As filed with the Securities and Exchange Commission on December 19, 1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
Lowe's Companies, Inc.
(Exact name of registrant as specified in its charter)
North Carolina 56-0578072
(State or other jurisdiction of (I.R.S. Employer
incorporation) Identification No.)
P. O. Box 1111
North Wilkesboro, North Carolina 28656
(910) 658-4000
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
William C. Warden, Jr.
Executive Vice President and General Counsel
Lowe's Companies, Inc.
P. O. Box 1111
North Wilkesboro, North Carolina 28656
(910) 658-4000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Lathan M. Ewers, Jr.
Randall S. Parks
Hunton & Williams
951 East Byrd Street
Richmond, Virginia 23219
(804) 788-8200
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of each class Amount to be maximum maximum Amount of
of securities to be registered(1) registered(2)(3) offering price per aggregate offering registration
unit(3)(4) price(2)(3)(4)(5) fee(6)(9)
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Debt Securities, Preferred Stock (par value
$5.00 per share), Depositary Shares,(7) Common
Stock (par value $.50 per share) Preferred Share
Purchase Rights(8) and Warrants . . . . . . . . --- --- $518,000,000 $156,969.70
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(1) This Registration Statement also covers such indeterminate amount of
securities as may be issued in exchange for, or upon conversion or
exercise of, as the case may be, the securities registered hereunder and
delayed delivery contracts that may be issued by the Registrant under
which the counterparty may be required to purchase Debt Securities,
Preferred Stock, Depositary Shares, Preferred Share Purchase Rights Common
Stock or Warrants. In addition, any of the securities registered hereunder
may be sold separately or as units with other securities registered
hereunder.
(2) If any Debt Securities are issued at an original issue discount, then such
greater principal amount as shall result in an aggregate initial offering
price of $518,000,000. In no event will the aggregate initial offering
price of Debt Securities, Preferred Stock, Depositary Shares, Preferred
Share Purchase Rights, Common Stock and Warrants issued under this
Registration Statement and not previously registered under the Securities
Act of 1933, as amended (the "Securities Act"), exceed $518,000,000.
(3) Not specified as to each class of securities to be registered pursuant to
General Instruction II.D of Form S-3 under the Securities Act.
(4) The proposed maximum offering price per unit will be determined from time
to time by the Registrant in connection with, and at the time of, the
issuance by the Registrant of the securities registered hereunder.
(5) No separate consideration will be received for any securities registered
hereunder that are issued in exchange for, or upon conversion or exercise
of, other securities registered hereunder.
(6) Calculated pursuant to Rule 457(o) of the Rules and Regulations of the
Securities and Exchange Commission (the "Commission") under the Securities
Act.
(7) Such indeterminate number of Depositary Shares to be evidenced by
Depositary Receipts issued pursuant to a Deposit Agreement. In the event
the Registrant elects to offer to the public fractional interests in
shares of the Preferred Stock registered hereunder, Depositary Receipts
will be distributed to those persons purchasing such fractional interests,
and such shares will be issued to the Depositary Bank under the Deposit
Agreement.
(8) The Rights to purchase Participating Cumulative Preferred Stock, Series A,
will be attached to and trade with shares of the Common Stock.
(9) Pursuant to Rule 429 under the Securities Act, this Registration Statement
also relates to $82,000,000 aggregate offering price of the Registrant's
Debt Securities, Preferred Stock, Depositary Shares, Common Stock,
Preferred Share Purchase Rights and Warrants registered under its
Registration Statement on Form S-3 (File No. 33-51865). Registrant
previously paid a registration fee of $83,348.49 in connection with such
Registration Statement, which originally covered $275,050,000 aggregate
offering price of securities.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT, THE COMBINED PROSPECTUS INCLUDED
IN THIS REGISTRATION STATEMENT ALSO RELATES TO DEBT SECURITIES, PREFERRED STOCK,
DEPOSITARY SHARES, COMMON STOCK, PREFERRED SHARE PURCHASE RIGHTS AND WARRANTS
COVERED BY THE REGISTRANT'S REGISTRATION STATEMENT ON FORM S-3 (FILE NO.
333-14257).
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PROSPECTUS SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED DECEMBER 19, 1997
$600,000,000
Lowe's Companies, Inc.
Securities
Lowe's Companies, Inc. ("Lowe's" or the "Company") intends to issue
from time to time in one or more series up to $600,000,000 aggregate offering
price of its (i) unsecured debt securities ("Debt Securities"), which may be
either senior debt securities ("Senior Debt Securities") or subordinated debt
securities ("Subordinated Debt Securities"), (ii) shares of preferred stock, par
value $5.00 per share ("Preferred Stock"), which may be issued in the form of
depositary shares evidenced by depositary receipts ("Depositary Shares"), (iii)
shares of common stock, par value $.50 per share ("Common Stock"), and (iv)
warrants to purchase shares of Common Stock or Preferred Stock ("Warrants") on
terms to be determined at the time of sale (the Debt Securities, Preferred
Stock, Depositary Shares, Common Stock and Warrants are referred to collectively
as the "Securities"). The Securities offered hereby (the "Offered Securities")
may be offered separately or as units with other Offered Securities, in separate
series in amounts, at prices and on terms to be determined at the time of sale
and to be set forth in a supplement to this Prospectus (a "Prospectus
Supplement").
The Senior Debt Securities will rank equally with all other
unsubordinated and unsecured indebtedness of the Company. The Subordinated Debt
Securities will be subordinated in right of payment to all existing and future
Senior Indebtedness, as defined in the Senior Indenture described herein. Both
the Senior Debt Securities and the Subordinated Debt Securities will be
effectively subordinated to any secured indebtedness of the Company and its
subsidiaries and to any unsecured, unsubordinated indebtedness and other
liabilities of the Company's subsidiaries. At October 31, 1997, the Company and
its subsidiaries had $67.4 million of secured indebtedness outstanding and the
Company had $603.9 million of unsecured and unsubordinated indebtedness
outstanding. At October 31, 1997, the Company's subsidiaries had $67.1 million
of secured unsubordinated indebtedness outstanding. The indentures governing
Debt Securities will not contain any restrictions on the ability of the Company
to incur additional unsecured indebtedness or any provisions that would afford
holders of the Debt Securities protection in the event of a significant
transaction involving the Company that might adversely affect the holders of the
Debt Securities. See "Description of Debt Securities."
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered, such as, where applicable, (i) in the case of
Debt Securities, the specific designation (including whether senior or
subordinated), aggregate principal amount, denomination, maturity, premium, if
any, priority, interest rate (which may be variable or fixed), time of payment
of any premium and any interest, terms for optional redemption or repayment or
for sinking fund payments, terms for conversion into or exchange for other
Offered Securities, and the initial public offering price; (ii) in the case of
Preferred Stock, the specific title and stated value, number of shares or
fractional interests therein, and the dividend, liquidation, redemption,
conversion, voting and other rights, the initial public offering price, and
whether interests in the Preferred Stock will be represented by Depositary
Shares; (iii) in the case of Common Stock, the initial offering price; (iv) in
the case of Warrants, the number and terms thereof, the description and the
number of securities issuable upon their exercise, the exercise price, the terms
of the offering and sale thereof and, where applicable, the duration and
detachability thereof, and (v) in the case of all Offered Securities, whether
such Offered Security will be offered separately or as a unit with other Offered
Securities, will be set forth in a Prospectus Supplement. The Prospectus
Supplement will also contain information, where applicable, about material
United States federal income tax considerations relating to, and any listing on
a securities exchange of, the Offered Securities covered by the Prospectus
Supplement.
The Offered Securities may be sold for public offering to underwriters
or dealers, which may be a group of underwriters represented by one or more
managing underwriters, or through such firms or other firms acting alone or
through dealers. The Offered Securities may also be sold directly by the Company
or through agents to investors. The names of any agents, dealers or managing
underwriters, and of any underwriters, involved in the sale of the Offered
Securities in respect of which this Prospectus is being delivered, the
applicable agent's commission, dealer's purchase price or underwriter's discount
and the net proceeds to the Company from such sale will be set forth in the
Prospectus Supplement. See "Plan of Distribution."
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(continued . . .)
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(cover page continued)
This Prospectus may not be used to consummate the sale of the
Securities unless accompanied by a Prospectus Supplement.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------------
The date of this Prospectus is , 1997.
RED HERRING
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INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAVE BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THAT A FINAL PROSPECTUS
SUPPLEMENT IS DELIVERED. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY NOR SHALL THERE BY ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OF SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and 7 World Trade Center, New York, New York 10045. Copies of
such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. Such reports, proxy statements and other information concerning the
Company may also be inspected at the offices of the New York Stock Exchange,
Inc. at 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission in Washington, D.C. a
Registration Statement on Form S-3 (herein, together with all amendments and
exhibits thereto, referred to as the "Registration Statement") under the
Securities Act with respect to the Securities to which this Prospectus relates.
As permitted by the Rules and Regulations of the Commission, this Prospectus
does not contain all of the information set forth in the Registration Statement,
including the exhibits thereto, which may be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 upon
payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission under
Section 13 of the Exchange Act are hereby incorporated by reference in this
Prospectus: (i) the Company's Annual Report on Form 10-K for the fiscal year
ended January 31, 1997; (ii) the Company's Quarterly Reports on Form 10-Q for
the fiscal quarters ended May 2, August 1 and October 31, 1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the termination of the offering of the Securities shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document that is
deemed to be incorporated by reference herein modifies or supersedes such
earlier statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus or the Prospectus Supplement.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the foregoing documents incorporated herein by reference
(other than exhibits to such documents). Written or telephone requests should be
directed to Lowe's Companies, Inc., P. O. Box 1111, North Wilkesboro, North
Carolina 28656, Attention: Robert A. Niblock, (910) 658-4561.
FORWARD-LOOKING STATEMENTS
This Prospectus, any Prospectus Supplement and the documents
incorporated by reference herein may contain forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act, including, without limitation, statements containing the words "believes,"
"anticipates," "expects" and words of similar import. Such forward-looking
statements relate to future events, the future financial performance of the
Company, and involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company
or industry to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements.
Prospective investors should specifically consider the various factors
identified in the Prospectus, any Prospectus Supplement, and the documents
incorporated by reference herein, which could cause actual results to differ.
The Company disclaims any obligation to update any such factors or to publicly
announce the result of any revisions to any of the forward-looking statements
contained or incorporated by reference herein to reflect future events or
developments.
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THE COMPANY
Lowe's Companies, Inc. is a specialty retailer of building materials
and related products for the do-it-yourself home improvement, home decor and
home construction, repair and remodeling markets. As of October 31, 1997, Lowe's
operated 425 retail stores with more than 33.7 million square feet of sales
floor located principally in the South Atlantic and South Central regions of the
United States. According to National Home Center News, an industry publication,
Lowe's is the second largest home center retailer in the United States.
Lowe's general offices are located in North Wilkesboro, North Carolina.
