<PAGE>
PROSPECTUS Filed Pursuant to
Rule 424(b)(3)
Registration # 333-83201
OFFER FOR
ALL OUTSTANDING 6 1/2% DEBENTURES DUE MARCH 15, 2029
IN EXCHANGE FOR
REGISTERED 6 1/2% DEBENTURES DUE MARCH 15, 2029
OF
LOWE'S COMPANIES, INC.
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON AUGUST 23, 1999
THE REGISTERED DEBENTURES
The terms of the registered debentures are substantially identical to the
old debentures that we issued on February 23, 1999, except for certain transfer
restrictions, registration rights and special interest provisions which apply
only to the old debentures.
Interest on the registered debentures is payable semi-annually on each
March 15 and September 15, beginning on September 15, 1999.
The registered debentures are unsecured obligations of Lowe's and will rank
equally to each other and to all our existing and future unsecured and
unsubordinated indebtedness. The registered debentures will be effectively
subordinated to any of our secured indebtedness and to any unsubordinated
indebtedness of our subsidiaries.
MATERIAL TERMS OF THE EXCHANGE OFFER
. Expires at 5:00 p.m., New York City time, on August 23, 1999, unless
extended.
. Not subject to any conditions other than:
(1) the exchange offer will not violate applicable law or any applicable
interpretation of the staff of the Securities and Exchange Commission;
(2) no legal proceeding challenging the exchange offer has been instituted or
threatened; and
(3) the old debentures have been properly tendered.
. All outstanding old debentures that are validly tendered and not validly
withdrawn will be exchanged to an equal principal amount of debentures which
are registered under the Securities Act of 1933, as amended.
. The exchange of old debentures for registered debentures will not be a
taxable exchange for U.S. federal income tax purposes.
. We will not receive any proceeds from the exchange offer.
. Tenders of old debentures may be withdrawn at any time prior to the
expiration of the exchange offer.
CONSIDER CAREFULLY THE "RISK FACTORS" BEGINNING ON PAGE 13 OF THIS PROSPECTUS.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved the debentures to be distributed in the exchange offer,
nor have these organizations determined that this prospectus is accurate or
complete. Any representation to the contrary is a criminal offense.
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The date of this prospectus is July 27, 1999
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TABLE OF CONTENTS
Page
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WHERE YOU CAN FIND MORE INFORMATION........................................... 1
INCORPORATION OF INFORMATION FILED WITH THE SEC............................... 1
WARNING REGARDING FORWARD-LOOKING STATEMENTS.................................. 3
SUMMARY OF THE TERMS OF THE EXCHANGE OFFER.................................... 5
SUMMARY DESCRIPTION OF THE REGISTERED DEBENTURES..............................11
SUMMARY DESCRIPTION OF INDENTURE PROVISIONS APPLICABLE TO THE REGISTERED
DEBENTURES...............................................................12
RISK FACTORS..................................................................13
THE EXCHANGE OFFER............................................................15
REGISTRATION RIGHTS AGREEMENT.................................................22
DESCRIPTION OF THE REGISTERED DEBENTURES......................................26
THE INDENTURE.................................................................28
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER..36
PLAN OF DISTRIBUTION..........................................................36
VALIDITY OF THE REGISTERED DEBENTURES.........................................37
EXPERTS.......................................................................37
(i)
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and other information with the Securities and
Exchange Commission. You may read and copy the reports and other information
that we file with the SEC at their public reference facilities at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549. You may also obtain information
about us from the following regional offices of the SEC: Seven World Trade
Center, 13th Floor, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60601-2511. Copies of these
materials can be obtained from the Public Reference Section of the SEC in
Washington, D.C. 20549 at prescribed rates. Our filings with the SEC are
available to the public on the SEC's Internet home page at http://www.sec.gov.
We have filed with the SEC a registration statement on Form S-4 with
respect to our registered 6 1/2% debentures due March 15, 2029. This
prospectus, which is a part of the registration statement, omits certain
information included in the registration statement. Statements made in this
prospectus as to the contents of any contract, agreement or other document are
only summaries and are not complete. We refer you to these exhibits for a more
complete description of the matter involved. Each statement regarding the
exhibits is qualified by the actual documents.
The indenture governing the outstanding debentures provides that we will
furnish to the holders of the debentures copies of such information, documents
and other reports and such summaries thereof as are required to be filed by us
under the Trust Indenture Act, at the times and in the manner provided pursuant
to the Act, provided that any information, documents or reports required to be
filed with the SEC pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934, shall be filed with the Trustee within 15 days after such filings
are required to be made with the SEC.
INCORPORATION OF INFORMATION FILED WITH THE SEC
We are "incorporating by reference" certain information that we have filed
with the SEC, which means:
. incorporated documents are considered part of this prospectus;
. we are disclosing important information to you by referring you to those
documents; and
. information that we file with the SEC will automatically update and
supersede this prospectus.
We incorporate by reference the documents listed below that we filed with
the SEC under the Securities Exchange Act of 1934:
. Annual Report on Form 10-K for the year ended January 29, 1999; and
. Quarterly Report on Form 10-Q for the quarter ended April 30, 1999.
We also incorporate by reference each of the following documents that we
may file with the SEC after the date of this prospectus:
. Registration statements filed under Section 12 of the Exchange Act;
. Reports filed under Sections 13(a) and (c) of the Exchange Act;
. Definitive proxy or information statements filed under Section 14 of the
Exchange Act in connection with any subsequent stockholders' meeting;
and
. Any reports filed under Section 15(d) of the Exchange Act.
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You may request a copy of any filings referred to above (excluding
exhibits), at no cost, by contacting us at the following address:
Lowe's Companies, Inc.
Attention: Treasurer
1605 Curtis Bridge Road
Wilkesboro, North Carolina 28697
(336) 658-4000 or (888) 34LOWES
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WARNING REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the registration statements, reports, proxy statements
and other information that we have filed with the SEC, which we incorporate by
reference in this prospectus, may include "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Although we believe that comments reflected in
such forward-looking statements are reasonable, we can give no assurance that
such expectations will prove to be correct. Possible risks and uncertainties
regarding these statements include, but are not limited to:
. general economic trends;
. availability and development of real estate for expansion;
. fluctuation in prices of commodities;
. the nature of competition;
. reliable supply of inventory; and
. weather conditions.
We have based these forward-looking statements largely on our expectations
as well as assumptions that we have made and information currently available to
our management. When used in this prospectus, the words "anticipate,"
"believe," "estimate," "expect" and similar expressions, as they relate to us or
our management, are intended to identify forward-looking statements. Forward-
looking statements are subject to a number or risks and uncertainties, certain
of which are beyond our control. Actual results could differ materially from
those anticipated in this prospectus. Furthermore, in light of these risks and
uncertainties, the forward-looking events and circumstances discussed in this
prospectus might not transpire.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
You should carefully read this prospectus in its entirety. It contains
information that you should consider when making your investment decision.
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not, and the initial purchasers have not,
authorized any other person to provide you with different information. If
anyone provides you with different or inconsistent information, you should not
rely on it. You should assume that the information appearing in this
prospectus, as well as information that we previously filed with the SEC and
incorporated by reference, is accurate as of the date on the front cover of this
prospectus only. Our business, financial condition, results of operations and
prospects may have changed since that date.
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PROSPECTUS SUMMARY
This summary highlights selected information from this prospectus, but does
not contain all information that may be important to you. This prospectus
includes or incorporates by reference specific terms of the exchange offer, as
well as information regarding our business and detailed financial data. We
encourage you to read the detailed information and financial statements
appearing elsewhere or incorporated by reference in this prospectus. Except if
the context requires otherwise, references in this prospectus to "we," "us,"
"our," "Lowe's" or "Company" refer to Lowe's Companies, Inc., a North Carolina
corporation, and its subsidiaries. The term "old debentures" refers to the 6
1/2% debentures due March 15, 2029 that were issued on February 23, 1999 to
qualified institutional buyers in a Rule 144A private placement. The term
"registered debentures" refers to the registered 6 1/2% debentures due March 15,
2029 offered pursuant to this prospectus.
THE EXCHANGE OFFER
On February 23, 1999 we completed the private offering of an aggregate
principal amount of $400,000,000 of old debentures. We entered into a
registration rights agreement with the initial purchasers in which we agreed,
among other things, to deliver to you this prospectus and to offer to exchange
your old debentures for registered debentures with substantially identical
terms. If the exchange offer is not completed within 30 days of the effective
date of the registration statement of which this prospectus is a part, then
special interest, in addition to the base interest that would otherwise accrue
on the debentures, shall accrue at an additional per annum rate of 0.25% for the
first 90 days after that date. The interest rate shall increase 0.25% for each
90 day period that this requirement is not satisfied, provided that the
aggregate increase in the annual interest rate cannot exceed 0.50%. You should
read the discussion under the heading "Description of the Registered Debentures"
for further information regarding the registered debentures.
