

By:_________________________________
Title:______________________________

8
<PAGE> 202

ANNEX D

ARTICLES 5.11, 5.12 AND 5.13 OF THE TEXAS BUSINESS CORPORATION CODE

I. ARTICLE 5.11 RIGHTS OF DISSENTING SHAREHOLDERS IN THE EVENT OF CERTAIN
CORPORATE ACTIONS

A. Any shareholder of a domestic corporation shall have the right to
dissent from any of the following corporate actions:

1. Any plan of merger to which the corporation is a party if
shareholder approval is required by Article 5.03 or 5.16 of this Act and
the shareholder holds shares of a class or series that was entitled to vote
thereon as a class or otherwise;

2. Any sale, lease, exchange or other disposition (not including any
pledge, mortgage, deed of trust or trust indenture unless otherwise
provided in the articles of incorporation) of all, or substantially all,
the property and assets, with or without good will, of a corporation
requiring the special authorization of the shareholders as provided by this
Act;

3. Any plan of exchange pursuant to Article 5.02 of this Act in which
the shares of the corporation of the class or series held by the
shareholder are to be acquired.

B. Notwithstanding the provisions of Section A of this Article, a
shareholder shall not have the right to dissent from any plan of merger in which
there is a single surviving or new domestic or foreign corporation, or from any
plan of exchange, if (1) the shares held by the shareholder are part of a class
shares of which are listed on a national securities exchange, or are held of
record by not less than 2,000 holders, on the record date fixed to determine the
shareholders entitled to vote on the plan of merger or the plan of exchange, and
(2) the shareholder is not required by the terms of the plan of merger or the
plan of exchange to accept for his shares any consideration other than (a)
shares of a corporation that, immediately after the effective time of the merger
or exchange, will be part of a class or series of shares of which are (i)
listed, or authorized for listing upon official notice of issuance, on a
national securities exchange, or (ii) held of record by not less than 2,000
holders, and (b) cash in lieu of fractional shares otherwise entitled to be
received.

II. ARTICLE 5.12 PROCEDURE FOR DISSENT BY SHAREHOLDERS AS TO SAID CORPORATE
ACTIONS

A. Any shareholder of any domestic corporation who has the right to dissent
from any of the corporate actions referred to in Article 5.11 of this Act may
exercise that right to dissent only by complying with the following procedures:

1. a. With respect to proposed corporate action that is submitted to a
vote of shareholders at a meeting, the shareholder shall file with the
corporation, prior to the meeting, a written objection to the action,
setting out that the shareholder's right to dissent will be exercised if
the action is effective and giving the shareholder's address, to which
notice thereof shall be delivered or mailed in that event. If the action is
effected and the shareholder shall not have voted in favor of the action,
the corporation, in the case of action other than a merger, or the
surviving or new corporation (foreign or domestic) or other entity that is
liable to discharge the shareholder's right of dissent, in the case of a
merger, shall, within ten (10) days after the action is effected, deliver
or mail to the shareholder written notice that the action has been
effected, and the shareholder may, within ten (10) days from the delivery
or mailing of the notice, make written demand on the existing, surviving,
or new corporation (foreign or domestic) or other entity, as the case may
be, for payment of the fair value of the shareholder's shares. The fair
value of the shares shall be the value thereof as of the day immediately
preceding the meeting, excluding any appreciation or depreciation in
anticipation of the proposed action. The demand shall state the number and
class of the shares owned by the shareholder and the fair value of the
shares as estimated by the shareholder. Any shareholder failing to make
demand within the ten (10) day period shall be bound by the action.
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b. With respect to proposed corporate action that is approved pursuant
to Section A of Article 9.10 of this Act, the corporation, in the case of
action other than a merger, and the surviving or new corporation (foreign
or domestic) or other entity that is liable to discharge the shareholder's
right of dissent, in the case of a merger, shall, within ten (10) days
after the date the action is effected, mail to each shareholder of record
as of the effective date of the action notice of the fact and date of the
action and that the shareholder may exercise the shareholder's right to
dissent from the action. The notice shall be accompanied by a copy of this
Article and any articles or documents filed by the corporation with the
Secretary of State to effect the action. If the shareholder shall not have
consented to the taking of the action, the shareholder may, within twenty
(20) days after the mailing of the notice, make written demand on the
existing, surviving, or new corporation (foreign or domestic) or other
entity, as the case may be, for payment of the fair value of the
shareholder's shares. The fair value of the shares shall be the value
thereof as of the date the written consent authorizing the action was
delivered to the corporation pursuant to Section A of Article 9.10 of this
Act, excluding any appreciation or depreciation in anticipation of the
action. The demand shall state the number and class of shares owned by the
dissenting shareholder and the fair value of the shares as estimated by the
shareholder. Any shareholder failing to make demand within the twenty (20)
day period shall be bound by the action.