USE OF PROCEEDS
Except as may be otherwise set forth in the Prospectus Supplement
accompanying this Prospectus, the net proceeds from the sale of the Securities
will be used for general corporate purposes, which may include financing the
acquisition of land, buildings and equipment for new and existing stores, the
repayment of indebtedness and the repurchase of outstanding securities of the
Company, including Common Stock. Funds not required immediately for those
purposes may be invested temporarily in short-term marketable securities.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges is computed by dividing earnings
by fixed charges. For this purpose, "earnings" include pretax earnings plus
fixed charges. "Fixed charges" include interest expense, capitalized interest
and the portion of rental expense that is representative of the interest factor
in these rentals.
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Nine Months Ended Years Ended January 31,
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October 31, 1997 October 31, 1996 1997 1996 1995 1994 1993
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Historical ratio of
earnings to fixed
charges . . . . . . 6.85x 6.77x 6.26x 5.76x 6.82x 6.45x 5.73x
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DESCRIPTION OF DEBT SECURITIES
The following sets forth certain general terms and provisions of the
Debt Securities offered hereby. Further terms of the Offered Securities are set
forth in the Prospectus Supplement.
The Senior Debt Securities are to be issued under an Amended and
Restated Indenture, dated as of December 1, 1995, between the Company and The
First National Bank of Chicago, as Trustee (the "Senior Trustee"). The
Subordinated Debt Securities are to be issued under an Indenture between the
Company and The Bank of New York, as Trustee (the "Subordinated Trustee"). The
Senior Indenture and the Subordinated Indenture are sometimes referred to
individually as an "Indenture" and collectively as the "Indentures." The Senior
Trustee and the Subordinated Trustee are sometimes referred to individually as a
"Trustee" and collectively as the "Trustees." The Senior Indenture and the form
of the Subordinated Indenture are filed as exhibits to the Registration
Statement. The following summaries of material provisions of the Indentures do
not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all the provisions of the Indentures, including the
definitions therein of certain terms. Whenever particular Sections, Articles or
defined terms of the Indentures are referred to, it is intended that such
Sections, Articles or defined terms shall be incorporated herein by reference.
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General
The Debt Securities to be offered by this Prospectus are limited to
$600,000,000 in aggregate principal amount of unsecured debt obligations of the
Company. However, the Indentures do not limit the aggregate principal amount of
Debt Securities that may be issued thereunder and provide that Debt Securities
may be issued thereunder from time to time in one or more series. (Section 301).
The Company has outstanding under the Senior Indenture $100,000,000 aggregate
principal amount of 6 3/8% Senior Notes due December 15, 2005 (the "6 3/8%
Senior Notes") and $268 million of Medium Term Notes, Series B, at rates ranging
from 6.70% to 7.61% with final maturities ranging from September 1, 2007, to May
15, 2037. The Company has outstanding under a separate indenture an additional
$239 million of Medium Term Notes, Series A, at rates ranging from 6.50% to
8.20% and with final maturities from March 10, 1999, to January 11, 2023 (the
Series A and Series B Medium Term Notes are referred to collectively as the
"Medium Term Notes"). No Debt Securities are currently issued and outstanding
under the Subordinated Indenture. Neither the Indentures nor the Debt Securities
will limit or otherwise restrict the amount of Senior Indebtedness (as defined
below under "--Subordination of Debt Securities") that may be incurred by the
Company or any of its subsidiaries.
The Senior Debt Securities will be unsecured obligations of the Company
and will rank on a parity with the 6 3/8% Senior Notes, the Medium Term Notes
and all other unsecured and unsubordinated indebtedness of the Company. The
Senior Debt Securities will be effectively subordinated to any secured
indebtedness of the Company and its subsidiaries and to any unsecured,
unsubordinated indebtedness of the Company's subsidiaries. At October 31, 1997,
the Company and its subsidiaries had $67.4 million of secured indebtedness
outstanding and the Company had $603.9 million of Senior Indebtedness
outstanding. At October 31, 1997, the Company's subsidiaries had $67.1 million
of secured unsubordinated indebtedness outstanding. The Subordinated Debt
Securities will be unsecured obligations of the Company and will be subordinated
in right of payment to all Senior Indebtedness.
Reference is made to the applicable Prospectus Supplement for the
specific terms of the series of Debt Securities offered thereby including (1)
the title of the Debt Security; (2) the aggregate principal amount and
denominations; (3) the maturity or maturities; (4) the price to be received by
the Company from the sale of such Debt Securities; (5) the interest rate or
rates (or the method of calculation thereof) to be established for the Debt
Securities, which rate or rates may vary from time to time; (6) the date or
dates on which principal of the Debt Securities is payable; (7) the date or
dates from which interest on the Debt Securities shall accrue and the payment
and record date or dates for payments of interest or the methods by which any
such dates will be determined; (8) the place or places where principal of,
premium, if any, and interest, if any, on the Debt Securities is payable; (9)
the terms of any sinking fund and analogous provisions with respect to the Debt
Securities; (10) the respective redemption and repayment rights, if any, of the
Company and of the holders of the Debt Securities and the related redemption and
repayment prices and any limitations on such redemption or repayment rights;
(11) any provisions relating to the conversion or exchange of the Debt
Securities; (12) any addition to or change in the affirmative or negative
covenants, if any, to be imposed upon the Company relating to any of the Debt
Securities; (13) any trustee or fiscal or authenticating or payment agent,
issuing and paying agent, transfer agent or registrar or any other person or
entity to act in connection with such Debt Securities for or on behalf of the
holders thereof or the Company or an affiliate; (14) whether such Debt
Securities are to be issuable initially in temporary global form and whether any
such Debt Securities are to be issuable in permanent global form and, if so,
whether beneficial owners of interests in any such permanent global security may
exchange such interests for Debt Securities of like tenor of any authorized form
and denomination and the circumstances under which any such exchanges may occur;
(15) the listing of the Debt Securities on any securities exchange or inclusion
in any other market or quotation or trading system; and (16) any other specific
terms, conditions and provisions of the Debt Securities.
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The holders of Debt Securities of a specified series that are
convertible into Common Stock ("Convertible Debt Securities") will be entitled
at certain times specified in the Prospectus Supplement relating to such
Convertible Debt Securities, subject to prior redemption, repayment or
repurchase, to convert any Convertible Debt Securities of such series into
Common Stock, at the conversion price set forth in such Prospectus Supplement,
subject to adjustment and to such other terms as are set forth in such
Prospectus Supplement. (Senior Indenture, Article 14; Subordinated Indenture,
Article 15).
Unless otherwise provided in the Prospectus Supplement, principal of
and any premium and interest on the Debt Securities shall be payable, and the
transfer of the Debt Securities will be registrable, at the office of the
applicable Trustee, except that, at the option of the Company, interest may be
paid by mailing a check to the address of the person entitled thereto as it
appears on the register for the Debt Securities. (Sections 305 and 1002).
Unless otherwise indicated in the Prospectus Supplement, the Debt
Securities will be issued only in fully registered form without coupons and in
denominations of $1,000 or any integral multiple thereof. No service charge will
be made for any registration of transfer or exchange of the Debt Securities, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. (Sections 302 and 305).
Debt Securities may be issued as Original Issue Discount Securities (as
defined in the Indentures) to be sold at a substantial discount below their
principal amount. Special federal income tax and other considerations applicable
thereto will be described in the Prospectus Supplement relating thereto.
Certain Covenants Applicable to Senior Debt Securities
Unless otherwise indicated in the applicable Prospectus Supplement with
respect to a series of Senior Debt Securities, Senior Debt Securities will have
the benefit of the following covenants contained in the Senior Indenture. Unless
otherwise indicated in the applicable Prospectus Supplement with respect to
Subordinated Debt Securities of a series, the Subordinated Debt Securities will
not have the benefit of such covenants. Certain capitalized terms used in this
section are defined below under "Certain Definitions." Other capitalized terms
not otherwise defined herein have the meanings ascribed to them in the Senior
Indenture.
Restrictions on Debt. The Senior Indenture provides that the Company
will not itself, and will not permit any Subsidiary to, incur, issue, assume or
guarantee any Debt secured by a Mortgage on any Principal Property of the
Company or any Subsidiary, or any shares of Capital Stock or Debt of any
Subsidiary, without effectively providing that the Securities of each series of
Senior Debt Securities then Outstanding (together with, if the Company shall so
determine, any other Debt of the Company or such Subsidiary then existing or
thereafter created that is not subordinate to the Securities of each series then
Outstanding) will be secured equally and ratably with (or, at the option of the
Company, prior to) such secured Debt, so long as such secured Debt shall be so
secured, and will not permit any Subsidiary to incur, issue, assume or guarantee
any unsecured Debt or to issue any Preferred Stock, in each instance unless the
aggregate amount of all such secured Debt together with the aggregate
preferential amount to which such Preferred Stock would be entitled on any
involuntary distribution of assets and all Attributable Debt of the Company and
its Subsidiaries in respect of sale and leaseback transactions would not exceed
10% of Consolidated Net Tangible Assets. This restriction does not apply to, and
there shall be excluded in computing Debt for the purpose of such restriction:
(a) Debt secured by Mortgages on any property acquired, constructed or improved
by the Company or any Subsidiary after the first date on which a Senior Debt
Security is authenticated by the Trustee under the Senior Indenture, which
Mortgages are created or assumed contemporaneously with, or within 30 months
after, such acquisition, or completion of such construction or improvement, or
6
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within six months thereafter pursuant to a firm commitment for financing
arranged with a lender or investor within such 30-month period, to secure or
provide for the payment of all or any part of the purchase price of such
property or the cost of such construction or improvement incurred after the
first date on which a Senior Debt Security is authenticated by the Trustee under
the Senior Indenture or Mortgages on any property existing at the time of the
acquisition thereof if any such Mortgage does not apply to any property
previously owned by the Company or any Subsidiary other than, in the case of any
such construction or improvement, any previously unimproved real property on
which the property so constructed, or the improvement, is located; (b) Debt of
any corporation existing at the time such corporation is merged with or into the
Company or a Subsidiary; (c) Debt of any corporation existing at the time such
corporation becomes a Subsidiary; (d) Debt of a Subsidiary to the Company or to
another Subsidiary; (e) Debt secured by Mortgages securing obligations issued by
a state, territory or possession of the United States, or any political
subdivision of any of the foregoing, or the District of Columbia to finance the
acquisition of or construction on property, and on which the interest is not, in
the opinion of counsel, includable in gross income of the holder; and (f)
certain extensions, renewals or replacements of any Debt referred to in the
foregoing clauses (a) through (e) inclusive. This restriction does not apply to
any issuance of Preferred Stock by a Subsidiary to the Company or another
Subsidiary, provided that such Preferred Stock is thereafter not transferable to
any Person other than the Company or a Subsidiary. (Senior Indenture, Section
1008).
