Prepared by MERRILL CORPORATION









THE HOME DEPOT, INC.




 




DEFERRED STOCK UNITS




PLAN AND AGREEMENT




 




 




                THIS DEFERRED STOCK UNITS PLAN AND

AGREEMENT evidences that, subject to the following terms and

conditions, on September 17, 2001 (the “Grant Date”), The Home Depot, Inc., a

Delaware Corporation, (the “Company”) granted to Robert L. Nardelli (the

“Executive”) an award of deferred stock units corresponding to two hundred

fifty thousand (250,000) shares of Common Stock, $.05 par value (“Common

Stock”), of the Company (each a “Deferred Stock Unit”):




1.         Definitions.   As used herein, the following terms shall be defined as set forth

below:




(a)           "Cause" shall mean that Executive

has been convicted of a felony involving theft or moral turpitude, or engaged

in conduct that constitutes willful gross neglect or willful gross misconduct

with respect to Executive's employment duties which results in material

economic harm to the Company; provided, however, that for purposes of

determining whether conduct constitutes willful gross misconduct, no act on Executive's

part shall be considered “willful” unless it is done by Executive in bad faith

and without reasonable belief that his action was in the best interests of the

Company.  Notwithstanding the foregoing,

the Company may not terminate Executive's employment for Cause unless (1) a

determination that Cause exists is made and approved by a majority of the

Company's Board of Directors (the "Board"), (2) Executive is given at

least thirty (30) days’ written notice of the Board meeting called to make such

determination, and (3) Executive and his legal counsel are given the

opportunity to address such meeting.




(b)           A "Change in Control"

shall be deemed to have occurred if:




(1)           Any “person” (as defined in Section

13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the

“Exchange Act”)), excluding for this purpose, (A) the Company or any subsidiary

of the Company, or (B) any employee benefit plan of the Company or any

subsidiary of the Company, or any person or entity organized, appointed or established

by the Company for or pursuant to the terms of any such plan which acquires

beneficial ownership of voting securities of the Company, is or becomes the

“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly

or indirectly, of securities of the Company representing more than twenty

percent (20%) of the combined voting power of the Company’s then outstanding

securities; provided, however, that no Change in Control will be deemed to have

occurred as a result of a change in ownership percentage resulting solely from

an acquisition of securities by the Company; or




 




(2)           During any two (2) consecutive years

(not including any period beginning prior to December 3, 2000), individuals who

at the beginning of such two (2) year period constitute the Board and any new

director (except for a director designated by a person who has entered into an

agreement with the Company to effect a transaction described elsewhere in this

definition of Change in Control) whose election by the Board or nomination for

election by the Company’s stockholders was approved by a vote of at least

two-thirds of the directors then still in office who either were directors at

the beginning of the period or whose election or nomination for election was

previously so approved cease for any reason to constitute at least a majority

of the Board; or













 




(3)           Consummation of a reorganization,

merger or consolidation or sale or other disposition of all or substantially

all of the assets of the Company (a “Business Combination”), in each case,

unless, following such Business Combination, all or substantially all of the

individuals and entities who were the beneficial owners of outstanding voting

securities of the Company immediately prior to such Business Combination

beneficially own, directly or indirectly, more than fifty percent (50%) of the

combined voting power of the then outstanding voting securities entitled to

vote generally in the election of directors, as the case may be, of the company

resulting from such Business Combination (including, without limitation, a

company which as a result of such transaction owns the Company or all or

substantially all of the Company’s assets either directly or through one or

more subsidiaries) in substantially the same proportions as their ownership,

immediately prior to such Business Combination of the outstanding voting

securities of the Company; or




 




(4)           Approval by the stockholders of the

Company of a complete liquidation or dissolution of the Company.




 




(c)           "Committee" means the

Compensation Committee of the Board.




(d)           "Disability" means Executive's

inability to substantially perform his duties under that certain employment

agreement entered into between the Company and Executive effective as of

December 4, 2000 (the "Employment Agreement"), with reasonable

accommodation, as evidenced by a certificate signed either by a physician

mutually acceptable to the Company and Executive or, if the Company and

Executive cannot agree upon a physician, by a physician selected by agreement

of a physician designated by the Company and a physician designated by

Executive; provided, however, that if such physicians cannot agree upon a third

physician within thirty (30) days, such third physician shall be designated by

the American Arbitration Association.