2. Within twenty (20) days after receipt by the existing, surviving,
or new corporation (foreign or domestic) or other entity, as the case may
be, of a demand for payment made by a dissenting shareholder in accordance
with Subsection (1) of this Section, the corporation (foreign or domestic)
or other entity shall deliver or mail to the shareholder a written notice
that shall either set out that the corporation (foreign or domestic) or
other entity accepts the amount claimed in the demand and agrees to pay
that amount within ninety (90) days after the date on which the action was
effected, and, in the case of shares represented by certificates, upon the
surrender of the certificates duly endorsed, or shall contain an estimate
by the corporation (foreign or domestic) or other entity of the fair value
of the shares, together with an offer to pay the amount of that estimate
within ninety (90) days after the date on which the action was effected
upon receipt of notice within sixty (60) days after that date from the
shareholder that the shareholder agrees to accept that amount and, in the
case of shares represented by certificates, upon the surrender of the
certificates duly endorsed.

3. If, within sixty (60) days after the date on which the corporate
action was effected, the value of the shares is agreed upon between the
shareholder and the existing, surviving, or new corporation (foreign or
domestic) or other entity, as the case may be, payment for the shares shall
be made within ninety (90) days after the date on which the action was
effected and, in the case of shares represented by certificates, upon
surrender of the certificates duly endorsed. Upon payment of the agreed
value, the shareholder shall cease to have any interest in the shares or in
the corporation.

B. If, within the period of sixty (60) days after the date on which the
corporate action was effected, the shareholder and the existing, surviving, or
new corporation (foreign or domestic) or other entity, as the case may be, do
not so agree, then the shareholder or the corporation (foreign or domestic) or
other entity may, within sixty (60) days after the expiration of the sixty (60)
day period, file a petition in any court of competent jurisdiction in the county
in which the principal office of the domestic corporation is located, asking for
a finding and determination of the fair value of the shareholder's shares. Upon
the filing of any such petition by the shareholder, service of a copy thereof
shall be made upon the corporation (foreign or domestic) or other entity, which
shall, within ten (10) days after service, file in the office of the clerk of
the court in which the petition was filed a list containing the names and
addresses of all shareholders of the domestic corporation who have demanded
payment for their shares and with whom agreements as to the value of their
shares have not been reached by the corporation (foreign or domestic) or other
entity. If the petition shall be filed by the corporation (foreign or domestic)
or other entity, the petition shall be accompanied by such a list. The clerk of
the court shall give notice of the time and place fixed for the hearing of the
petition by registered mail to the corporation (foreign or domestic) or other
entity and to the shareholders named on the list at the addresses therein
stated. The forms of the notices by mail shall be approved by the court. All
shareholders thus notified and the corporation (foreign or domestic) or other
entity shall thereafter be bound by the final judgment of the court.

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C. After the hearing of the petition, the court shall determine the
shareholders who have complied with the provisions of this Article and have
become entitled to the valuation of and payment for their shares, and shall
appoint one or more qualified appraisers to determine that value. The appraisers
shall have power to examine any of the books and records of the corporation the
shares of which they are charged with the duty of valuing, and they shall make a
determination of the fair value of the shares upon such investigation as to them
may seem proper. The appraisers shall also afford a reasonable opportunity to
the parties interest to submit to them pertinent evidence as to the value of the
shares. The appraisers shall also have such power and authority as may be
conferred on Masters in Chancery by the Rules of Civil Procedure or by the order
of their appointments.