Restrictions on Sales and Leasebacks. The Senior Indenture provides
that the Company will not itself, and will not permit any Subsidiary to, after
the first date on which a Senior Debt Security is authenticated by the Trustee
under the Senior Indenture, enter into any sale and leaseback transaction
involving any Principal Property that has been or is to be sold or transferred,
unless, after giving effect thereto, the aggregate amount of all Attributable
Debt with respect to such transactions plus all Debt to which Section 1008 of
the Senior Indenture is applicable, would not exceed 10% of Consolidated Net
Tangible Assets. This restriction will not apply to, and there shall be excluded
in computing Attributable Debt for the purpose of such restriction, Attributable
Debt with respect to any sale and leaseback transaction if: (a) the lease in
such transaction is for a period (including renewal rights) not exceeding three
years; (b) the Company or a Subsidiary, within 180 days after such transaction,
applies an amount not less than the greater of the net proceeds of the sale of
the Principal Property leased pursuant to such arrangement or the fair market
value of the Principal Property so leased at the time of entering into such
arrangement (as determined by the Board of Directors) to, subject to certain
restrictions, the retirement of Funded Debt of the Company ranking on a parity
with or senior to the Senior Debt Securities or the retirement of Funded Debt of
a Subsidiary; (c) such transaction is entered into prior to, at the time of, or
within 30 months after the later of the acquisition of the Principal Property or
the completion of the construction thereon; (d) the lease in such transaction
secures or relates to obligations issued by a state, territory or possession or
the United States, or any political subdivision thereof, or the District of
Columbia, to finance the acquisition of or construction on property, and on
which the interest is not, in the opinion of counsel, includable in the gross
income of the holder; or (e) such transaction is entered into between the
Company and a Subsidiary or between Subsidiaries. (Senior Indenture, Section
1009).
Certain Definitions. The Senior Indenture defines the following terms
used in this section:
"Attributable Debt" means, as to any particular lease under which any
Person is at the time liable, at any date as of which the amount thereof is to
be determined, the total net amount of rent required to be paid by such Person
under such lease during the remaining term thereof (excluding any subsequent
renewal or other extension options held by the lessee), discounted from the
respective due dates thereof to such date at the rate of 10% per annum
compounded annually. The net amount of rent required to be paid under any such
lease for any such period shall be the amount of the rent payable by the lessee
with respect to such period, after excluding amounts required to be paid on
account of maintenance and repairs, insurance, taxes, assessments, water rates
and similar charges and contingent rents (such as those based on sales). In the
case of any lease that is terminable by the lessee upon the payment of a
penalty, such net amount shall also include the amount of such penalty, but no
rent shall be considered as required to be paid under such lease subsequent to
the first date upon which it may be so terminated.
"Capital Stock", as applied to the stock of any corporation, means the
capital stock of every class whether now or hereafter authorized, regardless of
whether such capital stock shall be limited to a fixed sum or percentage with
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respect to the rights of the holders thereof to participate in dividends and in
the distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of such corporation.
"Consolidated Net Tangible Assets" means the aggregate amount of assets
(less applicable reserves and other properly deductible items) after deducting
therefrom (i) all current liabilities and (ii) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles, all as set forth on the most recent balance sheet of the Company
and its consolidated subsidiaries and computed in accordance with generally
accepted accounting principles.
"Debt" means loans, notes, bonds, indentures or other similar evidences
of indebtedness for money borrowed.
"Funded Debt" means all indebtedness for money borrowed having a
maturity of more than 12 months from the date as of which the amount thereof is
to be determined or having a maturity of less than 12 months but by its terms
being renewable or extendible beyond 12 months from such date at the option of
the borrower.
"Preferred Stock" means any stock of any class of the Company that has
a preference over Common Stock in respect of dividends or of amounts payable in
the event of any voluntary or involuntary liquidation, dissolution or winding up
of the Company and that is not mandatorily redeemable or repayable, or
redeemable or repayable at the option of the Holder, otherwise than in shares of
Common Stock or Preferred Stock of another class or series or with the proceeds
of the sale of Common Stock or Preferred Stock.
"Principal Property" means any building, structure or other facility,
together with the land upon which it is erected and fixtures comprising a part
thereof, used primarily for selling home improvement products or the
manufacturing, warehousing or distributing of such products, owned or leased by
the Company or any Subsidiary of the Company. (Senior Indenture, Section 101).
Subordination of Subordinated Debt Securities
The obligations of the Company to make any payment on account of the
principal of and premium, if any, and interest on the Subordinated Debt
Securities will be subordinate and junior in right of payment, to the extent set
forth in the Subordinated Indenture, to all Senior Indebtedness of the Company.
(Subordinated Indenture, Article 14).
In the event that the Company shall default in the payment of any
principal of or any premium or interest on any Senior Indebtedness when the same
becomes due and payable, whether at maturity or at a date fixed for prepayment
or by declaration of acceleration or otherwise, then, unless and until such
default shall have been cured or waived or shall have ceased to exist, no direct
or indirect payment (in cash, property, securities by set-off or otherwise) will
be made or agreed to be made for principal of or any premium or interest on the
Subordinated Debt Securities, or in respect of any redemption, retirement,
purchase or other acquisition of any of the Subordinated Debt Securities.
(Subordinated Indenture, Section 1401). Senior Indebtedness is defined in the
Subordinated Indenture as (a) all indebtedness of the Company for money borrowed
or constituting reimbursement obligations with respect to letters of credit and
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interest or currency swap agreements (including indebtedness secured by a
mortgage, conditional sales contract or other lien that is (i) given to secure
all or a part of the purchase price of property subject thereto, whether given
to the vendor of such property or to another or (ii) existing on property at the
time of acquisition thereof); (b) all indebtedness of the Company evidenced by
notes, debentures, bonds or other securities sold by the Company for money; (c)
lease obligations (including but not limited to capitalized lease obligations);
(d) all indebtedness of others of the kinds described in either of the preceding
clauses (a) or (b) and all lease obligations and obligations of others of the
kind described in the preceding clause (c) assumed by or guaranteed in any
manner by the Company or in effect guaranteed by the Company through an
agreement to purchase, contingent or otherwise; and (e) all (whether initial or
seriatim) renewals, deferrals, increases, extensions or refundings of and
modifications to indebtedness of the kinds described in any of the preceding
clauses (a), (b) or (d) and all renewals or extensions of leases of the kinds
described in either of the preceding clauses (c) or (d); unless, in the case of
any particular indebtedness, lease, renewal, extension or refunding, the
instrument or lease creating or evidencing the same or the assumption or
guarantee of the same expressly provides that such indebtedness, lease, renewal,
extension, deferral, increase, modification or refunding is not superior in
right of payment to the Subordinated Debt Securities or is expressly
subordinated by its terms in right of payment to all other indebtedness of the
Company (including the Subordinated Debt Securities).
In the event of (1) any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment, composition or other similar
proceeding relating to the Company, its creditors or its property; (2) any
proceeding for the liquidation, dissolution or other winding up of the Company,
voluntary or involuntary, whether or not involving insolvency or bankruptcy
proceedings; (3) any assignment by the Company for the benefit of creditors; or
(4) any other marshalling of the assets of the Company, all Senior Indebtedness
(including any interest thereon accruing after the commencement of any such
proceedings) shall first be paid in full before any payment or distribution,
whether in cash, securities or other property, is made to any holder of any of
the Subordinated Debt Securities on account thereof. In such event, any payment
or distribution on account of the principal of or any premium or interest on the
Subordinated Debt Securities, whether in cash, securities or other property
(other than securities of the Company or any other corporation provided for by a
plan of reorganization or readjustment the payment of which is subordinate, at
least to the extent provided in the subordination provisions with respect to the
Subordinated Debt Securities, to the payment of all Senior Indebtedness at the
time outstanding, and to any securities issued in respect thereof under any such
plan of reorganization or readjustment), which would otherwise (but for the
subordination provisions) be payable or deliverable in respect of the
Subordinated Debt Securities, shall be paid or delivered directly to the holders
of Senior Indebtedness in accordance with the priorities then existing among
such holders until all Senior Indebtedness (including any interest thereon
accruing after the commencement of any such proceedings) has been paid in full.
In the event of any such proceeding, after payment in full of all sums owing
with respect to Senior Indebtedness, the Holder or Holders of Subordinated Debt
Securities, together with the holders of any obligations of the Company ranking
on a parity with the Subordinated Debt Securities, shall be entitled to be paid
from the remaining assets of the Company the amounts at the time due and owing
on account of unpaid principal of (and premium, if any) and interest on the
Subordinated Debt Securities and such other obligations before any payment or
other distribution, whether in cash, property or otherwise, shall be made on
account of any capital stock or obligations of the Company ranking junior to the
Subordinated Debt Securities and such other obligations. If any payment or
distribution on account of the principal of or any premium or interest on the
Subordinated Debt Securities of any character, whether in cash, securities or
other property (other than securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in the subordination provisions
with respect to the Subordinated Debt Securities, to the payment of all Senior
Indebtedness at the time outstanding and to any securities issued in respect
thereof under any such plan of reorganization or readjustment), or any security
shall be received by the Trustee or any Holder of any Subordinated Debt
Securities in contravention of any of the terms of the Indenture and before all
the Senior Indebtedness shall have been paid in full, such payment or
distribution or security will be received in trust for the benefit of, and will
be paid over or delivered and transferred to, the holders of the Senior
Indebtedness at the time outstanding in accordance with the priorities then
existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay all such Senior
Indebtedness in full. (Subordinated Indenture, Section 1401).
By reason of such subordination, in the event of the insolvency of the
Company, holders of Senior Indebtedness may receive more, ratably, and any
Holder or Holders of the Subordinated Debt Securities having a claim pursuant to
such Subordinated Debt Securities may receive less, ratably, than the other
creditors of the Company. Such subordination will not prevent the occurrence of
an Event of Default in respect of the Subordinated Debt Securities.
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Effect of Corporate Structure
The Debt Securities are obligations exclusively of the Company. Because
the operations of the Company are currently conducted through subsidiaries, the
cash flow and the consequent ability to service debt of the Company, including
the Debt Securities, are dependent, in part, upon the earnings of its
subsidiaries and the distribution of those earnings to the Company or upon loans
or other payments of funds by those subsidiaries to the Company. The
subsidiaries are separate and distinct legal entities and have no obligation,
contingent or otherwise, to pay any amounts due pursuant to the Debt Securities
or to make any funds available therefor, whether by dividends, loans or other
payments. In addition, the payment of dividends and the making of loans and
advances to the Company by its subsidiaries may be subject to statutory or
contractual restrictions, are contingent upon the earnings of those subsidiaries
and are subject to various business considerations.