We believe the registered debentures issued in the exchange offer may be
resold by you without compliance with the registration and prospectus delivery
provisions of the Securities Act, subject to certain conditions. You should
read the discussion under the heading "The Exchange Offer" for further
information regarding the exchange offer and resale of the registered
debentures.
THE COMPANY
We are a leading specialty retailer of products and services for home
improvement, home decor, home repair and remodeling and home construction
markets. Our principal customer groups are do-it-yourself retail and commercial
business customers. As of June 28, 1999, we operated 532 stores with 49.9
million square feet of sales floor in 37 states located principally in the South
Atlantic, South Central and Midwest regions of the United States. We have
recently completed the acquisition of Eagle Hardware & Garden, Inc., a home
center retailer that currently operates 41 warehouse/home improvement centers in
10 Western states. We are the world's second largest home center retailer. Our
principal executive offices are located at 1605 Curtis Bridge Road, Wilkesboro,
North Carolina 28697, and our telephone number is (336) 658-4000.
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SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
The exchange offer relates to the exchange of up to $400,000,000 aggregate
principal amount of old debentures for an equal aggregate principal amount of
registered debentures. The registered debentures will be obligations of ours
entitled to the benefits of the indenture governing the old debentures. The
form and terms of the registered debentures are identical in all material
respects to the form and terms of the old debentures with three exceptions.
First, the registered debentures are registered under the Securities Act, and
therefore are not entitled to the benefits of the registration rights granted
under the registration rights agreement executed as part of the private offering
of the old debentures among us and the initial purchasers. Second, holders of
registered debentures will not be entitled to contingent increases in the
interest rates on the registered debentures. Third, the registered debentures
will not bear legends restricting their transfer.
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Registration Rights..................... You are entitled to exchange your old debentures for
registered debentures with substantially identical
terms. The exchange offer is intended to satisfy these
rights. After the exchange offer is complete, you will
not be entitled to any exchange or registration rights
with respect to the old debentures except in certain
limited circumstances.
Under the registration rights agreement, we have agreed
to:
. file a registration statement within 150 days after
the issue date of the old debentures enabling
holders to exchange the privately placed old
debentures for publicly registered debentures
with identical terms.
. use our best efforts to cause the registration
statement to become effective within 180 days
after the issue date of the old debentures.
. consummate the exchange offer within 30 days
after the effective date of our registration
statement, and use our best efforts to file a
shelf registration statement for the resale of
the old debentures if we cannot effect an
exchange offer within the time periods
listed above and under certain other
circumstances.
We have complied with the first two of these
conditions. The interest rate on the debentures will
increase if we do not comply with our remaining
obligation to complete this exchange offer. See
"Registration Rights Agreement -- Special Interest".
The Exchange Offer........................... We are offering to exchange each $1,000 principal
amount of the registered debentures for each $1,000
principal amount of our old debentures issued in a
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private offering on February 23, 1999.
To be exchanged, old debentures must be properly
tendered and accepted. All old debentures that are
validly tendered and not validly withdrawn will be
exchanged.
Resale of the Registered Debentures.......... Based on interpretations by the SEC set forth in no
action letters issued to third parties, including
"Exxon Capital Holdings Corporation" (available May 13,
1988), "Morgan Stanley & Co., Incorporated" (available
June 5, 1991), "Mary Kay Cosmetics, Inc." (available
June 5, 1991) and "Warnaco, Inc." (available October
11, 1991), we think the registered debentures issued in
the exchange offer may be offered for sale, resold and
otherwise transferred by you without compliance with
the registration and prospectus delivery provisions of
the Securities Act if:
. the registered debentures issued in the exchange
offer are being offered by you in the ordinary course
of your business;
. you are not participating, do not intend to
participate, and do not have any arrangement or
understanding with any person to participate in a
distribution of the registered debentures issued
to you in the offer;
. you are not a broker-dealer who purchased such
outstanding old debentures directly from us for
resale pursuant to Rule 144A or under an available
exemption under the Securities Act; and
. you are not an "affiliate" of ours as defined in
Section 405 of the Securities Act.
If our belief is inaccurate and you transfer any
registered debentures issued to you in the exchange
offer without delivering a prospectus meeting the
requirements of the Securities Act or without an
exemption from registration of your old debentures from
such requirements, you may incur liability under the
Securities Act. We do not assume or indemnify you
against such liability.
Each broker-dealer that is issued registered debentures
in the exchange offer for its own account in exchange
for old debentures which were acquired by such
broker-dealer as a result of market-making or other
trading activities must acknowledge it will deliver a
prospectus
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meeting the requirements of the Securities
Act in connection with any resale of the registered
debentures issued in the exchange offer. The Letter of
Transmittal states that by so acknowledging and by
delivery of a prospectus, such broker-dealer will not
be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. A broker-dealer may
use this prospectus for an offer to resell, resale or
other retransfer of registered debentures issued to it
in the exchange offer. We have agreed to use best
efforts to make this prospectus and any amendment or
supplement to the prospectus available to any such
broker-dealer for use in connection with such resales
for 180 days.
We believe that no registered holder of the outstanding
old debentures is an affiliate of ours. The exchange
offer is not being made to, nor will surrender for
exchange be accepted from, holders of outstanding old
debentures in any jurisdiction in which this exchange
offer or the acceptance thereof would violate the
securities or blue sky laws of such jurisdiction.
Expiration Date.............................. The exchange offer will expire at 5:00 p.m., New York
City time, on August 23, 1999, unless we decide to
extend the expiration date.
Accrued Interest on the Registered
Debentures and the Old Debentures........... The old debentures and the registered debentures will
bear interest from February 23, 1999. Old debentures
that are accepted for exchange will cease earning
interest from the date of completion of the exchange
offer. Holders who exchange their old debentures for
registered debentures will receive the same interest
payment on September 15, 1999 (the first payment date
for both the old debentures and registered debentures)
that they would have received if they had not accepted
the exchange offer.
Termination of the
Exchange Offer............................... We may terminate the exchange offer if our ability to
conduct the exchange offer is materially impaired due
to any legal or governmental action, new law, statute,
rule or regulation or any interpretation of the SEC
staff of any existing law, statute, rule or regulation.
We do not expect any of these conditions to occur,
although we cannot guarantee you that such conditions
will not occur. If we fail to consummate the exchange
offer, holders of old debentures will have certain
rights against us under the registration rights
agreement executed as
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part of the offering of the old debentures.
Procedures for Tendering
Old Debentures............................... If you are a holder of an old debenture and you wish to
tender your old debenture for exchange pursuant to the
exchange offer, you must transmit to The First National
Bank of Chicago, as exchange agent, on or prior to the
closing date:
. a properly completed and duly executed Letter of
Transmittal in the form that accompanies this
prospectus, or a facsimile of the Letter of
Transmittal, including all other documents
required by the Letter of Transmittal, to the
exchange agent at the address set forth on the
cover page of the Letter of Transmittal; or
. a timely confirmation of book-entry transfer of
your old debentures into the exchange agent's
account at the Depositary Trust Company, or DTC,
pursuant to the procedure for book-entry transfers
described in this prospectus under the heading "The
Exchange Offer -- Procedure for Tendering Old
Debentures." The confirmation must be received by the
exchange agent on or prior to the expiration date; or
. the documents necessary for compliance with the
guaranteed delivery procedures described below.
By executing the Letter of Transmittal, each holder
will represent among other things:
. the registered debentures will be held in the
ordinary course of business of the person receiving
such debentures whether or not such person is the
holder;
. neither the holder nor any other person has an
arrangement or understanding with any person to
participate in the distribution of the old debentures;
and
. neither the holder nor any other person is our
"affiliate," as that term is defined in Section 405 of
the Securities Act.
Special Procedures for
Beneficial Owners............................ If you are the beneficial owner of old debentures and
your name does not appear on a security position
listing of DTC as the holder of old debentures or if
you are a beneficial owner of old debentures registered
in the
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name of a broker, dealer, commercial bank, trust
company or other nominee and you wish to tender old
debentures in the exchange offer, you should promptly
contact the nominee in whose name your old debentures
are registered and instruct the nominee to tender on
your behalf. The transfer of record ownership may take
considerable time.
Guaranteed Delivery Procedures............... If you wish to tender your old debentures and time will
not permit the required documents to reach the exchange
agent by the expiration date, the procedure for
book-entry transfer cannot be completed on time or
certificates for registered old debentures cannot be
delivered on time, you may exchange old debentures
pursuant to the procedures described in this prospectus
under the heading "The Exchange Offer -- Guaranteed
Delivery Procedures."
Withdrawal Rights............................ You may withdraw the tender of your old debentures at
any time prior to 5:00 p.m., New York City time, on
August 23, 1999 unless your old debentures were
previously accepted for exchange.
Acceptance of Old Debentures and Delivery of
Registered Debentures....................... Subject to certain conditions described more fully
under the "The Exchange Offer," we will accept for
exchange any and all old debentures which are properly
tendered in the exchange offer prior to 5:00 p.m., New
York City time, on August 23, 1999. The registered
debentures issued pursuant to the exchange offer will
be delivered promptly following the closing date.