D. The appraisers shall determine the fair value of the shares of the
shareholders adjudged by the court to be entitled to payment for their shares
and shall file their report of that value in the office of the clerk of the
court. Notice of the filing of the report shall be given by the clerk to the
parties in interest. The report shall be subject to exceptions to be heard
before the court both upon the law and the facts. The court shall by its
judgment determine the fair value of the shares of the shareholders entitled to
payment for their shares and shall direct the payment of that value by the
existing, surviving, or new corporation (foreign or domestic) or other entity,
together with interest thereon, beginning 91 days after the date on which the
applicable corporate action from which the shareholder elected to dissent was
effected to the date of such judgment, to the shareholders entitled to payment.
The judgment shall be payable to the holders of uncertificated shares
immediately to the holders of shares represented by certificates only upon, and
simultaneously with, the surrender to the existing, surviving, or new
corporation (foreign or domestic) or other entity, as the case may be, of duly
endorsed certificates of those shares. Upon payment of the judgment, the
dissenting shareholders shall ceases to have any interest in those shares or in
the corporation. The court shall allow the appraiser a reasonable fee as court
costs, and all court costs shall be allotted between the parties in the manner
that the court determines to be fair and equitable.

E. Shares acquired by the existing, surviving, or new corporation (foreign
or domestic) or other entity, as the case may be, pursuant to the payment of the
agreed value of the shares or pursuant to payment of the judgment entered for
the value of the shares, as in this Article provided, shall, in the case of a
merger, be treated as provided in the plan of merger and, in all other cases,
may be held and disposed of by the corporation as in the case of other treasury
shares.

F. The provisions of this Article shall not apply to a merger if, on the
date of the filing of the articles of merger, the surviving corporation is the
owner of all the outstanding shares of the other corporations, domestic or
foreign, that are parties to the merger.

G. In the absence of fraud in the transaction, the remedy provided by this
Article to a shareholder objecting to any corporate action referred to in
Article 5.11 of this Act is the exclusive remedy for the recovery of the value
of his shares or money damages to the shareholder with respect to the action. If
the existing, surviving, or new corporation (foreign or domestic) or other
entity, as the case may be, complies with the requirements of this Article, any
shareholder who fails to comply with the requirements of this Article shall not
be entitled to bring suit for the recovery of the value of his shares or money
damages to the shareholder with respect to the action.

III. ARTICLE 5.13 PROVISIONS AFFECTING REMEDIES OF DISSENTING SHAREHOLDERS

A. Any shareholder who has demanded payment for his shares in accordance
with either Article 5.12 or 5.16 of this Act shall not thereafter be entitled to
vote or exercise any other rights of a shareholder except the right to receive
payment for his shares pursuant to the provisions of those articles and the
right to maintain an appropriate action to obtain relief on the ground that the
corporate action would be or was fraudulent, and the respective shares for which
payment has been demanded shall not thereafter be considered outstanding for the
purposes of any subsequent vote of shareholders.

B. Upon receiving a demand for payment from any dissenting shareholder, the
corporation shall make an appropriate notation thereof in its shareholder
records. Within twenty (20) days after demanding payment for his shares in
accordance with either Article 5.12 or 5.16 of this Act, each holder of
certificates representing

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shares so demanding payment shall submit such certificates to the corporation
for notation thereon that such demand has been made. The failure of holders of
certificated shares to do so shall, at the option of the corporation, terminate
such shareholder's rights under Articles 5.12 or 5.16 of this Act unless a court
of competent jurisdiction for good and sufficient cause shown shall otherwise
direct. If uncertificated shares for which payment has been demanded or shares
represented by a certificate on which notation has been so made shall be
transferred, any new certificate issued therefor shall bear similar notation
together with the name of the original dissenting holder of such shares and a
transferee of such shares shall acquire by such transfer no rights in the
corporation other than those which the original dissenting shareholder had after
making demand for payment of the fair value thereof.

C. Any shareholder who has demanded payment for his shares in accordance
with either Article 5.12 or 5.16 of this Act may withdraw such demand at any
time before payment for his shares or before any petition has been filed
pursuant to Article 5.12 or 5.16 of this Act asking for a finding and
determination of the fair value of such shares, but no such demand may be
withdrawn after such payment has been made or, unless the corporation shall
consent thereto, after any such petition has been filed. If, however, such
demand shall be withdrawn as hereinbefore provided, or if pursuant to Section B
of this Article the corporation shall terminate the shareholder's rights under
Article 5.12 or 5.16 of this Act, as the case may be, or if no petition asking
for a finding and determination of fair value of such shares by a court shall
have been filed within the time provided in Article 5.12 or 5.16 of this Act, as
the case may be, or if after the hearing of a petition filed pursuant to Article
5.12 or 5.16, the court shall determine that such shareholder is not entitled to
the relief provided by those articles, then, in any such case, such shareholder
and all persons claiming under him shall be conclusively presumed to have
approved and ratified the corporate action from which he dissented and shall be
bound thereby, the right of such shareholder to be paid the fair value of his
shares shall cease, and his status as a shareholder shall be restored without
prejudice to any corporate proceedings which may have been taken during the
interim, and such shareholder shall be entitled to receive any dividends or
other distributions made to shareholders in the interim.