(e)           "Good Reason" shall mean, without

Executive's consent, (1) the assignment to Executive of any duties inconsistent

in any material respect with Executive's position (including status, offices,

titles and reporting relationships), authority, duties or responsibilities as

contemplated by Section 3 of the Employment Agreement, or any other action by

the Company which results in a significant diminution in such position,

authority, duties or responsibilities, excluding any isolated and inadvertent

action not taken in bad faith and which is remedied by the Company within ten

(10) days after receipt of notice thereof given by Executive; (2) any failure

by the Company to comply with any of the provisions of Sections 4 or 5 of the

Employment Agreement other than an isolated and inadvertent failure not

committed in bad faith and which is remedied by the Company within ten (10)

days after receipt of notice thereof given by Executive; (3) Executive being

required to relocate to a principal place of employment more than twenty-five

(25) miles from his principal place of employment with the Company as of

December 4, 2000; (4) delivery by the Company of a notice discontinuing the

automatic extension provision of Section 2 of the Employment Agreement; (5)

failure by the Company to elect Executive to the position of sole Chairman of

the Board in compliance with the terms of Section 3.1 of the Employment

Agreement; or (6) any purported termination by the Company of Executive's

employment otherwise than as expressly permitted by the Employment Agreement.













2.             Deferred Stock Units.




(a)           Vesting Schedule; Issuance of Shares.  Fifty thousand (50,000) Deferred Stock Units

shall become vested on the Grant Date and each of the first four anniversaries

of Executive's employment date of December 4, 2000 (the “Vesting Dates”);

provided that, except as provided in subparagraph (c) below, Executive is

employed by the Company on the applicable Vesting Date.  The Company shall issue one share of Common

Stock to Executive for each vested Deferred Stock Unit on January 1 of the

third calendar year following the calendar year in which the Deferred Stock

Unit vests (as illustrated in the schedule on Appendix A hereto), unless (1)

Executive has elected to defer the issuance of such shares pursuant to subparagraph

(b) below, or (2) Executive's employment terminates prior to such date (in

which case shares shall be issued as provided under subparagraph (c)

below).  Each Deferred Stock Unit shall

be cancelled upon the issuance of a share of Common Stock with respect thereto.




(b)           Deferral.  Executive may elect in writing on or before December 31 of the

calendar year following the calendar year in which the Deferred Stock Units

vest (the “Latest Deferral Date”), to defer the issuance of shares of Common

Stock with respect to all or a part of such vested Deferred Stock Units.  Any such election shall specify the date of

issuance for the deferred shares and shall be irrevocable after the Latest

Deferral Date.




(c)           Termination of Employment; Change in Control.  If (1) the Company terminates Executive’s

employment other than for Cause, (2) Executive, upon fifteen (15) days’ prior

written notice, terminates his employment for Good Reason, (3) Executive’s

employment terminates due to death or Disability, or (4) a Change in Control

occurs while Executive is employed by the Company, any Deferred Stock Units

that have not yet vested shall immediately vest.  Unless Executive has elected pursuant to subparagraph (b) above

to defer issuance to a later date, the Company shall issue to Executive, within

ten (10) days after the termination of Executive's employment for any reason,

one share of Common Stock for each outstanding vested Deferred Stock Unit, and

each outstanding Deferred Stock Unit shall be cancelled.




(d)           Limitation of Rights; Dividend Equivalents.  Executive shall not have any right to

transfer any rights under the Deferred Stock Units except as permitted by

Paragraph 4 below, shall not have any rights of ownership in the shares of

Common Stock subject to the Deferred Stock Units prior to the issuance of such

shares, and shall not have any right to vote such shares.  Executive, however, shall receive a cash

payment equal to the cash dividends paid on shares underlying outstanding vested

Deferred Stock Units when cash dividends are paid to shareholders of the

Company.




3.         Administration.  This Plan and Agreement shall be administered by the

Committee.  The interpretation and

construction by the Committee of any provision herein and any determination by

the Committee pursuant to any provision of this Plan and Agreement shall be

final and conclusive.  No member of the

Committee shall be liable to any person for any such action taken or

determination made in good faith.













4.         Transferability.  Except as otherwise provided in this Paragraph 4, the Deferred

Stock Units granted pursuant to this Plan and Agreement shall not be sold,

pledged, assigned, hypothecated, transferred or disposed of in any manner,

whether by the operation of law or otherwise. 

Executive may transfer the Deferred Stock Units, in whole or in part, to

a spouse or lineal descendant (a “Family Member”), a trust for the exclusive

benefit of Executive and/or Family Members, a partnership or other entity in

which all the beneficial owners are Executive and/or Family Members, or any

other entity affiliated with Executive that may be approved by the Committee (a

"Permitted Transferee"). 

Subsequent transfers of the Deferred Stock Units shall be prohibited

except in accordance with this Paragraph 4. 

All terms and conditions of the Deferred Stock Units, including

provisions relating to the termination of Executive's employment with the

Company, shall continue to apply following a transfer made in accordance with

this Paragraph 4.  Upon any attempt of a

transfer of the Deferred Stock Units prohibited by this Paragraph 4, the

Deferred Stock Units shall immediately become null and void.