Certain U.S. Federal Income
Tax Consequences............................. An exchange of old debentures for registered debentures
will not be taxable to the holders. See "Material
United States Federal Income Tax Consequences of the
Exchange Offer."
Use of Proceeds.............................. We will not receive any proceeds from the issuance of
registered debentures in the exchange offer.
Exchange Agent............................... The First National Bank of Chicago is serving as
exchange agent in connection with the exchange offer.
The exchange agent can be reached at Corporate Trust
Administration, One First National Plaza, Suite 0126,
Chicago, Illinois, 60670-0126, Attention: D. Fanning.
For more information with respect to the exchange
offer, the telephone number for the exchange agent is
(630) 351-1238 and the facsimile number is (312)
407-1708.
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CONSEQUENCES OF NOT EXCHANGING OLD DEBENTURES
If you do not exchange your old debentures in the exchange offer, your old
debentures will continue to be subject to the restrictions on transfer set forth
in the legend on the certificate for your old debentures. In general, you may
offer or sell your old debentures only if they are registered under, offered or
sold pursuant to an exemption from, or offered or sold in a transaction not
subject to, the Securities Act and applicable state securities laws. After the
exchange offer is completed, we will not be required, and we do not intend, to
register the old debentures under the Securities Act.
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SUMMARY DESCRIPTION OF THE REGISTERED DEBENTURES
Following is a brief summary of certain terms of the registered debentures.
For a more complete description of the terms of the registered debentures, see
"Description of the Registered Debentures" in this prospectus.
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Terms of the Registered Debentures:
<S> <C>
Aggregate Principal Amount..................... $400,000,000
Interest Rate.................................. 6 1/2% per year
Maturity Date.................................. March 15, 2029
Interest Payment Dates......................... March 15 and September 15 of each year, beginning
September 15, 1999
Interest Calculations.......................... Based on 360-day year of twelve 30-day months
Ranking........................................ The registered debentures will rank equally with all
of our other senior indebtedness
Redemption or Sinking Fund..................... None
Form of Registered Debenture................... Global security
Settlement and Payment......................... Same-day -- immediately available funds
Secondary Trading Payments..................... Same day -- immediately available funds
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SUMMARY DESCRIPTION OF INDENTURE PROVISIONS APPLICABLE TO THE
REGISTERED DEBENTURES
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Limit on Debt.................................. The indenture does not limit the amount of debt that
we may issue or provide holders any protection should
we be involved in a highly leveraged transaction.
Certain Covenants.............................. The indenture contains covenants that, among other
things, will limit our ability to:
. incur, issue, assume or guarantee certain secured
indebtedness, and
. engage in certain sale and leaseback transactions.
The covenants also limit the ability of our
subsidiaries to incur, issue, assume or guarantee
additional indebtedness of any kind or to engage in
sale and leaseback transactions.
These covenants are subject to important exceptions
and qualifications, which are described under the
heading "The Indenture" in this prospectus.
Events of Default.............................. Each of the following is an event of default under
the indenture:
. Our failure for 30 days to pay when due interest
on the registered debentures;
. Our failure to pay principal or premium, if any,
on the registered debentures when due;
. Our failure to perform covenants with respect to
the registered debentures for 60 days after receipt
of notice of default;
. Default in the payment of principal or
acceleration of at least $10.0 million in aggregate
principal amount of our debt or the debt of our
subsidiaries after receipt of notice of such default
or acceleration; and
. Certain events of bankruptcy, insolvency or
reorganization of us or our subsidiaries.
Remedies....................................... If an event of default occurs, the trustee under the
indenture or holders of at least 25% in aggregate
principal amount of outstanding debentures may
declare the principal and accrued interest
immediately due and payable.
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RISK FACTORS
You should consider carefully the following risks and all of the
information set forth in this prospectus before tendering your old debentures in
the exchange offer and making an investment in the registered debentures. The
risk factors set forth below (other than "-- Consequences of Not Exchanging Old
Debentures") are applicable to the old debentures as well as the registered
debentures.
Consequences of Not Exchanging Old Debentures
If you do not exchange your old debentures for the registered debentures in
the exchange offer, you will continue to be subject to the restrictions on
transfer described in the legend on your old debentures. The restrictions on
transfer of your old debentures arise because we issued the old debentures in a
transaction not subject to the registration requirements of the Securities Act
and applicable state securities laws. In general, you may only offer or sell
the old debentures if they are registered under the Securities Act and
applicable state securities laws, or offered and sold pursuant to an exemption
from such requirements. If you are still holding any old debentures after the
expiration date and the exchange offer has been consummated, you will not be
entitled to have such old debentures registered under the Securities Act or to
any similar rights under the registration rights agreement (subject to limited
exceptions, if applicable). After the exchange offer is completed, we will not
be required, and we do not intend, to register the old debentures under the
Securities Act. In addition, if you exchange your old debentures in the
exchange offer for the purpose of participating in a distribution of the
registered debentures, you may be deemed to have received restricted securities
and, if so, will be required to comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. To the extent old debentures are tendered and accepted in the
exchange offer, the trading market, if any, for the old debentures would be
adversely affected.
Holders are Responsible for Compliance with Exchange Offer Procedures
We will issue the registered debentures in exchange for the old debentures
only after we have timely received your old debentures, along with a properly
completed and duly executed Letter of Transmittal and all other required
documents. Therefore, if you want to tender your old debentures in exchange for
registered debentures, you should allow sufficient time to ensure timely
delivery. Neither we nor the exchange agent is under any duty to give
notification of defects or irregularities in the tender of old debentures for
exchange. The exchange offer will expire at 5:00 p.m., New York City time, on
August 23, 1999, or on a later extended date and time as we may decide.
The registered debentures and any old debentures which remain outstanding
after the exchange offer will vote together as a single class for purposes of
determining whether the required percentage of holders have taken certain
actions or exercised certain rights under the indenture.
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Requirements for Transfer of Registered Debentures
Based on interpretations by the SEC staff set forth in no-action letters
issued to third parties, we believe that you may offer for resale, resell and
otherwise transfer the registered debentures without compliance with the
registration and prospectus delivery provisions of the Securities Act, subject
to certain limitations. These limitations include (i) that you are not an
"affiliate" of ours within the meaning of Rule 405 under the Securities Act,
(ii) that you acquire your registered debentures in the ordinary course of your
business and (iii) that you have no arrangement with any person to participate
in the distribution of such registered debentures. However, we have not
submitted a no-action letter to the SEC regarding this exchange offer and we
cannot assure you that the SEC would make a similar determination with respect
to this exchange offer. If you are an affiliate of ours, are engaged in or
intend to engage in or have any arrangement or understanding with respect to a
distribution of the registered debentures to be acquired pursuant to the
exchange offer, you will be subject to additional limitations. See "The
Exchange Offer -- Resale of the Registered Debentures."
Restrictions Imposed by the Indenture
The indenture relating to the debentures contains covenants that restrict
our ability to:
. incur additional indebtedness; or
. enter into certain sales and leasebacks transactions.
We cannot assure you that these restrictions will not adversely affect our
ability to finance our future operations or capital needs or engage in other
business activities that may be in our interest.
Lack of Public Market for the registered debentures; Restrictions on Resale
There is no existing trading market for the registered debentures, and we
cannot assure you regarding the future development of a market for the
registered debentures, or the ability of the holders of the registered
debentures to sell their registered debentures, or the price at which such
holders may be able to sell their registered debentures. If such a market were
to develop, the registered debentures could trade at prices that may be higher
or lower than the initial offering price of the old debentures depending on many
factors, including prevailing interest rates, our operating results and the
market for similar securities. Each of the initial purchasers has advised us
that it intends to make a market in the registered debentures. The initial
purchasers are not obligated to do so, however, and any market making with
respect to the registered debentures may be discontinued at any time without
notice. Therefore, we cannot assure you as to the liquidity of any trading
market for the registered debentures or that an active trading market for the
registered debentures will develop. We do not intend to apply for listing of
the old debentures or, if issued, the registered debentures, on any securities
exchange or for quotation through the National Association of Securities Dealers
Automated Quotation System.
Historically, the market for investment grade debt has been subject to
disruptions that have caused substantial volatility in the prices of such
securities. We cannot assure you that the market for the registered debentures
will not be subject to similar disruptions. Any such disruptions may have an
adverse effect on holders of the registered debentures.
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THE EXCHANGE OFFER
Pursuant to a registration rights agreement between us and the initial
purchasers of the old debentures, we agreed:
(1) to file a registration statement on or prior to 150 days after the
closing of the offering of the old debentures with respect to an offer
to exchange the old debentures for a new issue of debentures, with
terms substantially the same as those of the old debentures but
registered under the Securities Act,
(2) to use our best efforts to cause the registration statement to be
declared effective by the SEC on or prior to 180 days after the
closing of the old debentures offering, and
(3) to use our best efforts to consummate the exchange offer and to issue
the registered debentures within 30 days after the registration
statement is declared effective.