Although the Senior Indenture limits the incurrence of such
indebtedness, as described above under "--Certain Covenants Applicable to Senior
Debt Securities," the Debt Securities will be effectively subordinated to all
indebtedness and other liabilities, including current liabilities and
commitments under leases, if any, of the Company's subsidiaries. Any right of
the Company to receive assets of any of its subsidiaries upon liquidation or
reorganization of the subsidiary (and the consequent right of the holders of the
Debt Securities to participate in those assets) will be effectively subordinated
to the claims of that subsidiary's creditors (including trade creditors), except
to the extent that the Company is itself recognized as a creditor of such
subsidiary, in which case the claims of the Company would still be subordinated
to any security interests in the assets of such subsidiary and any indebtedness
of such subsidiary senior to that held by the Company.
No Restriction on Sale or Issuance of Stock of Subsidiaries
The Indentures contain no covenant that the Company will not sell,
transfer or otherwise dispose of any shares of, or securities convertible into,
or options, warrants or rights to subscribe for or purchase shares of, voting
stock of any of its subsidiaries, nor does it prohibit any subsidiary from
issuing any shares of, securities convertible into, or options, warrants or
rights to subscribe for or purchase shares of, voting stock of such subsidiary.
Consolidation, Merger and Sale of Assets
The Company, without the consent of the Holder or Holders of any of the
outstanding Debt Securities, may consolidate or merge with or into, or convey,
transfer or lease its properties and assets substantially as an entirety, to any
corporation organized under the laws of any domestic jurisdiction, provided that
the successor corporation assumes the Company's obligations on the Debt
Securities and under the Indentures and that after giving effect to the
transaction no Event of Default, and no event which, after notice or lapse of
time would become an Event of Default, has occurred and is continuing, and that
certain other conditions are met. (Section 801).
Events of Default
Events of Default with respect to Debt Securities of any series issued
thereunder are defined in the Indentures as being: (a) default for thirty days
in payment when due of any interest on any Debt Security of that series or any
additional amount payable with respect to Debt Securities of such series as
specified in the applicable Prospectus Supplement; (b) default in payment when
due of principal, premium, if any, or on redemption or otherwise, or in the
making of a mandatory sinking fund payment of any Debt Securities of that
series; (c) default for sixty days after notice to the Company by the Trustee
for such series, or by the holders of 25% in aggregate principal amount of the
Debt Securities of such series then outstanding, in the performance of any other
agreement in the Debt Securities of that series, in the Indentures or in any
supplemental indenture or board resolution referred to therein under which the
Debt Securities of that series may have been issued; (d) default in the payment
of principal when due or resulting in acceleration of other indebtedness of the
Company for borrowed money where the aggregate principal amount with respect to
which such default or acceleration has occurred exceeds $10 million and such
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acceleration is not rescinded or annulled within ten days after the written
notice thereof to the Company by the trustee or to the Company and the Trustee
by the holders of 25% in aggregate principal amount of the Debt Securities of
such series then outstanding, provided that such Event of Default will be cured
or waived if the default that resulted in the acceleration of such other
indebtedness is cured or waived or such indebtedness is discharged; and (e)
certain events of bankruptcy, insolvency or reorganization of the Company.
(Section 501). Events of Default with respect to a specified series of Debt
Securities may be added to the Indenture under which the series is issued and,
if so added, will be described in the applicable Prospectus Supplement. (Section
301). No Event of Default with respect to a particular series of Debt Securities
issued under the Indentures necessarily constitutes an Event of Default with
respect to any other series of Debt Securities issued thereunder.
The Indentures provide that the Trustee for any series of Debt
Securities shall, within ninety days after the occurrence of a Default with
respect to Debt Securities of that series, give to the holder of the Debt
Securities of that series notice of all uncured Defaults known to it, provided,
that, except in the case of default in payment on the Debt Securities of that
series, the Trustee may withhold the notice if and so long as it in good faith
determines that withholding such notice is in the interest of the holders of the
Debt Securities of that series, provided, further, that no notice of a default
made in the performance of any covenant or a breach of any warranty contained in
the Indentures shall be given until at least 60 days after the occurrence
thereof. "Default" means any event which is, or, after notice or passage of time
or both, would be, an Event of Default. (Section 602).
If an Event of Default with respect to Debt Securities of any series at
the time outstanding occurs and is continuing, either the Trustee or the Holder
or Holders of at least 25% in aggregate principal amount of the outstanding Debt
Securities of that series may declare the principal amount (or, if the Debt
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms of that series) of all
the Debt Securities of that series to be due and payable immediately. At any
time after a declaration of acceleration with respect to Debt Securities of any
series has been made, but before a judgment or decree based on acceleration has
been obtained, the Holder or Holders of a majority in aggregate principal amount
of outstanding Debt Securities of that series may, under certain circumstances,
rescind and annul such acceleration. (Section 502).
The Indentures provide that, subject to the duty of the Trustees in the
case of an Event of Default to act with the required standard of care, the
Trustees will be under no obligation to exercise any of these rights or powers
under the Indentures at the request or direction of any of the Holders, unless
such Holder or Holders shall have offered to the Trustees reasonable indemnity.
(Sections 601 and 603). Subject to such provisions for the indemnification of
the Trustees, the Holder or Holders of a majority in aggregate principal amount
of the outstanding Debt Securities of each series will have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustees, or exercising any trust or power conferred on the Trustees with
respect to the Debt Securities of that series. (Section 512).
The Company is required to furnish to the Trustees annually a statement
as to the performance by the Company of certain of its obligations under the
Indentures and as to any default in such performance. (Section 1005).
Global Securities
The Debt Securities of a series may be issued in the form of one or
more fully registered securities in global form (each a "Global Security") that
will be deposited with, or on behalf of, a depositary (the "Depositary Bank")
identified in the Prospectus Supplement relating to such series and will be
registered in the name of the Depositary Bank or its nominee. In such case, one
or more Global Securities will be issued in a denomination or aggregate
denominations equal to the aggregate principal amount of outstanding Debt
Securities of the series represented by such Global Security or Securities.
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Unless and until any such Global Security is exchanged in whole or in part for
Debt Securities in definitive certificated form, such Global Security may not be
transferred except as a whole by the Depositary Bank for such Global Security to
a nominee of such Depositary Bank or by a nominee of such Depositary Bank to
such Depositary Bank or another nominee of such Depositary Bank or by such
Depositary Bank or any such nominee to a successor of such Depositary Bank or a
nominee of such successor and except as described in the applicable Prospectus
Supplement. (Section 303).
The specific terms of the depositary arrangement with respect to a
series of Debt Securities to be represented by a Global Security will be
described in the Prospectus Supplement relating to such series. The Company
anticipates that the following provisions will apply to all depositary
arrangements.
Upon the issuance of any Global Security, and the deposit of such
Global Security with or on behalf of the Depositary Bank for such Global
Security, the Depositary Bank will credit, on its book-entry registration and
transfer system, the respective principal amounts of the Debt Securities
represented by such Global Security to the accounts of institutions
("participants") that have accounts with such Depositary Bank or its nominee.
The accounts to be credited will be designated by the underwriters or agents
engaging in the distribution or placement of such Debt Securities or by the
Company, if such Debt Securities are offered and sold directly by the Company.
Ownership of beneficial interests in such Global Security will be limited to
participants or persons that may hold interests through participants. Ownership
of beneficial interests by participants in such Global Security will be shown by
book-keeping entries on, and the transfer of that ownership interest will be
effected only through book-keeping entries to, records maintained by the
Depositary Bank or its nominee for such Global Security. Ownership of beneficial
interests in such Global Security by persons that hold through participants will
be shown by book-keeping entries on, and the transfer of that ownership interest
among or through such participants will be effected only through book-keeping
entries to, records maintained by such participants. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive certificated form rather than
book-entry form. Such laws may impair the ability to own, transfer or pledge
beneficial interests in any Global Security.
So long as the Depositary Bank for a Global Security or its nominee is
the registered owner of such Global Security, such Depositary Bank or such
nominee, as the case may be, will be considered the sole owner or holder of the
Debt Securities represented by such Global Security for all purposes under the
Indenture. Except as set forth below or otherwise specified in the applicable
Prospectus Supplement, owners of beneficial interests in a Global Security will
not be entitled to have Debt Securities of the series represented by such Global
Security registered in their names, will not receive or be entitled to receive
physical delivery of Debt Securities of such series in definitive certificated
form and will not be considered the holders thereof for any purposes under the
Indenture. Accordingly, each person owning a beneficial interest in such Global
Security must rely on the procedures of the Depositary Bank and, if such person
is not a participant, on the procedures of the participant through which such
person directly or indirectly owns its interest, to exercise any rights of a
holder under the Indenture. The Indenture provides that the Depositary Bank may
grant proxies and otherwise authorize participants to give or take any request,
demand, authorization, direction, notice, consent, waiver or other action which
a holder is entitled to give or take under the Indenture. (Section 104). The
Company understands that under existing industry practices, if the Company
requests any action of holders or any owner of a beneficial interest in such
Global Security desires to give any notice or take any action that a holder is
entitled to give or take under the Indenture, the Depositary Bank for such
Global Security would authorize the participants holding the relevant beneficial
interest to give such notice or take such action, and such participants would
authorize beneficial owners owning through such participants to give such notice
or take such action or would otherwise act upon the instructions of beneficial
owners owning through them.
Principal and any premium and interest payments on Debt Securities
represented by a Global Security registered in the name of a Depositary Bank or
its nominee will be made to such Depositary Bank or its nominee, as the case may
be, as the registered owner of such Global Security. None of the Company, the
Trustee or any paying agent for such Debt Securities will have any
responsibility or liability for any aspect of the records relating to or
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payments made on account of beneficial ownership interests in any Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests. (Section 308).
The Company expects that the Depositary Bank for any series of Debt
Securities represented by a Global Security, upon receipt of any payment of
principal, premium or interest, will credit immediately participants' accounts
with payments in amounts proportionate to their respective beneficial interests
in the principal amount of such Global Security as shown on the records of such
Depositary Bank. The Company also expects that payments by participants to
owners of beneficial interests in such Global Security or Securities held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers registered in "street name," and will be the responsibility of such
participants.
If the Depositary Bank for any series of Debt Securities represented by
a Global Security is at any time unwilling or unable to continue as Depositary
Bank and a successor Depositary Bank is not appointed by the Company within 90
days, the Company will issue such Debt Securities in definitive certificated
form in exchange for such Global Security. In addition, the Company may at any
time and in its sole discretion determine not to have the Debt Securities of a
series represented by one or more Global Securities and, in such event, will
issue Debt Securities of such series in definitive certificated form in exchange
for the Global Security representing such series of Debt Securities. (Section
305).
Further, an owner of a beneficial interest in a Global Security
representing Debt Securities of a series may, on terms acceptable to the Company
and the Depositary Bank for such Global Security, receive Debt Securities of
such series in definitive certificated form, if the Company so specifies with
respect to the Debt Securities of such series. In any such instance, an owner of
a beneficial interest in a Global Security will be entitled to have Debt
Securities of the series represented by such Global Security equal in principal
amount to such beneficial interest registered in its name and will be entitled
to physical delivery of such Debt Securities in definitive certificated form.