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ANNEX E

ARTICLE 7.5 OF THE CALIFORNIA REVISED LIMITED PARTNERSHIP ACT

SEC. 15679.1. REORGANIZATION; CONTROL

(a) For purposes of this article, "reorganization" refers to either of the
following:

(1) A merger pursuant to Article 7.5 (commencing with Section
15678.1).

(2) The acquisition by one limited partnership in exchange in whole or
part for its partnership interests (or the partnership interests or equity
securities of a partnership or other entity that is in control of the
acquiring limited partnership) of partnership interests of another limited
partnership if, immediately after the acquisition, the acquiring limited
partnership has control of the other limited partnership.

(3) The acquisition of one limited partnership in exchange in whole or
in part for its partnership interests (or the partnership interests or
equity securities of a partnership or other entity which is in control of
the acquiring limited partnership) or for its debts securities (or debt
securities of a limited partnership or other entity which is in control of
the acquiring limited partnership) which are not adequately secured and
which have a maturity date in excess of five years after the consummation
of the acquisition, or both, of all or substantially all of the assets of
another limited partnership.

(b) For purposes of this article, "control" means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a limited partnership.

SEC. 15679.2. PURCHASE OF DISSENTING PARTNERSHIP INTERESTS; FAIR MARKET VALUE;
DISSENTING INTEREST; DISSENTING LIMITED PARTNER

(a) If the approval of outstanding limited partnership interests is
required for a limited partnership to participate in a reorganization, pursuant
to the limited partnership agreement of the partnership, or otherwise, then each
limited partner of the limited partnership holding such interests may, by
complying with this article, require the limited partnership to purchase for
cash, at its fair market value, the interest owned by the limited partner in the
limited partnership, if such interest is a dissenting interest as defined in
subdivision (b). The fair market value shall be determined as of the day before
the first announcement of the terms of the proposed reorganization, excluding
any appreciation or depreciation in consequence of the proposed reorganization.

(b) As used in this article, "dissenting interest" means the interest of a
limited partner that satisfies all of the following conditions:

(1) Either:

(A) The interest was not, immediately prior to the reorganization,
either (i) listed on any national securities exchange certified by the
Commissioner of Corporations under subdivision (o) of Section 25100, or
(ii) listed on the list of OTC margin stocks issued by the Board of
Governors of the Federal Reserve System, provided that in either such
instance the limited partnership whose outstanding interests are so
listed provides, in its notice to limited partners requesting their
approval of the proposed reorganization, a summary of the provisions of
this section and Sections 15679.3, 15679.4, 15679.5, and 15679.6.

(B) Demands for payment are filed with respect to 5 percent or more
of the outstanding interests of any class of interests described in
clause (i) or (ii) of subparagraph (A).

(2) Which was outstanding on the date for the determination of limited
partners entitled to vote on the reorganization.

(3) (i) Which was not voted in favor of the reorganization, or (ii) if
such interest is described in clause (i) or (ii) of subparagraph (A) of
paragraph (1), was voted against the reorganization; provided, however,
that clause (i) rather than clause (ii) of this paragraph applies in any
case where the approval for the proposed reorganization is sought by
written consent rather than at a meeting.
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(4) Which the limited partner has demanded that the limited
partnership purchase at its fair market value in accordance with Section
15679.3.

(5) Which the limited partner submits for endorsement, if applicable,
in accordance with Section 15679.4.

(c) As used in this article, "dissenting limited partner" means the record
holder of a dissenting interest, and includes an assignee of record of such an
interest.