The registration rights agreement provides that, in the event that we fail
to file the registration statement within 150 days after the closing date, to
have the registration statement declared effective within 180 days after the
closing date, or to consummate the exchange offer within 30 days of the
effectiveness of the registration statement, we will be required to pay
additional interest on the old debentures over and above the regular interest on
the old debentures. Upon consummation of this exchange offer, the provisions
for additional interest on the old debentures shall cease.
The exchange offer is not being made to, nor will we accept tenders for
exchange from, holders of old debentures in any jurisdiction in which the
exchange offer or acceptance of the exchange offer would violate the securities
or blue sky laws of such jurisdiction.
Terms of the Exchange Offer
Upon the terms and subject to the conditions set forth in this prospectus
and in the Letter of Transmittal, we will accept for exchange old debentures
that are properly tendered on or prior to the expiration date and not withdrawn.
The expiration date is 5:00 p.m., New York City time, on August 23, 1999, or, if
we have extended the period of time for the exchange offer, the latest time and
date to which the exchange offer is extended.
As of the date of this prospectus, $400,000,000 aggregate principal amount
of the old debentures was outstanding. This prospectus, together with the
Letter of Transmittal, is first being sent on or about the date set forth on the
cover page to all holders of old debentures at the addresses set forth in the
securities register with respect to old debentures maintained by DTC. Our
obligation to accept old debentures for exchange pursuant to the exchange offer
is subject to certain conditions set forth below. See "-- Conditions to
Exchange Offer."
We expressly reserve the right, at any time or from time to time, to extend
the period during which the exchange offer is open, and thereby delay acceptance
for exchange of any old debentures, by mailing written notice of such extension
to the holders as described below. During any extension, all old debentures
previously tendered will remain subject to the exchange offer and may be
accepted for exchange by us. Any old debentures not accepted for exchange for
any reason will be returned without expense to the holder as promptly as
practicable after the expiration or termination of the exchange offer.
Old debentures tendered in the exchange offer must be $1,000 in principal
amount or any integral multiple thereof.
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We will mail written notice of any extension, amendment, non-acceptance or
termination to the holders of the old debentures as promptly as practicable,
such notice to be mailed to the holders of record of the old debentures no later
than 9:00 a.m. New York City time, on the next business day after the previously
scheduled expiration date or other event giving rise to such notice requirement.
Procedures for Tendering Old Debentures
Letter of Transmittal. The tender to us of old debentures by a holder as
set forth below and the acceptance of the tender by us will constitute a binding
agreement between the tendering holder and us upon the terms and subject to the
conditions set forth in this prospectus and in the Letter of Transmittal.
Except as set forth below, a holder who wishes to tender old debentures for
exchange must transmit a properly completed and executed Letter of Transmittal,
together with all other documents required by such Letter of Transmittal, to the
exchange agent at the address set forth below under "-- Exchange Agent" on or
prior to the expiration date.
Other Documents. In addition,
. the exchange agent must receive certificates for the old debentures along
with the Letter of Transmittal, or
. the exchange agent must receive prior to the expiration date a timely
confirmation of a book-entry transfer of the old debentures, if such
procedure is available, into the exchange agent's account at the DTC
pursuant to the procedure for book-entry transfer described below, or
. the holder must comply with the guaranteed delivery procedures described in
"--Guaranteed Delivery Procedures," below.
================================================================================
The method of delivery of old debentures, Letters of Transmittal and all other
required documents is at the election and risk of the holders. If the delivery
is by mail, it is recommended that registered mail, properly insured, with
return receipt requested, be used in all cases. Sufficient time should be
allowed to assure timely delivery. No Letters of Transmittal or old debentures
should be sent to us.
================================================================================
Signatures. Signatures on a Letter of Transmittal or a notice of
withdrawal, must be guaranteed unless the old debentures surrendered for
exchange pursuant thereto are tendered (1) by a registered holder of the old
debentures who has not completed the box entitled "Special Issuance
Instructions" on the Letter of Transmittal or (2) for the account of an eligible
institution, which is defined as a bank, stockbroker, national securities
exchange, registered securities association, savings and loan association or
credit union with membership in a signature medallion program pursuant to
Exchange Act Rule 17Ad-15. If signatures on a Letter of Transmittal or a notice
of withdrawal are required to be guaranteed, the guarantees must be by a firm
that is an eligible guarantor institution. If old debentures are registered in
the name of a person other than the person signing the Letter of Transmittal,
the old debentures surrendered for exchange must be endorsed by, or be
accompanied by, a written instrument or instruments of transfer or exchange, in
satisfactory form as determined by us, duly executed by the registered holder,
with the signature guaranteed by an eligible institution.
Powers of Attorney. If the Letter of Transmittal is signed by a person or
persons other than the registered holder or holders of old debentures, the old
debentures must be endorsed or accompanied by
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<PAGE>
appropriate powers of attorney, in either case signed exactly as the name or
names of the registered holder or holders that appear on the old debentures.
Representatives, Trustees, Guardians, Etc. If the Letter of Transmittal or
any old debentures or powers of attorney are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and unless waived by us, proper evidence satisfactory to
us of their authority to so act must be submitted with the Letter of
Transmittal.
Required Acknowledgments; Resales by Broker-Dealers. By tendering old
debentures, each holder, other than a broker-dealer, must acknowledge that it is
not engaged in, and does not intend to engage in, a distribution of registered
debentures. If any holder of old debentures is an "affiliate" of ours, as
defined in Rule 405 under the Securities Act, or is engaged in or intends to
engage in or has any arrangement with any person to participate in the
distribution of the registered debentures to be acquired pursuant to the
exchange offer, the holder:
. could not rely on the applicable interpretations of the SEC staff, and
. must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction.
Each broker-dealer that receives registered debentures for its own account
in exchange for old debentures must acknowledge that the old debentures were
acquired by the broker-dealer as a result of market-making activities or other
trading activities and that it will deliver a prospectus in connection with any
resale of the registered debentures. Any such broker-dealer may be deemed to be
an "underwriter" under the Securities Act. See "Plan of Distribution." The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
Acceptance of Old Debentures for Exchange; Delivery of Registered Debentures
The Company will accept, promptly after the expiration date, all old
debentures properly tendered and will issue the registered debentures promptly
after acceptance of the old debentures. For each old debenture accepted for
exchange, the holder of the old debenture will receive a registered debenture
having a principal amount equal to that of the surrendered old debenture. The
registered debentures will bear interest from the most recent date on which
interest has been paid on the old debentures or, if no interest has been paid,
from February 23, 1999. Accordingly, if the relevant record date for interest
payment occurs after the completion of the exchange offer, registered holders of
registered debentures on the record date will receive interest accruing from the
most recent date that interest has been paid or, if no interest has been paid,
from February 23, 1999. If, however, the relevant record date for interest
payment occurs prior to the completion of the exchange offer, registered holders
of old debentures on the record date will receive interest accruing from the
most recent date that interest has been paid or, if no interest has been paid,
from February 23, 1999. Old debentures accepted for exchange will cease to
accrue interest from and after the date of completion of the exchange offer,
except as set forth in the immediately preceding sentence. Holders of old
debentures whose old debentures are accepted for exchange will not receive any
payment in respect of interest on the old debentures otherwise payable on any
interest payment date the record date for which occurs on or after completion of
the exchange offer.
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<PAGE>
In all cases, issuance of registered debentures for old debentures that are
accepted for exchange pursuant to the exchange offer will be made only after
timely receipt by the exchange agent of:
. certificates for the old debentures or a timely book-entry confirmation of
the transfer of the old debentures into the exchange agent's account at the
book-entry transfer facility;
. a properly completed and duly executed Letter of Transmittal; and
. all other required documents.
If any tendered old debentures are not accepted for any reason set forth in
the terms and conditions of the exchange offer or if certificates representing
old debentures are submitted for a greater principal amount than the holder
desires to exchange, certificates representing the unaccepted or non-exchanged
old debentures will be returned without expense to the tendering holder thereof.
In the case of old debentures tendered by book-entry transfer into the exchange
agent's account at the book-entry transfer facility pursuant to the book-entry
transfer procedures described below, the non-exchanged old debentures will be
credited to an account maintained with the book-entry transfer facility.
All questions as to the validity, form, eligibility and acceptance of old
debentures tendered for exchange will be determined by us in our sole
discretion, which determination shall be final and binding. We reserve the
absolute right to reject any and all tenders of any particular old debentures
not properly tendered or not to accept any particular old debentures if
acceptance might, in the judgment of us or our counsel, be unlawful. We also
reserve the absolute right in our sole discretion to waive any defects or
irregularities or conditions of the exchange offer as to any particular old
debentures either before or after the expiration date, including the right to
waive the ineligibility of any holder who seeks to tender old debentures in the
exchange offer. The interpretation of the terms and conditions of the exchange
offer as to any particular old debentures either before or after the expiration
date by us shall be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of old debentures for
exchange must be cured within a reasonable period of time that we shall
determine. Neither us, the exchange agent nor any other person shall be
required to give notice of any defect or irregularity regarding any tender of
old debentures for exchange, nor shall any of the above incur any liability for
failure to give notice.