Debt Securities of such series so issued in definitive certificated form will,
except as set forth in the applicable Prospectus Supplement, be issued in
denominations of $1,000 and integral multiples thereof and will be issued in
registered form. (Section 305).
Modification and Waiver
Modifications and amendments of the Indentures may be made by the
Company and the applicable Trustee with the consent of the Holder or Holders of
a majority in principal amount of the Debt Securities of all affected series;
provided, however, that no such modification or amendment may, without the
consent of the Holder or Holders of all of the outstanding Debt Securities
affected thereby, (i) change the stated maturity date of the principal of, or
any installment of principal of, or premium, if any, or interest, if any, on,
any Debt Security; (ii) reduce the principal amount of, or premium, if any, or
interest, if any, on, any Debt Security, change the method of calculation
thereon or reduce the amount payable on redemption thereof; (iii) reduce the
amount of principal of a Debt Security payable upon acceleration of the maturity
thereof; (iv) change the place or currency of payment of principal of, or
premium, if any, or interest, if any, on, any Debt Security; (v) impair the
rights of any holder of any Debt Securities to conversion rights; (vi) impair
the right to institute suit for the enforcement of any payment on or with
respect to any Debt Security; or (vii) reduce the percentage in principal amount
of the Debt Security, the consent of whose Holder or Holders is required for
modification or amendment of the Indentures or for waiver of compliance with
certain provisions of the Indentures or for waiver of certain defaults.
(Sections 901 and 902).
The Holder or Holders of a majority in principal amount of the Debt
Securities of all affected series may, on behalf of the Holder or Holders of
such Debt Securities, waive compliance by the Company with certain restrictive
provisions of the Indentures. The Holder or Holders of a majority in principal
amount of the Debt Securities of all affected series also may, on behalf of the
Holder or Holders of all such Debt Securities, waive any past default under the
Indentures with respect to such Debt Securities, except a default in the payment
of the principal, or premium, if any, or interest on, any Debt Security or in
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respect of a provision that under the Indentures cannot be modified or amended
without the consent of the Holder or Holders of all of the outstanding Debt
Securities affected thereby. (Section 513).
Regarding the Trustees
The First National Bank of Chicago is the Trustee under the Senior
Indenture. Notice to the Senior Trustee Bank should be directed to its Corporate
Trust Office, One First National Plaza, Suite 0126, Chicago, Illinois
60670-0126, Attention: Corporate Trust Administrator.
The Bank of New York is the Trustee under the Subordinated Indenture.
Notice to the Subordinated Trustee should be directed to its Corporate Trust
Office, located at 101 Barclay Street, New York, New York 10007.
DESCRIPTION OF PREFERRED STOCK
General
The following summary does not purport to be complete and is subject in
all respects to applicable North Carolina law and the Company's Restated and
Amended Charter and Bylaws.
The Company is authorized by its Restated and Amended Charter to issue
5,000,000 shares of Preferred Stock. The Board of Directors is authorized to
designate with respect to each new series of Preferred Stock the number of
shares in each series, the dividend rates and dates of payment, voluntary and
involuntary liquidation preferences, redemption prices, whether or not dividends
shall be cumulative and, if cumulative, the date or dates from which the same
shall be cumulative, the sinking fund provisions, if any, for redemption or
purchase of shares, the rights, if any, and the terms and conditions on which
shares can be converted into or exchanged for, or the rights to purchase, shares
of any other class or series, and the voting rights, if any. Any Preferred Stock
issued will rank prior to the Common Stock as to dividends and as to
distributions in the event of liquidation, dissolution or winding up of the
Company. The ability of the Board of Directors to issue Preferred Stock, while
providing flexibility in connection with possible acquisitions and other
corporate purposes, could, among other things, adversely affect the voting
powers of holders of Common Stock and, under certain circumstances, may
discourage an attempt by others to gain control of the Company. The Company may
amend from time to time its Restated and Amended Charter to increase the number
of authorized shares of Preferred Stock. Any such amendment would require the
approval of the holders of a majority of the outstanding shares of Common Stock
and the approval of the holders of a majority of the outstanding shares of all
series of Preferred Stock voting together as a single class without regard to
series. As of the date of this Prospectus, the Company had no shares of
Preferred Stock outstanding.
The Prospectus Supplement relating to each series of the Preferred
Stock will describe the following terms thereof:
(a) title and stated value of such series;
(b) the number of shares in such series;
(c) the dividend payment dates and the dividend rate or method
of determination or calculation of such terms applicable to
the series;
(d) applicable redemption provisions, if any;
(e) sinking fund or purchase fund provisions, if any;
(f) the fixed liquidation price and fixed liquidation premium,
if any, applicable to the series; (g) the rate or basis of
exchange or conversion into other securities or method of
determination thereof applicable to the series, if any;
(h) the conversion rights, if any;
(i) applicable voting rights; and
(j) any other terms applicable thereto.
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Redemption
A series of Preferred Stock may be redeemable, in whole or in part, at
the option of the Company, and may be subject to mandatory redemption pursuant
to a sinking fund, in each case upon terms, at the times and at the redemption
prices set forth in the Prospectus Supplement relating to such series.
The Prospectus Supplement relating to a series of Preferred Stock that
is subject to mandatory redemption shall specify the number of shares of such
series of Preferred Stock that shall be redeemed by the Company in each year
commencing after a date to be specified, at a redemption price per share to be
specified, together with an amount equal to any accrued and unpaid dividends
thereon to the date of redemption.
If fewer than all the outstanding shares of any series of Preferred
Stock are to be redeemed, whether by mandatory or optional redemption, the
selection of the shares to be redeemed shall be determined by lot or pro rata as
may be determined by the Board of Directors or a duly authorized committee
thereof, or by any other method which may be determined by the Board of
Directors or such committee to be equitable. From and after the date of
redemption (unless default shall be made by the Company in providing for the
payment of the redemption price), dividends shall cease to accrue on the shares
of Preferred Stock called for redemption and all rights of the holders thereof
(except the right to receive the redemption price) shall cease.
Conversion Rights; Preemptive Rights
The Prospectus Supplement for any series of Preferred Stock will state
the terms, if any, on which shares of that series are convertible into shares of
Common Stock or another series of preferred stock of the Company. The Preferred
Stock will have no preemptive rights.
Dividend Rights
The holders of the Preferred Stock of each series shall be entitled to
receive, if and when declared payable by the Board of Directors, out of assets
available therefor, dividends at, but not exceeding, the dividend rate for such
series (which may be fixed or variable), payable at such intervals and on such
dates as are provided in the resolution of the Board of Directors creating such
series. If such intervals and dividend payment dates shall vary from time to
time for such series, such resolution shall set forth the method by which such
intervals and such dates shall be determined. Such dividends on Preferred Stock
shall be paid before any dividends, other than a dividend payable in Common
Stock of the Company, may be paid upon or set apart for any shares of capital
stock ranking junior to the Preferred Stock in respect of dividends or
liquidation rights (referred to in this Prospectus as "stock ranking junior to
the Preferred Stock").
Voting Rights
Except as indicated below or in the Prospectus Supplement relating to a
particular series of Preferred Stock, or except as expressly required by the
laws of the State of North Carolina or other applicable law, the holders of the
Preferred Stock will not be entitled to vote. Except as indicated in the
Prospectus Supplement relating to a particular series of Preferred Stock, each
such share will be entitled to one vote on matters on which holders of such
series of the Preferred Stock are entitled to vote. However, as more fully
described below under "Depositary Shares," if the Company elects to issue
Depositary Shares representing a fraction of a share of a series of Preferred
Stock, each such Depositary Share will, in effect, be entitled to such fraction
of a vote, rather than a full vote. Because each full share of any series of
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Preferred Stock shall be entitled to one vote, the voting power of such series,
on matters on which holders of such series and holders of other series of
preferred stock are entitled to vote as a single class, shall depend on the
number of shares in such series, not the aggregate liquidation preference or
initial offering price of the shares of such series of Preferred Stock.
In addition to the foregoing voting rights, under the North Carolina
Business Corporation Act as now in effect, the holders of Preferred Stock will
have the voting rights set forth above under "General" with respect to
amendments to the Company's Restated and Amended Charter that would increase the
number of authorized shares of Preferred Stock of the Company.
Liquidation Rights
In the event of any liquidation, dissolution or winding up of the
Company, the holders of Preferred Stock shall be entitled to receive, for each
share thereof, the fixed liquidation or stated value for the respective series
together in all cases with all dividends accrued or in arrears thereon, before
any distribution of the assets shall be made to the holders of any stock ranking
junior to the Preferred Stock. If the assets distributable among the holders of
Preferred Stock should be insufficient to permit the payment of the full
preferential amounts fixed for all series, then the distribution shall be made
among the holders of each series ratably in proportion to the full preferential
amounts to which they are respectively entitled.
Depositary Shares
General. The Company may, at its option, elect to offer fractional
shares of Preferred Stock, rather than full shares of Preferred Stock. In the
event such option is exercised, the Company will issue to the public receipts
for Depositary Shares, each of which will represent a fraction (to be set forth
in the Prospectus Supplement relating to a particular series of Preferred Stock)
of a share of a particular series of Preferred Stock as described below.
The shares of any series of Preferred Stock represented by Depositary
Shares will be deposited under a Deposit Agreement (the "Deposit Agreement")
between the Company and a bank or trust company selected by the Company having
its principal office in the United States and having a combined capital and
surplus of at least $50,000,000 (the "Depositary Bank"). Subject to the terms of
the Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable fraction of a share of Preferred Stock represented
by such Depositary Share, to all the rights and preferences of the Preferred
Stock represented thereby (including dividend, voting, redemption and
liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts
will be distributed to those persons purchasing the fractional shares of
Preferred Stock in accordance with the terms of the offering. If Depositary
Shares are issued, copies of the forms of Deposit Agreement and Depositary
Receipt will be incorporated by reference in the Registration Statement of which
this Prospectus is a part, and the following summary is qualified in its
entirety by reference to such documents.
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary Bank may, upon the written order of the Company, issue temporary
Depositary Receipts substantially identical to (and entitling the holders
thereof to all the rights pertaining to) the definitive Depositary Receipts but
not in definitive form. Definitive Depositary Receipts will be prepared
thereafter without unreasonable delay, and temporary Depositary Receipts will be
exchangeable for definitive Depositary Receipts at the Company's expense.
Withdrawal of Preferred Stock. Upon surrender of the Depositary
Receipts to the Depositary Bank, the owner of the Depositary Shares evidenced
thereby is entitled to delivery at such office of the number of whole shares of
Preferred Stock represented by such Depositary Shares. If the Depositary
Receipts delivered by the holder evidence a number of Depositary Shares in
excess of the number of Depositary Shares representing the number of whole
shares of Preferred Stock to be withdrawn, the Depositary Bank will deliver to
such holder at the same time a new Depositary Receipt evidencing such excess
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number of Depositary Shares. Owners of Depositary Shares will be entitled to
receive only whole shares of Preferred Stock. In no event will fractional shares
of Preferred Stock (or cash in lieu thereof) be distributed by the Depositary
Bank. Consequently, a holder of a Depositary Receipt representing a fractional
share of Preferred Stock would be able to liquidate his position only by sale to
a third party (in a public trading market transaction or otherwise), unless the
Depositary Shares are redeemed by the Company or converted by the holder.