SEC. 15679.3. NOTICE OF APPROVAL OF REORGANIZATION BY OUTSTANDING INTERESTS;
STATEMENT OF PRICE; WRITTEN DEMAND FOR PURCHASE; CONTENTS OF DEMAND

(a) If limited partners have a right under Section 15679.2, subject to
compliance with paragraphs (4) and (5) of subdivision (b) hereof, to require the
limited partnership to purchase their limited partnership interests for cash,
such limited partnership shall mail to each such limited partner a notice of the
approval of the reorganization by the requisite vote or consent of the limited
partners, within 10 days after the date of such approval, accompanied by a copy
of this section and Sections 15679.2, 15679.4, 15679.5, and 15679.6, a statement
of the price determined by the limited partnership to represent the fair market
value of its outstanding interests, and a brief description of the procedure to
be followed if the limited partner desires to exercise the limited partner's
rights under such sections. The statement of price constitutes an offer by the
limited partnership to purchase at the price stated any dissenting interests as
defined in subdivision (b) of Section 15679.2, unless they lose their status as
dissenting interests under Section 15679.11.

(b) Any limited partner who has a right to require the limited partnership
to purchase the limited partner's interest for cash under Section 15679.2,
subject to compliance with paragraphs (4) and (5) of subdivision(b) thereof, and
who desires the limited partnership to purchase such interest, shall make
written demand upon the limited partnership for the purchase of such interest
and the payment to the Limited partner in cash of its fair market value. The
demand is not effective for any purpose unless it is received by the limited
partnership or any transfer agent thereof (1) in the case of interests described
in clause (i) or (ii) of subparagraph (A) of paragraph (1) of subdivision (b) of
Section 15679.2, not later than the date of the Limited partners' meeting to
vote upon the reorganization, or (2) in any other case, within 30 days after the
date on which notice of the approval of the reorganization by the requisite vote
or consent of the limited partners is mailed by the limited partnership to the
limited partners.

(c) The demand shall state the number or amount of the limited partner's
interest in the limited partnership and shall contain a statement of what such
limited partner claims to be the fair market value of that interest on the day
before the announcement of the proposed reorganization. The statement of fair
market value constitutes an offer by the limited partner to sell the interest at
such price.

SEC. 15679.4. NOTICE OF THE NUMBER OR AMOUNT OF INTEREST DEMANDED TO BE
PURCHASED; CONDITIONS; TRANSFERS OF INTERESTS; NEW CERTIFICATES
OR STATEMENTS

Within 30 days after the date on which notice of the approval of the
outstanding interests of the limited partnership is mailed to the limited
partner pursuant to subdivision (a) of Section 15679.3, the Limited partner
shall submit to the limited partnership at its principal office or at the office
of any transfer agent thereof, (a) if the interest is evidenced by a
certificate, the limited partner's certificate representing the interest which
the Limited partner demands that the limited partnership purchase, to be stamped
or endorsed with a statement that the interest is a dissenting interest or to be
exchanged for certificates of appropriate denominations so stamped or endorsed,
or (b) if the interest is not evidenced by a certificate, written notice of the
number or amount of interest which the limited partner demands that the limited
partnership purchase. Upon subsequent transfers of the dissenting interest on
the books of the limited partnership, the new certificates or other written
statement issued therefor shall bear a like statement, together with the name of
the original holder of the dissenting interest.

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SEC. 15679.5. AGREEMENTS FIXING FAIR MARKET VALUE OF DISSENTING INTEREST;
PAYMENT

(a) If the limited partnership and the dissenting limited partner agree
that such limited partner's interest is a dissenting interest and agree upon the
price to be paid for the dissenting interest, the dissenting limited partner is
entitled to the agreed price with interest thereon at the legal rate on
judgments from the date of consummation of the reorganization. All agreements
fixing the fair market value of any dissenting limited partner's interest as
between the limited partnership and such limited partner shall be in writing and
filed in the records of the limited partnership.

(b) Subject to the provisions of Section 15679.8, payment of the fair
market value for a dissenting interest shall be made within 30 days after the
amount thereof has been agreed or within 30 days after any statutory or
contractual conditions to the reorganization are satisfied, whichever is later,
and in the case of dissenting interests evidenced by certificates of interest,
subject to surrender of such certificates of interest, unless provided otherwise
by agreement.