The exchange agent has established an account with respect to the old
debentures at DTC for purposes of the exchange offer and any financial
institution that is a participant in DTC's systems may make book-entry delivery
of old debentures by causing DTC to transfer the old debentures into the
exchange agent's account at DTC in accordance with DTC's procedures for
transfer.
================================================================================
Although delivery of old debentures may be effected through book-entry transfer
at DTC, the Letter of Transmittal or a facsimile thereof, with any required
signature guarantees and any other required documents, must, in any case, be
transmitted to and received by the exchange agent at the address set forth
below under "Exchange Agent" on or prior to the expiration date, or the
guaranteed delivery procedures described below must be complied with.
================================================================================
Guaranteed Delivery Procedures
If a registered holder of old debentures desires to tender the old
debentures and the old debentures are not immediately available, or time will
not permit the holder's old debentures or other
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<PAGE>
required documents to reach the exchange agent before the expiration date, or
the procedure for book-entry transfer cannot be completed on a timely basis, a
tender may be effected if:
. the tender is made through an eligible institution;
. prior to the expiration date, the exchange agent receives from the eligible
institution a properly completed and duly executed Letter of Transmittal or a
facsimile thereof and Notice of Guaranteed Delivery, substantially in the
form provided by us by telegram, telex, facsimile transmission, mail or hand
delivery, setting forth the name and address of the holder of old debentures
and the amount of old debentures tendered, stating that the tender is being
made thereby and guaranteeing that within five New York Stock Exchange
("NYSE") trading days after the date of execution of the Notice of
Guaranteed Delivery, the certificates for all old debentures will be
physically tendered in proper form for transfer, or a book-entry
confirmation, as the case may be, and any other documents required by the
Letter of Transmittal will be deposited by the eligible institution with the
exchange agent; and
. the certificates for all old debentures, in proper form for transfer, or a
book-entry confirmation, as the case may be, and all other documents
required by the Letter of Transmittal, are received by the exchange act with
in five NYSE trading days after the date of execution of the Notice of
Guaranteed Delivery.
Withdrawal Rights
Tenders of old debentures may be withdrawn at any time prior to 5:00 p.m.,
New York City time, on the expiration date. For a withdrawal to be effective, a
written or facsimile notice of withdrawal must be received by the exchange agent
at the address set forth below under "-- Exchange Agent." Any notice of
withdrawal must specify the name of the person having tendered the old
debentures to be withdrawn, identify the old debentures to be withdrawn
(including the principal amounts of such old debentures), and (where
certificates for old debentures have been transmitted) specify the name in which
such old debentures are registered, if different from that of the withdrawing
holder.
If certificates for old debentures have been delivered or otherwise
identified to the exchange agent, then, prior to the release of such
certificates, the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution unless the holder is an
eligible institution. If old debentures have been tendered pursuant to the
procedure for book-entry transfer, any notice of withdrawal must specify the
name and number of the account at the book-entry transfer facility to be
credited with the withdrawn old debentures and otherwise comply with the
procedures of the facility. All questions as to the validity, form and
eligibility of the notices will be determined by us and our determination shall
be final and binding on all parties. Certificates for any old debentures so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the exchange offer. Any old debentures that have been tendered for
exchange but which are not exchanged for any reason will be returned to the
holder thereof without cost to the holder. In the case of old debentures
tendered by book-entry transfer into the exchange agent's account at DTC
pursuant to the book-entry transfer procedures described above, the old
debentures will be credited to an account maintained with DTC for the old
debentures. Properly withdrawn old debentures may be retendered by following
one of the procedures described under "-- Procedures for Tendering Old
Debentures," at any time on or prior to the expiration date.
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<PAGE>
Conditions to Exchange Offer
Notwithstanding any other provision of the exchange offer, we are not
required to accept for exchange, or to issue registered debentures in exchange
for, any old debentures and may terminate or amend the exchange offer if, at any
time before the acceptance of such old debentures in exchange or the exchange of
the registered debentures for such old debentures, we determine that the
exchange offer violates applicable law, any applicable interpretation of the
staff of the SEC or any order of any governmental agency or court of competent
jurisdiction.
The foregoing conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to any such condition or may be
waived by us in whole or in part at any time and from time to time in our sole
discretion. Our failure to exercise any of the foregoing rights at any time
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time.
Exchange Agent
All executed Letters of Transmittal should be directed to the exchange
agent at the address set forth below. Questions and requests for assistance,
requests for additional copies of this prospectus or of the Letter of
Transmittal and requests for Notices of Guaranteed Delivery should be directed
to the exchange agent, addressed as follows:
By Registered or Certified Mail:
The First National Bank of Chicago
Corporate Trust Administration
One First National Plaza, Suite 0126
Chicago, Illinois 60670-0126
Attn: D. Fanning
By Overnight Courier:
Corporate Trust Administration
One North State Street, Suite 0126
Chicago, Illinois 60670-0126
Attn: D. Fanning
By Hand:
First Chicago Trust Co. of New York
14 Wall Street, 8th Floor
New York, New York 10005
Attn: Frank Ballentine
Confirm by Telephone:
Ms. Donna Fanning
(630) 351-1238
20
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- --------------------------------------------------------------------------------
Delivery of the Letter of Transmittal to an address other than as set forth
above or transmission or instructions via facsimile other than as set forth
above does not constitute a valid delivery of the Letter of Transmittal.
- --------------------------------------------------------------------------------
Fees and Expenses
We will not make any payment to brokers-dealers or others soliciting
acceptances of the exchange offer.
Transfer Taxes
Holders who tender old debentures for exchange will not be obligated to pay
any transfer tax in connection therewith, except that holders who instruct us to
register registered debentures in the name of, or request that old debentures
not tendered or not accepted in the exchange offer be returned to, a person
other than the registered tendering holder will be responsible for the payment
of any applicable transfer tax.
Appraisal Rights
Holders of old debentures will not have dissenters' rights or appraisal
rights in connection with the exchange offer.
Resale of the Registered Debentures
Based on interpretations by the SEC staff issued to third parties,
registered debentures issued in exchange for old debentures may be offered for
resale, resold or otherwise transferred by holders thereof without compliance
with the registration and prospectus delivery provisions of the Securities Act,
provided that:
. the registered debentures are acquired in the ordinary course of the
holders' business,
. the holders have no arrangement with any person to participate in the
distribution of the registered debentures, and
. the holder is not an "affiliate" of us as defined in Rule 405 under the
Securities Act.
Each holder, other than a broker-dealer, must acknowledge that it is not
engaged in, and does not intend to engage in, a distribution of registered
debentures. This analysis is based upon the SEC's position in no-action letters
issued regarding other transactions that were substantially similar to this
exchange offer. Although the SEC has not indicated that it has changed its
position on this issue, we have not sought our own interpretive letter from the
SEC. There is no assurance that the SEC would make a similar determination with
respect to the resale of our registered debentures. See "Risk Factors --
Requirements for Transfer of Registered Debentures."
If any holder is an affiliate of ours, or if any holder is engaged in or
intends to engage in or has any arrangement or understanding with respect to the
distribution of the registered debentures to be acquired pursuant to the
exchange offer, the holder
. can not rely on the applicable interpretations of the SEC staff; and
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<PAGE>
. must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with any resale transaction.
Each broker-dealer that receives registered debentures for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus meeting the requirements under the Securities Act in connection with
any resale of registered debentures. The Letter of Transmittal states that by
so acknowledging and delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of registered debentures
where the old debentures exchanged for such registered debentures were acquired
by such broker-dealer as a result of market-making activities or other trading
activities. We have agreed to use our best efforts to make this prospectus
available for a period not to exceed 180 days to any participating broker-dealer
for use in connection with any such resale. See "Plan of Distribution."
However, to comply with the securities laws of certain jurisdictions, if
applicable, the registered debentures may not be offered or sold unless they
have been registered or qualified for sale in such jurisdictions or an exemption
from registration or qualification is available.
REGISTRATION RIGHTS AGREEMENT
The summary herein of certain provisions of the registration rights
agreement does not purport to be complete and is subject to, and is qualified in
its entirety by, all the provisions of the registration rights agreement, a
copy of which is filed as an exhibit to the registration statement of which this
prospectus is a part.