Dividends and Other Distributions. The Depositary Bank will distribute
all cash dividends or other cash distributions received in respect of the
Preferred Stock to the record holders of Depositary Shares relating to such
Preferred Stock in proportion to the number of such Depositary Shares owned by
such holders.
In the event of a distribution other than in cash, the Depositary Bank
will distribute property received by it to the record holders of Depositary
Shares entitled thereto, unless the Depositary Bank determines that it is not
feasible to make such distribution, in which case the Depositary Bank may, with
the approval of the Company, sell such property and distribute the net proceeds
from such sale to such holders.
Redemption of Depositary Shares. If a series of Preferred Stock
represented by Depositary Shares is subject to redemption, the Depositary Shares
will be redeemed from the proceeds received by the Depositary Bank resulting
from the redemption, in whole or in part, of such series of Preferred Stock held
by the Depositary Bank. The redemption price per Depositary Share will be equal
to the applicable fraction of the redemption price per share payable with
respect to such series of Preferred Stock. Whenever the Company redeems shares
of Preferred Stock held by the Depositary Bank, the Depositary Bank will redeem
as of the same redemption date the number of Depositary Shares representing the
shares of Preferred Stock so redeemed. If fewer than all the Depositary Shares
are to be redeemed, the Depositary Shares to be redeemed will be selected by lot
or pro rata as may be determined by the Depositary Bank.
Voting the Preferred Stock. Upon receipt of notice of any meeting at
which the holders of Preferred Stock are entitled to vote, the Depositary Bank
will mail the information contained in such notice of meeting to the record
holders of the Depositary Shares relating to such Preferred Stock. Each record
holder of such Depositary Shares on the record date (which will be the same date
as the record date for the Preferred Stock) will be entitled to instruct the
Depositary Bank as to the exercise of the voting rights pertaining to the amount
of Preferred Stock represented by such holder's Depositary Shares. The
Depositary Bank will endeavor, insofar as practicable, to vote the amount of
Preferred Stock represented by such Depositary Shares in accordance with such
instructions, and the Company will agree to take all action that may be deemed
necessary by the Depositary Bank in order to enable the Depositary Bank to do
so. The Depositary Bank may abstain from voting shares of Preferred Stock to the
extent it does not receive specific instructions from the holders of Depositary
Shares representing such Preferred Stock.
Amendment and Termination of the Depositary Agreement. The form of
Depositary Receipt evidencing the Depositary Shares and any provision of the
Deposit Agreement may at any time be amended by agreement between the Company
and the Depositary Bank. However, any amendment that materially and adversely
alters the rights of the holders of Depositary Shares will not be effective
unless such amendment has been approved by the holders of at least a majority of
the Depositary Shares then outstanding. The Deposit Agreement may be terminated
by the Company or the Depositary Bank only if (i) all outstanding Depositary
Shares have been redeemed or (ii) there has been a final distribution in respect
of the Preferred Stock in connection with any liquidation, dissolution or
winding up of the Company and such distribution has been distributed to the
holders of Depositary Receipts.
Charges of Depositary Bank. The Company will pay all transfer and other
taxes and governmental charges arising solely from the existence of the
depositary arrangements. The Company will pay charges of the Depositary Bank in
connection with the initial deposit of the Preferred Stock and any redemption of
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the Preferred Stock. Holders of Depositary Receipts will pay other transfer and
other taxes and governmental charges and such other charges, including any fee
for the withdrawal of shares of Preferred Stock upon surrender of Depositary
Receipts, as are expressly provided in the Deposit Agreement to be for their
accounts.
Miscellaneous. The Depositary Bank will forward to holders of
Depository Receipts all reports and communications from the Company that are
delivered to the Depositary Bank and that the Company is required to furnish to
the holders of Preferred Stock.
Neither the Depositary Bank nor the Company will be liable if it is
prevented or delayed by law or any circumstance beyond its control in performing
its obligations under the Deposit Agreement. The obligations of the Company and
the Depositary Bank under the Deposit Agreement will be limited to performance
in good faith of their duties thereunder and they will not be obligated to
prosecute or defend any legal proceeding in respect of any Depositary Shares or
Preferred Stock unless satisfactory indemnity is furnished. They may rely upon
written advice of counsel or accountants, or upon information provided by
persons presenting Preferred Stock for deposit, holders of Depositary Receipts
or other persons believed to be competent and on documents believed to be
genuine.
Resignation and Removal of Depositary Bank. The Depositary Bank may
resign at any time by delivering to the Company notice of its election to do so,
and the Company may at any time remove the Depositary Bank, any such resignation
or removal to take effect upon the appointment of a successor Depositary Bank
and its acceptance of such appointment. Such successor Depositary Bank must be
appointed within 60 days after delivery of the notice of resignation or removal
and must be a bank or trust company having its principal office in the United
States and having a combined capital and surplus of at least $50,000,000.
Miscellaneous
The Preferred Stock, when issued and full consideration is received for
such Preferred Stock, will be fully paid and nonassessable.
DESCRIPTION OF COMMON STOCK
General
The following summary does not purport to be complete and is subject in
all respects to applicable North Carolina law, the Company's Restated and
Amended Charter and Bylaws, and the Rights Agreement, dated September 9, 1988,
between the Company and Wachovia Bank of North Carolina, N.A., as Rights Agent.
The Company is authorized by its Restated and Amended Charter to issue
700,000,000 shares of Common Stock and had 174,901,889 shares of Common Stock
outstanding at October 31, 1997. Each share of Common Stock is entitled to one
vote on all matters submitted to a vote of shareholders. Holders of Common Stock
are entitled to receive dividends when and as declared by the Board of Directors
of the Company out of funds legally available therefor. Dividends may be paid on
the Common Stock only if all dividends on any outstanding Preferred Stock have
been paid or provided for.
The issued and outstanding shares of Common Stock are fully paid and
nonassessable. Holders of Common Stock have no preemptive or conversion rights
and are not subject to further calls or assessments by the Company.
In the event of the voluntary or involuntary dissolution, liquidation
or winding up of the Company, holders of Common Stock are entitled to receive,
pro rata, after satisfaction in full of the prior rights of creditors and
holders of Preferred Stock, if any, all the remaining assets of the Company
available for distribution.
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Directors are elected by a vote of the holders of Common Stock. Holders
of Common Stock are not entitled to cumulative voting rights.
Wachovia Bank of North Carolina, N.A. of Winston-Salem, North Carolina,
acts as the transfer agent and registrar for the Common Stock.
Preferred Share Purchase Rights
In 1988, pursuant to the Company's Shareholder Rights Plan, the Company
distributed as a dividend one Right for each outstanding share of Common Stock.
As a consequence of a 100% stock dividend effective June 26, 1992, and a
two-for-one stock split effective April 14, 1994, the number of Rights
outstanding was adjusted such that each share of Common Stock had associated
with it one-quarter Right. Each Right entitles the holder to buy one
one-thousandth of a share of Participating Cumulative Preferred Stock, Series A,
at an exercise price of $100, subject to adjustment. The Rights will become
exercisable only if a person or group acquires or announces a tender offer for
20% or more of the outstanding Common Stock. When exercisable, the Company may
issue a share of Common Stock in exchange for each Right other than those held
by such person or group. If a person or group acquires 30% or more of the
outstanding Common Stock, each Right will entitle the holder, other than the
acquiring person, upon payment of the exercise price, to acquire Preferred Stock
or, at the option of the Company, Common Stock, having a value equal to twice
the Right's exercise price. If the Company is acquired in a merger or other
business combination or if 50% of its earnings power is sold, each Right will
entitle the holder, other than the acquiring person, to purchase securities of
the surviving company having a market value equal to twice the exercise price of
the Right. The Rights will expire on September 9, 1998, and may be redeemed by
the Company at a price of $.01 per right at any time prior to the tenth day
after an announcement that a 20% position has been acquired.
Until such time as a person or group acquires or announces a tender
offer for 20% or more of the Common Stock, (i) the Rights will be evidenced by
the Common Stock certificates and will be transferred with and only with such
Common Stock certificates, and (ii) the surrender for transfer of any
certificate for Common Stock will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate. Rights may not
be transferred, directly or indirectly (i) to any person or group that has
acquired, or obtained the right to acquire, beneficial ownership of 20% or more
of the Rights (an "Acquiring Person"); (ii) to any person in connection with a
transaction in which such person becomes an Acquiring Person; or (iii) to any
affiliate or associate of any such person. Any Right that is the subject of a
purported transfer to any such person will be null and void.
The Rights may have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that acquires more than 20% of
the outstanding shares of Common Stock of the Company if certain events
thereafter occur without the Rights having been redeemed. However, the Rights
should not interfere with any merger or other business combination approved by
the Board of Directors and the shareholders because the Rights are redeemable
under certain circumstances.
Change of Control Provisions
The rights of holders of Common Stock are governed by other provisions
that are intended to affect any attempted change of control of the Company.
Board of Directors. The Restated and Amended Charter classifies the
Board of Directors into three separate classes, with the term of one-third of
the directors expiring at each annual meeting. A director may be removed only
upon the affirmative vote of 70% of outstanding voting shares.
Fair Price Provisions. Provisions of the Restated and Amended Charter
(the "Fair Price Provisions") limit the ability of an Interested Shareholder to
effect certain transactions involving the Company. Unless the Fair Price
Provisions are satisfied, an Interested Shareholder (defined as the beneficial
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owner of 20% of outstanding voting shares) may not engage in a business
combination, which includes a merger, consolidation, share exchange or similar
transaction, involving the Company unless approved by 70% of the Company's
outstanding voting shares. In general, the Fair Price Provisions require that an
Interested Shareholder pay shareholders the same amount of cash or the same
amount and type of consideration paid by the Interested Shareholder when it
initially acquired the Company's shares.
The Fair Price Provisions are designed to discourage attempts to take
over Lowe's in non-negotiated transactions utilizing two-tier pricing tactics,
which typically involve the accumulation of a substantial block of the target
corporation's stock followed by a merger or other reorganization of the acquired
company on terms determined by the purchaser. Due to the difficulties of
complying with the requirements of the Fair Price Provisions, the Fair Price
Provisions generally may discourage attempts to obtain control of the Company.
North Carolina Shareholder Protection Act. The North Carolina
Shareholder Protection Act requires the affirmative vote of 95% of a
corporation's voting shares to approve a business combination with any person
that beneficially owns 25% of the voting shares of the corporation unless the
"fair price" provisions of the Act are satisfied. The statute's intended effect
is similar to the Fair Price Provisions of the Company's Restated and Amended
Charter.