SEC. 15679.6. DENIAL OF STATUS AS DISSENTING INTEREST; FAILURE TO AGREE UPON
FAIR MARKET VALUE; COMPLAINT; FILING; JOINDER OF PARTIES; TRIAL
OF ACTION

(a) If the limited partnership denies that a limited partnership interest
is a dissenting interest, or the limited partnership and a dissenting limited
partner fail to agree upon the fair market value of a dissenting interest, then
such limited partner or any interested limited partnership, within six months
after the date on which notice of the approval of the reorganization by the
requisite vote or consent of the limited partners was mailed to the limited
partner, but not thereafter, may file a complaint in the superior court of the
proper county praying the court to determine whether the interest is a
dissenting interest, or the fair market value of the dissenting interest, or
both, or may intervene in any action pending on such a complaint.

(b) Two or more dissenting limited partners may join as plaintiffs or be
joined as defendants in any such action and two or more such actions may be
consolidated.

(c) On the trial of the action, the court shall determine the issues. If
the status of the limited partnership interest as a dissenting interest is in
issue, the court shall first determine that issue. If the fair market value of
the dissenting interest is in issue, the court shall determine, or shall appoint
one or more impartial appraisers to determine, the fair market value of the
dissenting interest.

SEC. 15679.7. APPRAISALS; APPOINTMENT OF APPRAISER; REPORT; SUBMISSION TO
COURT; CONFIRMATION; FAILURE TO FILE REPORT; DETERMINATION BY
COURT; JUDGMENT; APPEAL; COSTS

(a) If the court appoints an appraiser or appraisers, they shall proceed
forthwith to determine the fair market value per interest of the outstanding
limited partnership interests of the limited partnership, by class if necessary.
Within the time fixed by the court, the appraisers, or a majority of them, shall
make and file a report in the office of the clerk of the court. Thereupon, on
the motion of any party, the report shall be submitted to the court and
considered on such additional evidence as the court considers relevant. If the
court finds the report reasonable, the court may confirm it.

(b) If a majority of the appraisers appointed fails to make and file a
report within 30 days from the date of their appointment, or within such further
time as may be allowed by the court, or the report is not confirmed by the
court, the court shall determine the fair market value per interest of the
outstanding limited partnership interests of the limited partnership, by class
if necessary.

(c) Subject to Section 15679.8, judgment shall be rendered against the
limited partnership for payment of an amount equal to the fair market value, as
determined by the court, of each dissenting interest which any dissenting
Limited partner who is a party, or has intervened, is entitled to require the
limited partnership to purchase, with interest thereon at the legal rate on
judgments from the date of consummation of the reorganization.

(d) Any such judgment shall be payable forthwith, provided, however, that
with respect to limited partnership interests evidenced by transferable
certificates of interest, only upon the endorsement and delivery

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to the limited partnership of those certificates representing the interests
described in the judgment. Any party may appeal from the judgment.

(e) The costs of the action, including reasonable compensation for the
appraisers, to be fixed by the court, shall be assessed or apportioned as the
court considers equitable, but, if the appraisal exceeds the price offered by
the limited partnership, the limited partnership shall pay the costs (including,
in the discretion of the court, if the value awarded by the court for the
dissenting interest is more than 125 percent of the price offered by the limited
partnership under subdivision (a) of Section 15679.3, attorneys' fees and fees
of expert witnesses).

SEC. 15679.8. EXTENT PAYMENT TO DISSENTING PARTNERS WOULD REQUIRE RETURN OF
PORTION THEREOF BY REASON OF UNIFORM FRAUDULENT TRANSFER ACT;
DISSENTING PARTNERS AS CREDITORS

To the extent that the payment to dissenting limited partners of the fair
market value of their dissenting interests would require the dissenting limited
partners to return such payment or a portion thereof by reason of Section 15666
or the Uniform Fraudulent Transfer Act (Chapter 1 (commencing with Section 3439)
of Title 2 of Part 2 of Division 4 of the Civil Code), then that payment or
portion thereof shall not be made and the dissenting Limited partners shall
become creditors of the limited partnership for the amount not paid, together
with interest thereon at the legal rate on judgments until the date of payment,
but subordinate to all other creditors in any proceeding relating to the winding
up and dissolution of the limited partnership, such debt to be payable when
permissible.

SEC. 15679.9. CASH DISTRIBUTIONS TO DISSENTING PARTNER AFTER REORGANIZATION,
BUT PRIOR TO PAYMENTS BY LIMITED PARTNER; CREDIT

Any cash distributions made by a limited partnership to a dissenting
limited partner after the date of consummation of the reorganization, but prior
to any payment by the limited partnership for such dissenting Limited partner's
interest, shall be credited against the total amount to be paid by the limited
partnership for such dissenting interest.