We entered into a registration rights agreement with the initial purchasers
on or prior to the date the old debentures were issued, pursuant to which we
agreed, for the benefit of the holders of the debentures, that we would, at our
own expense, (1) file an exchange offer registration statement with the SEC to
exchange the old debentures for registered debentures having substantially
identical terms in all material respects to the old debentures (except that the
registered debentures would not contain terms with respect to transfer
restrictions or interest rate increases as described herein) within 150 calendar
days after the date of issuance of the old debentures, (2) use our reasonable
best efforts to cause the exchange offer registration statement to be declared
effective by the SEC under the Securities Act, within 180 calendar days after
the date of issuance of the old debentures and (3) use our reasonable best
efforts to consummate the exchange offer within 30 calendar days after the date
of effectiveness of the exchange offer registration statement. Upon the
exchange offer registration statement being declared effective by the SEC, we
will offer the registered debentures in exchange for surrender of the old
debentures. We will keep the exchange offer open for at least 30 days (or
longer if required by applicable law) after the date that notice of the exchange
offer is mailed to holders of the old debentures. For each old debenture
surrendered to us pursuant to the exchange offer, the holder who surrendered
such old debenture will receive a registered debenture having a principal amount
equal to that of the old debenture. Interest on each registered debenture will
accrue from the last interest payment date on which interest was paid on the old
debenture surrendered in exchange therefor or, if no interest has been paid on
such debenture, from the original issue date of such old debenture.
Under existing interpretations of the Securities Act by the staff of the
SEC contained in several no-action letters to third parties, and subject to the
immediately following sentence, we believe that the registered debentures would
generally be freely transferable by holders thereof after the exchange offer
without further registration under the Securities Act, subject to the
representations required to be made by each holder of debentures, as set forth
below. However, any purchaser of old debentures who is one
22
<PAGE>
of our "affiliates," or who intends to participate in the exchange offer for the
purpose of distributing the registered debentures, (i) will not be able to rely
on the interpretation of the staff of the SEC, (ii) will not be able to tender
its old debentures in the exchange offer, and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or transfer of the old debentures unless such sale or
transfer is made pursuant to an exemption from such requirements.
In addition, in connection with any resales of registered debentures, any
participating broker-dealer that acquired the registered debentures for its own
account as a result of market-making or other trading activities must deliver a
prospectus meeting the requirements of the Securities Act. The SEC has taken
the position that participating broker-dealers may fulfill their prospectus
delivery requirements with respect to the registered debentures (other than a
resale of an unsold allotment from the original sale of the old debentures) by
delivering the prospectus contained in the exchange offer registration
statement. We will agree to make available for a period of up to 180 calendar
days after consummation of the exchange offer a prospectus meeting the
requirements of the Securities Act to any participating broker-dealer and any
other persons, if any, with similar prospectus delivery requirements, for use in
connection with any resale of registered debentures. A participating broker-
dealer or any other person that delivers such a prospectus to purchasers in
connection with such resales will be subject to the civil liability provisions
under the Securities Act and will be bound by the provisions of the registration
rights agreement.
Each of you who holds the old debentures who wishes to exchange old
debentures for registered debentures in the exchange offer will be required to
make certain representations, including representations that (1) any registered
debentures to be received by you will be acquired in the ordinary course of your
business, (2) you have no arrangement or understanding with any person to
participate in the distribution of the registered debentures, (3) you are not an
"affiliate," as defined in Rule 405 under the Securities Act, of ours or, if you
are our affiliate, you will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable, and (4) you are not
acting on behalf of any person who could not truthfully make the foregoing
representations.
Shelf Registration Statement
In the event that (1) any changes in law or the applicable interpretations
of the staff of the SEC do not permit us to effect the exchange offer, (2) for
any other reason the exchange offer is not consummated within 210 days after the
date the old debentures were issued, (3) under certain circumstances, if the
initial purchasers shall so request or (4) any of you, as holders of old
debentures (other than the initial purchasers), is not eligible to participate
in the exchange offer, we will, at our expense, (a) as promptly as practicable,
file with the SEC a shelf registration statement covering resales of the old
debentures, (b) use our reasonable best efforts to cause the shelf registration
statement to be declared effective under the Securities Act as promptly as
practicable, but in no event later than the 210th day after the date the old
debentures were issued and (c) use our reasonable best efforts to keep effective
the shelf registration statement until the earlier of two years after the date
of issuance of the old debentures or such shorter period ending when all old
debentures covered by the shelf registration statement have been sold in the
manner set forth and as contemplated in the shelf registration statement or all
of the old debentures become eligible for resale pursuant to Rule 144 under the
Securities Act without volume restrictions, if any. We will, in the event of
the filing of the shelf registration statement, provide to each of you as a
holder of the old debentures copies of the prospectus that is a part of the
shelf registration statement, notify you when the shelf registration statement
has become effective, and take certain other actions as are required to permit
unrestricted resales of the Debentures. As a holder of old debentures that
sells old debentures pursuant to the shelf registration statement, you generally
will be
23
<PAGE>
required to be named as a selling security holder in the related prospectus and
to deliver a prospectus to purchasers, you will be subject to the civil
liability provisions under the Securities Act in connection with such sales, and
you will be bound by the provisions of the registration rights agreement that
are applicable to such a holder. In addition, you as a holder of the old
debentures will be required to deliver information to be used in connection with
the shelf registration statement and to provide comments on the shelf
registration statement within the time periods set forth in the registration
rights agreement in order to have your old debentures included in the shelf
registration statement and to benefit from the provisions regarding liquidated
damages set forth in the following paragraph.
Special Interest
In the event that either (a) the exchange offer registration statement is
not filed with the SEC on or prior to the 150th calendar day following the date
of issuance of the old debentures, (b) the exchange offer registration statement
has not been declared effective on or prior to the 180th calendar day following
the date of issuance of the old debentures, (c) the exchange offer is not
consummated on or prior to the 30th calendar day following the date of
effectiveness of the exchange offer registration statement or (d) if required, a
shelf registration statement is not declared effective on or prior to the 210th
calendar day following the date of issuance of the old debentures, the interest
rate borne by the old debentures shall be increased by 0.25% per year following
the 150-day period in the case of clause (a) above, following such 180-day
period in the case of clause (b) above, following the 30-day period in the case
of clause (c) above or following the 210-day period in the case of clause (d)
above, which rate will be increased by an additional 0.25% per year for each 90-
day period that any additional interest continues to accrue; provided that the
aggregate increase in such annual interest rate may in no event exceed 0.50%.
Upon (w) the filing of the exchange offer registration statement after the 150-
day period described in clause (a) above, (x) the effectiveness of the exchange
offer registration statement after the 180-day period described in clause (b)
above, (y) the consummation of the exchange offer after the 30-day period
described in clause (d) above, the interest rate borne by the old debentures
from the date of such filing, effectiveness or consummation, as the case may be,
will be reduced to the original interest rate if we are otherwise in compliance
with this paragraph; provided, however, that if, after any such reduction in
interest rate, a different event specified in clause (a), (b) (c), or (d) above
occurs, the interest rate may a gain be increased pursuant to the foregoing
provisions. However, in certain circumstances, we will not be required to keep
the shelf registration statement effective for up to two periods not to exceed
an aggregate of 90 days in any consecutive 365-day period.
Default
"Default" means the occurrence of any of the following events:
. the exchange offer is not consummated on or before the deadline, which
is 30 days after the registration statement becomes effective and in no
event later than September 21, 1999;
. we fail to file the registration statement with the SEC by July 23,
1999;
. the SEC does not declare the registration statement effective by August
22, 1999; or
. the shelf registration statement, if required, is not declared effective
within 210 days of the closing or ceases to be effective or useable for
its intended purposes.
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Indemnification
We agree in the registration rights agreement to indemnify selling holders
against certain liabilities, including certain liabilities under the Securities
Act.
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DESCRIPTION OF THE REGISTERED DEBENTURES
The Debentures
We issued the old debentures to the initial purchasers on February 23,
1999. The initial purchasers sold the old debentures to "qualified
institutional buyers," as defined in Rule 144A under the Securities Act. The
terms of the registered debentures are substantially identical to the terms of
the old debentures. However, the registered debentures are not subject to
transfer restrictions or registration rights unless held by certain broker-
dealers, affiliates of ours, or certain other persons. See "The Exchange Offer
- -- Resale of the Registered Debentures." We do not plan to list the registered
debentures on any securities exchange or seek quotation on any automated
quotation system.
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The following chart summarizes the basic terms of the registered
debentures:
<TABLE>
<S> <C>
Principal Amount at Maturity.................. $400,000,000
Maturity Date:................................ March 15, 2029
Interest Payments Dates:...................... The registered debentures will bear interest at the
rate of 6 1/2% compounded semi-annually on September
15 and March 15 of each year, commencing on September
15, 1999.
Collateral and Ranking:....................... The registered debentures are unsecured obligations of
ours and will rank equally to each other, and to all
existing and future senior unsecured indebtedness and
will rank senior in right of payment to all existing
and future subordinated indebtedness.
Global Debenture:............................. The registered debentures will be issued as a single,
global debenture that will be deposited with DTC.
Individual holders will not receive certificates for
the registered debentures, except in certain limited
circumstances.
Payment Procedures:........................... We will make all payments on the registered debentures
(including principal, premium, if any, interest and
special interest, if any) in immediately available
same day funds, at the Lowe's office or agency
maintained for such purpose, which office or agency
shall be maintained in the Borough of Manhattan, The
City of New York, except that:
. Payments on registered debentures represented by
the global debenture will be payable by wire
transfer to the accounts specified by the holder
of interest in such global debenture.