DESCRIPTION OF WARRANTS
The Company may issue Warrants for the purchase of Preferred Stock or
Common Stock. Warrants may be issued independently or together with any other
Offered Securities and may be attached to or separate from such securities. Each
series of Warrants will be issued under a separate warrant agreement (each a
"Warrant Agreement") to be entered into between the Company and a warrant agent
("Warrant Agent"). The Warrant Agent will act solely as an agent of the Company
in connection with the Warrants of such series and will not assume any
obligation or relationship of agency or trust for or with any holders or
beneficial owners of Warrants. The following sets forth certain general terms
and provisions of the Warrants offered hereby. Further terms of the Warrants and
the applicable Warrant Agreement will be set forth in the applicable Prospectus
Supplement. If Warrants are issued, copies of the forms of Warrant Agreement and
the certificate evidencing the Warrants will be incorporated by reference in the
Registration Statement of which this Prospectus is a part, and the following
summary is qualified in its entirety by reference to such documents.
The applicable Prospectus Supplement will describe the following terms,
where applicable, of the Warrants in respect of which this Prospectus is being
delivered:
(a) the title of such Warrants;
(b) the aggregate number of such Warrants;
(c) the price or prices at which such Warrants will be issued;
(d) the designation, aggregate principal amount and terms of the
securities purchasable upon exercise of such Warrants;
(e) the designation and terms of the Offered Securities with
which such Warrants are issued and the number of such
Warrants issued with each such security;
(f) if applicable, the date on and after which such Warrants and
the related securities will be separately transferable;
(g) the price at which the securities purchasable upon exercise
of such Warrants may be purchased;
(h) the date on which the right to exercise such Warrants shall
commence and the date on which such right shall expire;
(i) the minimum or maximum amount of such Warrants that may be
exercised at any one time;
(j) information with respect to book-entry procedures, if any;
(k) a discussion of material federal income tax considerations;
and
(l) any other terms of such Warrants, including terms,
procedures and limitations relating to the exchange and
exercise of such Warrants.
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PLAN OF DISTRIBUTION
The Offered Securities may be sold for public offering to underwriters
or dealers, which may be a group of underwriters represented by one or more
managing underwriters, or through such firms or other firms acting alone or
through dealers. The Offered Securities may also be sold directly by the Company
or through agents to investors. The names of any agents, dealers or managing
underwriters, and of any underwriters, involved in the sale of the Offered
Securities in respect of which this Prospectus is being delivered, the
applicable agent's commission, dealer's purchase price or underwriter's discount
and the net proceeds to the Company from such sale will also be set forth in the
Prospectus Supplement.
Any underwriting compensation paid by the Company to underwriters or
agents in connection with the offering of Offered Securities and any discounts,
concessions or commissions allowed by underwriters to participating dealers will
be set forth in the Prospectus Supplement. Underwriters, dealers and agents
participating in the distribution of the Offered Securities may be deemed to be
"underwriters" within the meaning of the Securities Act, and any discounts and
commissions received by them and any profit realized by them on resale of the
Offered Securities may be deemed to be underwriting discounts and commissions
under the Securities Act.
If an underwriter or underwriters are utilized in the sale of the
Offered Securities, the Company will execute an underwriting agreement with such
underwriter or underwriters at the time an agreement for such sale is reached.
The underwriting agreement will provide that the obligations of the underwriters
are subject to certain conditions precedent and that the underwriters with
respect to a sale of Offered Securities will be obligated to purchase all such
Offered Securities if any are purchased. In connection with the sale of Offered
Securities, underwriters may be deemed to have received compensation from the
Company in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of Offered Securities for whom they may act
as agent. Underwriters may sell Offered Securities to or through dealers, and
such dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agent. Under such underwriting agreements, underwriters,
dealers and agents who participate in the distribution of the Offered
Securities, may be entitled to indemnification by the Company against certain
civil liabilities, including liabilities under the Securities Act or
contribution with respect to payments that the underwriters, dealers or agents
may be required to make in respect thereof. The underwriter or underwriters with
respect to an underwritten offering of Offered Securities will be set forth in
the Prospectus Supplement relating to such offering and, if an underwriting
syndicate is used, the managing underwriter or underwriters will be set forth on
the cover of such Prospectus Supplement.
If so indicated in an applicable Prospectus Supplement, the Company
will authorize dealers acting as the Company's agents to solicit offers by
certain institutions to purchase Offered Securities from the Company at the
public offering price set forth in such Prospectus Supplement pursuant to
Delayed Delivery Contracts ("Contracts") providing for payment and delivery on
the date or dates stated in such Prospectus Supplement. Each Contract will be
for an amount not less than, and the aggregate principal amount of Offered
Securities sold pursuant to Contracts shall not be less nor more than, the
respective amounts stated in such Prospectus Supplement. Institutions with whom
Contracts, when authorized, may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and other institutions, but will in all cases be subject
to the approval of the Company. Contracts will not be subject to any conditions
except (i) the purchase by an institution of the Offered Securities covered by
its Contracts shall not at the time of delivery be prohibited under the laws of
any jurisdiction in the United States to which such institution is subject and
(ii) if the Offered Securities are being sold to underwriters, the Company shall
have sold to such underwriters the total principal amount of the Offered
Securities less the principal amount thereof covered by Contracts. Agents and
underwriters will have no responsibility in respect of the delivery or
performance of Contracts.
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Certain of the underwriters and their affiliates may be customers of,
engage in transactions with and perform services for the Company and its
subsidiaries and the Trustees in the ordinary course of business.
The Offered Securities may or may not be listed on a national
securities exchange or a foreign securities exchange. No assurances can be given
that there will be a market for the Offered Securities.
LEGAL MATTERS
The validity of the Securities offered hereby will be passed upon for
the Company by Hunton & Williams, Richmond, Virginia.
EXPERTS
The consolidated financial statements of the Company incorporated in
this Prospectus by reference from the Company's Annual Report on Form 10-K for
the year ended January 31, 1997 have been audited by Deloitte & Touche LLP,
independent auditors as stated in their report, which is incorporated herein by
reference and have been so incorporated in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.
With respect to the unaudited interim financial information for the
periods ended May 2, 1997 and April 30, 1996, August 1, 1997 and July 31, 1996,
and October 31, 1997, and October 31, 1996, which is incorporated herein by
reference, Deloitte & Touche LLP have applied limited procedures in accordance
with professional standards for a review of such information. However, as stated
in their reports included in the Company's Quarterly Reports on Form 10-Q for
the quarters ended May 2, August 1 and October 31, 1997, and incorporated by
reference herein, they did not audit and they do not express an opinion on that
interim financial information. Accordingly, the degree of reliance on their
reports on such information should be restricted in light of the limited nature
of the review procedures applied. Deloitte & Touche LLP are not subject to the
liability provisions of Section 11 of the Securities Act for their reports on
the unaudited interim financial information because their reports are not
"reports" or a "part" of the registration statement prepared or certified by an
accountant within the meaning of Sections 7 and 11 of the Securities Act.
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No dealer, salesman or other person has been
authorized to give any information or to make any
representation not contained in this Prospectus
and, if given or made, such information or
representation must not be relied upon as having
been authorized by the Company or any
underwriter, agent or dealer. Neither the $600,000,000
delivery of this Prospectus nor any sale made
hereunder shall under any circumstances create an
implication that there has been no change in the
affairs of the Company since the date hereof.
This Prospectus does not constitute an offer or [LOGO]
solicitation by anyone 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 Securities
or to anyone to whom it is unlawful to make such
offer or solicitation.
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TABLE OF CONTENTS
Page
Available Information......................... 2 ---------------------------------
Incorporation of Certain Documents by
Reference..................................... 2 PROSPECTUS
Forward-Looking Statements.................... 2
The Company................................... 4 ---------------------------------
Use of Proceeds............................... 4
Ratio of Earnings to Fixed Charges............ 4
Description of Debt Securities................ 4
Description of Preferred Stock................ 14
Description of Common Stock................... 18
Description of Warrants....................... 20
Plan of Distribution.......................... 21
Legal Matters................................. 22 , 1997
Experts....................................... 22
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PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Estimated expenses in connection with the issuance and distribution of
the securities being registered, other than underwriting compensation, are as
follows:
Securities and Exchange Commission registration fee $ 156,970
Blue Sky fees and expenses 30,000
Legal fees 175,000
Accounting fees 75,000
Rating agency fees 125,000
Trustee fees 7,500
Printing, engraving and postage expenses 100,000
Miscellaneous expenses 30,530
----------
Total $ 700,000
==========
Item 15. Indemnification of Directors and Officers
Article IV of the Company's Bylaws provides that the Company will
indemnify any person as an officer or director of the Company or as an officer,
director, trustee or partner of another corporation, trust, partnership or
employee benefit plan at the request of the Company, against any liability
incurred in connection with any proceeding arising out of such service. To the
extent that such person is successful on the merits or otherwise in defense of
any such proceeding, the Company will indemnify him against expenses actually
and reasonably incurred in such defense. No indemnification is available if, at
the time of the activities that are the subject of the proceeding, such person
knew or believed that such activities were clearly in conflict with the best
interests of the Company. Further, Section 55-8-51 of the North Carolina
Business Corporation Act provides that a corporation may not indemnify a
director in connection with a proceeding by or in the right of the corporation
in which such director was adjudged liable to the corporation or in connection
with any other proceeding charging improper personal benefit to him, whether or
not involving action in his official capacity, in which he is adjudged liable on
the basis that personal benefit was improperly received by him.
The Company maintains an insurance policy for the benefit of directors
and officers insuring them against claims that are made against them by reason
of any wrongful act (as defined) committed in their capacity as directors or
officers.
Item 16. Exhibits
4.1 --Amended and Restated Indenture, dated as of December 1,
1995, between the Company and The First National Bank of
Chicago (incorporated herein by reference to Exhibit 4.1 of
the Company's Current Report on Form 8-K dated December 15,
1995)
II-1
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4.2 --Form of Subordinated Indenture between the Company and The
Bank of New York (incorporated herein by reference to Exhibit
4.2 of the Company's Registration Statement on Form S-3 dated
October 16, 1996)
4.3 --Rights Agreement dated September 9, 1988 between the Company
and Wachovia Bank of North Carolina, N.A. as Rights Agent
(incorporated herein by reference to Exhibit 4.1 of the
Company's Current Report on Form 8-K dated September 9, 1988)
4.4 --Form of Deposit Agreement*
4.5 --Form of Deposit Receipt*
4.6 --Form of Warrant Agreement*
4.7 --Form of Warrant Certificate*
5 --Opinion of Hunton & Williams
12 --Statement re Computation of Ratios
15 --Letter of Deloitte & Touche LLP re Unaudited Interim Financial
Information
23.1 --Consent of Deloitte & Touche LLP
23.2 --Consent of Hunton & Williams (included in Exhibit 5)
24 --Powers of Attorney of Directors and Officers of the Company (included
on signature pages)
25.1 --Statement of Eligibility and Qualification on Form T-1 of
The First National Bank of Chicago, as the Trustee, under the
Trust Indenture Act of 1939 (incorporated herein by reference
to Exhibit 25.1 of the Company's Registration Statement on
Form S-3 dated October 16, 1996)
25.2 --Statement of Eligibility and Qualification on Form T-1 of
The Bank of New York as the Trustee, under the Trust Indenture
Act of 1939 (incorporated herein by reference to Exhibit 25.2
of the Company's Registration Statement on Form S-3 dated
October 16, 1996)
- -------------
*To be filed subsequent to effectiveness of this Registration Statement and
incorporated by reference pursuant to a Report on Form 8-K.