SEC. 15679.10. DISSENTING LIMITED PARTNERS; RIGHTS AND PRIVILEGES; WITHDRAWAL
OF DEMAND FOR PAYMENT

Except as expressly limited by this article, dissenting limited partners
shall continue to have all the rights and privileges incident to their
interests, until payment by the limited partnership for their dissenting
interests. A dissenting limited partner may not withdraw a demand for payment
unless the limited partnership consents thereto.

SEC. 15679.11. DISSENTING INTERESTS; LOSS OF STATUS

A dissenting interest loses it status as a dissenting interest and the
holder thereof ceases to be a dissenting limited partner and ceases to be
entitled to require the limited partnership to purchase the interest upon the
happening of any of the following:

(a) The limited partnership abandons the reorganization. Upon
abandonment of the reorganization, the limited partnership shall pay, on
demand, to any dissenting limited partner, who has initiated proceeding in
good faith under this article, all reasonable expenses incurred in such
proceedings and reasonable attorneys' fees.

(b) The interest is transferred prior to its submission for
endorsement in accordance with Section 15679.4.

(c) The dissenting limited partner and the limited partnership do not
agree upon the status of the interest as a dissenting interest or upon the
purchase price of the dissenting interest, and neither files a complaint
nor intervenes in a pending action, as provided in Section 15679.6, within
six months after the date upon which notice of the approval of the
reorganization by the requisite vote or consent of limited partners was
mailed to the limited partner.

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(d) The dissenting limited partner, with the consent of the limited
partnership, withdraws such limited partner's demand for purchase of the
dissenting interest.

SEC. 15679.12. LITIGATION; SUSPENSION OF PROCEEDINGS PURSUANT TO
SEC.SEC. 15679.6 AND 15679.7

If litigation is instituted to test the sufficient or regularity of the
vote or consent of the limited partners in authorizing a reorganization, any
proceedings under Section 15679.6 and 15679.7 shall be suspended until final
determination of that litigation.

SEC. 15679.13. APPLICATION OF ARTICLE

(a) This article applies to the following:

(1) A domestic limited partnership formed on or after January 1, 1991.

(2) A foreign limited partnership if (A) the foreign limited
partnership was formed on or after January 1, 1991, or filed an application
to qualify to do business on or after January 1, 1991, and (B) limited
partners holding more than 50 percent of the voting power held by all
limited partners of the foreign limited partnership reside in this state.

(3) A limited partnership if the partnership agreement so provides or
if all general partners and a majority in interest of the limited partners
determine that this article shall apply.

(b) This article does not apply to limited partnership interests governed
by limited partnership agreements whose terms and provisions specifically set
forth the amount to be paid in respect of such interests in the event of a
reorganization of the limited partnership, or to limited partnerships with 35 or
fewer limited partners, unless the partnership agreement provides that this
article shall apply or unless all general partners and a majority in interest of
the limited partners agree that this article shall apply.

SEC. 15679.14. RIGHT TO ATTACK VALIDITY OF REORGANIZATION; ACTION TO SET ASIDE
OR RESCIND

(a) No limited partner of a limited partnership who has right under this
article to demand payment of cash for the interest owned by such limited partner
in a limited partnership shall have any right at law or in equity to attack the
validity of the reorganization, or to have the reorganization set aside or
rescinded, except in an action to test whether the vote or consent of limited
partners required to authorize or approve the reorganization has been obtained
in accordance with the procedures established therefor by the partnership
agreement of the limited partnership.

(b) If one of the parties to a reorganization is directly or indirectly
controlled by, or under common control with, another party to the
reorganization, subdivision (a) shall not apply to any limited partner of such
controlled party who has not demanded payment of cash for such limited partner's
interest pursuant to this article; but if such limited partner institutes any
action to attack the validity of the reorganization or to have the
reorganization set aside or rescinded, the limited partner shall not thereafter
have any right to demand payment of cash for such limited partner's interest
pursuant to this article.

(c) If one of the parties to a reorganization is directly or indirectly
controlled by, or under common control with, another party to the
reorganization, then, in any action to attack the validity of the reorganization
or to have the reorganization set aside or rescinded, (1) a party to a
reorganization which controls another party to a reorganization shall have the
burden of proving that the transaction is just and reasonable as to the limited
partners of the controlled party, and (2) a person who controls two or more
parties to a reorganization shall have the burden of proving that the
transaction is just and reasonable as to the limited partners of any party so
controlled.