. Payments on certificated debentures, if any, will
be payable by wire transfer to the accounts
specified by the holders or, if no such account
is specified, by mailing a check to each holder's
registered address.
</TABLE>
We have filed the registration statement to comply with its obligation
under the registration rights agreement to register the issuance of the
registered debentures. See "Registration Rights Agreement."
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The Indenture
General
The registered debentures are to be issued under an Amended and Restated
Indenture, dated as of December 1, 1995, as supplemented and amended by a First
Supplemental Indenture, dated as of February 23, 1999, between us and The First
National Bank of Chicago, as trustee. Collectively, the Amended and Restated
Indenture and the First Supplemental Indenture are called the Indenture.
The registered debentures will be issued in fully registered book-entry
form without coupons and in denominations of $1,000 and integral multiples
thereof. We do not intend to apply for the listing of the debentures on a
national securities exchange. No service charge will be made for the
registration or exchange of the registered debentures, but we may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. (Indenture, Sections 302 and 305).
The following is a summary of certain terms of the registered debentures
and certain provisions of the indenture and is subject to the detailed
provisions of the indenture, to which we refer you for a more complete
description. Whenever we refer to particular Sections, Articles or defined
terms of the indenture, we intend to incorporate herein by reference such
Sections, Articles or defined terms.
The registered debentures will be unsecured senior obligations of ours,
will mature March 15, 2029, will be limited to $400.0 million aggregate
principal amount and will bear interest at the rate of 6 1/2% per year from the
date of issuance, payable semiannually on each March 15 and September 15,
commencing September 15, 1999, to the persons in whose names the registered
debentures are registered at the close of business on March 1 immediately
preceding each March 15 or the September 1 immediately preceding each September
15. We will compute interest on the registered debentures on the basis of a
360-day year composed of twelve 30-day months. We expect that payments of
principal and interest to owners of book-entry interests (as described below)
will be made in accordance with the procedures of DTC and its participants in
effect from time to time. DTC shall act as the depositary, as described in the
Indenture. The registered debentures are not redeemable prior to maturity.
The Indenture does not limit the aggregate principal amount of debt
securities that may be issued thereunder and provides that debt securities may
be issued thereunder from time to time in one or more series. (Indenture,
Section 301). In addition to the old debentures, we have outstanding under the
Indenture $100.0 million of Senior Notes due December 15, 2005, $268.0 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, and $300.0 million of
67/8% Debentures due February 15, 2028. We have outstanding under a separate
indenture an additional $214.0 million of Medium Term Notes, Series A, at rates
ranging from 6.50% to 8.20% and with final maturities from August 4, 1999 to
January 11, 2023 (the Series A and Series B Medium Term Notes are referred to
collectively as the "Medium Term Notes"). Neither the indenture nor the
registered debentures will limit or otherwise restrict the amount of
indebtedness that we may incur.
The registered debentures will be unsecured obligations of our Company and
will rank on a parity with all of the other indebtedness outstanding under the
indenture, the Medium Term Notes and all of our other unsecured and
unsubordinated indebtedness. The registered debentures will be effectively
subordinated to any of our secured indebtedness and to any unsubordinated
indebtedness of our subsidiaries. At July 2, 1999, we had $185.6 million of
secured indebtedness outstanding, and we had $1,272.3 million of unsecured
indebtedness outstanding. At July 2, 1999, our subsidiaries had $182.4 million
of unsubordinated indebtedness outstanding.
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Certain Covenants Applicable to Debentures
The registered debentures will have the benefit of the following covenants
in the indenture. Certain capitalized terms used in this section are defined
below under "Certain Definitions." Other capitalized terms not otherwise
defined in these sections have the meanings ascribed to them in the indenture.
Restrictions on Debt. The indenture provides that we will not, and will
not permit any Subsidiary to incur, issue, assume or guarantee any Debt secured
by a Mortgage on any Principal Property of our 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 debt securities issued under the indenture
then Outstanding (together with, if we shall so determine, any other Debt of our
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 our option, 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 our 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 our Company or
any Subsidiary after the first date on which a debt security is authenticated by
the trustee under the indenture, which Mortgages are created or assumed
contemporaneously with, or within 30 months after, such acquisition, or
completion of such construction or improvement, or 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 debt security is
authenticated by the trustee under the 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 our 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 our Company or a Subsidiary; (c) Debt of any
corporation existing at the time such corporation becomes a Subsidiary; (d) Debt
of a Subsidiary to our 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
our Company or another Subsidiary, provided that such Preferred Stock is
thereafter not transferable to any Person other than our Company or a
Subsidiary. (Indenture, Section 1008).
Restrictions on Sales and Leasebacks. The indenture provides that we will
not, and will not permit any Subsidiary to, after the first date on which a debt
security is authenticated by the trustee under the 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
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<PAGE>
Attributable Debt with respect to such transactions plus all Debt to which
Section 1008 of the 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) our 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 our
Funded Debt ranking on a parity with or senior to debt securities issued under
the indenture 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 of 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 our Company and a Subsidiary or between
Subsidiaries. (Indenture, Section 1009).
Certain Definitions. The 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
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 (1) all current liabilities and (2) 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 our 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
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<PAGE>
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 our 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 our 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
our Company or any Subsidiary of our Company. (Indenture, Section 101).
Effect of Corporate Structure
The registered debentures are our obligations exclusively. Because our
operations are currently conducted through subsidiaries, the cash flow and the
consequent ability to service our debt, including the registered debentures, are
dependent, in part, upon the earnings of our subsidiaries and the distribution
of those earnings to us or upon loans or other payments of funds by our
subsidiaries to us. Our subsidiaries are separate and distinct legal entities
and have no obligation, contingent or otherwise, to pay any amounts due pursuant
to the registered debentures 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 us by our 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 indenture limits the incurrence of such indebtedness, as
described above under " -- Certain Covenants Applicable to Debentures --
Restrictions on Debt," the registered debentures will be effectively
subordinated to all indebtedness and other liabilities, including current
liabilities and commitments under leases, if any, of our subsidiaries. Any
right that we have to receive assets of any of our subsidiaries upon liquidation
or reorganization of the subsidiary (and the consequent right of the holders of
the debentures 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 we ourselves are recognized as a creditor of such subsidiary,
in which case our claims would still be subordinated to any security interests
in the assets of such subsidiary and any indebtedness of such subsidiary senior
to that that we hold.
No Restriction on Sale or Issuance of Stock of Subsidiaries
The indenture contains no covenant that we 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, or 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
We, without the consent of the holder or holders of any outstanding debt
securities issued under the indenture, may consolidate or merge with or into, or
convey, transfer or lease our properties and
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<PAGE>
assets substantially in their entirety, to any corporation organized under the
laws of any domestic jurisdiction, provided that the successor corporation
assumes our obligations on the debt securities and under the indenture and that
after giving effect to the transaction no Event of Default, and no event that,
after notice or lapse of time would become an Event of Default, has occurred and
is continuing, and that certain other conditions are met. (Indenture, Section
801).
Events of Default
The following will be Events of Default under the indenture:
(1) Our failure for 30 days to pay when due interest on the registered
debentures,
(2) Our failure to pay principal or premium, if any, on the registered
debentures when due,
(3) Our failure to perform covenants with respect to the registered
debentures for 60 days after receipt of notice of default,
(4) Default in the payment of principal or acceleration of at least $10.0
million in aggregate principal amount of debt of our Company or
subsidiaries after receipt of notice of such default or acceleration,
and
(5) Certain events of bankruptcy, insolvency or reorganization of our
Company or subsidiaries.
Subject to the provisions of the indenture relating to the duties of the
trustee in case an Event of Default occurs and is continuing, the trustee will
be under no obligation to exercise any of its rights or powers under the
indenture at the request or direction of any of the holders of registered
debentures issued under the indenture, unless such holders have offered to the
trustee reasonable indemnity. Subject to such provisions for the
indemnification of the trustee and certain other conditions provided in the
indenture, the holders of a majority in aggregate principal amount of the
outstanding debentures of any issue will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
trustee with respect to such issue of debentures or exercising any trust or
power conferred on the trustee with respect to such issue of debentures.
(Indenture, Section 512).
If an Event of Default (other than an Event of Default of the type
described in clause (5) above occurs, the principal of and any accrued interest
on the registered debentures then outstanding will become immediately due and
payable; provided, however, that after such acceleration, but before a judgment
or decree based on acceleration, the holders of a majority in aggregate
principal amount of registered debentures of such issue may, under certain
circumstances, rescind and annul such acceleration if all Events of Default,
other than the non-payment of accelerated principal, have been cured or waived
as provided in the indenture. (Indenture, Section 502). For information as to
waiver of defaults, see " -- Modification and Waiver."