II-2
<PAGE>
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement; provided, however,
that the undertakings set forth in subparagraphs (i) and (ii)
above do not apply if the information required to be included
in a post-effective amendment by those paragraphs is contained
in periodic reports filed with or furnished to the Commission
by the Registrant pursuant to Sections 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose 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.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) 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.
(5) 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 provisions described under
Item 15 above, or otherwise, the registrant has been advised that in the opinion
of the Commission such indemnification is against public policy as expressed in
the Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3
<PAGE>
(6) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in the form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to
be part of this registration statement as of the time it was declared effective.
(7) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(8) To file an application for the purpose of determining the
eligibility of a trustee to act under subsection (a) of Section 310 of the Trust
Indenture Act of 1939 in accordance with the rules and regulations prescribed by
the Commission under Section 305(b)(2) of the Trust Indenture Act of 1939.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of North Wilkesboro, State of North Carolina, on
December 16, 1997.
LOWE'S COMPANIES, INC.
(Registrant)
By: /s/ Robert L. Tillman
-------------------------
Robert L. Tillman
President and Chief
Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on December 16, 1997. Each of the directors and/or officers
of Lowe's Companies, Inc. whose signature appears below hereby appoints Robert
L. Tillman, William C. Warden, Jr. and Lathan M. Ewers, Jr., and each of them
severally, as his attorney-in-fact to sign in his name and behalf, in any and
all capacities stated below, and to file with the Commission any and all
amendments, including post-effective amendments, to this registration statement,
making such changes in the registration statement as appropriate, and generally
to do all such things in their behalf in their capacities as officers and
directors to enable Lowe's Companies, Inc. to comply with the provisions of the
Securities Act of 1933, and all requirements of the Securities and Exchange
Commission.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Robert L. Strickland Chairman of the Board of Directors
------------------------------ and Director
Robert L. Strickland
/s/ Robert L. Tillman President, Chief Executive Officer
------------------------------ and Director (Principal Executive Officer)
Robert L. Tillman
/s/ Thomas E. Whiddon Executive Vice President and Chief Financial
------------------------------ Officer (Principal Financial Officer)
Thomas E. Whiddon
/s/ Richard D. Elledge Senior Vice President and Chief Accounting
------------------------------ Officer (Principal Accounting Officer)
Richard D. Elledge
II-5
<PAGE>
/s/ William A. Andres Director
------------------------------
William A. Andres
/s/ John M. Belk Director
------------------------------
John M. Belk
/s/ James F. Halpin Director
------------------------------
James F. Halpin
------------------------------ Director
Carol A. Farmer
/s/ Leonard G. Herring Director
------------------------------
Leonard G. Herring
/s/ Paul Fulton Director
------------------------------
Paul Fulton
/s/ Claudine B. Malone Director
------------------------------
Claudine B. Malone
/s/ Robert G. Schwartz Director
------------------------------
Robert G. Schwartz
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit
- ------ -------
4.1 --Amended and Restated Indenture, dated as of December 1,
1995, between the Company and The First National Bank of
Chicago (incorporated herein by reference to Exhibit 4.1 of
the Company's Current Report on Form 8-K dated December 15,
1995)
4.2 --Form of Subordinated Indenture between the Company and The
Bank of New York (incorporated herein by reference to Exhibit
4.2 of the Company's Registration Statement on Form S-3 dated
October 16, 1996)
4.3 --Rights Agreement dated September 9, 1988 between the Company
and Wachovia Bank of North Carolina, N.A. as Rights Agent
(incorporated herein by reference to Exhibit 4.1 of the
Company's Current Report on Form 8-K dated September 9, 1988)
4.4 --Form of Deposit Agreement*
4.5 --Form of Deposit Receipt*
4.6 --Form of Warrant Agreement*
4.7 --Form of Warrant Certificate*
5 --Opinion of Hunton & Williams
12 --Statement re Computation of Ratios
15 --Letter of Deloitte & Touche LLP re Unaudited Interim Financial
Information
23.1 --Consent of Deloitte & Touche LLP
23.2 --Consent of Hunton & Williams (included in Exhibit 5)
24 --Powers of Attorney of Directors and Officers of the Company (included
on signature pages)
25.1 --Statement of Eligibility and Qualification on Form T-1 of
The First National Bank of Chicago, as the Trustee, under the
Trust Indenture Act of 1939 (incorporated herein by reference
to Exhibit 25.1 of the Company's Registration Statement on
Form S-3 dated October 16, 1996)
25.2 --Statement of Eligibility and Qualification on Form T-1 of
The Bank of New York as the Trustee, under the Trust Indenture
Act of 1939 (incorporated herein by reference to Exhibit 25.2
of the Company's Registration Statement on Form S-3 dated
October 16, 1996)
- -------------
*To be filed subsequent to effectiveness of this Registration Statement and
incorporated by reference pursuant to a Report on Form 8-K.
Exhibit 5
HUNTON & WILLIAMS
951 Esat Byrd Street
Riverfront Plaza-East
Richmond, VA 23219
FILE NO.: 23797.000253
December 19, 1997
Lowe's Companies, Inc.
Highway 268 East
North Wilkesboro, North Carolina 28656-0001
Registration Statement on Form S-3
Relating to $518,000,000 Issue Amount
of Unallocated Securities
-------------------------
Ladies and Gentlemen:
We have acted as counsel to Lowe's Companies, Inc., a North
Carolina corporation (the "Company"), in connection with the registration by the
Company of an aggregate of $518,000,000 of its (i) unsecured debt securities
("Debt Securities"), which may be either senior debt securities ("Senior Debt
Securities") or subordinated debt securities ("Subordinated Debt Securities"),
(ii) shares of preferred stock, par value $5.00 per share ("Preferred Stock"),
which may be issued in the form of depositary shares evidenced by depositary
receipts ("Depositary Shares"), (iii) shares of common stock, par value $.50 per
share ("Common Stock"), and (iv) warrants to purchase shares of Common Stock or
Preferred Stock ("Warrants") on terms to be determined at the time of sale (the
Debt Securities, Preferred Stock, Depositary Shares, Common Stock and Warrants
are referred to collectively as the "Securities"), as set forth in the
Registration Statement on Form S-3 (the "Registration Statement") that is being
filed on the date hereof with the Securities and Exchange Commission (the
"Commission") by the Company pursuant to the Securities Act of 1933, as amended.
The Securities are to be issued in one or more series and are to be sold from
time to time as set forth in the Registration Statement, the Prospectus
contained therein (the "Prospectus") and any amendments or supplements thereto.
<PAGE>
Lowe's Companies, Inc.
December 19, 1997
Page 2
In rendering this opinion, we have relied upon, among other things, our
examination of such records of the Company and certificates of its officers and
of public officials as we have deemed necessary.
Based upon the foregoing and the further qualifications stated below,
we are of the opinion that:
1. The Company is duly incorporated, validly existing and in good
standing under the laws of the State of North Carolina; and
2. When (a) the terms of any class or series of the Securities have
been authorized by appropriate corporate action of the Company and (b) the
Securities have been issued and sold upon the terms and conditions set forth in
the Registration Statement, the Prospectus and the applicable supplement to the
Prospectus, and with respect to the Debt Securities, such Debt Securities have
been duly executed, authenticated and delivered in accordance with the
applicable indenture, then (x) the Debt Securities will be validly authorized
and issued and binding obligations of the Company and (y) the Preferred Stock
and the Common Stock will be legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement and to the statement made in reference
to this firm under the caption "Legal Matters" in the Registration Statement.
Very truly yours,
/s/ Hunton & Williams
<TABLE>
LOWE'S COMPANIES, INC.
RATIO OF EARNINGS TO FIXED CHARGES
(In Thousands)
<CAPTION>
For the Nine Months Ended October 31, For the Year Ended January 31,
------------------------------------- ----------------------------------------------------------
<S> <C>
1997 1996 1997 1996 1995 1994 1993
-------------------------- ----------------------------------------------------------
Income Before Income Taxes 443,758 367,477 453,606 352,107 343,531 198,324 125,892
Fixed Charges:
Interest Expense 54,206 42,710 57,832 48,937 40,110 23,043 17,588
1/3 Rental Expense 14,920 14,843 19,719 18,045 13,400 9,067 6,800
-------------------------- ----------------------------------------------------------
Earnings, as Defined 512,884 425,030 531,157 419,089 397,041 230,434 150,280
Fixed Charges:
Interest Expense 54,206 42,710 57,832 48,937 40,110 23,043 17,588
Capitalized Interest 5,777 5,253 7,315 5,768 4,678 3,592 1,849
1/3 Rental Expense 14,920 14,843 19,719 18,045 13,400 9,067 6,800
-------------------------- ----------------------------------------------------------
Fixed Charges 74,903 62,806 84,866 72,750 58,188 35,702 26,237
Fixed Charge Coverage (Ratio
of Earnings to Fixed Charges) 6.85 6.77 6.26 5.76 6.82 6.45 5.73
</TABLE>
Deloitte &
Touche LLP
1100 Carillon Telephone(704)372-3560
227 West Trade Street
Charlotte, North Carolina 28202-1675
December 18, 1997
Lowe's Companies, Inc.
North Wilkesboro, North Carolina
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Lowe's Companies, Inc. and subsidiaries for the periods ended May
2, 1997 and April 30, 1996 as indicated in our report dated May 13, 1997; August
1, 1997 and July 31, 1996 as indicated in our report dated August 12, 1997, and
October 31, 1997 and 1996 as indicated in our report dated November 11, 1997;
because we did not perform an audit, we expressed no opinion on that
information.
We are aware that our reports referred to above, which were included in your
Quarterly Reports on Form 10-Q for the quarters ended May 2, 1997, August 1,
1997 and October 31, 1997 are being used in this Registration Statement.
We also are aware that the aforementioned reports, pursuant to Rule 436(c) under
the Securities Act of 1933, are not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Lowe's Companies, Inc. on Form S-3 of our report dated February 20, 1997
appearing and incorporated by reference in the Annual Report on Form 10-K of
Lowe's Companies, Inc. and subsidiaries for the year ended January 31, 1997 and
to the reference to us under the heading "Experts" in the Prospectus, which is
part of this Registration Statement.
DELOITTE & TOUCHE LLP
Charlotte, North Carolina
December 18, 1997