5.         Adjustments.   The number of shares covered by the Deferred Stock Units and, if

applicable, the kind of shares covered by the Deferred Stock Units shall be

adjusted to reflect any stock dividend, stock split, or combination of shares

of the Company's Common Stock.  In

addition, the Committee may make or provide for such adjustment in the number

of shares covered by the Deferred Stock Units, and the kind of shares covered

the Deferred Stock Units, as the Committee in its sole discretion may in good

faith determine to be equitably required in order to prevent dilution or

enlargement of Executive's rights that otherwise would result from (a) any exchange

of shares of the Company's Common Stock, recapitalization or other change in

the capital structure of the Company, (b) any merger, consolidation,

spin-off, spin-out, split-off, split-up, reorganization, partial or complete

liquidation or other distribution of assets (other than a normal cash

dividend), issuance of rights or warrants to purchase securities, or (c) any

other corporate transaction or event having an effect similar to any of the

foregoing.  Moreover, in the event of

any such transaction or event, the Committee may provide in substitution for

the Deferred Stock Units such alternative consideration as it may in good faith

determine to be equitable under the circumstances and may require in connection

therewith the surrender of the Deferred Stock Units so replaced.




6.         Fractional Shares.  The Company shall not be required to issue

any fractional shares pursuant to this Plan and Agreement, and the Committee

may round fractions down.




7.         Taxes. 

To the extent that the Company is required to withhold federal, state,

local or foreign taxes in connection with any benefit realized by Executive or

any other person under this Plan and Agreement, it shall be a condition to the

realization of such benefit that Executive or such other person make arrangements

satisfactory to the Company for payment of all such taxes required to be

withheld, which arrangements may include Executive's delivery to the Company of

a check equal to the amount of such taxes. 

Upon the payment of any dividend equivalents payable pursuant to

Paragraph 2(d) above, Executive agrees that the Company shall deduct therefrom

such amounts as are necessary to satisfy applicable withholding requirements.




8.         No Impact on Other Benefits and Employment.  This Plan and Agreement shall not confer

upon Executive any right with respect to continuance of employment or other

service with the Company and shall not interfere in any way with any right that

the Company would otherwise have to terminate Executive's employment at any

time, subject to the terms of the Employment Agreement.  Nothing herein contained shall affect

Executive's right to participate in and receive benefits under and in

accordance with the then current provisions of any pension, insurance or other

employment plan or program of the Company or any of its subsidiaries nor

constitute an obligation for continued employment.













9.         Cancellation.  With Executive's concurrence, the Committee may cancel this Plan

and Agreement.  In the event of such

cancellation, the Committee may authorize the granting of new deferred stock

units, which may or may not cover the same number of shares that had been the

subject of the Deferred Stock Units, in such manner and subject to such other

terms and conditions as then determined by the Committee.




10.       Governing Law.  The validity, construction and effect of this Plan and Agreement

will be determined in accordance with (a) the Delaware General Corporation Law,

and (b) to the extent applicable, other laws (including those governing

contracts) of the State of Georgia (without regard to the choice of law

provisions thereof).




11.       Merger Clause.  This Plan and Agreement supersedes any and all understandings

between the Company and Executive with respect to the Deferred Stock Units and,

except as otherwise provided herein, this Plan and Agreement may be amended

only in writing signed by the Company and Executive.




Please indicate

your understanding and acceptance of the foregoing by signing and returning a

copy of this Plan and Agreement.




 




	

   


  	

   


  	

  THE HOME DEPOT, INC.


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

  /s/  Bernie Marcus


  
	

   


  	

   


  	

  By:


  	

  Bernie Marcus


  





 




              I hereby acknowledge

receipt of the Deferred Stock Units granted on September 17, 2001, which have

been granted to me under the foregoing terms and conditions.  I further agree to conform to all of the

terms and conditions of such Deferred Stock Units.




 




	

   


  	

   


  	

  EXECUTIVE


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

  /s/  Robert L. Nardelli


  
	

   


  	

   


  	

  Robert L.

  Nardelli


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

  Date:


  	

    10/24/01


  	

   


  














APPENDIX

A




 




SCHEDULE

FOR DEFERRED STOCK UNITS




 




 




 








	

  Number

  of


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Deferred


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  Distribution

  Date


  
	

  Stock

  Units


  	

   


  	

  Vesting

  Date


  	

   


  	

  Latest

  Deferral Date


  	

   


  	

  if

  No Deferral


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  1.     50,000


  	

   


  	

  September 17, 2001


  	

   


  	

  December 31, 2002


  	

   


  	

  January 1, 2004


  
	

  2.     50,000


  	

   


  	

  December 4, 2001  


  	

   


  	

  December 31, 2002


  	

   


  	

  January 1, 2004


  
	

  3.     50,000


  	

   


  	

  December 4, 2002  


  	

   


  	

  December 31, 2003


  	

   


  	

  January 1, 2005


  
	

  4.     50,000


  	

   


  	

  December 4, 2003  


  	

   


  	

  December 31, 2004


  	

   


  	

  January 1, 2006


  
	

  5.     50,000


  	

   


  	

  December 4, 2004  


  	

   


  	

  December 31, 2005


  	

   


  	

  January 1, 2007