No holder of any debenture will have any right to institute any proceeding
with respect to the indenture or for any remedy thereunder, unless such holder
has previously given to the trustee written notice of a continuing Event of
Default and unless also the holders of at least 25% in aggregate principal
amount of the debentures of such issue have made written request, and offered
reasonable indemnity, to the trustee to institute such proceeding as trustee,
and the trustee has not received from the holders of a majority in aggregate
principal amount of debentures of such issue a direction inconsistent with such
request. However, such limitations do not apply to a suit instituted by a
holder of a registered debenture
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for enforcement of payment of the principal of,
and premium, if any, or interest on such registered debenture on or after the
respective due dates expressed in such debenture.
We shall furnish to the trustee annually a statement as to the performance
by us of certain of our obligations under the indenture and as to any default in
such performance. (Indenture, Section 1005).
Modification and Waiver
Modifications and amendments of the indenture with respect to any issue of
debentures may be made by us and the trustee with the consent of the holders of
a majority in aggregate 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 of each such outstanding debt security affected
thereby:
(1) change the stated maturity date of the principal of, or any
installment of principal of, or premium if any, or interest on, any
such debt security:
(2) reduce the principal amount of, or the premium, if any, or interest
on, any such debt security;
(3) change the place or currency of payment of principal of, or premium,
if any or interest on, any such debt security;
(4) impair the right to institute suit for the enforcement of any payment
on or with respect to any debt security;
(5) reduce the percentage in principal amount of the debt security of such
issue necessary to modify or amend the indenture;
(6) reduce the percentage of aggregate principal amount of the debt
security, the consent of whose holders is required for modification or
amendment of the indenture or for waiver of compliance with certain
provisions of the indenture or for waiver of certain defaults
thereunder; or
(7) impair the rights of any holder of debt securities to conversion
rights.
The holders of a majority in aggregate principal amount of the debentures
of any issue may waive compliance with certain restrictive provisions of the
indenture with respect to such issue of debentures. The holders of a majority
in aggregate principal amount of the debentures of any issue may waive any past
default under the indenture with respect to such issue of debentures, except a
default in the payment of principal or premium, if any, or interest.
Same-Day Funds Settlement and Payment
We will make all payments of principal and interest in respect of
registered debentures in book-entry form in immediately available funds to the
accounts specified in DTC.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing house or next-day funds. In contrast, the
registered debentures will trade in DTC's Same-Day Funds Settlement System until
maturity or until the registered debentures are issued in certificated form, and
secondary market trading activity in the registered debentures will therefore be
required by DTC to
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settle in immediately available funds. No assurance can be given as to the
effect, if any, of settlement in immediately available funds on trading activity
in the registered debentures.
Concerning the Trustee
The First National Bank of Chicago is the trustee under the indenture. We
may maintain deposit accounts or conduct other banking transactions with the
trustee in the ordinary course of business. Notice to The First National Bank
of Chicago, Corporate Trust Administration, One First National Plaza, Suite
0126, Chicago, Illinois 60670-0126, Attention: D. Fanning.
Form, Denomination, Transfer, Exchange and Book-Entry Procedures
The registered debentures will be issued in fully registered book-entry
form without interest coupons and in denominations of $1,000 and integral
multiples thereof. The registered debentures generally will be represented by
one or more fully-registered global securities, which shall be called
collectively the global debenture. Notwithstanding the foregoing, old debentures
held in certificated form will be exchanged solely for registered debentures in
certificated form, as discussed below. The global debenture will be deposited
upon issuance with DTC and registered in the name of Cede & Co. Except as set
forth below, the global debenture may be transferred, in whole and not in part,
only to another nominee of DTC or to a successor of DTC or its nominee.
A holder may transfer registered debentures in accordance with the
indenture. The Registrar and the trustee may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and we may
require a holder to pay any taxes and fees required by law or permitted by the
indenture. We are not required to transfer or exchange any registered
debentures selected for redemption. Also, we are not required to transfer or
exchange a registered debenture for a period of 15 days before a selection of
registered debentures to be redeemed.
The registered holder of a registered debenture will be treated as the
owner of such registered debenture for all purposes.
Global Debentures and Book-Entry System
The certificates representing the registered debentures will be issued in
the form or one or more permanent global certificates in definitive fully
registered form and will be deposited with, or on behalf of, DTC and registered
in the name of Cede & Co., as the nominee of DTC. Except as described below,
the registered debentures will not be issued in definitive form. Unless and
until they are exchanged in whole or in part for the individual registered
debentures represented thereby, any interests in the global debentures may not
be transferred except as a whole by DTC to a nominee of DTC or by a nominee of
DTC to DTC or another nominee of DTC or by DTC or any nominee of DTC to a
successor depositary or any nominee of such successor.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities and
Exchange Act of 1934, as amended. DTC holds securities that its participants
pledge, in deposited securities through electronic computerized book-entry
changes in participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other
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organizations. DTC is owned by a number of its direct participants and by
the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship with a direct
participant, either directly or indirectly. The rules applicable to DTC and its
participants are on file with the SEC.
Upon the issuance of the global debentures, and the deposit of such global
debentures with or on behalf of DTC, DTC will credit, on its book-entry
registration and transfer system, the respective principal amounts of the
registered debentures represented by such global debentures to the accounts of
participants that have accounts with DTC or its nominee. The accounts to be
credited will be designated by the underwrites or agents engaging in the
distribution or placement of the registered debentures. Ownership of beneficial
interests in such global debentures will be limited to participants or persons
that may hold interests through participants. Ownership of beneficial interests
by participants in such global debentures 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 DTC or its nominee for such
global debentures. Ownership of beneficial interests in such global debentures
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 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 the global debentures.
So long as DTC or its nominee is the registered owner of such global
debentures, DTC or such nominee, as the case may be, will be considered the sole
owner of holder of the registered debentures represented by the global
debentures for all purposes under the indenture. Except as set forth below,
owners of beneficial interests in the global debentures will not be entitled to
have registered debentures represented by such global debentures registered in
their names, will not receive or be entitled to receive physical delivery of
registered debentures 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 global debentures must
rely on the procedures of DTC 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 DTC may grant proxies and otherwise authorize
participants to give or take any request, demand, authorization, direction,
notice, consent, waiver or other action that a holder is entitled to give or
take under the indenture. (Indenture, Section 104). We understand that under
existing industry practices, if we request any action of holders or any owner of
a beneficial interest in the global debentures desires to give any notice or
take any action that a holder is entitled to give or take under the indenture,
DTC 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 the registered
debentures represented by the global debentures registered in the name of DTC or
its nominee will be made to DTC or its nominee, as the case may be, as the
registered owner of the global debentures. Neither we, the trustee nor any
paying agent for the registered debentures will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the global debentures or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests. (Indenture, Section 308).
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We expect that DTC, 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 debentures as shown on the records of DTC. We also expect
that payments by participants to owners of beneficial interests in such global
debentures 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 DTC is at any time unwilling or unable to continue as depositary and a
successor depositary is not appointed by us within 90 days, we will issue the
registered debentures in definitive certificated form in exchange for such
global debentures. In addition, we may at any time and in our sole discretion
determine not to have the registered debentures represented by one or more
global debentures and, in such event, will issue the registered debentures in
definitive certificated form in exchange for global debentures. (Indenture,
Section 305).
Further, an owner of a beneficial interest in the global debentures may, on
terms acceptable to us and DTC, receive registered debentures in definitive
certificated form, if we so specify. In any such instance, an owner of
beneficial interest in the global debentures will be entitled to have registered
debentures equal in principal amount to such beneficial interest registered in
its name and will be entitled to physical delivery of such registered debentures
in definitive certificated form. Registered debentures so issued in definitive
certificated form will be issued in denominations of $1,000 and integral
multiples thereof and will be issued in registered form. (Indenture, Section
305).
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER
The following summarizes the material federal income tax consequences of
the exchange of old debentures for registered debentures. This summary is based
on current law, which is subject to change at any time, possibly with
retroactive effect. In addition, this summary does not address the tax
consequences of the exchange under applicable state, local or foreign laws.
The exchange of old debentures for registered debentures pursuant to the
exchange offer will not result in any United States federal income tax
consequences to holders. When a holder exchanges an old debenture for a
registered debenture pursuant to the exchange offer, the holder will have the
same adjusted basis and holding period for the registered debenture as for the
old debenture immediately before the exchange.
Each holder should consult his own tax advisor as to the particular tax
consequences to it of exchanging old debentures for registered debentures,
including the applicability and effect of any state, local or foreign tax laws.
PLAN OF DISTRIBUTION
Each broker-dealer that receives registered debentures for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such registered debentures. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of registered debentures received
in exchange for old debentures where such old debentures were acquired as a
result of market-making activities or other trading activities. We have agreed
that we will, for a period of 180 days after the consummation of the
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[LOGO]
Lowe's Companies, Inc.
OFFER FOR
ALL OUTSTANDING 6 1/2% DEBENTURES DUE MARCH 15, 2029
IN EXCHANGE FOR
REGISTERED 6 1/2% DEBENTURES DUE MARCH 15, 2029
_______________________________
PROSPECTUS
_______________________________
July 27, 1999