(d) Subdivisions (b) and (c) shall not apply if a majority in interest of
the limited partners other than limited partners who are directly or indirectly
controlled by, or under common control with, another party to the reorganization
approve or consent to the reorganization.

5
<PAGE> 211

(e) This section shall not prevent a partner of a limited partnership that
is a party to a reorganization from bringing an action against a general partner
of the limited partnership, the limited partnership, or any person controlling a
general partner at law or in equity as to any matters (including, without
limitation, an action for breach of fiduciary obligation or fraud) other than to
attack the validity of the reorganization or to have the reorganization set
aside or rescinded.

6
<PAGE> 212

ANNEX F

LIST OF AFFILIATED COMPANIES

MWAC One, a California limited partnership
86 Warehouse II, a California limited partnership
86 Warehouse III, a California limited partnership
DFW Warehouse Four Limited Partnership, a California
limited partnership
Denver Warehouse Five, a California limited partnership
Fontana Warehouse Six, a California limited partnership
ATL Warehouse Seven, a California limited partnership
Richmond Warehouse Eight, a California limited
partnership
St. Louis Warehouse Nine, a California limited
partnership

<PAGE> 1

EXHIBIT 23.1

ACCOUNTANT'S CONSENT

The Board of Directors
The Home Depot, Inc.

We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.

KPMG PEAT MARWICK LLP

Atlanta, Georgia

February 13, 1997

<PAGE> 1

EXHIBIT 23.2

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Amendment No. 2 to the Registration Statement No.
333-20437 of The Home Depot, Inc. on Form S-4 of our report dated January 17,
1997 (relating to the combined financial statements of Maintenance
Warehouse/America Corp. and affiliates, as of and for the year ended December
31, 1995) appearing in the Prospectus, which is part of this Registration
Statement.

We also consent to the reference to us under the heading "Experts" in such
Prospectus.

DELOITTE & TOUCHE LLP

San Diego, California

February 13, 1997

<PAGE> 1

EXHIBIT 99.1

PROXY FOR HOLDERS OF COMMON STOCK OF MAINTENANCE WAREHOUSE/AMERICA CORP.

PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE

SPECIAL MEETING OF SHAREHOLDERS ON MARCH 14, 1997

The undersigned hereby appoints Ronald L. Neeley and Lucille A. Neeley and
each of them, proxies, with full power of substitution and resubstitution, for
and in the name of the undersigned, to vote all shares of Common Stock of
Maintenance Warehouse/America Corp. (the "Company") which the undersigned would
be entitled to vote if personally present at the Special Meeting of Shareholders
to be held on March 14, 1997, at 10:00 a.m., local time, at the offices of
Seltzer Caplan Wilkins & McMahon, 750 "B" Street, Suite 2100, San Diego,
California 92101, and at any adjournment thereof, upon the matters described in
the accompanying Notice of Special Meeting of Shareholders and Proxy
Statement/Prospectus, receipt of which is hereby acknowledged, and upon any
other business that may properly come before the meeting or any adjournment
thereof. Said proxies are directed to vote on the matters described in the
Notice of Special Meeting and Proxy Statement/Prospectus as follows, and
otherwise in their discretion upon such other business as may properly come
before the meeting or any adjournment thereof.

1. To approve the Merger Agreement dated as of January 16, 1997 among the
Company, The Home Depot, Inc., Home Depot Sub, Inc. and the shareholders of the
Company.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

2. In the discretion of the proxies, on any other matter that may properly come
before the meeting or any adjournment thereof.

(CONTINUED, AND TO BE SIGNED, ON THE OTHER SIDE)

THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS INDICATED, THE
PROXY WILL BE VOTED FOR THE PROPOSALS ON THE OTHER SIDE.

DATE: 1997
-------------------,

------------------------------

Please sign exactly as your
name or names appear hereon.
Where more than one owner is
shown above, each should sign.
When signing in a fiduciary or
representative capacity,
please give full title. If
this proxy is submitted by a
corporation, it should be
executed in the full corporate
name by a duly authorized
officer. If a partnership,
please sign in partnership
name by authorized person.

PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING. IF YOU ATTEND
THE SPECIAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE
PREVIOUSLY RETURNED YOUR PROXY.